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Suntec Real Estate Investment Trust (Suntec REIT) posted a distributable income of S$69.5 million for Q4 2015, up 7.7 percent from S$64.56 million in Q4 2014.
Distribution per unit (DPU) rose 6.7 percent to 2.750 cents in Q4 2015 from 2.577 cents in Q4 2014.
Suntec REIT also saw its gross revenue and net property income jump 13.9 percent and 17.9 percent to S$87.5 million and S$62.5 million, respectively. It attributed the increase to the opening of Phase 3 of Suntec City mall and higher contribution from Suntec Singapore.
For the financial year ended 2015, Suntec REIT witnessed its distributable income grow 9.4 percent to S$252 million, while DPU climbed 6.4 percent to 10 cents.
Gross revenue climbed 16.7 percent to S$329.5 million, while net property income expanded 19.6 percent to S$229.2 million.
Credit Suisse noted that average rent of leases signed at Suntec office dropped four percent quarter-on-quarter to S$8.86 per sq ft per month, which was attributed by management to renewals of larger space.
“Given large incoming supply and weak demand there is a potential downside risk to rents in 2016 where we estimate ~27 percent of Suntec Office is due to expire.”
Meanwhile, overall occupancy at Suntec City Mall increased 1.6 percentage point to 98 percent. It added that 255,673 sq ft is up for renewal this year.
“This will mainly consist of expiries from Phase 1 of Suntec City Mall where rents were originally signed at S$13.09 per sq ft per month in 2013. We have factored in -5 percent rent reversions.”
With this, Credit Suisse maintained its underperform rating for Suntec REIT.
“We have adjusted our DPU forecasts by +0.8 percent and -1.4 percent in 2016 and 2017, respectively, to factor in the negative retail reversions, divestment of Park Mall and additional space of ~38,000 sq ft of strata area acquired at Suntec City Offices.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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