Paragon and Clementi Mall both recorded negative rental reversions.
SPH REIT’s net property income (NPI) in the third quarter of 2018 dipped 3.8% to $40.56m from $42.17m last year. Revenue dipped as well by 2.9% to $51.77m.
According to its financial statement, distributable income dipped 1.7% to $35.1m. Distribution per unit (DPU) held steady at 1.37 cents and will be paid on 17 August 2018.
SPH REIT noted that Paragon recorded a rental reversion of -6.2% for new and renewed leases cumulatively for YTD 2018. These leases were committed about a year ago, during the retail sales downturn. The decline was more moderated in Q3 compared to 1H 2018.
“As part of our long-standing philosophy of partnering tenants for mutual sustainability, the rental negotiation with tenants took into consideration occupancy cost and we continue to work closely with them as they ride through cyclical and structural changes,” the REIT said.
Meanwhile, the Clementi Mall recorded a positive rental reversion of 5.3% in YTD 3Q 2018 with a renewal of 3.2% of the mall’s net lettable area. The overall portfolio registered a rental reversion of -6.0%.
However, in tandem with the recovery in retail sales since June 2017, tenant sales in the malls have continued to register growth, and the portfolio was close to full occupancy at 99.6%.
SPH REIT CEO Susan Leng commented, “We remain focused on curating the right retail mix that will resonate with shoppers and are pleased to introduce a new shopping concept at Level 3, Paragon. This concept offers open store design for seamless interactions across brands, merchandise and shoppers, and also introduces carefully curated new-to-market concepts.”
Leng added, “The first phase was launched in June and when fully completed in December, will span across about 16,000 sqft of more than 20 fashion, lifestyle and F&B tenants. Paragon also welcomed MCM, its first flagship store in Southeast Asia at Level 1.”
The company has also completed the acquisition of The Rail Mall, a cluster of shop units along Upper Bukit Timah Road, with the opportunity to further strengthen its current F&B mix and create a differentiated positioning for the asset.
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