SINGAPORE (Apr 22): The manager of Suntec Real Estate Investment Trust (Suntec REIT has announced distribution per unit (DPU) of 1.760 cents for the 1QFY2020 ended March, a 27.7% drop from DPU of 2.434 cents in the same quarter last year.

The lower DPU is due to the lower distributable income from operations, retention of 10% of distribution of $5.5 million, absence of capital distribution at $6.5 million, and a larger unit base.

Distributable income from operations fell 6.5% to $55.1 million, from $58.9 million a year ago. The drop is due to the absence of dividend contribution from Suntec Singapore, lower advertising and promotional income for Suntec City Mall, lower occupancy at Towers 1 and 2 of the Marina Bay Financial Centre (MBFC), and the weakened Australian dollar.

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Including the $5.5 million retained to conserve cash reserves and assist tenants amid the Covid-19 outbreak, distribution to unitholders for 1QFY2020 comes up to $49.6 million for 1QFY2020, some 24% lower than a year ago.

Gross revenue dipped 3.1% y-o-y to $86.9 million, mainly due to advertising and promotional (A&P) income, and lower convention revenue at Suntec City Mall and Suntec Convention respectively. This was partially offset by a higher occupancy rate and rental income – with an overall committed occupancy of 98.8% as at March 31 – at Suntec City Office and Mall, as well as rental income from 55 Currie Street in Adelaide, Australia.

Expenses include a A$295 million acquisition of 21 Harris Street in Sydney, Australia on April 6.

Consequently, net property income decreased 7.2% y-o-y to $54.0 million.

Income contribution from joint ventures decreased by 4.2% y-o-y to $23.0 million.

The REIT’s portfolio includes Suntec City Mall – retail and office units; 54% contribution by asset from Suntec City; 3% from Suntec Singapore; 7% from One Raffles Quay; 17% from its MBFC properties; 10% from 177 Pacific Highway; 6% from Southgate Complex in Melbourne; and 3% from 55 Currie Street in Adelaide.

As at Mar 31, the overall committed occupancy for the Singapore and Australia office portfolios stood at 98.8% and 97.7% respectively.

The Net Asset Value (NAV) per unit stood at $2.075 compared to $2.126 in December 2019.

The REIT’s average leverage ratio climbed to 39.9% from 37.7% a year ago.

Looking forward, the REIT portfolio in Singapore is expected to remain resilient in 2020 thanks to the properties’ diverse tenant base and limited office supply.

Rental revenue is expected to remain robust mainly due to 52% of lease renewals for FY2020, and strong rent reversions achieved from previous quarters.

However, due to the Covid-19 outbreak, lower shopper traffic, and international and large-scale trade fairs will cause income contribution to be affected for FY2020.

The mall will focus on initiatives to drive shopper traffic to pre-Covid-19 levels once the situation improves. The option of temporary closure of the convention centre will be considered if the situation does not improve.

Chong Kee Hiong, CEO of the manager says, “To ride through this challenging period together, Suntec City will be waiving the rents of all our retail tenants in April 2020, including tenants providing essential services such as supermarkets, pharmacies, food courts and restaurants”.

“We are cognizant of the heightened uncertainties in the external environment and will proactively manage the risks to strengthen the resiliency of our properties. We will continue to adopt a disciplined approach in reducing operating costs, discretionary capital expenditure as well as practise prudent capital management so as to prepare ourselves for the upturn,” he adds.

The actual quantum of the DPU will be announced on April 30 after book closure, and DPU will be paid on May 28. 

As of 10.34am, units in Suntec REIT are trading 6 cents lower, or down 4.5%, at $1.28.