Suntec REIT

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vested

Suntec REIT: New city taking shape

Suntec REIT announced on 15 Aug that it has established a US$1.5b Euro Medium Term Note programme. We believe Suntec REIT may use this to address part of its refinancing needs due in 2014.

If so, this will lock in part of its debts into fixed rates, enhance its debt maturity profile and improve its unencumbered asset ratio. Looking ahead, we remain positive on Suntec REIT’s performance.

While its 2Q13 NPI and distributable income were down 38.5% and 18.7% YoY respectively due to the concurrent execution of Phases 1 and 2 of the remaking of Suntec City, we believe that the worst is likely over given that Phase 1 enhancement works were completed in Jun and the retail space there has since become operational.

At current price, Suntec REIT trades at one of the lowest P/B in the S-REITs sector at 0.73x, while offering a compelling FY14F yield of 6.9%. We are revising our fair value from S$1.85 to S$1.80 due to higher risk-free rate. As valuations remain attractive and outlook is positive, we maintain BUY on Suntec REIT. (Kevin Tan)

Source: OCBC

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vested

Suntec REIT: Unveils Suntec City’s new look

Suntec REIT announced yesterday that its major enhancement of Suntec City has reached a milestone with the opening of Phase 1 and Suntec Singapore.

Management reported that Suntec Singapore has hosted 96 events and 650k visitors since opening in Jun 2013, affirming its status as an attractive Meetings, Incentives, Conventions and Exhibitions (MICE) destination, and expects a full calendar ahead for 2013 with customers like Spikes Asia, IFLA, etc.

The newly created retail space at Phase 1 now houses ~100 retail outlets and 50 F&B restaurants, including UNIQLO’s largest outlet in Singapore.

We continue to believe that the outlook and valuation remain attractive for Suntec REIT.

Maintain BUY with an unchanged fair value estimate of S$1.80.


Source: OCBC

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not vested

Scoop of the Day: Suntec REIT (SUNTEC SP, Neutral, TP $1.78) reported a weak set of 3Q13 results due to closure and ongoing AEI works at Suntec City mall (Phase 2 & 3), with gross revenues at $65.9m (+5.3% YoY) and net property income of $40.3m (+4.7%).

Cumulative 9-month gross revenues were down 21.5% YoY at $162.5m (70% of DMG FY13F estimates), while NPI of $98.9m (-25.6%YoY) similarly accounts for 70% of our FY13F estimates.

However, Suntec continues to draw on capital gains from its CHIJMES sale to lift its DPU payout for the 9-months by 10% to 6.766cents, which is in-line with our
FY13F DPU estimate at 9.05 cents.

Pre-commitment leasing of Phase 2 improved from 70% in 2Q13 to current 83.7%. However, in the absence of rental guidance for Phase 2 and a potential delay in
opening, this could lead to negative downgrades by investors in our view.

Maintain our FY14F DPU of 9.68 cents or implied 5.6% yield, and our Neutral rating on Suntec.

Source: DMG

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Suntec REIT: Poised for strong harvest

Suntec REIT posted 3Q13 DPU of 2.289 S cents, up 1.8% QoQ (-2.6% YoY). This brings the 9M13 DPU to 6.766 S cents (-5.6%), meeting 73.4% of both consensus and our FY13F DPU.

As at 30 Sep, both the office and retail portfolio occupancy rates were maintained at high levels of 99.8% and 98.3%, respectively. We understand that ~160,000 sqft of leases was signed in 3Q, leaving only a balance of 1.7% of office NLA due for renewal in 2013.

As such, its portfolio performance is expected to stay relatively steady, despite potential weakness in 4Q13/1Q14 as Suntec REIT prepares for Phase 3 AEI.

Management also updated that pre-commitment at Phase 2 retail space has improved from 70.1% in 2Q to 83.7%.

While there are a few anchor tenants (which may command lower rents), Suntec REIT reiterated that ROI of 10.1% remains on track. In 4Q, we can reasonably
expect revaluation gains of the portfolio assets, which may improve Suntec REIT’s gearing and P/B ratios (currently at 37.2% and 0.84x respectively).

Maintain BUY with higher fair value of S$1.85 (S$1.80 previously) as we roll our valuation to FY14.

source: DBS

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vested

Suntec REIT: Starting to shine brightly

Suntec REIT’s 4Q13 results exceeded both market and our expectations.

Going forward, we understand that management will continue to focus on forward renewal of its office leases.

With only 12.5% of its office leases due to expire in 2014, we believe the office segment will remain robust.

Suntec REIT also updated that Phase 2 AEI is on track for completion in 1Q14, and that pre-commitment for the retail space has reached 97.0%, up from 83.7% in 3Q.

While bottomline may experience a dip in 1Q as Phase 3 tenants vacate for the last phase of AEI, we continue to be overall positive on its longer-term potential, arising from
1) strong rental uplift at Suntec City,
2) earnings accretion from 177-199 Pacific Highway acquisition and
3) potential interest savings post refinancing of its S$773.5m club loan due in 2014.

