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Suntec City, which underwent a S$410 million asset enhancement initiative (AEI), has officially reopened on Thursday (22 October).
Renovation works at Suntec City began in June 2012, and was completed in June 2015 according to to Suntec REIT manager, ARA Trust Management (Suntec) Limited.
Enhancement works involved decanting low-yielding spaces and converting levels 1 and 2 of Suntec Singapore Convention & Exhibition Centre to retail use, increasing retail footprint from around 855,000 sq ft to 960,000 sq ft.
“[This] marks an important milestone for Suntec City as we celebrate its official opening. Through this transformation, Suntec City is now a more vibrant and exciting destination with new retail offerings and experiences for everyone,” said Yeo See Kiat, Chief Executive Officer of ARA.
Meanwhile, Suntec REIT saw its distribution per unit (DPU) increase 6.3 percent year-on-year to 7.25 cents during the first nine months of 2015, while gross revenue rose 17.7 percent to S$242 million.
Net property income jumped 20.3 percent year-on-year to S$166.7 million “due to the reopening of Suntec City mall (Ph 2 and 3) and improved contribution from Suntec convention centre,” said Credit Suisse.
Meanwhile, contribution from associates (MBFC and ORQ) “fell eight percent year-on-year due to a drop off of -31.1 percent year-on-year in income support at MBFC Properties.”
Credit Suisse noted that occupancies at ORQ and MBFC fell to 99.8 percent and 97.7 percent respectively, while average rents of new leases inked at Suntec office remained firm at S$9.21 per sq ft per month.
“Given the large supply completing in 2016/17, we highlight that there is a potential downside risk to occupancy and rents,” it said.
As such, Credit Suisse maintained an underperform rating for the trust.
“We believe there could be downside risk with 40.4 percent of Suntec’s office portfolio expiring in 2016/2017, while reversions at Suntec City Mall are also likely to be under pressure,” it said.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg