- Suntec REIT (SGX:T82U) reported 1H23 DPU of S$0.03476, -14.7% h-o-h/-27.7% y-o-y. Top-line growth was offset by weaker margins, higher funding cost and weaker FX. See Suntec REIT's dividend date.
- - Read this at SGinvestors.io -
- Management of Suntec REIT continues to explore capital recycling opportunities to unlock value and strengthen its balance sheet.
- We maintain our HOLD rating on Suntec REIT but trim our DDM-based target price to S$1.30 from S$1.35 given the moderating outlook and high gearing.
Improving operations, higher funding costs
- - Read this at SGinvestors.io -
- NPI margin was lower due to higher maintenance fund contribution for Suntec City and higher fixed costs for Suntec Convention Centre. JV income was impacted by higher funding costs and weaker FX.
- Suntec REIT's gearing was unchanged at 42.6% and borrowing cost for 1H23 was stable at 3.64%. However, guidance remains for interest cost to rise to ~4% by year end.
- Notably, there was no valuation done.
- In line with guidance to divest mature assets, Suntec REIT sold three strata office units in Suntec City totalling ~S$27m at ~ 20% above book. Divestment of a bigger portfolio of such assets is likely to unlock gains and lower gearing.
Outlook moderating for office, retail more stable
- Read more at SGinvestors.io.
