Interim results preview
- Forecast 1H22 distributable income to be 8.6% lower
- Expect softer occupancy at Three Garden Road
- Negative rental reversion should continue to work its way through the portfolio
Champion REIT will announce its FY22 interim result on 19 Aug. We expect distributable income to fall 8.6% to HK$722m mainly led by lower rental earnings. Assuming the payout ratio remains at 90%, distribution income should drop by a similar 8.6%. Interim DPU is estimated c.9% lower.
Total revenue is expected to decrease by 5% primarily due to weaker performance at Three Garden Road and Langham Place Mall. Three Garden Road should see softer occupancy upon the departure of a mid-sized tenant with rental reversion to remain negative. Meanwhile, rental income from Langham Place Mall should be dragged by negative rental reversions, lower turnover rents and rental concessions granted due to the fifth wave of pandemic. Langham Place Office should continue to experience negative rental reversion with high expiry rents.
With net expense ratio expected to climb higher to 11.4%, net property income should fall by a larger 7%.
Key things to watch out for include tenants sales recovery and rental reversion trend at Langham Place Mall, occupancy, leasing demand and reversionary growth trend at Three Garden Road and Langham Place Office, interest cost hedging among others.