Suntec REIT

[winston]

From UOB-Kay Hian:-

Suntec REIT (BUY/S$1.64/Target: S$2.10)

• Suntec Office Towers achieved committed occupancy of 100% with recent new leases signed at between S$11.50 and S$13.50psf pm. It is well positioned to benefit from positive rental reversion with 9.5% and 44.1% of its leases for office space up for renewal in 2HFY08 and FY09 respectively.

• Suntec REIT provides FY09 distribution yield of 6.16%.

[winston]

Not vested.

Macquarie cuts target price to S$1.64 (previously S$1.92)

[ishak]

Singapore, 30 July 2008 – ARA Trust Management (Suntec) Limited (“ARA Suntec”), Manager of Suntec Real Estate Investment Trust (“Suntec REIT”), is pleased to announce a distribution income of S$42.0 million for the period 1 April 2008 to 30 June 2008 (3QFY08), which was 40.2% higher year-on-year against 3QFY07. The DPU of 2.793 cents for 3QFY08 was 33.0% higher year-on-year.

For the same period, Suntec REIT’s DPU was 24.9% higher than the Forecast.

Commenting on Suntec REIT’s performance, Mr. Yeo See Kiat, Chief Executive Officer of ARA Suntec, said, “I am pleased to report a higher DPU year-on-year underpinned by the strong organic growth and asset enhancement of our properties. Notwithstanding the ongoing US subprime crisis, both the office and retail portfolios have achieved stronger committed rents compared to last quarter.”

Continual strong growth achieved for office rentals
The office portfolio achieved another strong performance during the quarter. Renewal and replacement leases at Suntec City were secured at higher closing rents of between S$12.00 – S$15.00 p.s.f. per month. Together with Park Mall, both properties have continued to achieve a significant growth over the preceding rents. As at 30 June 2008, the committed occupancy for the overall office portfolio stood at 99.4%.

Committed retail passing rent at Suntec City Mall crossed S$11 p.s.f. per month mark
The committed retail passing rent at Suntec City Mall strengthened to a new high of S$11.09 p.s.f. per month, whilst Park Mall and Chijmes also achieved higher committed retail passing rents of S$7.17 p.s.f. per month and S$10.75 p.s.f. per month respectively as at 30 June 2008. Suntec REIT’s revenue from other income initiatives grew 13.7% year-on-year to S$1.75 million for the quarter.

Successfully secured refinancing of bridge loans for One Raffles Quay acquisition
On 30 June 2008, Suntec REIT signed a S$400 million 3-year unsecured club loan facility from a panel of banks at a highly competitive interest rate to refinance the remaining outstanding bridge loans pertaining to the acquisition of a one-third interest in One Raffles Quay.

With the completion of this refinancing, Suntec REIT has no major refinancing needs for the rest of FY2008 and FY2009.

Comments from the Report (Section 10)
According to the Ministry of Trade and Industry, Singapore's GDP in the second quarter of 2008 rose 1.9% year-on-year, down from 6.9% in the previous quarter. The official GDP forecast for 2008 remains at between 4.0-6.0%, a reflection of continual downside risk relating to weak external economic conditions. The Asian economies are expected to continue to grow strongly, and recent actions taken by the US Fed Reserve to restore market confidence in the US economy lend support to maintaining the growth forecast.

Singapore office rents experienced a moderate increase during the second quarter 2008. According to property consultany CB Richard Ellis (CBRE), prime office rents rose to $16.10 per sq ft per month whilst Grade A office rents rose to S$18.80 per sq ft per month in the quarter ended June 2008.

Office vacancy in the Grade A segment remains tight, driving a heightened demand for office space in the fringe areas. There is increasing competitive activity for pre-commitments of upcoming office developments within the CBD area. CBRE is of the view that the notwithstanding the abundant potential confirmed office supply coming on-stream, the demand take-up is strong, with more than 30% of known supply from 3Q08-2012 currently pre-committed or under offer.

