Suntec REIT Reports A 9.4% Drop In DPU



Key Highlights:

  • 4Q19 distribution per unit fell 9.4% to 2.347¢

  • It is currently trading at 5.1% yield and 0.87 price to book ratio


1. Distributable Income


Net property income grew 4.2% to $ 63.3m, the increase was mainly contributed by 55 Currie Street, Suntec City and Southgate Complex. However, the increase in income was eroded by higher advertising and promotion expenses and the property tax for Suntec City and weaker AUD currency for its Australia property.


The REIT is currently trading at a 5.1% dividend yield.



2. Occupancy and Rental Reversion


The occupancy rate for office and retail went up slightly to 99.1% and 99.5% respectively. The REIT continues its strong momentum on rental reversion since last quarter, with an increase of 5.1%.


Its gearing went down slightly to 37.7%, with an interest cost of 3.05%.



3. Growth catalyst


Moving forward, Suntec REIT's portfolio continues to enjoy potential growth:

  1. The rent recovery of both the retail and office segment in Singapore, driven by both quality tenant mix and rent recovery

  2. The strong occupancy rate of its Australia property

  3. In Melbourne, the construction works for Olderfleet is on-track to be completed in mid-2020, which has already secured a 95.6% of committed occupancy rate



Summary


With the growth catalyst in the near future, we would potentially see higher distribution in Q2 or Q3 next year. Suntec REIT was as a key constituent in our REIT portfolio last year, we have taken profits two weeks ago during the portfolio rebalancing exercise. With its strong fundamental, we will continue to watch Suntec REIT in the coming months.


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