Suntec REIT reported an in-line set of 1Q17 results. Gross revenue jumped 12.9% YoY to S$88.4m, while DPU increased 2.3% YoY to 2.425 S cents. The former and latter accounted for 25.1% and 24.0% of our FY17 forecasts, respectively.

Growth was largely driven by contribution from 177 Pacific Highway in Australia, which obtained its practical completion in Aug 2016, but partially offset by lower retail revenue from Suntec City mall and Suntec Singapore, coupled with a smaller distribution from capital (S$3.0m in 1Q17 versus S$4.0m in 1Q16).

For Suntec REIT’s retail portfolio, 20.8% of NLA is expiring for the remainder of 2017, as at 31 Mar 2017. Suntec City mall achieved committed occupancy of 98.4%, while footfall and tenant sales psf grew 7.3% and 4.3% YoY, respectively.

Meanwhile, its Singapore office portfolio’s average rent came in at S$8.66 psf/month, as at 31 Mar 2017, which was largely unchanged from the previous quarter (S$8.65 psf/month as at 31 Dec 2016).

We are currently reviewing our HOLD rating and S$1.54 fair value estimate and will provide more updates in due course.

Source: OCBC Research - 26 Apr 2017