The Singapore retail sector continues to grow, driven by expansion activity and new entrants into the market by retailers, as malls are being rejuvenated and re-positioned with themed shopping concepts to cater to target retail segments. With the upcoming retail supply, CBRE expects prime rents to continue to increase, albeit at a moderate pace.

Outlook for the Financial Year 2008
Barring any unforeseen circumstances, the Manager expects Suntec REITS's performance in its office and retail properties to continue to be strong in the financial year, and for the distribution per unit (DPU) to exceed the forecast of 8.69 cents stated in the Circular to Unitholders dated 18 September 2007.

• Revenue and NPI outperformed 3QFY07 by 26.9% and 34.7% respectively
• Income available for distribution up 40.2% from 3QFY07
• Cost-to-Revenue ratio of 22.4% for 3QFY08
• DPU up 33.0% from 3QFY07
• Total Debt Outstanding 1.83bn
• Debt-to-Assets1 Ratio 31.4%
• Target Debt-to-Assets Ratio Up to 45%
• Corporate Family Rating “Baa1”
• Average All-in Financing Cost 3.36%
• Total return of 61.3% and annualized return of 15.6% since IPO
• Net asset value (NAV) per unit: S$2.26
• Distribution Amount (cents/unit): 2.793
• Ex date: 5 August 08
• Books closure: 7 August 08
• Payment: 29 August 08

[Musicwhiz]

Suntec REIT has consistently delivered growing DPU over the years. I have been vested since IPO back in Dec 2004, and my dividend yield is now about 10%. Hopefully, when the circle line is up and the IR are complete, then they can grow their DPU and yield even further.

[ishak]

Suntec REIT has consistently delivered growing DPU over the years. I have been vested since IPO back in Dec 2004, and my dividend yield is now about 10%. Hopefully, when the circle line is up and the IR are complete, then they can grow their DPU and yield even further.

I am also an IPO holder and added somemore in Feb this year.
Saw your portfolio in your blog, impressive considering the current climate. Cheers.

[winston]

Not vested.

Singapore Hot Stocks-Suntec Reit up on Citi upgrade

SINGAPORE, July 31 (Reuters) - Units in Suntec Real Estate Investment Trust jumped as much as 3.3 percent to a 7-week high after reporting better-than-expected quarterly earnings and in the wake of an upgrade by Citigroup.

Suntec Reit units rose to a high of S$1.58 on exceptionally heavy trading volume of nearly eight million.

The Reit said it will distribute S$42 million ($30.8 million) to unitholders in the third quarter ended June 2008, a 40.2 percent rise from S$30 million in the year ago period.

Citigroup upgraded Suntec Reit to "buy" from "hold", and raised its target price to S$1.70 from S$1.64, citing better-than-expected results and higher rental income from its office space.

"With 32.6 percent of total office net leaseable area up for renewal in 2009, Suntec is well-positioned for rental reversion with the current S$14 per square feet versus passing rent of around S$6.30 per square feet," said Citigroup analysts Wendy Koh, Ian Chua and Chun Keong Tan in a research note.

[ishak]

Suntec REIT: Yet another strong quarter

Summary: Suntec REIT (Suntec) posted yet another strong set of results this time, with 3Q distributable income up 40.2% YoY and 11.8% QoQ to S$42m. Its performance was driven by strong reversionary growth on both its office and retail assets. Suntec will pay out 2.793 S cents to investors, up 10.9% from last quarter’s 2.52 S cents payout. This works out to an annualized yield of about 7.3%. About 46% of Suntec’s office portfolio ex-ORQ is up for renewal over 4Q08 and FY09. We expect office rentals to peak by year end and hold – and even if rents slide back a little, there is still plenty of upside potential for Suntec’s properties that are currently earning less than S$6 psf/month. We like Suntec’s assets, its consistently strong performance, and its compelling yield. Maintain BUY and S$1.71 fair value estimate. (Meenal Kumar)

[ishak]

BUY S$1.53 STI : 2,925.50
Price Target : 12-Month S$ 1.75 (Prev S$ 1.73)
Reason for Report : 3QFY08 Results
Potential Catalyst: Rental reversions

Still trending up
Story: Suntec Reit reported a Q3 bottomline growth of 40% yoy and 9% qoq to $42m on a 27% improvement in topline to $59.2m. The better showing was due to higher operating performance, lower expense ratio of 22.5% and inclusion of associate income from ORQ. Q3 DPU came in at 2.793cts, translating to an annualized yield of 7.3%.

