Suntec – BT

Suntec Reit’s Q2 net up 19.3%

SUNTEC Real Estate Investment Trust (Suntec Reit), which is controlled by Hong Kong tycoon Li Ka-shing, yesterday reported a 19.3 per cent increase in distributable income for its second quarter ended March 31, on the back of higher office rents.

The trust, based on Suntec City and other properties, said that distributable income came to $28 million for the three months ended March, up from $23.5 million for the same period a year ago.

The Reit’s distribution per unit rose 8.5 per cent to 1.97 cents, up from 1.81 cents. Net property income rose 10.3 per cent to $35.2 million, from $32 million for the previous corresponding period.

The Reit attributed the improved performance to higher office revenues from its Suntec City and Park Mall offices. For Suntec City, revenue was driven by both higher occupancy and increased rentals, said the Reit. Revenue from the property was also boosted by strata office space acquisitions.

‘Office rents continued to register double-digit growth rates in the first quarter of 2007 as vacancy in Grade A office space dropped further to 0.4 per cent from 0.8 per cent in the previous quarter,’ Suntec Reit said in a filing to the Singapore Exchange.

Office rents in Singapore are close to a 10-year high as demand continues to grow amidst limited supply. Market watchers expect the rent hikes to continue as supply is expected to remain tight at least until 2010 when several major office complexes are due to be completed.

In the meantime, Suntec Reit plans to continue boosting its portfolio. It said on Jan 30 that it plans to expand its commercial assets in Singapore by about 50 per cent to $3 billion in two to three years to benefit from the economic growth.

Its portfolio of investment properties was valued at $3.87 billion as at March 31, 2007, giving the trust a ‘revaluation surplus’ of $613.6 million. Suntec Reit’s shares fell 2 cents, or one per cent, to close at $2 yesterday. The share price has risen 9.9 per cent this year.