Suntec – BT

Suntec Reit distribution income surges

Jump of 31.7% to $44.1m for the Oct-Dec period; DPU for quarter also up at 2.858 cents

SUNTEC Real Estate Investment Trust (Suntec Reit) has reported a distribution income of $44.1 million for the quarter ended Dec 31, 2008, a jump of 31.7 per cent.

The distribution per unit (DPU) for the quarter came to 2.858 cents, up 25.4 per cent year-on-year. This works out to an annualised DPU of 11.339 cents, representing a yield of 17.4 per cent based on Suntec Reit’s closing unit price of 65 cents on Jan 21.

Suntec Reit has changed its financial year-end from Sept 30 to Dec 31, and for the 15 months ended Dec 31, achieved a DPU of 13.303 cents.

For the October-December 2008 quarter, gross revenue rose 16.8 per cent to $63.5 million and net property income jumped 28.1 per cent to $47.9 million.

Regarding Suntec Reit’s dividend payout ratio, CEO of ARA Suntec, Yeo See Kiat, said: ‘We’re giving 100 per cent. We’ve been giving 100 per cent since day one.’ ARA Suntec is the manager of Suntec Reit.

When asked about the request by some Reits to the government for a reduction in the minimum payout ratio to Reit unit-holders to as low as 50 per cent and yet still enjoy tax concessions, Mr Yeo said temporarily lowering the cap would give Reits a bit of flexibility in these tough times. However, Suntec Reit is not considering such a temporary measure, Mr Yeo noted, adding that if Suntec Reit had wanted to, it could have lowered its payout ratio to the currently-permissible cap of 90 per cent.

When asked whether Suntec Reit intends to pass the Budget’s tax rebates to retailers seeking to benefit from the government measure, Mr Yeo said that he might be willing to talk to the retailers on an individual basis but Suntec Reit had to go through the Budget concessions in detail before it could give a clear answer.

Asked about refinancing, Mr Yeo said: ‘We have worked very hard to maintain our credit rating.’ Suntec Reit’s average all-in financing cost for the quarter was 3.26 per cent and its gearing stood at 34.3 per cent as at Dec 31, 2008.

‘Whilst our next major refinancing is only due in December 2009, we are currently working on the refinancing ahead of its maturity,’ Mr Yeo added.