Suntec REIT - CGS-CIMB Research 2024-01-24: Continue To Focus On Capital Management

• Suntec REIT (SGX:T82U)’s FY23 gross revenue grew 8.3% y-o-y to S$462.7m but distribution income came in at S$206.8m (-19.1% y-o-y), inclusive of capital distribution of S$23m. FY23 DPU of 7.135 cents (-19.7% y-o-y) was broadly within our expectations.
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• Overall portfolio valuation rose 0.7% y-o-y to S$11.9bn at end-FY23;
  • Singapore portfolio value rose 2.9-3.7% while
  • Australia and UK saw a 4.5-10.2% y-o-y decline due to a 50-60bp cap rate expansion.

Strong Singapore office portfolio offset lower overseas earnings

• Singapore office assets benefited from a +12.3% rental reversion for FY23 (+13.1% in 4Q23). Suntec REIT renewed/leased 729k sq ft of space in FY23. Management guided that it expects rent reversions to remain positive in FY24F, although the rental growth trajectory is likely to moderate to mid-single digits.
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• UK contributions were dragged by lower occupancy at The Minster Building, and UK revenue in FY24F is likely to be affected by leasing downtime, according to management.

Retail segment continued to perform well

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LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | https://www.cgs-cimb.com 2024-01-24 SGinvestors.io

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