Suntec REIT - RHB Invest 2023-01-25: Strong Finish To FY22, Outlook Is Challenging

• Suntec REIT (SGX:T82U)'s 4Q22 DPU was in line, but operational performances surprised on the upside on strong rent reversions and occupancy boosts. Market concerns over asset value declines and potential gearing breaches proved unfounded, as Singaporean asset values rose – more than offsetting overseas weaknesses – but the outlook is moderated by a mix of slowing demand, cost pressures, and steep interest cost rises.
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Suntec REIT's operational numbers surprised on the upside

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• Australian assets saw sharp 2.4ppts q-o-q improvements in occupancy while high UK occupancy was maintained. 4Q22 rent reversions for Singapore offices improved to 7.7% while Australia saw a strong 24% rent growth in FY22.
• Despite high tech tenant concentration in its office portfolio (~26%) management expects occupancy and office rent reversions to stay positive. 4Q22 retail occupancy rose 1.5ppts q-o-q with a healthy 10.6% rent reversion. The convention segment rebounded strongly with a 275% revenue increase in 2H.

Asset values held firm.

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Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2023-01-25 SGinvestors.io

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