- Paragon REIT (SGX:SK6U)'s 9M23 revenue grew S$2.5m or 1.2% y-o-y to S$215.6m, in line at 72.1% of our FY23 forecast. Gross revenue for its Singapore and Australia assets increased 2.4% y-o-y and 5.4% y-o-y, respectively.
Improvement in operating metrics
- - Read this at SGinvestors.io -
- No reversion numbers were shared. Approximately 4% of Paragon REIT's leases by rental income will expire in FY23F, attributed to the Australia portfolio.
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Slight deterioration of balance sheet; gearing remains low
- Paragon REIT's gearing remained low at 30.1%, with fixed debt of 85%. Cost of debt increased q-o-q from 4.05% to 4.21% while adjusted interest coverage ratio fell from 3.4x to 3.1x.
- Paragon REIT has S$300m in perpetuals with a call/reset date of 30 Aug 2024. Assuming interest rates remain at present levels, the coupon rate will increase from 4.1% to ~6%. If Paragon REIT redeems the perpetuals by drawing on bank loans, we estimate that, at present interest rate levels, interest on new loans will be ~5% and gearing will increase to ~37%, still healthy.
S$31m fair value loss on Australian assets
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