Suntec REIT - Maybank Research 2024-07-29: Divestment On Track; Awaiting Catalysts

• Suntec REIT (SGX:T82U) reported 1H24 DPU of 3.042 cents, -17% h-o-h/-12.5% y-o-y, in line with MIBG estimates. DPU from operations was -6.4% h-o-h/-0.3% y-o-y, excluding capital top-ups from Park Mall divestment.
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• Management will continue to unlock value from strata office (S$31.5m divested year-to-date), working towards its S$100m target for FY24.

Singapore underpins portfolio performance

• Suntec REIT's 2Q24 gross revenue and NPI rose 6.6%/5.7%, respectively. Higher property expenses partially offset top-line gains. Retail reversions of 20.2% held up in 2Q, continuing to defy the broader headwinds from inflation.
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• The vacated space of Pure Yoga was compartmented and backfilled at high double-digit reversions, helped by flocks of tourists alighting at the new coach drop-off point. Backfilling of Pure Fitness space is expected to complete in 2H24. Tenant sales and traffic are +1%/+6% higher y-o-y.
• The positive reversion of 7.9% confirmed continued strength in its office segment, amid new supply coming onstream in the vicinity. Management expects positive reversions to hold for SG office, in light of rather favourable tenant retention rates.
• Convention business saw 1H24 gross revenue rise 16.5% y-o-y. A pipeline of medium-sized events lined up until year-end is reflected in a stronger 2H24 outlook.

Potential relief

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Li Jialin Maybank Research | https://www.maybank-ke.com.sg/ 2024-07-29 SGinvestors.io

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