Suntec REIT - DBS Research 2022-10-27: Singapore Holding The Fort

• Suntec REIT (SGX:T82U)'s 3Q22 DPU fell 14% y-o-y to 2.084 cents, in line with our estimates, mainly impacted by higher interest costs, higher management fees in cash (50% vs 20% in 2Q22), and weaker AUD and GBP, partially offset by capital distribution of S$5.8m. 3Q22 Core DPU (excluding capital distribution) fell 16% y-o-y to 1.884 cents.
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• Suntec REIT's gearing was stable at 43.1%. Average cost of debt increased by 30bps to 2.76%. ICR declined to 2.5x vs 2.7x.

Strong recovery seen from Singapore assets, especially Suntec City Mall and Suntec Convention Centre (coming out from low base); working on renewals in Australia/UK properties.

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• Suntec City Mall reversions remained strong (+5.6%) while Suntec City Office positive reversions were stable at +3.9%. Singapore office reversions were +5.9% while Suntec City Office reversions were +3.9% (stable q-o-q). Suntec City Mall recorded stronger reversions q-o-q, +5.6% vs +3.2% in 2Q22, as recovery continues.
• Tenant sales (whole mall) hit a high of 121% of pre-COVID levels in Jul 22 and Sep 22. Suntec City Mall’s same-store tenant sales in 3Q22 is ~4% above pre-COVID levels. Shopper traffic remained high at ~84% of pre-COVID levels but moderated from the high of 91% in Jun 22.

Australia office market is stable operationally; more than half of 2023 lease expiries (~25% of NLA) have agreed on renewal terms, but it may see a non-renewal.

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Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-10-27 SGinvestors.io

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