Suntec REIT reported a distribution per unit (DPU) from operations of 1.58 cents in 3QFY2024 ended Sepmteber, down by 0.9% y-o-y. With the absence of capital distribution in 3QFY2024, DPU also declined by 11.2% y-o-y.
This came on the back of vacancies at 55 Currie Street in Australia and The Minster Building in London.
For the same period, the REIT’s distributable income from operations stood at $46.2 million, which was in line with 3QFY2023.
That said, operating performance from the Singapore Office and Retail portfolios continued to strengthen in 3QFY2024, according to the REIT. Occupancy at 55 Currie Street and Suntec City Mall also saw quarter-on-quarter improvement within the same period.
Meanwhile, the REIT’s gross revenue fell by 4.6% y-o-y to $117.7 million, while net property income stood at $79.8 million, down by 5.7% y-o-y. This was due to lower contributions from Suntec Convention, 55 Currie Street and The Minster Building in London.
As at Sept 30, the REIT’s portfolio committed occupancy stood at 95.6% for the REIT’s office portfolio and 97.7% for its retail portfolio. Weighted average lease expiry (WALE) stood at 3.9 years for the office portfolio and 2.4 years for the retail portfolio.
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As at the same period, adjusted interest coverage ratio (ICR) stood at 1.9 times, in line with the previous quarter.
Chong Kee Hiong, CEO of the manager, says, “The Singapore office and retail portfolios continued to achieve strong occupancies and robust rent reversions. While Melbourne and Adelaide market conditions remain weak, leasing has gained traction as occupancy at 55 Currie Street and Southgate Complex improved.”
On the environmental, social and governance (ESG) front, Suntec REIT has also attained the highest GRESB 5 Star rating for the fifth consecutive year since its inaugural participation in 2020.
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Chong adds: “Suntec REIT’s continual advancement in the areas of ESG reflects our commitment to growing our business responsibly. We remain focused on strengthening the operating performance of our assets and will explore opportunities to divest our mature assets while delivering long-term value to our stakeholders.”
Looking ahead, the REIT manager expects to see revenue from Singapore offices “continue to strengthen, underpinned by strong occupancies and past quarters of robust rent reversions”.
Strong tenant sales growth and rental reversions are expected to remain strong, while maintaining Suntec City Malls “robust” revenue. The REIT manager also expects revenue from Suntec City Mall to improve due to higher occupancy, rent and revenue from marketing communications.
In Australia, CBD market occupancy across Melbourne and Adelaide are expected to decline amid elevated incentive levels. Lower property valuation is also expected due to expanding capitalisation rates. Revenue for the REIT’s Australian portfolio is likely to decline due to the leasing downtime at 55 Currie Street and Southgate Complex.
Occupancy and rental growth in Central London are expected to improve due to tight supply and an increase in office utilisation. According to the REIT manager, good quality office assets in good quality office assets in prime locations remain well sought after. Despite this, revenue for the UK portfolio is likely to be impacted by the The Minster Building although it is expected to be fully leased by the end of 2024.
Units in Suntec REIT closed flat at $1.25 on Oct 24.
