2 Key Things That Investors Should Know About Suntec Real Estate Investment Trust’s Office Properties

Suntec Real Estate Investment Trust (SGX: T82U) 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 CityOne Raffles Quay, and a commercial building in Sydney, just to name a few.

Given that the REIT has exposure in both retail and office properties, it might be useful for investors to view these two types of properties separately. In this article, we will look at two slides from Suntec’s 2017 fourth quarter earnings update for more insight into its office properties.

We will start with a quick summary of the office segment’s performance for the quarter:

Source: Suntec REIT’s result presentation

From the above, we can see is that Singapore office properties contributed 82% of the REIT’s office portfolio income in 2017 while the Australia office properties accounted for the the rest. Out of the five office properties owned by Suntec REIT, only two of the properties were fully owned as of 31 December 2017.

In terms of committed occupancy, the REIT’s Singapore portfolio was at 99.7% while the Australia portfolio recorded 97.3% at the end of last year.

Next, we will look at lease expiry profile for the office properties.

Source: Suntec REIT’s result presentation

Notably, Suntec REIT’s lease expiry profile for its office portfolio had a combination of long-term and short-term leases, with a weighted average lease expiry of 3.8 years.

In general, its Singapore properties had a shorter lease expiry profile of 3.03 years while the REIT’s Australia properties had a longer expiry profile of 6.82 years.

Having a combination of both short-term and long-term leases could provide good visibility of future income for Suntec REIT over the next five years. It could also help lessen the burden of renewing leases by reducing the concentration of leases expiring in any single year.

We believe we’ve identified a dividend dynamo whose financials are strong enough to qualify its dividend as “safe” – and have profiled this stock in a research report that’s now available to download completely free of charge. Simply click here to claim your copy today!

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.