See more: Paragon REIT reports higher revenue in 1QFY2024 update, mulls acquisitions
The analysts note that the REIT’s portfolio occupancy has remain unchanged q-o-q at 98.1%, with Singapore malls boasting 100% occupancy.
No reversion numbers were reported in 1QFY2024 but management shared that luxury tenants continue to view Singapore as an important market, with some shifting emphasis from Hong Kong to Singapore. Some brands, such as Saint Laurent and Burberry, have expanded their footprint within Paragon over the past 12 months, said the company.
Management also shared that Burberry is converting its space into a duplex unit, doubling its footprint and elevating the retail offering on Level 2 of Paragon, which could draw footfall to higher levels in the mall, the analysts believe. Meanwhile, some stores on Level 2 will relocate to Level 3.
On the other hand, gearing remained low at 29.9% as at 1QFY2024, with 85% of debt on fixed rates. Cost of debt increased q-o-q from 4.30% to 4.57% in 1QFY2024. Management did not provide interest rate guidance for FY2024 but said that it intends to maintain the proportion of borrowings at similar levels as it refinances $220 million in borrowings maturing in FY2024.
Regarding its $300 million 4.1% perpetuals with a reset/call date in August, management commented that it would likely refinance the instrument with bank borrowings, which has the lowest cost of debt currently.
“Post refinancing of the perpetuals, management estimates gearing will increase to about 37%-38%, still at comfortable levels, in our view. While management remains keen on portfolio rebalancing, we think opportunities are limited in the near term,” say Ong and Lock.
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As at 1.15pm, units in Paragon REIT are trading at 84 cents.
