Paragon

Paragon REIT 3QFY2023 Business Updates

Paragon REIT

On 31st October 2023, Paragon REIT announced their 3QFY2023 Business Updates. Back them, I have bought Paragon REIT because of its flagship malls Paragon and The Clementi Mall. Both are shopping malls that has great shopper traffic over the years.

Year to Date, Paragon REIT’s gross revenue grew S$2.5m or 1.2% year-on-year to S$215.6m from S$213.1m. Gross revenue for Singapore and Australia assets increased 2.4% year-on-year and 5.4% year-on-year, respectively.

Paragon REIT 3QFY2023 Debt

Paragon REIT 3QFY2023 Debt Maturity Profile

As of 30th September 2023, Paragon REIT’s gearing stood at 30.1%. Paragon REIT is one of the few rare REITs with exceptionally low gearing.

85% of Paragon REIT’s borrowings are based on rate to mitigate against sudden interest rate hikes and average cost of debt of stood at 4.21%.

Debt is well staggered with a weighted average term to maturity at 2.4 years. There is no further refinancing due for the remainder of FY2023.

Paragon REIT 3QFY2023 Occupancy

Paragon REIT 3QFY2023 Occupancy

As of 30th September 2023, Paragon REIT’s overall portfolio occupancy stood at 98.1%. The occupancy rate of Paragon REIT’s Singapore portfolio was rock solid at 100%!

Paragon REIT 3QFY2023 Lease Expiry

Weight Average Lease Expiry stood at 5.2 years. Lease expiry profile is well staggered. Based on the above table, Paragon REIT still have much work to do on the lease renewals regarding its Australia assets.

Current Dividend Yield

Paragon REIT Share Price 10-Nov-23

Based on Paragon REIT’s share price of S$0.80 and FY2022 Distribution Per Unit (DPU) of 5.52 cents, this translate to a high current dividend yield of 6.90%.

Summary of Paragon REIT 3QFY2023 Business Updates

The catalyst for Paragon REIT will be the acquisition of The Seletar Mall and The Woodleigh Mall from its Sponsor.

For now, based on 3QFY2023 business updates, the pros are

  • YTD, gross revenue grew S$2.5m or 1.2% year-on-year to S$215.6m from S$213.1m.
  • Paragon REIT’s gearing continue to stand low at 30.1%.
  • 85% of Paragon REIT’s borrowings are based on rate to mitigate against sudden interest rate hikes.
  • Debt is well staggered with no refinancing outstanding for FY2023.
  • Singapore portfolio’s occupancy was rock solid at 100%.
  • High current dividend yield of 6.90%.

The cons are:

  • Occupancy for Australian assets are stable but not doing great.
  • 15% based on gross rental income for the leases of Australian assets  are expiring in FY2023.

When do you think Paragon REIT can add The Seletar Mall and The Woodleigh Mall to its portfolio?

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