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2 Things You Didn’t Know About Suntec Real Estate Investment Trust

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With its units first starting to trade in Singapore’s share market in December 2004, Suntec Real Estate Investment Trust (SGX: T82U) is one of the earliest real estate investment trusts listed here.

It is also one of the few REITs which own both retail and commercial office properties in its portfolio. Most REITs listed in Singapore have a singular focus on the types of properties they own, so you might get REITs which only deal with industrial properties for instance. Another REIT with diverse assets here would be Starhill Global Real Estate Investment Trust (SGX: P40U) – the REIT holds both retail and commercial office properties as well.

Other than the fact that Suntec REIT has a long history and a rather unique asset-mix, here are two other interesting facts about it which you might not have known.

1. Tenant concentration

In 2013, Suntec REIT’s office portfolio contributed to 68.5% of total net property income. In the same year, about 50% of its gross rental income came from businesses in banking, insurance, and financial services. Properties in its portfolio such as One Raffles Quay even have up to 93% of its gross rental income coming from such businesses.

Singapore is a financial hub with the banking and financial sector being a very important part of our economy. But, having such high concentration of tenants coming from just one sector alone might be a risk investors need to take note of with Suntec REIT.

2. Not all of Suntec belongs to Suntec

Despite having the Suntec moniker, Suntec REIT does not in fact fully own the entire Suntec City and Suntec Convention Center. In fact, Suntec REIT only owns 57% of Suntec City Office Towers, 100% of Suntec City Mall and 60.8% of Suntec Singapore Convention and Exhibition Centre.

Such partial ownerships of different properties might make it confusing when trying to understand the importance of each property to the REIT. Investors should take note of this issue when analysing the trust.

Foolish Summary

These are just a few things that investors need to take note of before investing into Suntec REIT.

The trust has actually produced great results for its unit-holders, chalking up a return of around 165% since its IPO. This example shows that there is no such thing as the perfect investment – all we have to do is to be aware and comfortable of the kind of risks we are taking with each investment.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.