Suntec REIT’s ICR includes the impact of its two tranches of perpetual securities issued in 2020 and 2021. In previous briefings, Chong had expressed a wish to improve Suntec REIT’s ICR and states that equity fund raising is unlikely to be an option for the REIT.
Suntec REIT’s headline distributions per unit (DPU) look underwhelming for FY2023, with a 19.3% y-o-y decline to 7.135 cents. In FY2019, before Covid, Suntec REIT’s DPU was 9.507 cents. For FY2023, DPU from operations fell by 21.6% y-o-y to 6.341 cents. DPU was topped up to 7.135 cents from gains from the sale of a property (Park Mall) in 2015. These gains have been largely distributed.
Chong Kee Hiong, CEO of Suntec REIT’s manager has a stated strategy to bring the REIT’s aggregate leverage of 42.4% as at Dec 31, 2023, down to 40%. (Suntec REIT’s aggregate leverage is within 45% for its interest coverage ratio (ICR) of 2x.) Still, Chong would be more comfortable with a lower aggregate leverage.
