SINGAPORE (July 26): Religare Capital Markets says Suntec REIT’s 2Q results are in line with expectations, with revenue and distribution per unit (DPU) accounting for 25.7% and 24.8% of its full-year estimates, respectively.
Suntec REIT on Wednesday posted a marginal 0.3% decline in DPU of 2.493 cents for the second quarter ended June, mainly due to an enlarged units base.
Gross revenue for the quarter grew 10.6% to $87.3 million on the back of an increase in office revenue from the opening of 177 Pacific Highway, a grade ‘A’ commercial tower in Sydney.
See: Suntec REIT posts marginally lower 2Q DPU of 2.493 cents on enlarged base
In a sales commentary on Wednesday, Religare analyst Tata Goeyardi notes that, similar to a year ago, some $8 million of capital was distributed to support the DPU.
“Any weakness in DPU [in the upcoming quarters] is expected to be mitigated with DPU top-up using proceeds from the divestment of Park Mall,” says Goeyardi, pointing out that Suntec REIT has cash in hand amounting to some $153 million as at end-June.
“Looking ahead, Suntec REIT earnings is expected to remain stable as weakness from the loss of income from Park Mall is expected to be offset by income from 177 Pacific Highway and Southgate,” Goeyardi says.
In addition, the analyst opines that the office segment is showing signs of stabilising, even as the retail sector is expected to remain soft.
Religare is currently reviewing its rating for Suntec REIT. It previously had a “hold” call on Suntec REIT with a target price of $1.66.
As at 4.14pm, units of Suntec REIT are trading 1 cent lower at $1.92.
