SINGAPORE (July 26): The manager of Suntec REIT today posted a distribution per unit (DPU) of 2.493 cents for the second quarter ended June, 0.3% lower compared to the 2.501 cents it posted in the same period a year ago.
The lower DPU was mainly due to an enlarged units base which included approximately 95.7 million new units issued on May 29, 2017. Distributable income in 2Q grew 4.3% to $66.0 million.
This brings the trust’s 1H17 DPU to 4.918 cents, 0.9% up from the 4.872 posted in the previous year.
Gross revenue for the quarter grew 10.6% to $87.3 million compared to $78.9 million, mainly due to an increase in office revenue from the opening of 177 Pacific Highway, a grade ‘A’ commercial tower in Sydney, upon its completion in Aug 2016.
In line with the higher revenue from 177 Pacific Highway, property expenses grew 6.2% y-o-y to $27.9 million.
The increase in office revenue was partially offset by 1% lower retail revenue from Suntec City mall at $25.5 million, as well as a 10.8% decline in revenue from Suntec Singapore to $18.4 million, comprising $13.9 million from convention and $4.5 million from retail.
Net property income (NPI) grew 12.8% to $59.4 million as a result.
Total income contribution from joint ventures – comprising ORQ, MBFC Properties and Southgate Complex for the quarter – was $21.8 million, 0.5% higher y-o-y, mainly due to the contribution from Southgate Complex.
As at end-June, the overall committed occupancy for the office and retail portfolio stood at 98.7% and 99.0%, respectively.
Cash and cash equivalents stood at $153.0 million as at June 30, 2017.
“Notwithstanding the uncertainties in the macroeconomic environment, we are pleased to have delivered a higher distributable income and DPU for the first half of 2017,” says Chan Kong Leong, CEO of the manager.
“We expect our Australian assets to continue to perform well given the positive occupier demand in both the Sydney and Melbourne markets amidst the stock withdrawals and low level of new supply,” he adds. “We will continue to fine tune our trade and tenant mix adjustments and increase our asset utilisation to further strengthen Suntec City Mall’s value proposition.”
In a separate filing to SGX on Wednesday morning, the manager of Suntec REIT announced that it is expanding its footprint in Australia.
Wholly-owned sub trust Suntec REIT 477 Trust has entered into agreements to acquire a 50% interest in a freehold land and property to be developed from Mirvac Group for a consideration of A$414.17 million.
A leading Australian property group, Mirvac will continue to be the co-owner with its remaining 50% interest in the property.
The property – Olderfleet, 477 Collins Street – is located in the prestigious Melbourne Central Business District.
The 40-storey building is under construction and is expected to achieve practical completion by mid-2020. On completion, the property will have an estimated total net lettable area of 58,000 sqm, which comprises 56,000 sqm of office space and 2,000 sqm of retail space as well as 414 car park lots.
“While we remain Singapore-centric, our strategy to expand in Australia for income diversification has partially helped us mitigate the property cycles in our Singapore core market as we seek to continue to deliver stable sustainable returns to our unitholders,” says Chan.
Units of Suntec REIT closed 2 cents higher at $1.93 on Tuesday.
