Suntec REIT’s distribution per unit (DPU) for the 1QFY2021 ended March grew 16.2% y-o-y to 2.045 from 1.76 cents previously, on the back of higher distributable income which grew 5.4% y-o-y to $58.1 million.
Net property income (NPI) for the 1QFY2021 came in at $59.5 million, representing 10.2% y-o-y growth from $54 million the year before.
Gross revenue for 1QFY2021 grew 0.2% to $87.1 million from $86.9 million previously.
The higher NPI is in line with the higher revenue, as well as higher contribution from joint ventures, which jumped 20.7% to $27.8 million from $23 million the previous year.
According to the REIT’s 1QFY2021 business update released on April 23, the boost in NPI was driven mainly by the contributions from its office assets, particularly 9 Penang Road and MBFC properties in Singapore, and 21 Harris Street and 477 Collins Street in Australia.
In addition, a stronger Australian dollar and lower financing cost also contributed to better earnings.
The performance was partially offset by lower occupancy and rent at Suntec City Mall and rent assistance granted to retail tenants at Southgate Complex.
Buut Chong Kee Hiong, CEO of the REIT’s manager, says signs of recovery are emerging for its retail portfolio.
SEE:'Buy' Suntec REIT on better demand for assets; potential divestments: RHB
“We are also seeing green shoots of recovery in our retail business as tenant sales at Suntec City Mall recovered faster than footfall in 1Q 2021,” he says.
Looking ahead for the rest of FY2021, the REIT’s manager expects occupancy for its Singapore office portfolio to improve as more workers return to office. Despite the likelihood of hybrid working arrangements to continue, revenue from its office assets are expected to remain stable on positive rent reversion and office occupancy in the mid-90% range.
For its retail business, increased footfall and tenancy is expected to boost revenue from Suntec City Mall. Traffic is anticipated to return to 90% of 2019 (pre-Covid) levels, while ccupancy is expected to increase to around 95% by the end of the year.
The REIT’s performance is expected to get a continued boost from its Australian portfolio, underpinned by strong occupancy, long lease tenures and annual rent escalations.
In addition, revenue from Suntec REIT’s office asset in the UK is anticipated to remain stable, backed by full occupancy, long WALE and no lease expiry until 2027.
The DPU is expected to be paid out by May 28.
Units in Suntec REIT closed up 1 cent of 0.65% higher at $1.55 on April 22.
