10 Quick Things Investors Should Know About Suntec Real Estate Investment Trust’s Latest Earnings

In late January, Suntec Real Estate Investment Trust (SGX: T82U) released its 2017 fourth quarter and full year earnings update. As a quick introduction, Suntec REIT is one of the largest REITs in Singapore and currently has interests in retail malls and offices in Singapore and Australia. Its portfolio includes Suntec City, One Raffles Quay, and a commercial building in Sydney, just to name a few.

Here are 10 things investors should know about Suntec REIT’s latest results:

1. Gross revenue for the reporting quarter declined 1.8% year-on-year to S$87.32 million while net property income fell by 2.2% to S$59.36 million.

2. Yet, the REIT’s distribution per unit (DPU) was up by 0.3% year-on-year to 2.604 cents, mainly due to distributions from capital.

3. Based on Suntec REIT’s 2017 total DPU of 10.005 cents, and its closing unit price of S$1.95 as of 8 February 2018, the REIT has a trailing distribution yield of 5.1%.

4. As of 31 December 2017, the REIT’s gearing stood at 36.4%, which is a safe distance from the regulatory ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 99.2% and 98.8%, respectively, for its office and retail properties at end-2017.

6. The weighted average lease expiry (by net lettable area) for the REIT”s retail portfolio was at 2.35 years as of 31 December 2017. The Singapore and Australia portions of the retail portfolio had WALEs of 2.24 years and 6.31 years, respectively. For the office portfolio, the WALE (by net lettable area) was 3.80 years, split between 3.03 years in Singapore, and 6.82 years in Australia.

7. In the reporting quarter, income contribution from joint ventures was down by 1.0% year-on-year to S$21.3 million.

8. In 2017, Suntec REIT expanded its footprint in Australia with the acquisition of a 50% interest in the premium-grade 477 Collins Street commercial development in Melbourne which is currently under construction.

9. The REIT has two projects under development: 9 Penang Road and the aforementioned 477 Collins Street. They are scheduled to be completed by end-2019 and mid-2020 respectively.

10. In its earnings release, Mapletree Industrial Trust gave some comments on its outlook:

“The Singapore office market improved in the fourth quarter of 2017 as occupier demand continued to pick up on the back of a stronger economic growth. The overall CBD occupancy strengthened by 1.1% to 89.2% while the overall CBD rents increased by 4.2% to S$9.23 psf/mth driven by the higher occupancy rates and signing rents in quality buildings.

Looking ahead, the Manager will continue its proactive asset management to maintain its high occupancy level for its Singapore office portfolio notwithstanding the remaining vacant space in the recently completed buildings and the secondary stock in the market.

Suntec City mall posted stronger operational performance in the fourth quarter of 2017. The committed occupancy stood at 99% as at 31 December 2017 while footfall and tenant sales per square foot registered 12.8% and 4.8% year-on-year growth respectively in 2017. The Manager will continue its strategy of increasing asset utilisation and active tenant adjustment to further strengthen the positioning of Suntec City mall.

In Australia, the national office CBD occupancy increased marginally by 0.1% to 89.2% in the third quarter of 2017. Occupier demand continues to be positive in the Sydney, North Shore and Melbourne office markets on the back of centralisation and expansionary activities. Looking ahead, occupancy and rents are expected to improve given the strong occupier demand coupled with limited new supply.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.