From time to time, Foolish hats turn up in annual general meetings. My better half is a shareholder of Suntec Real Estate Investment Trust (SGX: T82U) and I thought that it would be a good experience for us to be at the annual general meeting together. You can read more about the real estate investment trust (REIT) here. Here are nine quick things I learnt during the meeting: Suntec REIT is the top performing REIT in the Singapore Exchange last year. Management deems the REIT as the second largest REIT in Singapore by assets under management (AUM). As of 31 December 2014,…
From time to time, Foolish hats turn up in annual general meetings.
My better half is a shareholder of Suntec Real Estate Investment Trust (SGX: T82U) and I thought that it would be a good experience for us to be at the annual general meeting together.
You can read more about the real estate investment trust (REIT) here.
Here are nine quick things I learnt during the meeting:
- Suntec REIT is the top performing REIT in the Singapore Exchange last year. Management deems the REIT as the second largest REIT in Singapore by assets under management (AUM). As of 31 December 2014, Suntec REIT’s AUM was $8.8 billion.
- Among the highlights shared by the management team was the refinancing of $1.6 billion in debt during 2014; management added there was no further refinancing needed until 2016. Suntec REIT’s all-in financing cost was kept at 2.44% as of 31 December 2014.
- The chief Executive Officer (CEO) of Suntec REIT’s manager, Yeo See Kiat, also commented that the development project for 177 Pacific Highway (an A-grade commercial tower in Sydney) is poised for completion in early 2016 and is “100% committed”.
- Responding to a question on the asset enhancement initiative (AEI) for Suntec City, Deputy CEO Susan Sim gave a little bit of color for the different phases of the AEI. The theme for the AEI’s Phase 1 was fast fashion, with youthful brands like Uniqlo epitomising its target clientele. Phase 2 was more family orientated, with Golden Village cited as an example of this theme. For Phase 3, the REIT was looking towards destination dining in a move to expand its reach past its usual office-worker clientele; to that point, Suntec REIT will be exploring ideas such as corporate dining and sky dining.
- Sim also commented that Suntec REIT was not going to be a “Gucci or Prada mall” and will be looking for entry level brands as its tenants.
- Sim also talked about the current headwinds in the retail industry where it was imperative to start attracting shoppers through a loyalty program and by using social media to build communities. As part of these efforts, Suntec REIT will be working with its tenants to adjust the rental model to include these elements. Details were not available at that point of time.
- There was also questions on competition from the newly opened South Beach tower. Yeo commented that there was limited impact at the moment (note: office occupancy was 100% as of 31 December 2014) but it is a situation that the team is monitoring.
- A shareholder had a question regarding the valuation of the properties under Suntec REIT’s management as said shareholder felt it had inflated the profit line. Yeo responded with the opinion that the valuation for the properties were reasonable. Board Chairman Chew Gek Khim felt that the revision of the valuations also reflects potential value that could be realized for the REIT in the future.
- A shareholder also challenged the board based on the perceived rise in management’s fee. As a note, ARA Asset Management Limited (SGX: D1R) is the manager of the properties under Suntec REIT. Chew felt that the performance of the team should be taken into consideration as well. The distribution per unit (DPU) was cited as an example by another board member. From the graph below for the DPU, there is certainly work to be done for the management team.
Source: Suntec REIT’s filing
There were more questions than the above, but these are the one which I was able to keep up with. I do hope that the notes were helpful for you. Fool on!
For more (free!) stock analyses and investing tips, sign up here for your FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.
Like us on Facebook to follow our latest hot articles.
The Motley Fool's purpose is to help the world invest, better.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Suntec REIT.