REIT-TIREMENT - REITs Investing & Personal Finance

REITs investment & personal finance


Wednesday, February 09, 2022

Suntec REIT Review @ 9 February 2022

Basic Profile & Key Statistics

Suntec REIT invests in Office, Retail and Convention Centre properties and owns 10 properties across Singapore, Australia and England.

Performance Highlight


Gross revenue, NPI, JV income, distributable income and DPU have improved YoY mainly due to contribution from The Minster Building and Nova properties, contribution from the completed Olderfleet from 1 August 2020, higher revenue from 21 Harris Street, 177 Pacific Highway and Suntec City. 

Rental Reversion

FY21 rent reversion is 3.2% for Singapore office and -14.4% for Suntec City Mall.

Footfall and Tenant Sales
In 4Q, shopper traffic and tenant sales have improved. For December, tenants sales for whole mall has recovered to 2019 average level despite shopper traffic at only 60% of 2019 average level. 

Related Parties Shareholding

  • There is no official sponsor mentioned in Annual Report
  • REIT manager's shareholding is high at 1.643%
  • Directors of REIT manager's shareholding is high at 8.559%

Lease Profile

  • Occupancy is slightly high at 96%
  • WALE is moderate at 4.32 years
  • Highest lease expiry within 5 years is low at 22.1% which falls in 2023
  • Weighted average land lease expiry is slightly long at 74.75 years

Debt Profile

  • Gearing ratio is high at 43.7%. Include perps, gearing is at 46.8%.
  • Cost of debt is moderate at 2.35%
  • Fixed rate debt % is low at 53%
  • Unsecured debt % is low at 58.2%
  • WADM is moderate at 2.92 years
  • Highest debt maturity within 5 years is slightly low at 29.1% which falls in 2026
  • Interest coverage ratio is low at 2.6 times
  • Preferred/perpetual securities over debt is moderate at 6.6%

Diversification Profile

  • Top geographical contribution is high at 64.5% 
  • Top property contribution is high at 42.7% 
  • Top 5 properties contribution is high  at 80.9% 
  • Top tenant contribution is low at 6.4% 
  • Top 10 tenants contribution is low at 30.6%

Key Financial Metrics

  • Property yield is low at 3.2%
  • Management fees over distribution is high at 23.4% in which unitholders receive S$ 4.27 for every dollar paid 
  • Distribution on capital is low at 2.2%
  • Distribution margin is moderate at 48.8%
  • 6% of TTM distribution is from income support

Trends

  • Flat - NAV per Unit
  • Downtrend - DPU, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

  • P/NAV - Average for 1y and 3y; Below average for 5y
  • Dividend Yield - Average for 1y; Above average for 3y & 5y

Author's Opinion

Favorable Less Favorable
Diversified SectorHigh Gearing Ratio
High REIT Manager's ShareholdingLow Fixed Rate Debt %
High Directors of REIT Manager's ShareholdingLow Unsecured Debt %
Well Spread Lease ExpiryLow Interest Coverage Ratio
Low Top Tenant & Top 5 Tenants ContributionsHigh Top Geographical Contribution
 High Top Property & Top 5 Properties Contributions
 Low Property Yield
 Non-Competitive Management Fees
 Low Distribution on Capital
 DPU Downtrend
 Interest Coverage Ratio Downtrend
 Property Yield Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

Suntec REIT performance has been improving from those recent acquisitions. With the gradual recovery of economy, high vaccination rate, easing for restrictions and more employees return to office, hopefully, Suntec REIT performance would be improved moving forward. 


You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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