Suntec REIT

[winston]

not vested

Analysts mixed on Suntec REIT, with conflicting views on office space

by Lim Hui Jie

Analysts have mixed views on the outlook of Suntec REIT, with RHB and Maybank analysts giving the counter a “buy” and “sell” rating respectively.

In his initiation report, Maybank Kim Eng’s Chua Su Tye has given a target price of $1.20 for the REIT, as he expects “challenging headwinds” for the REIT.

He added that “slow retail recovery and rising office vacancy due to increasing WFH trends suggest weak fundamentals”, in his view.

Chua said retail recovery at Suntec City mall has been sluggish, with 9MFY2020 footfall down 53% y-o-y, flat from 1HFY2020, and 9MFY2020 tenant sales also down 33% y-o-y.

The figures put Suntec behind CMT’s (Capital Mall Trust, now Capitaland Integrated Commercial Trust) downtown malls sales at -26% y-o-y.

Furthermore, 3QFY2020 retail rent reversion fell to -9.4% from -2.4% in 2QFY2020. Chua thinks that Suntec’s plans to rebalance and strengthen its retail tenants’ profile could pressure occupancy to about 90%, down from 93.3% in 3QFY2020, as the convention operations remain loss-making due to a lack of large-scale events in 2021.

Chua also noted that the Singapore office occupancy remains high at 98.1%, but rent reversion moderated to +4.6% from +9.1%, and management expects downsizing trends averaging 10-15% across leases expiring in FY2021-2023.

Post-deal, gearing rises to about 43%, which is the highest among peers. The REIT is keen on asset recycling to further lower gearing, but Chua sees a neutral DPU impact given weak pricing power in this cycle, and also sees “an overhang from a potential dilutive equity raising as SUN continues to pursue acquisition opportunities.”

On the other hand, RHB Group Research’s Vijay Natarajan is more optimistic on the counter, giving it a target price of $1.79 and calling it his “preferred pick” in the office/retail space for its “attractive valuation” of 0.7x price to book value (P/BV), and earnings recovery from its recently completed and acquired assets.

He notes that Suntec REIT’s office portfolio (66%), which accounts for the bulk of its income, is expected to remain resilient while retail mall earnings should rebound in 2021, given the absence of rental rebates.

Source: The Edge

https://www.theedgesingapore.com/capita ... fice-space

[winston]

not vested

Suntec Real Estate Investment Trust (Suntec Reit) posted on Tuesday a 3.7 per cent fall in distribution per unit (DPU) to 2.261 Singapore cents for the fourth quarter compared with 2.347 cents for the year-ago period.

Gross revenue fell 12 per cent at S$165.9 million for H2, compared to S$188.7 million a year ago.

This was due to a fall in rental income, most significantly from its office and retail properties such as Suntec Singapore, for which revenue fell by 65.9 per cent.

Source: Phillips

[winston]

Suntec REIT (SUN SP)
2H20: The Sunshine After The Rain

SUN’s 2H20 results were affected by rental assistance for Suntec City Mall and losses
from Suntec Convention.

Growth in 2021 will be driven by positive rental reversion for Suntec City Office, absence of rent assistance totalling S$22m in FY20 for Suntec City Mall and full-year contributions from 477 Collins Street in Melbourne.

SUN provides attractive 2021 distribution yield of 5.9% and trades at a significant 25% discount to NAV/share of S$2.055. Maintain BUY. Target: S$1.72.

Source: UOBKH

https://research.uobkayhian.com/content ... 66b64f4c71

[winston]

not vested

A Retail Lift

SUN’s 2H20 DPU, down 12.8% YoY, was in line with ours and consensus’ estimates.

While retail recovery gained pace in 4Q20, rising office vacancy due to increasing WFH trends suggest weak fundamentals into FY21.

Its overseas AUM remains a silver lining, as contributions rise from 21 Harris and 477 Collins in Australia, and Nova properties in the UK.

We see an overhang from a potential dilutive equity raise as it continues to pursue acquisition opportunities, given high c.44% gearing.

Source: KE

https://factsetpdf.maybank-ke.com/PDF/2 ... 1b01f4.pdf

[winston]

not vested

Suntec REIT (SUN SP) - Recovery in sight but high gearing to impede growth

Suntec REIT’s FY20 DPU fell 22.1% to 7.40 S cents but was above our expectations.

Looking ahead, we expect its Retail segment to continue its gradual but uneven recovery.

Its Convention segment’s performance will continue to be adversely impacted by the Covid-19 pandemic.

Its Singapore Office portfolio is expected to achieve positive rental reversions, although at a smaller magnitude as compared to FY20.

There are also uncertainties over the longer-term impact of work from home trends.

In Australia, Suntec REIT’s office portfolio is expected to be resilient, underpinned by firm occupancy and long WALE, although the AUD volatility remains a risk. HOLD.

Source: OCBC

[winston]

not vested

Suntec REIT (SUN SP) - Recovery in 1Q21 DPU

Suntec REIT’s 1Q21 DPU rebounded 16.2% YoY to 2.045 S cents and was in-line with our expectations.

Looking ahead, we expect its Retail segment to continue its gradual but uneven recovery.

Its Convention segment’s performance will continue to be adversely impacted by the Covid-19 pandemic, while its Singapore Office portfolio is expected to achieve positive rental reversions, although at a smaller magnitude as compared to FY20.

There are also uncertainties over the longer-term impact of work from home trends.

In Australia and the UK, Suntec REIT’s office portfolio is expected to be resilient, underpinned by firm occupancy and long WALE, coupled with annual rent escalations in Australia. HOLD.

Source: OCBC

[behappyalways]

Suntec REIT divests stake in 9 Penang Road property for $295.5 mil
https://www.theedgesingapore.com/news/r ... y-2955-mil

[behappyalways]

Suntec REIT divests Suntec City office strata units for $197 mil; acquires The Minster Building in London for $667.2 mil
https://www.theedgesingapore.com/news/r ... r-building

[behappyalways]

Suntec REIT reports FY2023 DPU of 7.135 cents, 19.7% lower y-o-y
https://www.theedgesingapore.com/capita ... ower-y-o-y

[behappyalways]

Suntec REIT reports 1QFY2024 DPU of 1.511 cents, 1.8% lower y-o-y
https://www.theedgesingapore.com/capita ... ower-y-o-y