Sunday, July 22, 2012

Suntec Reit posts DPU of 2.361 cents in Q2

Business Times: Fri, Jul 20

SUNTEC Real Estate Investment Trust's distribution per unit (DPU) dipped 6.8 per cent to 2.361 cents for the second quarter ended June 30 from 2.532 cents a year earlier.

This represents an annualised yield of 6.5 per cent based on the unit's closing price of $1.46 on July 18.

Distributable income for the quarter fell to $53 million, down 5.7 per cent from $56.2 million a year ago.

This was mainly because of lower revenue from Suntec City Mall, part of which began an asset-enhancement initiative (AEI) in June.

In the first six months of the year, Suntec Reit's DPU was 4.814 cents, down 2.2 per cent from 4.92 cents last year.

H1 DPU exceeded expectations, and the Reit managed a 100 per cent occupancy for its office portfolio at Suntec City Office Towers, said chief executive Yeo See Kiat.

Gross revenue for the same period rose 18 per cent to $144.3 million from $122.3 million a year earlier mainly because of the consolidation of Suntec Singapore's revenue after the Reit acquired an additional 40.8 per cent of the property in August 2011.

Excluding Suntec Singapore, gross revenue was $116.5 million, down 4.8 per cent from a year ago, as a result of lower retail revenue from Suntec City Mall and the loss in revenue following the sale of Chijmes in January.

Net property income in H1 was $94.4 million, up 0.9 per cent from a year ago.

The group's net asset value per unit was $1.979 as at June 30, down slightly from $1.987 at the end of last year.

Financing costs averaged 2.82 per cent for H1 2012 and gearing was 37.5 per cent as at end-June.

Overall occupancy for the retail portfolio was 98.5 per cent. Overall occupancy for the office portfolio stood at 99.9 per cent.

The Reit said it expected Grade A office rents to continue to come under pressure from weaker demand from large occupiers and incoming supply.

But it expects its office portfolio this year to "outperform" last year's. Just 2.2 per cent of office leases are due to expire this year, it noted.

It expects retail to stay flat for the remainder of the year, and occupancies for the rest of Suntec City Mall not affected by the AEI are expected to remain stable.

"The manager will consider utilising part of the proceeds from the sale of Chijmes to mitigate the temporary dip in distribution per unit resulting from the AEI works, if necessary," the Reit said.

Giving an update on the AEI that began on June 1, the Reit said work is progressing smoothly. Phase 1 is on schedule to be completed by Q2 next year and involves 193,000 sq ft of retail net lettable area (NLA).

Some 58.5 per cent of the Phase 1 NLA has been pre-committed, up from 45 per cent three months ago.

Mr Yeo said: "Based on our leasing progress to date, our projected rental enhancement and return on investment of 10.1 per cent are on track."

Yesterday, Suntec Reit closed at $1.465 before the results announcement, up half a cent.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G) | | | |

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