Suntec REIT: Suntec City Mall rental reversions weak

Suntec City mall entranceSuntec City mall entrance

Rent reversion at Suntec City Mall is expected to be weak in 2022 as retailers remain cautious amid rising operating costs and worker shortages, Suntec REIT said Wednesday.

However, the manger is planning to continue incorporating a higher gross turnover rent component in the rent structure so effective rent will increase if tenants’ turnover recovers to pre-pandemic (2019) levels, the REIT said in a filing to SGX with answers to shareholders’ questions before its annual general meeting (AGM). 

Footfall at the mall in 2021 recovered to 66 percent of 2019’s level, while tenant sales recovered even faster, to around 90 percent of 2019’s level, the REIT said. 

“The recently announced easing of border measures and Safe Management Measures (SMMs) are expected to boost recovery of footfall from office, convention and tourists,” Suntec REIT said. 

In addition, the REIT noted the Suntec Convention Centre is fully operational, and the manager is looking for new revenue streams for the property. 

“With the recent significant easing of SMMs and the introduction of a new Vaccination Travel Framework, the manager expects demand from larger-scale conferences and events to increase. International MICE events recovery will be slower due to the longer lead time required to organise such large scale events,” Suntec REIT said. “The domestic market will remain as the key driver for revenue recovery in 2022.”

For the Singapore office portfolio, 2021 rental reversions were positive 3.2 percent, the REIT said, adding it expected rent reversion to remain positive this year, albeit at more moderate levels due to high expiry rents. 

The REIT was sanguine about the potential impact of hybrid work and work-from-home on occupancy. 

“With digitalisation and changes in organisational needs, some financial institutions at One Raffles Quay and MBFC properties may consider right sizing. Any returned spaces are expected to be readily leased on the back of limited new supply in the market,” Suntec REIT said. 

“While downsizing requirements were received in 2021, expansions by tenants outweighed downsizing requirements for the year,” the REIT said.

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. 

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