Suntec REIT announced 1Q13 DPU of 2.228 S cents, down 9.2% YoY. This is within expectations, given that the quarterly distribution made up 24-25% of our and consensus FY13F DPU. Retail segment registered a 38.9% YoY decrease in revenue due to the partial closure of Suntec City Mall. However, the office segment continued to perform, achieving a 7.6% growth in revenue on the back of positive rental reversions and consistently high occupancy of 99.7%. Management updated that it has signed a total of 185,000 sqft of leases in 1Q, leaving it with only 10.3% of office leases due to expire in 2013. As such, we expect the segment to continue to exhibit resilience for the rest of FY13. We also understand that the Suntec City AEI and ROI target of 10.1% remain on track, with Phase 1 space due to open in Jun 2013 as planned and already securing a 96.7% pre-commitment. We are keeping our forecasts intact but now raise our fair value to S$2.16 from S$1.94. Maintain BUY on Suntec REIT.
Strong delivery of 1Q13 results
Suntec REIT announced its 1Q13 results after the market close yesterday. Gross revenue fell 32.2% YoY to S$49.7m, while NPI saw a 37.4% decline to S$30.7m amid the partial closure of Suntec City Mall (SCM) and Suntec Singapore for asset enhancement works (AEI). However, distributable income dropped by a more benign rate of 13.3% to S$47.6m. Further aided by a S$2.7m top-up from Chijmes sale proceeds, the distributable amount eased only by 8.4% to S$50.3m. This translates to a DPU of 2.228 S cents, down 9.2% YoY. We deem the results to be well within expectations, given that the quarterly distribution made up 24-25% of our and consensus FY13F DPU.
Office segment alleviated fall in 1Q revenue
Retail segment registered a 38.9% YoY decrease in revenue as another portion of SCM next to Promenade MRT station was closed in Mar to execute the Phase 2 AEI. We also note that Suntec Singapore made minimal contribution during the quarter. However, the office segment continued to perform, achieving a 7.6% growth in revenue on the back of positive rental reversions and consistently high occupancy of 99.7% (unchanged QoQ). Management updated that it has signed a total of 185,000 sqft of leases in 1Q, leaving it with only 10.3% of office leases due to expire in 2013. As such, we expect the segment to continue to exhibit resilience for the rest of FY13.
Maintain BUY
We also understand that the Suntec City AEI and ROI target of 10.1% remain on track, with Phase 1 space due to open in Jun 2013 as planned and already securing a 96.7% pre-commitment (83% in 4Q12). In addition, Phase 2 pre-commitment reached 53.0%, up from 37% in previous quarter. We are keeping our forecasts intact as the results have panned out according to our expectations. However, we now raise our fair value to S$2.16 from S$1.94 after lowering our equity risk premium to reflect Suntec REIT’s continued strong execution and portfolio resilience. Maintain BUY.
Suntec REIT announced its 1Q13 results after the market close yesterday. Gross revenue fell 32.2% YoY to S$49.7m, while NPI saw a 37.4% decline to S$30.7m amid the partial closure of Suntec City Mall (SCM) and Suntec Singapore for asset enhancement works (AEI). However, distributable income dropped by a more benign rate of 13.3% to S$47.6m. Further aided by a S$2.7m top-up from Chijmes sale proceeds, the distributable amount eased only by 8.4% to S$50.3m. This translates to a DPU of 2.228 S cents, down 9.2% YoY. We deem the results to be well within expectations, given that the quarterly distribution made up 24-25% of our and consensus FY13F DPU.
Office segment alleviated fall in 1Q revenue
Retail segment registered a 38.9% YoY decrease in revenue as another portion of SCM next to Promenade MRT station was closed in Mar to execute the Phase 2 AEI. We also note that Suntec Singapore made minimal contribution during the quarter. However, the office segment continued to perform, achieving a 7.6% growth in revenue on the back of positive rental reversions and consistently high occupancy of 99.7% (unchanged QoQ). Management updated that it has signed a total of 185,000 sqft of leases in 1Q, leaving it with only 10.3% of office leases due to expire in 2013. As such, we expect the segment to continue to exhibit resilience for the rest of FY13.
Maintain BUY
We also understand that the Suntec City AEI and ROI target of 10.1% remain on track, with Phase 1 space due to open in Jun 2013 as planned and already securing a 96.7% pre-commitment (83% in 4Q12). In addition, Phase 2 pre-commitment reached 53.0%, up from 37% in previous quarter. We are keeping our forecasts intact as the results have panned out according to our expectations. However, we now raise our fair value to S$2.16 from S$1.94 after lowering our equity risk premium to reflect Suntec REIT’s continued strong execution and portfolio resilience. Maintain BUY.
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