Suntec REIT (SGC:T82U) announced on Thursday morning a distributable income for quarter ended 30 September of S$52.2 million, a drop of 12.6% year-on-year, and distribution per unit (DPU) of 1.848 cents.
For 3Q 2020, Suntec REIT’s Gross Revenue declined 13.4% to S$79.6 million while it’s Net Property Income dropped 19% to 47.3% year-on-year, as Covid-19 continued to affect both the convention and retail business.
Decrease in distributable income was due to rent assistance granted to tenants at Suntec City Mall, Marina Bay Link Mall and Southgate Complex Retail and the absence of contribution from Suntec Singapore and a one-off compensation received at MBFC Properties in 3Q 2019. This decline was mitigated by the better performance of the Australia office portfolio and One Raffles Quay, as well as lower financing costs.
“There are encouraging signs of recovery in our retail business in 3Q 2020 as tenant sales recovery at Suntec City Mall has been stronger than improvement in footfall”, said Mr Chiong Kee Hiong, CEO of the Manager. “As a result, there will be a full distribution of the 3Q distributable income.”
The demand for the Singapore Office Portfolio remains subdued due to economic uncertainties and cost containment. Portfolio occupancy is expected remain above market range of 93%.
Tenant sales and shopper traffic are expected to further improve for Suntec City Mall as more office workers return back to office.
However, the outlook for Suntec Convention remains challenging due to loss of revenue from international and large-scale consumer events. A comprehensive business review is being undertaken to identify medium and long-term opportunities to pivot Suntec Convention’s core business.
The Australia portfolio remains resilient due to strong occupancy, long lease tenure and new contributions from 2 properties in Sydney and Melbourne.
The results follow the recent acquisition of a 50% in two Grade A office buildings in the heart of London, for an agreed value of £430.6 million, announced earlier on 8 October.
Suntec REIT’s average leverage ratio is 41.5% with a financing cost of 2.6% per annum as at 30 September.
Suntec REIT aims to invest in income-producing real estate which is primarily used for office and/or retail purposes and hold properties in Singapore Suntec City, a 60.8% interest in Suntec Singapore Convention & Exhibition Centre, a one-third interest in One Raffles Quay, a one-third interest in Marina Bay Financial Centre Towers 1 and 2 and the Marina Bay Link Mall, and a 30.0% interest in 9 Penang Road.
Suntec REIT also holds a 100% interest in a commercial building located at 177 Pacific Highway, Sydney, a 100% interest in a commercial building located at 21 Harris Street, Pyrmont, Sydney, a 50.0% interest in Southgate Complex, Melbourne, a 50.0% interest in a commercial building located at Olderfleet 477 Collins Street, Melbourne and a 100% interest in a commercial building located at 55 Currie Street, Adelaide, Australia.