Suntec REIT NPI dipped 7.6% to $58.1m in Q1

Lower revenue from Suntec Singapore and 177 Pacific Highway dragged on earnings.

Suntec Real Estate Investment Trust (Suntec REIT) began 2019 on a dismal note after its net property income (NPI) slipped 7.6% YoY to $58.2m in Q1 from $62.99m in 2018, an announcement revealed. Revenue also edged down 1.1% YoY from $90.72m to $89.68m.

The REIT attributed the weak performance to lower convention revenue from Suntec Singapore, and lower revenue from 177 Pacific Highway due to the weakened AUD. This was partially offset by an increase in retail and office revenue from Suntec City.

Also read: Suntec REIT NPI down 1.4% to $240.98m in 2018

The firm’s distributable income inched up 0.8% YoY in Q1 to $65.35m from $64.81m, whilst distribution per unit (DPU) remained marginally unchanged at $0.02434. The boost in distributable income was attributed to strong performance of Suntec City, and an additional 25% interest in Southgate Complex.

According to Chong Kee Hiong, CEO of ARA Trust Management, revenue at Suntec City rose 5.5% driven by an increase in occupancy and positive rental reversion. The key operation indicators remained robust with footfall and tenants’ sales growing 3.3% and 1.3% YoY, respectively.

As at 31 March, the overall committed occupancy for the Singapore office portfolio stood at 98.6%, according to the firm’s financial statement. The performance of the Singapore office portfolio is expected to improve further in 2019 given the limited supply coming on-stream.

For Australia, the overall committed occupancy for the office portfolio improved to 99.8% as at 31 March driven by higher occupancy in Southgate Complex. Construction works for Olderfleet, 477 Collins in Melbourne is on schedule to complete in mid-2020. Including the heads of agreement signed, the pre-committed occupancy for the development had increased to 89% to-date.

“In view of the higher interest rate environment, we will continue with our prudent capital management strategy, improve underlying performance of our assets and source for accretive acquisitions to enhance unitholders value,” Chong noted.

On 17 April, ARA Trust Management announced that the office component of 9 Penang Road had been 100% pre-leased to UBS, which will occupy all eight floors of office space amounting to 381,000 sqft.

Fit-out work is expected to commence soon after TOP, with target occupation in the second half of 2020. Development works is on track and scheduled to complete in Q4 2019.