Suntec REIT posts strong 3Q13 as Suntec Mall Phase 1 reopens

Gross revenue spiked to S$65.9m.

3Q13 gross revenue jumped 40% q/q, +5% y/y, to S$65.9mn mainly due to the opening of Suntec Singapore following the completion of the asset enhancement works (Phase 1) in June 2013, and higher revenue from Suntec City Office (positive office reversions), offset by the closure of Suntec City Mall (Phase 2), reports Barclays.

Similarly, NPI jumped 44% q/q to S$28mn. 9M13 NPI was still down 26% y/y to S$98.9mn due to very weak 1H13 before Suntec Mall Phase 1 reopened.

"We expect a fuller operational recovery in 2015 as Phase 2 completes by 4Q13 and Phase 3 by 4Q14, but reported DPU will be smoothed out with capital distributions," said Barclays.

The research firm further observed resilient occupancy and rents for the 16-year-old Suntec City Office; pre-commitment for Suntec City Mall Phase 2 improved to 83.7%.

Meanwhile, 3Q13 DPU of 2.289cts (-3% y/y, +2% q/q) brings 9M13 DPU to 6.766cts (-6% y/y), which is 75% of Barclays and Bloomberg consensus’ forecast of 9.0cts for FY13.

Excluding the capital distribution of S$4.5mn from part of the sale proceeds from the divestment of Chijmes, operational DPU would have fallen 11% y/y but still gained 10% q/q to 2.09cts.

"This is also in line with our expectations. The capital distribution is to mitigate the temporary dip of the DPU resulting from the execution of the AEI," said Barclays.