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Suntec REIT
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Joelton
Supreme |
24-Sep-2024 11:06
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CBC downgrades Suntec Reit as funding costs continue to weigh
OCBC Investment Research has downgraded Suntec Real Estate Investment Trust : T82U -2.26% (Reit) to &ldquo sell&rdquo as it expects marginal decline in financing costs in the near term.
The research house believes the trust might not reap significant benefits from the US Federal Reserve&rsquo s half-point cut immediately.
While benchmark rate cuts are likely to lower borrowing costs, the trust&rsquo s all-in financing costs may not come down significantly in the near term, said OCBC in a report on Friday (Sep 20), as the trust has &ldquo a sizeable amount&rdquo of interest rate hedges expiring in fiscal year 2025 that were previously entered into at low costs, noted the brokerage. As at end-June, Suntec Reit&rsquo s financing costs stand at 4 per cent.
&ldquo As such, we are assuming only a slight decline in Suntec Reit&rsquo s financing costs in FY2025 as compared to our FY2024 forecasts,&rdquo said the brokerage.
Given the Reit&rsquo s high proportion of floating rate debt, OCBC believes that the trust could be the first to benefit from the Fed rate cut &ndash buoyed by an uplift in investor sentiment.
However, the research house highlighted the risks of a rebound in the 10-year Treasury yields, which will be affected by the US presidential election.
Additionally, OCBC also noted that the Reit&rsquo s share price has &ldquo run ahead of fundamentals&rdquo .
&ldquo The stock is now trading at FY2024 and FY2025 distribution yields of 4.5 per cent and 4.8 per cent, respectively, based on our projections and a closing price of S$1.37,&rdquo it said. &ldquo Historically, Suntec Reit had traded at a 10-year average forward distribution yield of 5.7 per cent.&rdquo
But the Reit needs to improve its operational performance to sustain its share price movement, said OCBC.
Although the research team likes the stock for its robust rental reversions, it cautioned that rents for the Singapore office assets are likely to moderate.
&ldquo This does not bode well for Suntec City office as expiring rents in FY2025 are S$10.05 per square foot (psf) per month, higher than FY2024&rsquo s expiring rents of S$9.47 psf per month,&rdquo it said.
However, it expects the trust&rsquo s retail operations to remain resilient and its convention business to improve further.
OCBC lifted its fair value estimate for the counter to S$1.19 from S$1.15.
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LoudShout
Veteran |
17-Sep-2024 09:35
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Expected interest rate cuts in September are poised to benefit real estate investment trusts (REITs) because of their close correlation, though experts suggest the impact will be more immediate for those with fewer loans hedged to fixed rates. &ldquo The protracted rate cuts will have an immediate impact on floating rates for REITs, with a more pronounced effect on those that had more than 20% of their loans left unhedged,&rdquo DBS experts said. Among S-REITs, DBS identified CDL Hospitality Trusts (CDLHT) and Far East Hospitality Trust (FEHT) as the likely top beneficiaries of the rate reduction, alongside Suntec REIT (SUN), OUE Commercial REIT (OUECT), and Lendlease Global Commercial REIT (LREIT), which have only 50-60% of their loan books hedged to fixed rates. In terms of sectors, DBS stated that retail has the greatest potential to benefit from the interest rate cuts heading into Q4 2024 to 2025, followed by industrial, hotels, and office, citing their income resilience. DBS added that growth momentum for retail, office, and warehouse sectors will remain robust in the second half of 2024.
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MrBear12
Supreme |
14-Sep-2024 10:59
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Back to its NaV | ||||
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ozone2002
Supreme |
14-Sep-2024 09:50
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Last:1.3  +0.03moving up on Fed rate cuts and collecting dividends along the way
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Tempest
Master |
06-Sep-2024 10:41
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Well loaded at 1.15 range when opportunity was there. Let see if this gem hit 1.5 | ||||
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MrBear12
Supreme |
06-Sep-2024 08:51
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Aye, Aye. Monitoring.
