Suntec REIT

[ishak]

Announcement on 6 August 2008

SUNTEC REIT’S RATING OUTLOOK RESTORED TO STABLE

ARA Trust Management (Suntec) Limited, as manager of Suntec Real Estate Investment Trust (“the Manager”), wishes to announce that Moody’s Investors Service (“Moody’s”) has today restored Suntec REIT’s rating outlook to stable, and also affirmed its Baa1 corporate family rating and Baa2 unsecured debt rating.

This follows Suntec REIT’s successful refinancing of all outstanding bridge loans pertaining to its acquisition of a one-third interest in One Raffles Quay in October 2007, and Moody’s expectation of “continued stable and dependable earnings from Suntec REIT’s portfolio of quality and well-located office and retail assets, supported by a diversified tenant profile”.

Mr. Yeo See Kiat, Chief Executive Officer of the Manager, said, “I am happy that Moody’s has restored our outlook to stable. The recently concluded S$400 million club loan facility clearly underscores Suntec REIT’s strong credit standing in the market.”

Moody's changes Suntec REIT's outlook to stable
Singapore, August 06, 2008 -- Moody's Investors Service has today affirmed the Baa1 issuer and Baa2 unsecured ratings of Suntec Real Estate Investment Trust (Suntec REIT) and changed its outlook to stable.

"The outlook change follows Suntec REIT's successful refinancing of all bridge loans related to its acquisition of One Raffles Quay (ORQ)," says Kathleen Lee, lead analyst for Suntec REIT. "The affirmation of the rating also reflects Moody's expectation of continued stable and dependable earnings from Suntec REIT's portfolio of quality and well-located office and retail assets, supported by a diversified tenant profile. Although its credit metrics have weakened following the ORQ acquisition - with Debt / EBITDA likely to be around 9x and EBITDA/Interest in the 3- 3.5x range in 2009 - they, nonetheless, remain appropriate for its rating", says.Lee.

Suntec REIT recently finalized a club bank deal for S$400 Million which -- together with convertible bonds and MTNs raised earlier in the year -- has fully refinanced the over $871million of bridge loans taken out in October last year.

Upward pressure on the rating is unlikely in the next 12 months given the recent debt funded acquisition of ORQ and the resultant weakening in credit metrics to a level at the lower end of the tolerance for its rating. On the other hand, negative rating pressure could emerge if there is disappointment in the underlying performance of its assets &/or unexpected, material increases in interest rates. In this context Moody's notes that Suntec has approx 32% of office and 22% of retail leases due for renewals in FY09 and that 45% of its outstanding debt obligations will be refinanced over the next 12-18 months. Metrics that could lead to negative rating pressure would include if debt/EBITDA rises above 10x or EDITDA / Interest coverage falls below 3x on a sustained basis. In addition, Suntec has substantial debt falling due in December 2009 and a failure to have early refinancing plans in place for this could lead to downward rating pressure.

Suntec REIT is a Singapore-based real estate investment trust which is listed on the Singapore stock exchange in December 2004. Its principal investment strategy is to invest in income producing real estate which is primarily used for retail &/or office space

Singapore
Kathleen Lee
Vice President - Senior Analyst
Corporate Finance Group
Moody's Singapore Pte Ltd.

[ishak]

Moderating our office outlook
04 Sep 2008

Suntec REIT (Suntec) has acquired another 3498.3 square feet (sf) of strata-titled office space in Suntec City for about S$7.7m. We believe the office sector is facing macro headwinds, and expect a demand-supply mismatch to put downward pressure on rentals. We still think Suntec is defensively positioned – average rentals are at a huge discount to spot rentals and should provide a cushion even in the face of rental declines. We also like Suntec for its core asset and relatively strong balance sheet. Nevertheless, we lower our fair value estimate down 10% to S$1.53 to accommodate our revised outlook. This gives investors a total return of about 12%. Maintain BUY.

Buys more strata space. Suntec REIT (Suntec) has acquired another 3498.3 square feet (sf) of strata-titled office space in Suntec City Office Tower One for about S$7.7m. This works out to a price of about S$2201.1 psf, in line with earlier transactions this year. The buy was funded with the proceeds from a Nov 2006 private placement earmarked for this purpose. With this latest buy, Suntec has now acquired about 61,538 sf of strata-titled office space in Suntec City. With almost 1m sf of third-party owned strata space remaining and more than S$66m in unused proceeds, we expect Suntec to continue making opportunistic buys going forward.

