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10 Quick Things Investors Should Know About Suntec Real Estate Investment Trust’s 2018 Second-Quarter Earnings

Last week, Suntec Real Estate Investment Trust (SGX: T82U) released its 2018 second quarter (2Q 2018) earnings update. As a quick introduction, Suntec 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-third interest in One Raffles Quay, a commercial building in Sydney and a 50% stake in Southgate Complex in Melbourne, 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 improved 3.7% to S$90.5 million while net property income grew by 2.2% to S$60.7 million.

2. Despite the improvements, the REIT’s distribution per unit (DPU) was down by 0.8% year-on-year to 2.474 cents.

3. Based on Suntec REIT’s 2018 annualised DPU of 9.81 cents and its closing unit price of S$1.85 as of 27 July 2018, the REIT has a trailing distribution yield of 5.3%.

4. As of 30 June 2018, the REIT’s gearing stood at 35%, which is a safe distance from the regulatory ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 99.0% and 98.2% for its office and retail properties, respectively, at end of the quarter.

6. The weighted average lease expiry (by net lettable area) was at 2.31 years and 3.66 years for the retail and office portfolios respectively.

7. In the latest quarter, income contribution from joint ventures was up by 3.7% year-on-year to S$22.6 million.

8. On 31 May 2018, Suntec REIT completed the acquisition of an additional 25% interest in Southgate Complex, raising its total interest in the integrated development to 50%.

9. Suntec City Mall’s footfall and tenant sales grew 8.5% and 5.0%, respectively, on a year-on-year basis.

10. Here are some comments from the REIT on its outlook:

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

In Australia, the national office CBD occupancy increased by 0.5% to 99.1% in the first quarter of 2018. Leasing activity continues to be positive in the Sydney, North Shore and Melbourne office markets driven mainly by flight to quality and expansionary activities. Looking ahead, occupancy and rental levels are expected to remain high given the strong occupier demand coupled with limited new supply.

In view of the rising interest rate environment, the Manager will continue its prudent capital management strategy and proactively manage the refinancing of loans due in 2018 and 2019.”

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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.