Suntec REIT

[millionairemind]

Suntec Reit
July 1 close: $0.89
PHILLIP SECURITIES RESEARCH, July 1

OUR fundamental view of Suntec Reit has not changed. We feel revenue is still being subjected to pressure as Singapore goes through the recession. We feel key issues for the management will be to maintain the rental while keeping occupancy of the portfolio stable.

Suntec Reit has 64 per cent of its portfolio net lettable area (NLA) exposed to the office sector and 34 per cent exposed to the retail sector. 77 per cent of office leases are expiring over the next three years and we are concern about falling reversionary rent achieved by the expiring office leases.

Although expiring leases rent is lower than the passing average rent, average rent for leases secured has peaked out in Q2 2008 and has fallen 26 per cent in Q1 2009. Furthermore, Suntec Reit office portfolio could come under pressure from the completion of over 9.2 million sq ft of office space in the core downtown area over the next five years. Given that our outlook is for a bottoming of office rent in Q4 2010, we would expect the gap between expiring leases and renewal leases to converge with a negative bias.

Suntec has no near term refinancing concern. It has successfully secured $825 million of term loan in April 2009. The current gearing is 35 per cent. Although management has not indicated any acquisition plans, we believe that Suntec will build up its equity balance for two reasons: in anticipation of asset devaluation and to ready itself for any opportunities that arise for its next phase of growth. Currently, Suntec owns approximately 57 per cent of Suntec City Office Towers, it may resume its programme to acquire strata office units not presently owned.

We revise our average rent and occupancy assumptions and reduce our distribution per unit forecasts over FY2009F-FY2011F by 4-9 per cent. We maintain our 'hold' rating and raise our fair value from $0.69 to $0.94 mainly on lower weighted average cost of capital assumptions.
HOLD

[winston]

Not vested. From CIMB:-

Suntec REIT (S$1.06)- 2Q09 results - Retail kicker in 2010

Suntec REIT’s 2Q09 results exceeded both the Street and our expectations on stronger top line, better net property income margins, and lower interest expense.

Distributable income of S$47.7m (+14% yoy) and DPU of 2.98cts (+7% yoy) formed 32% of our full year forecast. 1H09 DPU of 5.9cts also exceeds expectations at 64% of our full year forecast. Occupancy levels for the office portfolio declined 2.6%pts to 94.8% that for retail portfolio were stable at 98.4%.

In view of the strong 1H performance, we have moderated our rental decline assumptions and assumed higher net property income margins Our target price rises accordingly to S$1.28 from S$1.07 (discount rate 8.8%) based on DDM valuation. Maintain Outperform.

[millionairemind]

Suntec Reit
Buy
DBS Group Research July 31 close $1.09

SUNTEC reported a set of in-line results with revenue rising 9 per cent y-o-y to $64.5 million but marginally down q-o-q. NPI remained relatively flat q-o-q at $48.8 million while distributable income came in 2.8 per cent higher to $47.7 million. Annualised yield works out to 11.2 per cent. No revaluation was done for the quarter.

As expected, average office renewal rents dipped to $8.24 per square foot/month versus $9.90 psf/month in Q1 but still resulted in positive rental reversions. Office portfolio occupancy dipped to 95 per cent in Q2 and is expected to stabilise at this level for the rest of this year. The retail component remained relatively flat.

Office rents is expected to continue to dip but at a smaller pace. Current asking rents is still at about $8 psf/month. The group has a remaining 4.5 per cent of net lettable area to be renewed in FY2009 and another 26 per cent in FY2010. To improve connectivity from the upcoming opening of the Circle Line station at Suntec Mall, some minor enhancement works are planned over the next few months but capex should remain small.

Suntec's valuations are undemanding at FY2009 and FY2010 DPU yield of 10.1 per cent and 8.3 per cent and P/B NAV of 0.53x. Suntec's balance sheet is healthy at 33.9 per cent gearing with no refinancing needs till 2011. Maintain 'buy' with revised TP of $1.18.

[winston]

Not vested. From DBS:-

Suntec REIT reported results in line with estimates.

Operations remained stable while occupancies assumptions have been moved upwards. Valuations are undemanding at a P/BV of 0.6x P/BV, offering a prospective FY09- FY10 DPU yield of 9.5%- 7.9%. Maintain BUY with revised TP S$1.32 (Prev S$ 1.23).

[Musicwhiz]

Thank you for the news Winston. I have a tiny stake in this.

[grandmaster89]

I am looking into this REIT as well. I feel that there is a need to start forming a dividend asset in my portfolio. Currently 1/3 cash and the rest is on Noble Group and MTQ Corp.

A REIT with gearing < 30%, regional diversification, steady operating and free cashflow, no immediate refinancing concerns, steady quarterly dividend payouts of yields exceeding 7% and growing revenue and profits will be ideal.

[winston]

Not vested.

Singapore's Suntec REIT to launch $107 mln placement

SINGAPORE, Dec 11 (Reuters) - Singapore's Suntec REIT said on Friday it plans a private placement of 128.5 million new shares for between S$1.16 and S$1.19 a unit to raise a gross S$149.1 million ($107.30 million).


Source: Reuters

[Musicwhiz]

Not vested.

Singapore's Suntec REIT to launch $107 mln placement

SINGAPORE, Dec 11 (Reuters) - Singapore's Suntec REIT said on Friday it plans a private placement of 128.5 million new shares for between S$1.16 and S$1.19 a unit to raise a gross S$149.1 million ($107.30 million).


Source: Reuters

Siao liao. I am gonna get diluted. Sounds like a song title by a Country Singer eh?

[grandmaster89]

Unless I am mistaken, their gearing is already pretty low so why the need for fund raising???

[winston]

Not vested. From UOBKH:-


Earnings Revision

We have cut our 2010 DPU forecast by 2.6% to 7.4 cents due to dilution from
the placement exercise.

Valuation/Recommendation

Our fair price is reduced marginally from S$1.04 to S$1.02, based on a Two-Stage Dividend Discount Model (required rate of return: 7.7%; terminal growth: 2.5%).

Maintain SELL.