Office rentals facing macro headwinds. We continue to expect office rentals to peak by year end but now further moderate our outlook beyond 2008. The office sector is facing some formidable macro threats: a deteriorating economy at home and abroad; slowing GDP growth; and the continuing credit crunch. The rationale for office space growth in Singapore hinged on the expansion of the financial services sector. However, global banks are now likely to slow investment in a bid to control costs because of difficulties back home. Meanwhile, new supply continues as planned – about 10.2m sf of new space will be coming on-stream between 2008 and 2012. We believe this demand-supply mismatch will put downward pressure on rentals. We have priced in a 36% fall in office rentals from current levels by 2011 (versus a 20% decline previously). We think this is a fair base case.

… but Suntec buffered by tailwinds. We still think Suntec is defensively positioned - average monthly office rents at Suntec City Office of S$6.30 psf are a whopping 48-58% below recently secured leases at S$12-15 psf pm. Meanwhile, about 46% of Suntec’s office portfolio ex-One Raffles Quay is up for renewal over 4Q08 and FY09. With such a huge value gap, we expect reversionary growth to provide a cushion even in the face of rental declines. Also in the REIT’s favor is its relatively strong balance sheet with no near-term debt expiry and the strength of its core asset, which will benefit from the revitalization of the Marina area and the completion of the Circle Line. With our revised outlook, we adjust our fair value estimate down 10% to S$1.53 from S$1.71 previously. This gives investors a total return of about 12%. Maintain BUY.

[ishak]

Suntec REIT: Lehman Issue A Non-Issue (BUY\S$1.27\Target S$1.87)
17 Sep 2008

Lehman occupies minimal amount of office space. Following Lehman Brothers’ (Lehman) debacle and subsequent Chapter 11 bankruptcy filing, its Singapore operations has also ceased after SGX suspended it from taking new securities and derivatives positions. We note that Lehman presently takes up approximately 40,000 sf of office space in Suntec City Office Tower Five. This represents a mere 3.1% of Suntec REIT’s (SRT) total Suntec City Offices portfolio of 1.29m sf, and an even smaller 1.4% of its entire portfolio of 2.90m sf. Although Lehman employees have not vacated and talks over any possible settlement have yet to commence, we predict a minimal 0.9% dip in FY09 DPU in the event of a termination by end-Sep 08 and a replacement tenant cannot be found within the next six months. As such, exposure to the Lehman collapse is not a major issue.

Staying on course for positive rental reversions. As Lehman’s lease agreement was only renewed in early-07 at the prevailing market rents then, SRT does stand to benefit from positive rental reversions if a new tenant were to step in. Most importantly, the organic drivers underlying Suntec City Office Towers remain intact, with a considerable 42.7% of the leases due in FY09 still paying at significantly below market rents. Other banking & financial services tenants within SRT’s portfolio, such as Deutsche Bank and UBS (Suntec City Office Towers), as well as Deutsche Bank, Credit Suisse, UBS, ABN Amro and Barclays (One Raffles Quay) have either remained relatively unscathed or managed to remain solvent.

Medium-term office story still stands. The recent signing of new leases at Marina Bay Financial Centre Phase 1, as well as new leases and renewals at Capital Tower and One George Street, provide positive reminders of Singapore’s growing position as a regional financial hub. At a time when the global investment climate is severely weakened, this implies that demand for office space remains and that the medium-term office story is still thriving.

Maintain BUY at S$1.87. Of late, office landlords, particularly office REITs, have been absorbing a sizable amount of flak on the back of global macroeconomic uncertainty, as well as expected falls in occupancy levels, dips in capital values and rental rates. The creeping up of unemployment rate has not contributed positively. Given the historically low P/B levels of office REITs at 0.5x currently, share prices appear to have factored in these negativities. Although we are not expecting the weakened sentiments to cool off anytime soon, we continue to believe that SRT will be able to grow organically. Since the Street first got wind of Lehman’s highly possible collapse, SRT has slipped 15.0%. We believe any remaining overhang should evaporate with SRT’s limited exposure to Lehman. Presently, SRT is trading at an FY08-09 yield of 7.2 – 8.7%. Maintain BUY at S$1.87.

