The 2 Ways Suntec Real Estate Investment Trust Diversifies Its Income

Suntec Real Estate Investment Trust (SGX: T82U) is one of the oldest REITs in Singapore considering it got listed all the way back in late 2004. It is also one of the largest REITs here with its market capitalisation of nearly S$4.3 billion.

In here, let’s take a look at how Suntec REIT is diversifying its income base.

1. Diversification through different property types

The chart below shows the income contributions from Suntec REIT’s different types of properties in the third quarter of 2016:

Suntec REIT income segment chart
Source: Suntec REIT earnings investor’s presentation

You can see that Suntec REIT generates income from three types of properties, namely, offices, retail malls, and convention centres.

The office income portion comes mainly from Suntec REIT’s ownership stakes in Suntec City in Singapore and 177 Pacific Highway in Australia. The retail portion is also from Suntec City while the conventions income is derived from Suntec Singapore.

2. Geographical diversification

Since its listing, Suntec REIT had traditionally derived most of its income from Singapore. But, things have changed recently because of two events.

Firstly, there’s the August 2016 completion of Suntec REIT’s commercial building on 177 Pacific Highway in North Sydney, Australia. Secondly, Suntec REIT had acquired an effective 25% interest in Southgate Complex in Melbourne, Australia, in November 2016.

These transactions will help Suntec REIT diversify its geographical income source away from Singapore. Also, the REIT’s recent forays into the Australia property market may indicate more transactions there in the future.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and 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 Lawrence Nga doesn’t own shares in any companies mentioned.