Suntec REIT

[winston]

not vested

SUNTEC Real Estate Investment Trust (Suntec Reit) on Wednesday posted a 27.7 per cent drop in distribution per unit to 1.76 Singapore cents for the first quarter ended March 31, 2020 from 2.434 cents a year ago.

Source: Phillips

[winston]

not vested

Suntec REIT: Retail and convention business under pressure

Suntec REIT’s 1Q20 results fell short of our expectations, as DPU dipped 27.7% YoY to 1.76 S cents.

This was partly due to a retention of 10% of distribution and absence of capital distributions to conserve cash in anticipation of a muted 2Q20.

One of the main drags on Suntec REIT’s performance was its Convention business, which saw a NPI of -S$1.7m due to a 47.2% YoY fall in the number of events.

Although Suntec City Mall achieved robust positive rental reversions of 16.1% in 1Q20, management now expects rental reversions to be negative at -5% to -10% for the rest of FY20 given the COVID-19 impact.

The office segment was a brighter spot, as rental reversion came in at +13.1% in 1Q20, and likely to stay in the positive territory given where expiry rents are.

After reducing our FY20F and FY21F DPU forecasts by 29.7% and 21.6%, respectively, our fair value estimate dips from S$2.05 to S$1.50.

Notwithstanding our fair value cut, we see value at current prices, with Suntec REIT trading at FY20F P/B ratio of 0.61x, as at 22 Apr close.

Maintain BUY.

Source: OCBC

[winston]

not vested

Suntec REIT
Challenging times

1Q20 DPU of 1.76 Scts below expectations at 18.2% of our FY20F forecast.

Sluggish retail operations, mitigated by a more stable office portfolio.

Reiterate Add with a lower TP of S$1.75.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 8BAC0048C8

[winston]

not vested

Suntec REIT (SUN SP, BUY, TP: SGD1.78)
Expecting a Better 2H; Keep BUY

Company Update

BUY with unchanged SGD1.78 TP, 26% upside and c.6% yield.

Suntec REIT remains our preferred office/retail pick on valuation grounds and expected improvement in operational numbers.

The office portfolio, which accounts for c.70% of income, is expected to remain resilient, while the impact on the retail portfolio is partly mitigated by the strategic location of its malls.

With the recent completion of development assets, organic income is set to improve from 2H onwards.

Source: RHB

https://research.rhbtradesmart.com/atta ... da7d33.pdf

[winston]

not vested

Suntec REIT posts 35.1% fall in 2Q20 DPU to 1.53 cents

by Felicia Tan

The manager of Suntec REIT has announced a 35.1% drop in distribution per unit (DPU) to 1.53 cents for the 2Q20 ended June, from the DPU of 2.361 cents a year ago.

DPU for 1H20 fell 31.3% to 3.293 cents from the 4.795 cents a year ago.

Distributable income for 1H20 fell 21% y-o-y to $103.1 million. Some 10.0% of the distributable income for 1H20 was retained by the manager in view of the Covid-19 outbreak, which “significantly affected” the REIT’s convention and retail businesses.

Suntec Convention has been closed since April 7. The rental assistance granted to tenants and the weakened Australian dollar also contributed to the decline in distributable income.

The decline was slightly offset by better performance from the REIT’s Suntec City Office, Southgate Complex, and contributions from 21 Harris Street and 55 Currie Street in Australia.

“To maintain financial flexibility in view of the evolving COVID-19 situation, the Manager has retained 10% of the distributable income from operations and held back its capital distribution in 1H 2020…

This is to achieve balance between providing a reasonable return to unitholders, building cash reserve as well as assisting our tenants to weather this period,” says Chong Kee Hiong, CEO of the manager.

Had the retention been included, the DPU for 1H20 would have been 3.659 cents per unit.
Gross revenue for 1H20 fell 16.1% to $149.4 million from the $178.0 million posted last year, mainly due to lower revenue from Suntec City and Suntec Singapore.

1H20 gross revenue for Suntec City declined 12.4% y-o-y to $104.9 million mainly due to the decrease in retail revenue, while gross revenue for Suntec Singapore fell 58.3% y-o-y to $16.2 million on rental assistance for eligible small- and medium-sized enterprise (SME) tenants.

Property expenses for 1H20 fell 7.8% to $58.5 million mainly due to lower staff costs and food and beverage-related costs due to lesser convention events.

Net property income for 1H20 fell 20.6% y-o-y to $90.9 million, mainly due to the rental assistance granted to retail tenants and eligible office tenants.

Total income contribution for the period from joint ventures comprising ORQ, MBFC Properties, and Southgate Complex was 5.8% lower y-o-y at $46.9 million. This was mainly due to one-off compensation received in 1H19, rental assistance granted to tenants at MBFC Properties and Southgate Complex.