[ishak]

24-Sep-2008

1. Date of change of Deemed Interest: 17-09-2008
2. The change in the percentage level: From 5.98 % To 4.86 %
3. Name of Substantial Shareholder: Temasek Holdings (Private) Limited ("Temasek")

No. of shares held before the change: 89,136,628
As a percentage of issued share capita:5.98 %
No. of shares held after the change: 74,379,960
As a percentage of issued share capita: 4.86 %

[blid2def]

24-Sep-2008

1. Date of change of Deemed Interest: 17-09-2008
2. The change in the percentage level: From 5.98 % To 4.86 %

No. of shares held before the change: 89,136,628
As a percentage of issued share capita:5.98 %
No. of shares held after the change: 74,379,960
As a percentage of issued share capita: 4.86 %

Erm.. which substantial shareholder though?

[winston]

Singapore Hot Stocks-CCT, Suntec fall on downgrades

SINGAPORE, Sept 29 (Reuters) - CapitaCommercial Trust (CCT) and Suntec Real Estate Investment Trust fell on Monday after Credit Suisse downgraded them to "underperform" due to the weaker outlook for Singapore's office market.

"We now expect rentals to peak earlier in 2008, and fall 50 percent to S$9.18 per square foot per month in 2011, prompted by peak vacancy of 16.5 percent in 2010," Credit Suisse analyst Shirley Wong wrote in a report.

Wong estimated that capital values could fall 40 percent, which could be even more detrimental, triggering provisions for developers and the risk of exceeding gearing limits for real estate investment trusts.

Credit Suisse, which previously had a neutral call on Suntec and an outperform recommendation on CCT, had earlier this year predicted a 30 percent fall in office rentals.

At 0310 GMT, Suntec was down 5.6 percent at S$1.18 while CCT was 4.6 percent lower at S$1.26.

[winston]

Not vested. From Financecaptain:-

Credit Suisse:-

Suntec REIT (SUN SP, UNDERPERFORM, TP S$0.98)

We are downgrading SUNT to UNDERPERFORM from Neutral, with a revised target priceof S$0.98 from S$1.76 (-44.3%), as we cut our 2009-10E DPU by 3.8-9.8% and increase our cost of equity from 7.0% to 9.4%. SUNT has enjoyed the highest revaluation gains (+61%) since IPO, and the reverse could happen if asset prices fall, in our opinion.

In addition, we believe room for rents improvements for Suntec City Mall and Tower is limited, and yield potential for ORQ is likely to be truncated, given that significant lease expiries will only surface beyond 2010E (4.3% 2008-10E).

[ishak]

CHANGE OF SUNTEC REIT’S FINANCIAL YEAR END
29 Sep 2008

ARA Trust Management (Suntec) Limited, as manager of Suntec Real Estate Investment Trust (“Suntec REIT”, and the manager of Suntec REIT, the “Manager”), wishes to announce that Suntec REIT is changing its financial year end from 30 September to 31 December. Therefore, the current financial year will be a 15-month period from 1 October 2007 to 31 December 2008. Thereafter, Suntec REIT’s financial year will be a 12-month period ending on 31 December each year.

The reason for the change of Suntec REIT’s financial year is to enable better management of the Suntec REIT’s internal processes and smoother flow of its operations which will result in better administrative and operational efficiencies.

Following the change in the financial year end of Suntec REIT, Suntec REIT will issue its annual report within three months and its financial statement for the full financial year within 60 days after the end of the current financial year (i.e. 31 December 2008).

There will be no change in the frequency and timing of distributions to unitholders of Suntec REIT, which will be made no later than 60 days after the end of each calendar quarter.

[winston]

Not vested. From UOB-Kay Hian

Suntec REIT: Target: S$1.58
− Yield: 9%.
− Will benefit from a rise in meeting, incentive travel, convention and exhibition (MICE) activities on improved connectivity to Suntec City.

[millionairemind]

*DJ Suntec REIT Target Cut To S$1.01 From S$1.70 By Citigroup

(END) Dow Jones Newswires

October 30, 2008 19:42 ET (23:42 GMT)