Suntec Real Estate Investment Trust (SGX: T82U) released its first quarter 2019 (1Q 2019) earnings on Wednesday. As a recap, Suntec REIT owns commercial and retail properties in both Singapore and Australia, and is one of the oldest and largest REITs in Singapore.
Here are seven highlights from Suntec REIT’s latest earnings report:
1. Gross revenue decreased by 1.1% year-on-year from S$90.7 million to S$89.7 million. This was mainly due to lower convention revenue (down 12.6%) and slightly lower office revenue, offset by higher retail revenue (up 5.5%). Even though there were more corporate events, this was offset by fewer major convention events during the period. For the Australian assets, revenue was also negatively impacted by Australian dollar movements against the Singapore dollar.
2. Net property income (NPI) declined by 7.6% year-on-year to S$58.2 million. This was due to weaker NPI contributions from both office and convention, offset by a slightly better NPI performance from retail. For joint venture properties, income contribution rose by 5.7% year-on-year to S$24 million from S$22.7 million.
3. Distributable income rose slightly from S$64.8 million to S$65.3 million, and distribution per unit (DPU) was flat at 2.434 Singapore cents, compared to 2.433 Singapore cents a year ago. Trailing 12-month DPU amounted to 9.867 Singapore cents, translating to a historical distribution yield of 5.3% at the closing price of S$1.86 on 23 April 2019.
4. As of 31 March 2019, the overall committed occupancy for the Singapore office portfolio stood at 98.6%, and the performance of the portfolio is expected to improve given limited supply coming on-stream in 2019. For Australia, the overall committed occupancy improved to 99.8% due to higher occupancy in Southgate Complex.
5. The REIT’s aggregate leverage ratio stood at 38.6%, which offers the REIT some room to gear up to the statutory gearing limit of 45% for REITs. This was after the REIT issued 3.355% 6-year medium-term notes in January this year, and also secured a S$400 million 5-year term loan facility in April. The REIT has no more loans due this year and its weighted average debt maturity stands at approximately 3.3 years. All-in-financing cost is 3.04% with interest coverage ratio at 2.9 times.
6. Suntec REIT recently announced that 9 Penang Road’s (the site of the old Park Mall) office component has been 100% pre-leased to UBS AG, and UBS is targeted to occupy all eight floors of space amounting to 381,000 square feet. Expected completion is for the second half of 2020.
7. As of 31 March 2019, the REIT’s net asset value per share stood at S$2.092. Based on the closing price of S$1.86, the REIT was trading at a price-to-book of 0.89 times.
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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore contributor Royston Yang owns shares in Suntec REIT.