(+) Strong liquidity profile. No more than 21% of debt matures within the next 3 years, with S$300mn perpetual bond callable in 30 Aug 2024. We foresee low short-term liquidity needs, especially with SPH REIT’s leverage ratio at 29.5%, allowing a debt headroom of S$878mn (keeping asset values constant), while allowing asset values to fall 40% (keeping debt levels constant) before the MAS limit of 50% is breached. As a benchmark, retail asset prices fell roughly 11% in the GFC.
(+) Up to 6 months of zero rental income before interest coverage falls below 1. Based on FY19 GRI, SPH REIT can forego 6 months of rental income before the year’s EBIT is unable to cover interest expenses and perpetual distributions. We note that this buffer is adequate as Singapore enters Phase 2 of reopening just 3 months after the start of circuit breaker measures on 7 April.