Suntec REIT reported an in-line set of 3Q17 results. Gross revenue and NPI jumped 10.6% and 11.6% YoY to S$91.1m and S$63.9m, respectively. This was driven by higher revenue from Suntec Singapore and the office portfolio due largely to contribution from 177 Pacific Highway in Australia, but partially offset by softer retail revenue from Suntec City mall. DPU fell 2.1% YoY to 2.48 S cents despite a lower capital distribution.

For 9M17, Suntec REIT’s gross revenue rose 11.4% to S$266.9m; NPI similarly jumped 13.0% to S$185.1m and formed 75.0% of our FY17 forecast. DPU of 7.401 S cents was flat (-0.1%), and constituted 74.1% of our full-year projection.

Operationally, Suntec REIT’s portfolio occupancy came in at 98.6% of its office segment and 98.8% for retail. Average rents of S$8.61 psf/month and S$8.35 psf/month were secured for its Singapore office portfolio and Suntec City office, which were lower by 3.1% and 5.0% QoQ, respectively.

Suntec City Mall registered healthy growth in footfall (+12.2%) and tenants sales psf (+4.9%) for 9M17. We maintain our HOLD rating and S$1.80 fair value estimate on the stock.

Source: OCBC Research - 27 Oct 2017