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Suntec REIT reports DPU of 4.512 cents for 2HFY2021, up 9.8% y-o-y

·4-min read

For the FY2021, Suntec REIT’s DPU stood at 8.666 cents, up 17.1% y-o-y.

The manager of Suntec REIT has reported a distribution per unit (DPU) of 4.512 cents for the 2HFY2021 ended Dec 31, 2021, 9.8% higher than the DPU of 4.109 cents in the corresponding period the year before.

The higher DPU was due to the higher distribution income from operations, which increased 21.6% y-o-y to $129.0 million on the back of the two new acquisitions made in London, UK.

For the 2HFY2021, distribution income from operations rose 21.6% y-o-y to $129.0 million.

Distributable income stood the same at $129.0 million, although rising 10.8% y-o-y, as the manager had released the 10.0% of distributable income for the 1HFY2020 it withheld, in 2HFY2020.

Gross revenue for the 2HFY2021 rose 15.3% y-o-y to $191.3 million, while net property income (NPI) improved by 30.3% y-o-y to $142.0 million for the period.

The better performance was mainly attributable to the contribution from The Minster Building in London, which was acquired on July 28, 2021, as well as contribution from the completed Olderfleet in Melbourne, Australia from Aug 1, 2020.

During the half-year period, the higher gross revenue and NPI were also driven by higher revenue from 21 Harris Street and 177 Pacific Highway in Sydney, Australia, as well as Suntec City in Singapore.

Revenue for Suntec City increased by $2.0 million y-o-y, mainly due to the higher retail revenue of $4.9 million due to the lower rental assistance granted to the mall’s retail tenants.

Revenue for Suntec City Office fell $2.9 million y-o-y mainly due to the divestment of the portfolio of its strata units.

FY2021

For the FY2021, Suntec REIT’s DPU stood at 8.666 cents, 17.1% higher than the DPU of 7.402 cents in the FY2020.

Total revenue for the year rose 13.5% y-o-y to $358.1 million, while NPI increased 27.4% y-o-y to $254.6 million.

Distributable income rose 18.2% y-o-y to $247.2 million.

As at Dec 31, 2021, cash and cash equivalents stood at $268.3 million.

Outlook

Looking ahead, the REIT’s office portfolio in Singapore is expected to see better days in tandem with the economic recovery with demand mainly from the technology and financial services sectors.

To this end, income contribution from its Singapore office portfolio is expected to increase in the next year, due to cumulative positive rent reversions. However, the REIT points out that the high expiry rents across its portfolio may result in weak positive rent reversion.

There is also cautious optimism for Suntec City Mall on its continued recovery of mall traffic and tenant sales on the back of higher vaccination rates and easing restrictions.

That said, rent version is likely to be weak as retailers remain cautious on the uncertain operating environment.

Recovery of Suntec Convention is likely to be slow in the near-term due to weak international business and leisure travel.

“As such, 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,” says the REIT in a Jan 26 filing.

Meanwhile, Suntec REIT’s Australia portfolio is said to see resilient revenue underpinned by strong occupancy, annual rent escalations and long lease tenures on its properties.

Office revenue is expected to be stable in the UK due to its high occupancy rates and long weighted average lease expiry (WALE).

Chong Kee Hiong, CEO of the manager, says, “We are pleased to have delivered on our active portfolio management strategy. Through the divestments of lower yielding assets and the acquisitions of higher yielding, DPU and NAV accretive assets, the diversification into UK has reinforced the REIT’s income stream and enhanced unitholders’ value.”

“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 21 tenant sales exceeding that of December 19. Occupancy has also improved to 95%, as more F&B and activity-based tenants are introduced to retain and attract shoppers,” he adds.

Units in Suntec REIT closed 1 cent higher or 0.65% up at $1.54 on Jan 25.

Photo: Suntec

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