We maintain BUY with unchanged fair value of S$1.90 on Suntec REIT.

Source: OCBC

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vested

Suntec REIT: BUY; S$1.595; SUN SP
A year of reckoning
Price Target : 12-Month S$ 1.78 (Prev S$ 1.80)

• 4Q13 DPU increased by 10% y-o-y to 2.6Scts
• Phase 2 of Suntec Mall to open by 2Q14; earnings to continue to improve sequentially
• Maintain BUY, TP revised to S$1.78


Highlights

4Q13 revenues and NPI up due to contribution from Phase 1 at Suntec Mall. 4Q13 revenue and NPI grew 30% and 63% to S$71.6m and S$49.8m, respectively, led by contribution from completed Phase 1 refurbishment of Suntec Mall.

There was also higher revenue from Suntec Office and stable performance at other properties (Park Mall, stakes in ORQ and MBFC). Distributable income grew 11% to S$58m, comprising S$54m distribution income from operations and additional S$4m of capital distributions, translating into 2.56Scts DPU (+10% y-o-y).


Our View

Phase 2 to open by end-1Q14; final refurbishments at Suntec City Mall. The newly opened Suntec Mall (Phase 1) continues to ramp up operations while Phase 2 has achieved 97% pre-commitment rate last quarter (up from c.84%) and will open in 1Q14, supporting the Manager’s ability to execute its refurbishment strategy.

The mall will see final refurbishment works in February. Phase 3 which is slated for completion in 4Q14 will feature international and high-end fashion retailers. And because the tenants will be mainly specialty shops, we estimate rents for this part of the mall will be highest among the three phases.


Office portfolio performed strongly; Australia acquisition to contribute positively. Suntec REIT’s office portfolio continues to enjoy strong occupancy of 99.8%. In the quarter, it secured average rent of S$8.65psf for Suntec Office.

Looking ahead, the manager has forward renewed 268k sqft of office space in 2014, with only 12.5% (vs 17.6% previously) of its office NLA to be renewed. In addition, contribution from recently acquired 177-100 Pacific Highway, Sydney, will lead to steady earnings growth in the coming years.


Recommendation

Maintain BUY, TP revised to S$1.78. We continue to like Suntec REIT for anticipated strong growth in distributions after the completion of its AEI by end 2014. We nudged down TP to S$1.78 after adjusting for slightly higher interest costs in our forecasts.


Source: DBS

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vested

Suntec REIT (SUN SP)

4Q13: ROI For Suntec AEI To Exceed Projections

Results in line with expectations.

Management guided for positive office portfolio performance in 2014 supported by high office portfolio committed occupancy of 99.6%.

Suntec AEI phase 2 is on track and has achieved pre-commitments.

With phase 2 and 3 rents of Suntec AEI likely to exceed phase 1 rentals, ROI will exceed the 10.1% projection.

Maintain BUY and DDM-derived target price of S$2.12.


Source: UOBKH

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A display of growth potential
SUN SP / SUNT.SI | ADD - Maintained | S$1.59 - TP: S$1.96
Mkt.Cap: US$2,808.00m | Avg.Daily Vol: US$10.20m | Free Float: 93.80%

SUN ended FY13 on a high note, with 4Q13 revenue and net property income (NPI) posting a +30.2% yoy and +10.2% yoy jump, respectively. FY13 DPU was 3% above our forecast. The strong growth in earnings was mainly attributed to the opening of Phase 1 of Suntec City following the completion of AEI works.

We maintain an Add rating with an unchanged DDM-based (discount rate: 8.0%) target price of S$1.96 on the back of further income contribution from the near-to-completion Phase 2 of Suntec mall in 1Q14.


Strong quarter

Suntec REIT (SUN) posted a respectable 4Q13 revenue of S$71.6m (+30.2%) and NPI of S$49.8m (+62.9%). The strong growth was mainly attributed to the completed Phase 1 AEI at Suntec mall.

Currently, these area boasts a high 99.6% committed occupancy, while the areas unaffected by the AEI reported an occupancy of 91.3%. Together with Park Mall, SUN’s retail malls have achieved a high occupancy of 97.3% while its office portfolio remained at 99.6%.


AEI to bring near-term growth

Phase 2 of the AEI has achieved an impressive pre-commitment of 97.0%, scheduled to be completed in 1Q14, SUN is expected to benefit from the additional income contribution in 3Q14 (assuming 2-3 months of a fitting out period).

However, earnings in 1H14 are expected to remain weak as SUN begins Phase 3 of the AEI in early Feb, which is scheduled to be completed in 4Q14. During the results briefing, management indicated that the AEI continues to remain on track for a 10.1% ROI, securing an average rental rate of S$10.10–S$12.59 psf/mth (based on stabilised rent).


