Listed back in 2004, Suntec Real Estate Investment Trust (SGX:T82U) is one of the oldest REITs in the Singapore market. Its portfolio consists of commercial/retail real estate in Singapore and Australia, including its namesake, Suntec City, a 60.8% interest in Suntec Singapore Convention & Exhibition Center, and a one-third interest in One Raffles Quay, among others.
Last week, Suntec REIT released its results for the first quarter of 2018. Here are 10 important takeaways:
1. Gross revenue grew 2.6% from the same period a year ago to S$90.7 million, while net property income was up 1.9% to S$63.0 million.
2. Distributable income grew 4.8% to S$64.8 million and distribution per unit (DPU) inched up by 0.3% to 2.433 Singapore cents.
3. The growth in the REIT’s DPU was due to higher contributions from Suntec Singapore and Suntec City Mall that were partially offset by higher financing costs and lower income from joint ventures.
4. There was a 6.5% decline in income from joint ventures because of lower contributions from One Raffles Quay. The property had enjoyed a one-off gain in 2017’s first quarter that was absent in the reporting quarter.
5. As of 31 March 2018, Suntec REIT had total assets of S$9.2 billion and liabilities of S$3.5 billion. It therefore had net assets of S$5.6 billion, an improvement of 2.3% from 31 December 2017. However, its adjusted net asset value (NAV) per unit decreased by 1.8% to S$2.08.
6. With total debt of S$3.27 billion, the REIT had an aggregate leverage of 36.6% (including share of borrowings of joint ventures) at the end of 2018’s first quarter. As a reminder, REITs in Singapore have a regulatory leverage ceiling of 45%. The REIT also ended 2018’s first quarter with an all-in financing cost of 2.73%, interest cover of 3.8 times, and with 65% of its debt either on fixed rates, or hedged.
7. Suntec REIT’s office portfolio occupancy stood at 99.1% as of 31 March 2018, with the tenant retention rate at 88%. The office portfolio had a weighted average lease expiry (WALE) of 3.62 years, with only 9.0% of office leases expiring for the rest of 2018.
8. Meanwhile, the REIT’s retail portfolio had an occupancy rate of 98.4%, and a tenant retention rate of 71%. The retail segment had a WALE of 2.22 years, with 21.1% of net lettable area expiring later this year.
9. Suntec REIT’s Manager also gave an update on the REIT’s two major development projects. Firstly, 9 Penang Road in Singapore (formerly Parklane Mall) is in the process of building its steel super structure, and is scheduled to be completed by the end of 2019. Secondly, its development of Olderfleet, 477 Collins Street in Australia is also in progress; the property is scheduled for completion by mid-2020.
10. On Suntec REIT’s outlook, the REIT’s Manager said that they would continue to be proactive to maintain a high occupancy rate in the REIT’s portfolio, and strengthen its office proposition. On the REIT’s retail front, the Manager said that they would continue to enhance the shopping experience, increase asset utilisation, and strengthen key operational indicators such as occupancy, footfall, and tenant sales.
11. At the time of writing, units of Suntec REIT are trading hands at S$1.93 each. This translates to a price-to book ratio of 0.927, and an annualised distribution yield of 5.04%.
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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 Jeremy Chia doesn’t own shares in any companies mentioned.