Suntec REIT (T28U.SG) is off 0.6% at $1.57 after posting 4Q10 gross revenue of $61.41 million, down 0.6% on-year and off 2.9% on-quarter; its net property income was flat on-year and down 6.7% on-quarter at $47.2 million, while DPU fell 19.8% on-year and 7.4% on-quarter to 2.316 cents. 

The REIT says the fall in revenue is due to lower retail revenue. OCBC, which maintains its Hold call, revises fair value to $1.60 from $1.55; “we are overall positive on the office sector recovery, and confident of the manager’s expectation that negative rental reversions for Suntec’s office portfolio will bottom out by end 2011. However, we continue to have lingering concerns about Suntec’s retail portfolio.” 

The house notes, 25.5% of retail portfolio NLA is expiring in 2011, followed by 30.3% in 2012, 27% in 2013. “We still think that the MBFC1 acquisition will help to boost the proportion of office to retail mix for Suntec, and help mitigate some of the top-line effects of thinning retail traffic, but this is, nonetheless, still a temporary fix.”