SPH REIT 3QFY19 DPU is 1.39 Cents

I have recently added SPH REIT into my stock portfolio. SPH REIT has announced their 3QFY19 financial results on 11th July 2019 which kind of surprised me as their 3QFY19 financial results were pretty good and better as compared to the same quarter in FY18. Distribution Per Unit (DPU) increased  by 1.5%. Gross Revenue increased by 12.7% and Net Property Income increased by 14.2%.

Below are the 3QFY19 financial results.

3QFY19 Financial Results

3QFY19
(S$’000)
3QFY18
(S$’000)
Change
Gross Revenue 58,333 51,769 12.7%
Net Property Income 46,328 40,559 14.2%
Distributable Income 35,953 35,205 2.1%
Distribution Per Unit (“DPU”) (cents) 1.39 1.37 1.5%

YTD 3QFY19 Financial Results

YTD3QFY19
(S$’000)
YTD3QFY18
(S$’000)
Change
Gross Revenue 170,261 158,840 7.2%
Net Property Income 133,969 125,017 7.2%
Distributable Income 106,995 105,532 1.4%
Distribution Per Unit (“DPU”) (cents) 4.14 4.11 0.7%

Occupancy

Occupancy stood at a high of 99%.

We all know that rental reversions show whether new leases signed in the quarter have higher rental rates or lower rental rates. Investors should look out for positive rental reversion.

The Clementi Mall and The Rail Mall recorded positive rental reversion of 5.8% and 9.1% respectively for YTD FY19. This means that the new leases signed in the quarter for The Clementi Mall and The Rail Mall were 5.8% and 9.1% higher respectively in terms of rental rates as compared to previous tenants on average.

The overall portfolio registered a positive rental reversion of 8.4%.

Gearing Ratio

Currently, gearing stood at 30.1% and thus there is still a lot of room for further debt to fund future acquisitions.

The Weight Average Debt Maturity is 1.8 years. I consider this as short and this is something investors should monitor and keep a watch out for in an unfavourable economy. However, if you look at the below Debt Maturity Profile, S$280 million of debt in 2020 have fixed interest rate which means the interest expense is pretty much stable which means no surprises till then.

Summary

The current dividend yield for SPH REIT is 5.04% based on 5.54 cents paid out in FY18 and the current share price of S$1.10.

In the presentation slides, it mentioned about Right of First Refusal (ROFR) about The Seletar Mall which has maintained high occupancy since its opening in November 2014. This has been a hot speculation topic for decades among investors of SPH REIT. We shall see whether if there are acquisition plans by SPH REIT in FY19 which will further add value to this gem.