Suntec REIT reports 3Q21 net property income climbed nearly 46 percent

Suntec City mall in SingaporeSuntec City mall in Singapore; photo taken pre-Covid

Suntec REIT reported Friday its third quarter net property income climbed 45.5 percent on-year to S$68.8 million on two newly acquired assets in London and the completed development at 477 Collins Street in Melbourne, Australia.

In addition, the REIT said it provided less rent assistance for retail tenants over the quarter, while the office portfolio across Singapore, Australia and the U.K. were resilient.

Gross revenue for the July-to-September quarter increased 16.5 percent on-year to S$92.7 million while joint venture income rose 21.7 percent on-year to S$30.3 million, Suntec REIT said in a filing to SGX.

Distribution per unit (DPU) for the quarter increased 20.8 percent on-year to 2.232 Singapore cents.

Chong Kee Hiong, CEO of the REIT’s manager, said Suntec City Mall would increase its focus on activity-based and experiential concepts to around 35 percent of the mall’s leasable area, which along with the more than 25 percent devoted to food and beverage offerings, will position the mall for recovery.

“As Singapore reaches a high vaccination rate of more than 80 percent, there is cautious optimism on the continued recovery of mall traffic and tenant sales. Rent reversion is expected to remain weak as retailers adopt a more prudent approach amidst an uncertain operating environment,” the REIT said in the statement.

The REIT said it expected mall occupancy to remain around 95 percent by year-end, with recovery to be led by higher occupancy and higher gross turnover (GTO) rents — or the portion of sales landlords add to rental — but the revenue recovery would be slowed by negative rent reversions over the past few quarters.

For Suntec Convention, recovery of the convention business is expected to be low on weak international business and leisure travel, the REIT said.

“While physical-virtual hybrid events will likely remain a mainstay for the Meetings, Incentives, Conferences and Exhibitions (MICE) business, the domestic market, aided by easing of restrictions on larger-scale events, will be the key driver for recovery,” the REIT said. “The increased number of Vaccinated Travel Lanes (VTLs) will provide a boost for international events, but this will not be significant until more VTLs from different parts of the world, especially in Asia are introduced.”

In Australia, revenue is expected to remain resilient, underpinned by strong occupancy, annual rent escalations and long lease tenures, Suntec REIT said.

The REIT said in the U.K., office revenue is expected to be stable, supported by high occupancy and no lease expiries until 2027.