Suntec REIT posts 2H21 net property income rose 30 percent, beating Daiwa forecasts

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

Suntec REIT reported Wednesday its net property income for the second half of 2021 rose 30.3 percent on-year to S$142.01 million, due in part to the acquisition of The Minster Building in July. The results beat forecasts from Daiwa.

In addition, the REIT pointed to contributions from the Olderfleet 477 Collins Street property, completed in August 2020, and higher revenue from 21 Harris Street, 177 Pacific Highway and Suntec City properties.

Gross revenue for the six months ended 31 December grew 15.3 percent on-year to S$191.31 million, the REIT said in a filing to SGX.

The distribution per unit (DPU) came in at 4.512 Singapore cents for the first half, up 9.8 percent from 4.109 Singapore cents in the year-ago period, the REIT said. 

Daiwa had forecast Suntec REIT would report net property income of S$136 million, on gross revenue of S$184.6 million, with a DPU of 4.351 Singapore cents.

The REIT said: “This strong performance was mainly driven by contributions from the two newly acquired assets in London and higher income from Suntec City Mall. The office portfolio in Singapore, Australia and United Kingdom remained resilient, providing income stability to unitholders.”

Suntec City

Suntec City revenue for the second half rose S$2 million on-year, or 1.9 percent, to S$109.30 million, mainly on higher retail revenue of S$4.9 million on lower rent assistance granted to retail tenants and higher occupancy, the REIT said.

However, Suntec City Office revenue for the six month period fell by S$2.9 million on-year, mainly on the divestment of a portfolio of strata office units and lower occupancy, the filing said.

“Recovery of the retail business at Suntec City Mall has been encouraging. Although the return of mall traffic was slowed by work from home and other safe management measures, tenant sales had recovered much faster, with December 2021 tenant sales exceeding that of December 2019,” Chong Kee Hiong, CEO of the REITs manager, said in the statement. Occupancy at the property rose to 95 percent as more food and beverage and activity-based tenants were added, he said.  

For the full year, Suntec REIT reported net property income rose 27.4 percent on-year to S$254.63 million, on gross revenue of S$358.07 million, up 13.5 percent on-year. The full year DPU was 8.666 Singapore cents, up 17.1 percent from 7.402 Singapore cents in the year-ago period, Suntec REIT said.

Read more about Suntec REIT’s portfolio performance.

Outlook

Suntec REIT was cautiously optimistic in its outlook.

For Suntec City Mall, the REIT said, “With higher vaccination rates and the further easing of restrictions, there is cautious optimism on the continued recovery of mall traffic and tenant sales. Although leasing activity has picked up, rent reversion is likely to be weak as retailers remain cautious due to the uncertain operating environment.” 

The recovery of the convention business for Suntec Convention Center is likely to be slow amid weak international business and leisure travel, the REIT said. 

“The domestic market remains as the key revenue driver albeit it being highly dependent on the further easing of restrictions on large-scale corporate and consumer events. Income contribution from Suntec Convention remains significantly impacted for 2022,” the REIT said.

The REIT added that the Australia office properties were expected to remain resilient, with strong occupancy, annual rent escalations and long lease tenures with minimal expiries this year.

Portfolio

In Singapore, Suntec REIT’s portfolio holds integrated commercial property Suntec City, 66.3 percent of Suntec Singapore Convention & Exhibition Centre, one-third of One Raffles Quay, one-third of Marina Bay Financial Centre Towers 1 and 2 and the Marina Link Mall. 

In Australia, the REIT holds all of 177 Pacific Highway in Sydney, all of 21 Harris Street in Sydney, all of 55 Currie Street in Adelaide, 50 percent of Southgate Complex in Melbourne, 50 percent of Olderfleet 477 Collins Street in Melbourne.

In the U.K., the REIT holds a 50 percent interest in Nova Properties and all of The Minster Building, both located in London.