SPH REIT Acquires 50.0% Interest in Westfield Marion Shopping Centre, Adelaide, South Australia

When SPH REIT announced its FY19 full year results, I mentioned that the debt gearing currently stood at 27.5% which I felt is low for a retail REIT and there is definitely further room for more acquisitions.

On 7th November 2019, SPH REIT announced the acquisition of 50% in Westfield Marion Shopping Centre, Adelaide, South Australia. The other 50% stake is managed by Scentre Group Limited (“Scentre Group”), the largest Australian Retail REIT.

Westfield Marion Shopping Centre houses 327 tenants and have a high occupancy of 99.3% by Gross Lettable Area (“GLA”). The Weighted Average Lease Expiry (“WALE”) is 6.7 years by GLA and 4.2 years by income.

A picture speaks a thousand words. Post acquisition, you can see that Westfield Marion will make up 15% of SPH REIT’s portfolio valued at S$4.2 billion. The acquisition will be funded via the combination of proceeds from the S$300.0m of perpetual securities issued on 30 August 2019, debt and/or equity fund raising.

Rationale for Acquisition

I shall not touch into the details for the rationale for acquisition as you can find the details from the presentation slides. The important to me is the post acquisition DPU on whether it is accretive or not.

  • Deepens strategic presence in Australia with entry into attractive and stable Adelaide market.
  • Dominant, destination lifestyle mall in South Australia.
  • Complementary acquisition, adding to resilience, diversity and quality of SPH REIT’s portfolio.
  • DPU and NAV per unit accretive transaction.

Pro forma FY2019 DPU

Below is the illustrated Pro forma based on FY2019 DPU. We are expected to get 0.09 cents more post acquisition. Oh well, not much difference in terms of dividends to be collected.

Frasers Commercial Trust Continues to Maintain DPU of 2.40 Cents For 4QFY19

One thing I liked about Frasers Commercial Trust is that it has been maintaining its Distribution Per Unit (“DPU”) over the past quarters and past years. On 22nd October 2019, Frasers Commercial Trust announced its 4QFY19 financial results. Compared to 3QFY19, the financial results have improved slightly.

In 4QFY19, gross revenue increased by 1.7% to S$32.9 million as compared to 4QFY18. Net Property Income (“NPI”) increased by 0.5% to S$21.7 million while Distributable Income increased 2.3% to S$21.9 million. The Distribution Per Unit (“DPU”) remains unchanged. Depending on how you view this, DPU remaining unchanged can be a good thing or bad thing for investors. In my opinion, a good REIT is one that can grow its DPU year on year. But given the lower occupancy at Alexandra Technopark, divestment of 55 Market Street and weakening Australian Dollar, it is already a miracle that Frasers Commercial Trust is able to maintain its DPU pay out of 2.40 cents for each quarter. Read More

CapitaMall Trust DPU Increased by 4.8% in 3QFY19

CapitaMall Trust currently makes up 11% of my stock portfolio. On 21st October 2019, CapitaMall Trust announced a decent set of 3QFY19 financial results. Gross revenue increased by 17.9% to S$201.1 million. Net Property Income (“NPI”) increased by 17.6% to S$144.2 million. The most important of all, Distribution Per Unit (“DPU”) increased by 4.8% to 3.06 cents.

The increase in gross revenue was mainly due to the acquisition of the balance 70% interest in Westgate in November 2018 and the commencement of operations at Funan. There may be slight impact to gross revenue in the subsequent quarters as Lot One Shopper’s Mall commence its rejuvenation works in 3QFY19. The rejuvenation works are expected to complete by 2H2020.

One thing noteworthy is that even though shopper traffic increase by 1.3% year on year, tenant sales fell by 1.3% year on year. Read More