3 Top-Performing Singapore Blue-Chip REITs in 2025.  Are their dividends still attractive?

The Reit manager is maintaining its S$100 million divestment target

 

[SINGAPORE] The manager of Suntec Real Estate Investment Trust (Suntec Reit) has ruled out acquiring retail assets in Australia, even as its peer, Keppel Reit, recently made its first retail investment there. 

 

Earlier this month, Keppel Reit acquired its first retail mall in Australia, expanding beyond its traditional focus as a pure-play office Reit.

 

But the chief executive officer of the Reit manager of Suntec Reit, Chong Kee Hiong, said that such a move is not on its cards.

 

&ldquo Everyone has their own strategy,&rdquo he said at a briefing on Friday (Oct 24), a day after the release of Suntec Reit&rsquo s third-quarter results. &ldquo For Suntec, we have articulated that when we go overseas, our (acquisitions) are predominantly office assets, and any retail acquisitions should be ancillary to the building.&rdquo

 

He added that   Suntec Reit   : T82U +0.74%, which currently owns five office properties in Australia, has not considered any standalone retail assets in the country so far.   The Reit&rsquo s retail exposure is mostly in its Singapore-based Suntec City property.

 

Financial performance

For the third quarter ended Sep 30, Suntec Reit posted a distribution per unit (DPU) of S$0.01778, up from S$0.0158 the year before. Distributable income rose 13.4 per cent year on year to S$52.4 million, from S$46.2 million.

The higher DPU and income were driven by stronger operational performance in its Singapore portfolio and lower financing costs. Revenue edged down 0.2 per cent year on year to S$117.5 million, while net property income slipped 1.6 per cent to S$78.5 million.

 

Gains from the Singapore portfolio were offset by the surrender of three floors at its Sydney property, which have since been backfilled, and lower takings from its London asset.

 

Divestments to continue

Chong said that opportunities to divest strata office units in Suntec City are improving amid better market sentiment. The manager is maintaining its S$100 million divestment target for these strata offices, as part of its broader strategy to lower its gearing. 

 

In Australia, however, buyers remain &ldquo pretty selective&rdquo , and the Reit will &ldquo continue to watch this space&rdquo . Chong said the manager hopes to divest one or two Australian assets with strong occupancy next year.

 

He added that there are no plans for fresh acquisitions at the moment as the Reit&rsquo s valuation remains &ldquo way below book&rdquo , and its gearing is still relatively high at 41 per cent.

 

On sponsor ESR&rsquo s privatisation

Suntec Reit&rsquo s sponsor, ESR, was privatised in July this year, a move aimed at paving the way for the sponsor to focus more on growing its core businesses in logistics and data centres.

 

On whether the privatisation would affect Suntec Reit, Chong said that there had been no effect on the Reit so far and that the Reit remains a &ldquo material&rdquo part of ESR&rsquo s portfolio.

 

Likening Suntec Reit&rsquo s size to an aircraft carrier, he made the point that it would take time for the privatisation to have any impact on Suntec Reit, relative to other businesses under ESR. &ldquo It&rsquo s not easy to move an aircraft carrier. It&rsquo s easier to turn a small ship,&rdquo he said.

Chew steps down following her retirement as non-executive director, after 11 years in the role

 

[SINGAPORE] David Matheson, ESR Group&rsquo s current chief investment officer, has been appointed as chairman of the manager of Suntec Real Estate Investment Trust (Reit), effective from Tuesday (Sep 30). 

 

He replaces Chew Gek Khim, 64, who stepped down from the role following her retirement on Tuesday as non-executive director after 11 years in the position, the manager said.

 

In a bourse filing, it noted Matheson&rsquo s extensive Reit and asset management experience in Asia. 

 

Prior to taking on the role of ESR Group chief investment officer in August this year, the 45-year-old was at Starwood Capital Europe Advisors for 3.5 years. He was managing director and co-head of Europe at the private investment firm.

 

From 2013 to 2022, he was with Oxford Properties Management as executive vice-president for Europe and the Asia-Pacific. 

 

At Suntec Reit, he will also assume the role of non-executive director of the manager. 

Over the five sessions, Suntec Reit booked S$8.5 million in net institutional inflow, taking its cumulative net inflows for 2025 to S$53.7 million. This year, the Reit has booked the most net institutional inflows in the Singapore Reit sector, adding to its S$114 million in net institutional inflow in 2024. 

