SPH REIT’s NPI rises by 0.4% to $105.3m in 1H22

The increase was driven by a gradual recovery in the operating environment.

SPH REIT ended the first half of the financial year 2022 with increases in its net property income (+0.4% YoY to  $105.3m) and gross revenue (1.2% YoY to $141.6m).

According to OCBC Investment Research, the jump in the S-REIT’s NPI and revenue was due to the gradual recovery in the operating environment.

The growth however was partially offset by the increase in its operating expenses due to higher electricity rates.

Apart from the NPI and gross revenue, the REIT’s DPU also came in line with market expectations at $0.0268 (+9.8% YoY).

On the other hand, the REIT’s rental reversion was in the negative as of 28 February 2022 at 6.4% due to weak retail leasing sentiment.  The negative rental revision was also seen in their properties at the Orchard
Road, namely Paragon and The Clementi Mall at 7.3% and 4.0%, respectively.

Despite the good performance of the SPH REIT OCBC Investment Research still warned of risks when investing in the company.

The analyst said the REIT might be affected by the slowdown in macroeconomic conditions which in turn may stifle consumer and business sentiment, and a pullback in visitor arrivals and/or tourism spending in the Orchard Area.

OCBC also warned that the rising interest rate environment could raise the borrowing costs for SPH REIT.