Making Sense Of Suntec Real Estate Investment Trust From An Investor’s Perspective

Suntec Real Estate Investment Trust (SGX: T82U) is a retail and commercial real estate investment trust that currently has five properties in its portfolio.

Four of the five are located in Singapore (this includes Suntec City and One Raffles Quay) while the remaining property is located in North Sydney, Australia. The REIT has a market capitalisation of S$4.3 billion at its closing unit price of S$1.70 last Friday.

For more colour on Suntec REIT’s Singapore properties, all four are located in the Garden City’s central business district (CBD).

The REIT’s office portfolio ended the second-quarter of 2016 with an occupancy rate of 98.9%; for some perspective, Singapore’s core CBD market has an occupancy rate of just 95.1%. Suntec REIT’s retail portfolio also had high occupancy of 97.7%.

It’s worth noting too that the REIT’s properties are also conveniently located in close proximity to Mass Rapid Transit (MRT) stations.

Suntec REIT completed a makeover of Suntec City, its major asset, in the middle of 2015. The makeover started in 2013 and occurred in three phases. It has allowed the REIT to optimise usage of the mall’s gross floor area (GFA) and improve the shopper experience.

Let’s also take a quick look at Suntec REIT’s financials.

Suntec REIT ended the second-quarter of 2016 with total debt of S$3.04 billion and total assets of S$8.7 billion. This gives rise to a debt to asset ratio of 35%. For reference, REITs in Singapore are subject to a one-tier regulatory gearing limit of 45%.

The REIT currently has a net asset value of S$2.13 per unit. At its current unit price of S$1.70, this implies a price to book (P/B) ratio of 0.8. What this means is that investors can buy the REIT’s net assets (total assets minus total liabilities) at a 20% discount to their theoretical accounting value.

Lastly, the REIT’s distribution per unit over the last 12 months is S$0.101, which gives a distribution yield of 5.9% at its closing price last Friday.

Hopefully what I’ve shared above can serve as useful starting points for further research for any of you who are interested in Suntec REIT.

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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 Esjay does not own shares in any companies mentioned.