 

On Aug 8, HSBC upgraded its rating on Suntec Reit from to &ldquo buy&rdquo from &ldquo hold&rdquo , and raised its target price for the stock to S$1.40 from S$1.25. On Jul 24, the Reit reported its results for the first half of FY2025 &ndash its distributable income rose 4.6 per cent year on year to S$92.8 million, with distribution per unit (DPU) rising by 3.7 per cent to S$0.03155. 

 

Despite global macroeconomic uncertainties, Suntec Reit said its Singapore office, retail and convention portfolios continued to deliver strong operating performances. It added that financing costs declined from that in H1 FY2024, due to refinancing efforts and debt reduction from the divestment of Suntec strata office units, reflecting the team&rsquo s focus on strengthening property fundamentals. 

The strong performance by Reit&rsquo s Singapore portfolio, along with lower financing costs, buoy the first half&rsquo s numbers

 

[SINGAPORE] The manager of Suntec Real Estate Investment Trust (Reit) on Thursday (Jul 24) posted a distribution per unit (DPU) of S$0.03155 for the first half ended June, up 3.7 per cent from S$0.03042 in the previous corresponding period. 

 

The distribution for H1 will be paid on Aug 29, after the record date on Aug 1. 

 

Distributable income rose 4.6 per cent to S$92.8 million for H1, from S$88.7 million in the same period the year before. 

 

The increase in DPU and distributable income came on the back of strong operating performance of Suntec Reit&rsquo s Singapore portfolio and lower financing cost, which fell to S$81.9 million in H1, from S$88.4 million in the year-ago period. 

 

Revenue was up 3.3 per cent to S$234.5 million for the half-year period, from S$226.9 million in the same period the year before. Net property income (NPI) grew 5.6 per cent to S$159.5 million for the half-year period, from S$151 million in the year before. 

 

The increase in its top line and NPI came amid a one-off compensation from a Sydney commercial building, as well as stronger operating performance in Singapore. 

 

Chong Kee Hiong, chief executive officer of the manager, said: &ldquo The Singapore office, retail and convention portfolios continued to deliver strong operating performances.&rdquo  

 

Suntec City&rsquo s revenue rose 1.9 per cent on the year to S$133.2 million, mainly due to higher retail and office revenue generated by higher rent. 

 

Suntec Singapore&rsquo s revenue contribution of S$39.9 million in H1 FY2025 comprised S$29 million from its convention segment and S$10.9 million from its retail segment. 

 

Convention revenue grew by S$800,000, driven by the increased number of large and mid-scale events and conferences in the recorded period. NPI of its convention segment rose 64.4 per cent on year due to higher-yielding events and lower utility rates secured, said the manager. 

 

On the other hand, Suntec Singapore&rsquo s retail revenue remained stable.

 

Gains in overall revenue and NPI were, however, offset by lower occupancy at one of the Reit&rsquo s Adelaide properties, and lower contribution from The Minister Building, a corporate office in London, said the manager. 

 

Looking ahead, the manager expects cautious demand for office spaces in light of global headwinds and slower economic growth. However, the limited new supply and Singapore&rsquo s reputation as an attractive business hub will continue to support core Central Business District rent growth, the manager added. 

 

It also expects portfolio occupancy of its Singapore office assets to remain high, while maintaining positive rent reversion. As at Jun 30, the portfolio had a committed occupancy of 99 per cent.

 

The manager also noted that retail sales are expected to remain under pressure as consumers tighten their purse strings. 

 

However, it expects the committed occupancy of its Suntec City Mall to remain high, at more than 95 per cent, with the recovery of the tourism and meetings, incentives, conferences, and exhibitions (Mice) industries supporting demand for prime retail space. As at end-June, the mall had a committed occupancy of 98 per cent and positive rent reversion of 18 per cent. 

 

The manager expects performance of its convention segment to be stable, with the trust focusing on higher-yielding and public-sector events, as well as new revenue streams from areas such as entertainment and corporate training. 

 

As at end-June, Suntec Reit&rsquo s total debt outstanding stood at S$4.1 billion, with a weighted average debt maturity of 3.23 years. Its aggregate leverage ratio fell to 41.1 per cent, from 42.4 per cent as at Dec 31, 2024.