Commenting on Suntec City Mall’s performance for 1H20, Chong Kee Hiong, CEO of the manager says the mall’s committed occupancy fell to 96.3%, while positive rent reversion in 1H20 fell to 8.4% due to negative rent reversion of most leases committed in the second quarter.

As at June 30, the REIT’s Singapore office portfolio has committed occupancy of 98.6%. Suntec City Office achieved rent reversion of 9.1%, extending the positive rent reversions to nine consecutive quarters.

Overall committed occupancy for the Australia office portfolio stood at 93.1%, higher than the nationwide Central Business District (CBD) occupancy of 91.6%.

In its outlook statement, Suntec REIT says it anticipates “stable rental revenue” in its Singapore office portfolio, albeit a moderated positive rent reversion for the rest of 2020.

The REIT also expects improvements in shopper traffic and tenant sales for Suntec City Mall following the lifting of the circuit breaker measures.

In June 2020, three new digital initiatives – Suntec+ Eats, Suntec+ Shop Live and Suntec+ eMall – were launched to cater to changing shopper behaviour and help increase tenant sales.

For Suntec Convention, the REIT says it is facing “unprecedented challenges” due to a standstill in events since April 2020. Some $40 million was injected into Suntec Singapore on July 1, 2020, to support its business needs.

The REIT says its Australia office portfolio remains resilient with its long lease tenure with less than 1.0% by net lettable area (NLA) expiring in 2020.

Source: The Edge

https://www.theedgesingapore.com/capita ... -153-cents

[winston]

not vested

SUNTEC Real Estate Investment Trust (Suntec Reit)'s distribution per unit (DPU) fell by 31.3 per cent to 3.293 Singapore cents for the six months ended June 30, from 4.795 cents a year ago.

This comprises a DPU of 1.76 cents for the three months ended March 31 and a DPU of 1.533 cents for the three months ended June 30, the real estate investment trust's (Reit) manager said in a regulatory filing on Thursday.

Gross revenue was down 16.1 per cent to S$149.4 million for the half year, from S$178.1 million a year ago.

Source: Phillips

[winston]

not vested

Suntec REIT (SUN SP) - Feeling the pinch

Suntec REIT’s 2Q20 results met our expectations, with DPU falling 35.1% YoY to 1.533 S cents.

This was due to a weaker topline, retention of 10% of its distributable income and no capital distributions for the quarter.

Looking ahead, management guided for positive rental reversions for its Singapore office portfolio in 2H20, but expects a moderation in magnitude from 1H20.

Rental reversions for Suntec City Mall are expected to come in negative at -10% to -20% in 2H20.

For 2020, Suntec REIT expects to provide 3-4 months of rental assistance from its own pocket for the majority of its tenants at Suntec City mall.

Early termination of leases and rent deferments are expected to increase in 2H20.

For office, Suntec REIT highlighted that ~50% of tenants at Suntec City Office are SMEs, of which 40% of these tenants are estimated to be able to qualify for rental assistance (i.e. ~20% of tenant base).

Suntec REIT’s Australia operations were largely stable, as majority of its tenants are large corporations and government tenants.

After adjustments, our fair value estimate is raised from S$1.50 to S$1.57. BUY.

Source: OCBC

[behappyalways]

Suntec REIT diversifies into UK with $756 million acquisition of London properties
https://www.theedgesingapore.com/news/r ... properties

[winston]

not vested

Suntec REIT (SUN SP)
Maiden Acquisition In The UK

Nova Properties provides an NPI yield of 4.6% which is attractive, given its prime location at the West End of London.

However, SUN trades at a 31% discount to NAV and aggregate leverage is already high at 41.3%.

Assuming SUN issues 286m units at S$1.35 each (10% discount to assumed unit price of S$1.50) through a private placement in mid-21, we estimate that the equity fundraising exercise would dilute 2022F DPU by 5.4%.

Nevertheless, SUN provides an attractive 2021F dividend yield of 6.5%.

Maintain BUY. Target price: S$1.65.

Source: UOBKH

https://research.uobkayhian.com/content ... 3938e80f37

[winston]

not vested

Suntec REIT (SUN SP) - Diversification into UK but potential equity funding raising looms

We expect Suntec REIT’s retail and convention performance to be adversely impacted by the Covid-19 outbreak.

Its Singapore office segment is expected to be a brighter spot, as rental reversions are likely to stay in the positive territory in FY20 given where expiry rents are.

In Australia, Suntec REIT’s office portfolio is also expected to be resilient, underpinned by firm occupancy and minimal lease expiries in FY20, although the AUD volatility remains a risk. BUY.

Source: OCBC