Suntec – BT

Suntec Reit Q3 distribution per unit falls 14.3%

Distribution income falls 3.2% to $46.2m on 2.1% rise in gross revenue

SUNTEC Real Estate Investment Trust (Suntec Reit) has reported lower distribution income for the quarter ended September 30, 2010, compared to the year-ago period, and expects to face ongoing challenges in the office and retail sectors even amidst a recovery there.

Suntec Reit owns Suntec City Mall, certain office units in Suntec Towers One, Two and Three, and the whole of Suntec Towers Four and Five. It also owns Park Mall, Chijmes, a one-third stake in One Raffles Quay and a fifth of a joint venture that owns Suntec Singapore International Convention & Exhibition Centre.

Suntec Reit’s manager, ARA Trust Management (Suntec) Limited (ARA), reported yesterday that the Reit’s distribution income fell to $46.2 million, down 3.2 per cent from a year ago.

Its distribution per unit fell 14.3 per cent to 2.5 cents, from 2.9 cents the year before.

Its gross revenue was up 2.1 per cent to $63.2 million, while its net property income was up 7.6 per cent to $50.6 million.

ARA said Suntec Reit’s gross revenue was higher, thanks mainly to the higher office revenue achieved during the quarter. Its gross office revenue for the quarter was $30 million, 4.6 per cent up from the year before, mostly from the higher rental income from its Suntec City offices.

It also said that the committed occupancy of its Suntec City offices, as at September 30, had improved further to 98.1 per cent, from the quarter before. The committed occupancy of its Park Mall offices and those at One Raffles Quay stood at 97.5 per cent and 100 per cent, respectively. With this, Suntec Reit’s overall committed occupancy for its office portfolio strengthened to 98.5 per cent, as at September 30.

ARA chief, Yeo See Kiat, said, ‘I am encouraged by the further strengthening of the Singapore office market. In the nine months of 2010, we have renewed and signed more than 580,000 sq ft of office leases, leaving less than 1 per cent of our office portfolio expiring in FY 2010.’

Suntec Reit’s gross retail revenue was $33.2 million, or $28,000 lower than the year before – with Suntec City Mall contributing the bulk of the revenue. The committed occupancy of Suntec City Mall stood at 98.0 per cent, as at September 30, and the committed occupancy at Park Mall and Chijmes stood at 100 per cent and 90 per cent, respectively. That put the trust’s overall committed occupancy for its retail portfolio at 97.6 per cent, as at September 30.

Mr Yeo added, ‘On the capital management front, we have put in place a new $700 million term loan facility at a significantly lower interest margin, which will further improve Suntec Reit’s overall financing cost and strengthen our debt maturity profile.’

Looking ahead, ARA expects further strength for the property sector for the rest of the year, believing that the pickup in confidence seen in Singapore’s business climate will continue to buoy the office market.

‘However, the Singapore retail sector overall continues to experience rental pressure during the quarter, as the demand and supply situation in the industry is still finding its equilibrium. The manager expects ongoing challenges to the office and retail sectors notwithstanding signs of positive recovery in both sectors,’ Suntec Reit’s results statement said.

Suntec Reit shares closed 2 cents up at $1.56 yesterday.