Things shld take a turn for better when interest rates come down |
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Tempest
Master |
06-Sep-2024 08:36
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Monitor Suntec closely. Don't miss the rally. Dyodd fast | ||||
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Shenzhun01
Member |
02-Sep-2024 09:41
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office reits seem to be doing well today
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PiRPiR
Veteran |
30-Aug-2024 20:37
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https://www.theedgesingapore.com/capital/brokers-calls/sunny-days-ahead-s-reits-says-rhb-analyst-who-keeps-overweight-sector
'Sunny days ahead' for S-REITs, says RHB analyst who keeps 'overweight' on the sector , Keppel REIT, Suntec REIT, AIMS APAC REIT as its top picks. Analyst Vijay Natarajan says the recent turn of events arising from easing inflation leading to a favourable rate cut outlook have tilted the balance firmly in favour of S-REITs, which have been battered by high interest rates in the last few months. While there will be a lag effect of about 12-18 months for positive impacts to flow through to bottom lines, Natarajan expects decisive shifts in investor sentiment and early positionings to ride the upcycle. The analyst recaps the 2QFY2024 REITs results and outlook. He says that the majority of the REITs distribution per unit (DPUs) came in slightly below expectations mainly on higher financing expenses, but there were few positive surprises on stronger topline growth and better net property income margins. Forward operational guidance remains upbeat for most of the sector, with post-rent reversions expected to continue in the mid-to-high single digits for Singapore?s industrial, office, and retail sectors, he notes. Yet, one exception was the hospitality sector, where there was some caution on the revenue/available room (RevPAR) growth outlook, with a tightening of visitor spend amidst a stronger Singapore dollar and wearing off from last year?s (2H2023) high base effect, the analyst adds. Natarajan says that overall finance costs for most of the REITs are expected to increase by 5-30 basis points (bps) in 2H2024 as loans get refinanced, but most ? overall ? guided for costs to peak by 4Q2024. ?Valuations were largely stable for Singapore-centric assets, while positive surprises came from overseas markets, where valuations seem to have bottomed out and stabilised slightly earlier than our expectations ? we might see a slight rebound as early as 4Q, with rate cuts now firmly in place,? he notes. Meanwhile, the concerns over high gearing and debt refinancing have also largely abated, with valuations stabilising and refinancing secured for some of the more challenged US office REITs. Natarajan says that past cycles have shown sharp rallies during turning points in interest rates. ?S-REITs? performance has a high inverse correlation to risk-free rates, i.e. long term treasury yields, with particularly high sensitivity at turning points of the cycle,? he says. The sector saw a 15%-40% rebound in 2012, 2016 and 4Q2023, when the market saw interest rates easing, the analyst notes. S-REITs are currently trading at about 30% below 2021?s peak, and the analyst sees room for the recent rally to continue well into 4Q2024 and 2025. On valuation, the sector is trading at 0.9x P/BV (-1 standard deviation below mean) with a yield spread of about 335 bps, which is considerably higher than global peers, he continues. ?We recommend investors to adopt a slightly more aggressive stance, with a balanced mix of high-quality industrial REITs for stable yields, and office and selective overseas REITs to ride on the rebound from the turn in interest rate cycle,? says Natarajan. For office REITs, the analyst remains positive in his long-term outlook for demand for Singapore office space, with economic growth expected to pick up in 2H2024. He names Keppel REIT and Suntec REIT as top picks. On the other hand, Natarajan remains selective on retail REITs amid softening signs in retail sales and valuation grounds, and neutral on the hospitality sector. He names CapitaLand International Commercial Trust as the best proxy to retail-cum-office exposure, and Starhill Global REIT P40U -0.98% |
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Joelton
Supreme |
26-Jul-2024 12:14
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Suntec Reit DPU falls 12.5% to S$0.03042 due to lack of capital distribution
A strong performance by the Singapore office, retail and convention portfolio was partially offset by higher financing costs and vacancies at its Adelaide and London properties, says the manager
SUNTEC Real Estate Investment Trust : T82U -1.72% (Suntec Reit) recorded a distribution per unit (DPU) of S$0.03042 in the six months ended Jun 30, 2024, marking a 12.5 per cent fall on year. DPU was S$0.03476 in the corresponding year-ago period.
Its manager on Thursday (Jul 25) evening attributed the fall mainly to the absence of distribution income from capital in H1 2024.
Capital contributed S$11.5 million to distributable income in H1 2023.
Distributable income fell 11.8 per cent year on year to S$88.7 million, from S$100.5 million.
Distributable income from operations alone fell 0.3 per cent in H1 2024, from S$89 million in H1 2023.
The manager said that operating performance from the Singapore office, retail and convention portfolio continued to strengthen. However, higher financing costs and vacancies at 55 Currie Street in Adelaide and The Minster Building in London weighed on the distributable income.
At S$226.9 million, revenue was up 1.2 per cent for the half year, from S$224.3 million previously.
The increase came mainly from higher revenue from Suntec City, Suntec Singapore and 21 Harris Street in Sydney.
Suntec City revenue grew 3 per cent on year, on the back of higher retail revenue due to higher rent.
Suntec Singapore&rsquo s revenue contribution of S$39.3 million in H1 2024 comprised S$28.2 million from its convention segment, and S$11.1 million from its retail segment. Both figures were higher than in H1 2023. The growth in the convention segment came from higher revenue from meetings, incentives, conventions and exhibitions, as well as long-term licences and advertising. In the retail segment, revenue growth was propelled by higher rent.
However, this was offset by lower revenue from Australian properties 177 Pacific Highway, 55 Currie Street and Olderfleet, 477 Collins Street, as well as The Minster Building in London.
Chong Kee Hiong, chief executive officer of the manager, added that The Minster Building is expected to achieve full occupancy in H2 2024.