Well-poised for future growth
With 12.5% of office space up for renewal in FY14 and asking leases secured at S$8.65 psf/mth last quarter, we expect SUN to continue to achieve positive rental reversions in FY14 - particularly on the back of a recovering office market. In addition, the recent acquisition of Leighton Tower is expected to bring the next stage of growth for the REIT in FY16 when the construction is completed. On the basis of clear growth prospects, we maintain an Add rating with an unchanged target price of S$1.96.

Source: CIMB

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Suntec Reit's Q4 distribution income rises 11 per cent to $58.2m by Dennis Chan

Suntec Real Estate Investment Trust (Suntec Reit) has achieved an 11 per cent rise in distribution income to S$58.2 million for the fourth quarter. Gross revenue for the three months to Dec 31 climbed by 30.2 per cent to S$71.7 million. This was mainly due to the opening of Suntec City mall (Phase1) and Suntec Singapore following the completion of its asset enhancement works.

For the same reasons, net property income soared 62.9 per cent to S$49.8 million. Distribution per unit (DPU) for the quarter rose 10.1 per cent to 2.562 cents. For the full year, distribution income fell 0.9 per cent to S$211.2 million. DPU fell by 1.7 per cent to 9.328 cents, working out to a yield of 5.9 per cent based on the unit's closing price yesterday.

Of its retail portfolio, the committed occupancy for Suntec City mall (Phase 1) was 99.6 per cent while the committed occupancy for the rest of the mall unaffected by enhancement works was 91.3 per cent. Park Mall maintained full occupancy, taking the overall committed occupancy for the retail portfolio to 97.3 per cent as at Dec 31.

Of its office portfolio, Suntec City Office Towers kept its high committed occupancy of 99.2 per cent, while Park Mall office was fully occupied. Jointly controlled entities, One Raffles Quay and MBFC Properties, had full occupancy. Overall committed occupancy for Suntec Reit's office portfolio stood at 99.6 per cent. Suntec Reit made its first foray overseas during the quarter.

Last November, it announced the acquisition of 177-199 Pacific Highway, in North Sydney, a freehold property to be developed for A$413.19 million (S$468 million).

The 31-storey A grade commercial tower is fully pre-committed, and when it is completed in early 2016, will be the area's newest landmark office tower.

Mr Yeo See Kiat, chief executive officer of ARA Trust Management (Suntec) that manages Suntec Reit, said the deal will lift earnings and boost distribution income to unitholders as there will be coupon payments of 6.32 per cent a year payable to Suntec Reit during the construction.

"Unitholders will also enjoy income certainty and stability through the long lease terms with annual rental escalations."

As for Phase 2 of the remaking of Suntec City, it has achieved a pre-committed occupancy of 97 per cent to date.

"Based on our leasing progress, our projected rental enhancement and return on investment of 10.1 per cent are on track," he said.

Additional food and beverage offerings in Phase 2 include Marché, McDonald's and Andersen's of Denmark while the new retail brands that have signed up include Avenue Kids, Bricksworld, Cellini and Cold Wear.

Suntec Reit units yesterday eased half a cent to S$1.585.

The results were announced after the market closed.

http://business.asiaone.com/news/suntec-...-cent-582m

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vested

Suntec continues to deliver

FY13 results in line with our and market expectations. Highest quarterly DPU since 4Q09.

FY13 DPU of 9.328 SGD cts includes a 0.839 SGD cts top-up (total SGD19m) from the sales proceeds of CHIJMES for capital distribution.

Pre-commitments for Phase 2 leases for Suntec City AEI hit 97% and opens in early 2Q14. Phase 3 works will start next month.


Results in line with expectations

Following the massive SGD410m AEI on Suntec City, Suntec’s FY13 revenue contracted by a modest 10.6% YoY to SGD234m, forming 96.5% of our and 98% of consensus estimates. Full-year DPU declined 1.7% YoY to 9.328 SGD cts, constituting 101% of our and 102.5% of consensus forecasts.

The amount included a top-up of 0.839 SGD cts (total SGD19m) from the sales proceeds of CHIJMES for capital distribution. Stripping out the top-up, FY13 DPU would have been 8.489 SGD cts (-10.5% YoY).

Aggregate leverage inched up to 39.1% from 38.6% last quarter following new borrowings. Net financing costs for FY13 averaged 2.5% with an average term of 2.44 years.


AEI making good progress

Committed occupancy for Phase 1 leases hit 99.6% with average passing rent of SGD13.09 psf per month. Suntec also said that 97% of Phase 2 NLA has been pre-committed (previous quarter: 83.7%).

Among the brands that have signed up are Marche, McDonald’s, Andersen and Etude House. Phase 2 works will complete in April while Phase 3 AEI will commence next month.

Our investment thesis on Suntec remains intact. In this growth-limited environment, Suntec is one of the very few S-REITs that has a DPU CAGR of 4.2% from 2013-2016 (13.3% over three years), following the rental reversions from the major overhaul at Suntec City.

Maintain BUY with an unchanged DDM-derived TP of SGD1.75 (discount rate of 8%).

Source: Kim Eng

http://research.maybank-ib.com/pdf/docu ... 4_5673.pdf