SPH REIT : Resilient Portfolio Benefits From Recovering Retail Sentiments

For Immediate Release	PRESS RELEASE
8 October 2022

Resilient portfolio benefits from recovering retail sentiments

• 12M FY2022 DPU at 5.52 cents, 2% increase year-on-year ("yoy")
• Net Property Income rose 3.5% yoy to S$209.7 million
• Maintains strong portfolio occupancy rate of 97.5%

SINGAPORE, 8 October 2022 - SPH REIT Management Pte. Ltd. ("SPH RM" or the "Manager"), the Manager of SPH REIT, today announced its financial results for the 12 months ended 31 August 2022 ("12M FY2022").

On 29 July 2022, SPH REIT announced a change in financial year end from 31 August to 31 December. The revised FY 2022 will be a 16-month period from 1 September 2021 to 31 December 2022. Distribution for four months ending on 31 December 2022 is scheduled to be declared in February 2023.

In April 2022, the Covid-19 social distancing measures in Singapore were substantially lifted except for the requirement to wear masks at indoor venues. SPH REIT's assets in Singapore benefited from the easing and saw improvements both in footfall and tenant sales. Meanwhile in Australia, similar movement restrictions were lifted earlier in December 2021.

Financial Performance

SPH REIT's gross revenue increased 1.7% yoy to S$281.9 million and net property income ("NPI") increased 3.5% yoy to S$209.7 million. SPH REIT declared a distribution per unit ("DPU") of 1.39 cents for 4Q FY 2022. This distribution will be paid to unitholders on 25 November 2022.

Full year distribution ended 31 August 2022 DPU was 5.52 cents, an increase of 2.2% yoy.

Operational Performance

SPH REIT maintained its strong portfolio occupancy rate of 97.5%, a reflection of its proactive leasing efforts to renew or sign leases in advance mitigating vacancies.

In addition, the high occupancy was supported by a high tenant retention ratio of 82.9%, reiterating tenants' confidence in SPH REIT's strategic assets. Consequently, portfolio rental reversion rate was -2.8% for 12M FY2022 as against -8.4% in FY2021. The portfolio weighted average lease expiry ("WALE") held steady at 5.3 years by net lettable area ("NLA") and 3.0 years by gross rental income ("GRI").

Singapore

Footfall at the Singapore assets saw an increase of 8.8% yoy. Correspondingly, tenant sales for Paragon and The Clementi Mall had registered marked improvements by 25.6% yoy and 8.8% yoy, respectively.

Paragon

In July 2022, Singapore Tourism Board ("STB") reported that it expects to receive 4 to 6 million visitors in 2022 with global travel picking up pace. Paragon, a premier-upscale retail mall located in the heart of Orchard Road looks to benefit from the recovery in international tourist arrival.

Footfall had increased 16.4% yoy from 11.4 million to 13.3 million.

The Clementi Mall

As Singapore workforce gradually resumed working from office, The Clementi Mall located in a well-established residential estate and an education hub (being in proximity to several tertiary education institutions), enjoyed an increase in footfall.

Footfall increased 15.9% yoy from 15.3 million to 17.7 million.

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Australia

Footfall at the 2 Australia assets saw a decrease marginally by 3.6% yoy . Tenant sales for Westfield Marion was higher at 4.8% yoy. Tenant sales at Figtree Grove registered a marginal increase of 1.8% yoy.

Westfield Marion

Westfield Marion is a 20-minute drive southwest of Adelaide CBD, South Australia and was largely spared from lockdowns as the incidences of Covid-19 cases were relatively low. Footfall was generally unaffected and marginally lowered by 1.7% yoy from 11.7 million to 11.5 million.

Figtree Grove Shopping Centre

Figtree Grove Shopping Centre is a 1.5-hour drive southwest of Sydney CBD, New South Wales. New South Wales was affected by approximately 4 months of lockdown from June to October 2021. Correspondingly, footfall fell by 9.0% yoy.

Stable portfolio valuation

Singapore assets recorded higher valuations as compared to the preceding year, with the valuation rising from S$3,296.2 million to S$3,338.7 million, or a 1.3% yoy increase as at 31 August 2022.

Australian portfolio valuation rose by A$6.5 million to A$847 million as at 31 August 2022, representing a 0.8% increase yoy.

Net asset value per unit as at 31 August 2022 remained stable at S$0.92.

Capital management

SPH REIT continues to adopt a disciplined approach to capital management. As at 31 August 2022, the proportion of fixed debt percentage is 71% to mitigate against the increasing interest rate environment with an average cost of debt of 1.77%. Total borrowings amounted to approximately S$1.3 billion (with revolving credit facility lines of S$225 million remaining undrawn) at a gearing ratio of 30.0%, providing ample debt headroom. SPH REIT's debt maturity profile remains well-spread out with a weighted average term to maturity at 2.5 years.

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Market outlook

Global geopolitical tensions and inflation are impacting financing costs and operational costs such as energy.

Dr Leong Horn Kee, Chairman of SPH REIT, said: "The portfolio has shown improved performance as Singapore and Australia move towards normalisation. It is also encouraging that international arrivals are gradually picking up. We are therefore pleased to announce a DPU of 5.52 cents for the 12 months ended 31 August 2022, a 2.2% yoy increase. As our economies recover from the pandemic, our assets are well positioned to manage the challenges ahead."

Ms Susan Leng, CEO of SPH REIT, said: "The return to normalcy is evident in Singapore and Australia, resulting in better performance in footfall as well as tenant sales, particularly at our Singapore assets. The close partnership with our various stakeholders has seen us through the challenging pandemic period. We are pleased to cite as an example, Zegna's investment for their new store and the introduction of their latest concept in Paragon."

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Summary Results of SPH REIT

	2H	2H	Change
	2022	2021
	%
	S$'000	S$'000
Gross revenue	140,220	137,221	2.2
Net property income	104,428	97,773	6.8
Distributable income to unitholders	78,057	81,622	(4.4)
Distribution to unitholders	79,706	82,396	(3.3)
Distribution per unit (cents)	2.84	2.96	(4.1)
	12M FY2022	12M FY2021	Change
	S$'000	S$'000	%
Gross revenue	281,856	277,179	1.7
Net property income	209,701	202,627	3.5
Distributable income to unitholders	160,671	157,803	1.8
Distribution to unitholders	154,811	150,1601	3.1
Distribution per unit (cents)	5.52	5.401	2.2
Annual distribution yield (%)	5.873	5.932	(1.0)

Notes:

1. The distribution to unitholders for FY2021 includes S$14.5 million of FY2020 distributable income deferred as allowed under COVID-19 relief measures, which is equivalent to 0.52 cents per unit.
2. Based on S$0.91 per unit closing price on 31 August 2021.
3. Based on S$0.94 per unit closing price on 31 August 2022.

Issued by SPH REIT Management Pte. Ltd.

Co. Regn. No. 201305497E

For further information and enquiries, please contact:

Benjamin Kuah Hsien Yiao	Terence Ho Kin Wai
Chief Financial Officer &	Manager
Head of Investor Relations	Corporate Communications & CSR
SPH REIT Management Pte. Ltd.	SPH REIT Management Pte. Ltd.
Tel : [phone]	Tel: [phone]
Email:[e-mail]	Email:[e-mail]
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