Wednesday, January 23, 2013

Suntec REIT

Suntec REIT: 4Q12 results in-line with expectations. NPI at $30.5m, -41.3% yoy and DPU at 2,32c, -6.2% yoy. Result brings FY12 NPI to $163.4m, -15.5% yoy and DPU to 9.49c, -4.5% yoy. Drop in yoy performance was largely due to the closure of Suntec SG, and Suntec City Mall (Phase 1) for asset enhancement works and the divestment of CHIJMES, although this was partially mitigated by higher office rev. Grp note that it has achieved a pre-commitment of about 83% in Suntec REIT’s Phase 1 NLA and is about to embark on Phase 2 of the AEI in March 2013, which has abt 37% of Phase 2 NLA pre-committed even before we commence works. Some of the additional brands that have signed up for Phase 1 include Antton & Co, Black Rara, HABA, Kally Feng Shui, Lush, Lionesse, Popeyes, Regina, Smile Inc., Smoothie King, Stationery Superstore, Suit Select, Tech@Vogue, The Travel Store, Wacoal and Yankee Candle. Looking ahead, grp note that current priorities are to focus on the smooth execution of the AEI and proactive lease management to strengthen the lease commitments, as well as to maintain the high occupancy level for the rest of our office and retail portfolios. We note that overall fundamentals remain strong, with grp having a 99..7% occupancy REIT and gearing at 36.7%. At current price, grp trades at a 5.5% yield and a 0.8x P/B. Ratings as follow: Deutsche maintains Hold with $1.71 TP SCB maintains In-line with $1.77 TP CS maintains U/p with $1.56 TP Maybank-KE maintains Buy with $1.81 TP

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