Point: Rental reversions from Suntec Office remained strong. The group renewed about 89,000sf of NLA during the quarter at between $12-15psf, higher than the $11.50-13.50psf transacted in 2Q. This helped lift average portfolio office rents to $6.30psf/mth. Looking forward, we believe the pace of office rental growth should decelerate given the softer economic outlook and increasing supply. Nevertheless, with another 644,789sf (45.8%) of NLA to be renewed in 4QFY08 and FY09, Suntec is well placed to benefit from the wide spreads between the passing and new office rents. The retail component also did well with average rents at Suntec Mall surpassing $11psf/mth, or c15% over previous levels. Plans for Park Mall asset enhancement activities are likely to be announced by end FY08. This is likely to provide further upside surprise to earnings when completed. Refinancing concerns have abated as the group recently completed a
$400m debt refinancing due Oct 08, through a club loan. Beyond this, it has a further $125m (MTN programme) due in FY09 and $700m (CMBS issue) maturing in FY10.

Relevance: We have tweaked our FY08 and FY09 DPU to 9.0cts and 10.2cts to adjust for the better than expected office rentals. The stock is offering 5.9% and 6.7% FY08/09 yields. Maintain Buy with a DCF-backed price target of $1.75, reflecting a higher risk free rate assumption of 3.9% and lower terminal growth of 0.5%.

[ishak]

Suntec REIT: Stirling 3Q08 Performance on Top of Healthy Financing Costs
(BUY\S$1.53\Target S$2.05)

3Q08 performance surpassed estimates. Suntec REIT (SRT) notched an impressive 40.2% YoY jump in 3Q08 distributable income to S$42.0m (+11.8% QoQ), making up 31.4% of our estimates. For the nine months ending FY08, distributable income of S$113.2m (84.7% of FY08F) has surpassed our projections. DPU for the quarter (excluding deferred units) came in at 2.8 cts (+33.0% YoY, +10.9% QoQ). Gross revenue was up 26.9% YoY and 5.8% QoQ to S$59.2m. On the back of lower property tax, NPI saw a more superior ascent, heading up 34.7% YoY and 7.9% QoQ to S$46.0m.

Financing cost inches up QoQ, but refinancing concerns assuaged. Further details pertaining to the S$400m 3-yr unsecured club loan issued on 30 Jun 08 were unveiled. Management cited the loan’s all-in financing cost at no more than 3.36%, with a floating SOR plus a 3-yr fixed spread. Judging from recent refinanced loans by S-REITs and anecdotal evidences, we estimate it could range from 3.1 – 3.25%. Although this has resulted in higher QoQ financing cost of 3.36% (2Q08 was 3.13%), we draw comfort from the clearance of any remaining near-term refinancing malice.

Maintain BUY at S$2.05. We stick to our case for Singapore’s near term office story, with office landlords as key beneficiaries on the back of expiring rents which are significantly below market rents. At present levels, SRT is trading at FY08 - 09F yield of 5.7 – 6.6%. Valuations continue to stay undemanding at 0.6X P/B. We keep our forecasted numbers unchanged, maintaining BUY for Suntec REIT at our DDM-pegged fair value of S$2.05, translating to an upside potential of 34.0%.

[Dubby]

Suntec Reit

Schroder Investment sold 902,000 @ $1.50;

Remaining 75,895,000 4.97%

Not vested