1QFY22 Operational Update: Singapore retail trends on track for recovery
- Tenant sales at Paragon held largely status quo despite 2-pax dine-in limit slapped on half the quarter
- Occupancies robust at above 99.7% for SG and above 98.2% for Australia
- Announcement of recent GST hike may help propel spending on bigger ticket retail items and benefit Paragon mall
- Daily trading volume rose more than three folds since index inclusion
- Maintain HOLD with unchanged TP of S$0.92, upside capped with sponsor’s pending privatisation
High occupancy with a boost from Singapore retail segment
- High portfolio occupancy at 98.8% as Singapore occupancy trends back to 99.8%.
- The Rail Mall, Clementi Mall and Paragon clocked in occupancies of 100%, 99.9% and 99.7% respectively as of 30th November 2021.
- Australia occupancy also performed well with occupancies in the range of 98.2% – 99.1%.
- WALE improved to 5.5 years by NLA and 2.9 years by GRI.
- Approximately 7% of Singapore assets and 12% of Australia assets by NLA will be up for renewal in this financial year, with strong potential to clock in strong reversions on these leases.
Retail value at c.70% of pre-COVID levels with pent up demand for food & beverage
- Tenant sales remained resilient and saw a single digit decline y-o-y albeit a dine-in limit of 2 for a span of 6 weeks before a resumption back to 5 from 10 Nov.
- The return of 5 pax dine-in has helped to increase shopper traffic to Paragon and Clementi, and F&B demand was generally strongly witnessed across all eating formats. Popular restaurants and cafes are were fully booked out via reservations, with queues witnessed around the clock in the basement food hall at Paragon.
- While atrium sales continue to be disallowed, the use of atrium spaces for displays and festive exhibitions is permitted that helped to boost festive spending interest at Paragon.
- Trade sectors continue to see diversion in performance, with selected fashion retailers (sports & casual wear) performing ahead of office & formal wear. Supermarket and chain stores segment continued to do well both within Singapore and Australia.
- The announcement of GST hike to be implemented sooner rather than later between 2022 and 2025 may help to propel sales of bigger ticket items for the likes of luxury goods and watches, and benefit prime Orchard malls such as Paragon.
Liquidity boost of more than threefolds post inclusion into EPRA NAREIT index
- Inclusion into the FTSE EPRA NAREIT developed index has also propelled daily trading volume by over 3x to a daily average volume of 4.6 million shares for the quarter.
- Cost of debt reported for the quarter remains robust at 1.68% and well staggered across 2.7 years.
Paragon tenant sales trend
