I like the simplicity of this Reit with assets of Paragon and Clementi mall, which I visited often.
Paragon is not just retail but also consists of medical suites/offices. In my opinion, it is definitely one of the malls in Orchard area that has relatively higher human traffic. Clementi mall is suburban and co-located with MRT. It is always crowded be it weekdays or weekends when I patronised.
In my opinion, SPH Reit has a very well mix of good services even with just 2 assets. Gearing of 25% is considered one of the lowest among S-reits with possible injection of Seletar mall into the Reit when the time is riped.
Paragon and Clementi are undergoing AEIs. Paragon AEI is to replace the air handling unit and is expected to have additional 7K sqft NLA by mid-2018. Part of the space has already been pre-leased. As for Clementi Mall the AEI is being planned and due for completion in the next 2 years.
The downside is projected yield is also lower at 5.8% with no discount to current book value. Furthermore with just two assets, it is also not well diversified and if without addition of new asset, DPU growth is limited to just rental reversion and AEI. Retail sector is also not seeing the best of outlook ahead which can further dampened its performance going ahead.
In view of the economic slowdown and the deepened crisis in the sector I am working in, I think SPH Reit is one stock that is less volatile which is suitable for my risk versus income appetite.