However, the leasing pipeline in Adelaide, where 55 Currie Street is located, remains weak under existing market conditions.
Net property income (NPI) fell 1.5 per cent on the year to S$151 million for the half-year period, from S$153.3 million.
A distribution of S$0.01511 per unit for the period Jan 1 to Mar 31 this year was paid out on May 30.
The remaining distribution of S$0.01531 per unit for the Apr 1 to Jun 30 period will be paid by the end of August.
The manager also noted that the Reit had divested S$31.5 million of strata units in Suntec City Office Towers at an average price of 27 per cent above book value. It will use the proceeds to pare down debts.
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vivacious
Supreme |
26-Jul-2024 09:10
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lol... i ran at 114... not gonna invest in this anymore
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halleluyah
Supreme |
26-Jul-2024 09:06
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run road.....
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Rover88
Member |
26-Jul-2024 09:04
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Next AGM, propose change of name to Sunset Reit...LOL!
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vivacious
Supreme |
26-Jul-2024 09:03
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run! | ||||
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MrBear12
Supreme |
26-Jul-2024 07:45
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Thankx SDEXXXX, more details from BT:
Suntec Reit DPU falls 12.5% to S$0.03042 due to lack of capital distributionA strong performance by the Singapore office, retail and convention portfolio was partially offset by higher financing costs and vacancies at its Adelaide and London properties, says the manager  Published Thu, Jul 25, 2024 · 08:23 PM
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SUNTEC Real Estate Investment Trust : T82U -1.72% (Suntec Reit) recorded a distribution per unit (DPU) of S$0.03042 in the six months ended Jun 30, 2024, marking a 12.5 per cent fall on year. DPU was S$0.03476 in the corresponding year-ago period. Its manager on Thursday (Jul 25) evening attributed the fall mainly to the absence of distribution income from capital in H1 2024. Capital contributed S$11.5 million to distributable income in H1 2023. Distributable income fell 11.8 per cent year on year to S$88.7 million, from S$100.5 million. Distributable income from operations alone fell 0.3 per cent in H1 2024, from S$89 million in H1 2023. The manager said that operating performance from the Singapore office, retail and convention portfolio continued to strengthen. However, higher financing costs and vacancies at 55 Currie Street in Adelaide and The Minster Building in London weighed on the distributable income. BT IN YOUR INBOXStart and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up
At S$226.9 million, revenue was up 1.2 per cent for the half year, from S$224.3 million previously. The increase came mainly from higher revenue from Suntec City, Suntec Singapore and 21 Harris Street in Sydney. Suntec City revenue grew 3 per cent on year, on the back of higher retail revenue due to higher rent. Suntec Singapore&rsquo s revenue contribution of S$39.3 million in H1 2024 comprised S$28.2 million from its convention segment, and S$11.1 million from its retail segment. Both figures were higher than in H1 2023. The growth in the convention segment came from higher revenue from meetings, incentives, conventions and exhibitions, as well as long-term licences and advertising. In the retail segment, revenue growth was propelled by higher rent. However, this was offset by lower revenue from Australian properties 177 Pacific Highway, 55 Currie Street and Olderfleet, 477 Collins Street, as well as The Minster Building in London. Chong Kee Hiong, chief executive officer of the manager, added that The Minster Building is expected to achieve full occupancy in H2 2024. However, the leasing pipeline in Adelaide, where 55 Currie Street is located, remains weak under existing market conditions. Net property income (NPI) fell 1.5 per cent on the year to S$151 million for the half-year period, from S$153.3 million. A distribution of S$0.01511 per unit for the period Jan 1 to Mar 31 this year was paid out on May 30. The remaining distribution of S$0.01531 per unit for the Apr 1 to Jun 30 period will be paid by the end of August. The manager also noted that the Reit had divested S$31.5 million of strata units in Suntec City Office Towers at an average price of 27 per cent above book value. It will use the proceeds to pare down debts. The counter closed down S$0.02 or 1.7 per cent at S$1.14 on Thursday, before the announcement. |
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SDEXXXXD
Veteran |
25-Jul-2024 19:06
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Singapore, 25 July 2024 ? Suntec REIT reports distributable income from operations1 of $88.7
million for the period from 1 January to 30 June 2024 (?1H 24?), in line with the half year ended 30 June 2023 (?1H 23?). Distribution per unit (?DPU?) from operations1 of 3.042 cents to unitholders was 1.2% lower year-on-year. With the absence of capital distribution in 1H 24, DPU declined 12.5% year-on-year. |
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Newbornborn
Senior |
12-Jul-2024 13:00
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Uuptrend sign as of now | ||||
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vivacious
Supreme |
12-Jul-2024 09:41
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decided to let go at 114. | ||||
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SDEXXXXD
Veteran |
12-Jul-2024 09:32
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Up 5% this week. . Hopefully good 👍
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vivacious
Supreme |
11-Jul-2024 16:13
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hopefully, then back to 12 series
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