- We expect Suntec REIT (SGX:T82U)’s office portfolio to be impacted by the technology sector’s slowdown – moderating rent growth with a slight uptick in vacancy. This, coupled with the sharp interest cost impact from a spike in rates, should weigh on Suntec REIT's share price.
- - Read this at SGinvestors.io -
Office demand drivers slowing down.
- The technology, media and telecommunications (TMT) sector is the largest occupier of Suntec City Office Towers (~38% of FY21 rents) and has also been the key source of new leasing demand in recent years. Suntec City Office Towers is the largest asset in Suntec REIT's portfolio (~30% of income) and currently has a high committed occupancy of 99.6% and rent reversion (YTD) of 3.3% as at 3Q. For FY23F, ~27% of leases are due for renewal and we expect committed occupancy could fall to ~98% levels with flattish rent reversions.
- - Read this at SGinvestors.io -
- Suntec City Mall’s performance should remain relatively steady while the convention segment is expected to rebound strongly in FY23.
Divestments likely in FY23.
- Read more at SGinvestors.io.
