Last Friday (23 April 2021) morning, Suntec REIT (SGX:T82U) released its business update for the first quarter of the financial year 2021 ended 31 March 2021.

I have gone through the documents posted by the REIT and in this post, you will find a summary about its latest financial performance, debt and portfolio occupancy profile, and also its distribution payout to unitholders (yes, the REIT is one of the Singapore-listed REITs that is still continuing to pay out a distribution to its unitholders on a quarterly basis.) On top of that, you will also find my thoughts (as a unitholder) about the REIT’s latest set of results.

Let’s begin…

Financial Performance (Q1 FY2020 vs. Q1 FY2021)

Q1 FY2020Q1 FY2021% Variation
Gross Revenue
(S$’mil)		$86.9m$87.1m+0.2%
Property Operating
Expenses (S$’mil)		$32.9m$27.6m-16.1%
Net Property
Income (S$’mil)		$54.0m$59.5m+10.2%
Distributable
Income to
Unitholders (S$’mil)		$49.6m$58.1m+17.1%

The latest set of results (for Q1 FY2021) reported by the REIT was an improved one compared to the same time period last year (i.e. Q1 FY2020), due to higher rent from Suntec City office, higher gross turnover rent from Suntec City Retail Mall, along with contributions from new revenue streams in Suntec Convention.

Coupled with a 16.1% drop in its property operating expenses, the REIT’s net property income saw a 10.2% q-o-q gain.

Finally, the REIT’s distributable income to unitholders also went up by 17.1% due to contributions from 9 Penang Road, 21 Harris Street, and 477 Collins Street (the latter two properties are located in Australia), one-off compensation received from One Raffles Quay, better performance in its Marina Bay Financial Centre properties, stronger AUD (against SGD), and lower financing cost.

Debt Profile (Q4 FY2020 vs. Q1 FY2021)

Next, let us take a look at the REIT’s debt profile, where I will be comparing the statistics reported for the first quarter of the financial year 2021 ended 31 March 2021, against that recorded in the previous quarter three months ago – i.e. Q4 FY2020 ended 31 December 2020, to find out if it has improved or deteriorated:

Q4 FY2020Q1 FY2021
Aggregate Leverage
(%)		44.3%44.4%
Interest Coverage
Ratio (times)		2.6x2.7x
Average Term to
Debt Maturity (years)		3.0 years2.9 years
Average Cost of
Debt (%)		2.5%2.4%

My Observations: Compared to the previous quarter, the REIT’s debt profile is little changed in my opinion.

I’ve noted that a total of S$527m of borrowings are due in FY2021, and that there are adequate facilities of S$630m for refinancing.

Another thing to point out is that, the REIT’s aggregate leverage continues to remain on the high side (in fact, it continues to be one of the highest among all the Singapore-listed REITs), and that in the AGM on 15 March, the CEO mentioned that the REIT will be looking at ways to bring down the statistic (you can read a summary I’ve written on the AGM here.) I will continue to keep a close watch on the REIT’s aggregate leverage in the quarters ahead.

Portfolio Occupancy Profile (Q4 FY2020 vs. Q1 FY2021)

Just like how I have studied about the REIT’s debt profile in the previous section, I too will be comparing the occupancy rates reported for the current quarter under review (i.e. Q1 FY2021 ended 31 March 2021) against that reported in the previous quarter three months ago (i.e. Q4 FY2020 ended 31 December 2020):

Q4 FY2020Q1 FY2021
Singapore Retail90.2%91.5%
Singapore Office96.7%96.1%
Australia Retail91.7%90.3%
Australia Office94.0%93.9%
United Kingdom Office100.0%100.0%

My Observations: Compared to three months ago, the REIT’s office properties in Singapore and Australia saw slight declines. However, despite of that, the REIT’s Singapore office occupancy is still higher than the 93.9% occupancy rate recorded in Core CBD, and for its Australia office occupancy, it is still higher than the 86.7% occupancy rate recorded in Nationwide CBD offices in the country.

Another thing to note is the improvements in its Singapore retail to 91.5% (from 90.2% recorded in the previous quarter.)

Distribution Per Unit

As I have mentioned in the beginning of today’s post, the REIT is one that still continues to pay out a distribution to its unitholders on a quarterly basis.

For the current quarter under review, its payout of 2.045 cents/unit is 16.2% higher compared to 1.760 cents/unit paid out in Q1 FY2020. The improvements is due to a higher distributable income from operations, along with absence of distributions retained (S$5.5m) in Q1 FY2020.

If you are a unitholder of the REIT, do take note of the following dates on the distribution payout:

Ex-Date: 30 April 2021
Record Date: 03 May 2021
Payout Date: 28 May 2021

In Conclusion

Apart from the REIT’s aggregate leverage being slightly on the high side, on the whole, it is good to note that its financial performance have improved. The same can be said for its distribution payout to unitholders as well.

No doubt the REIT’s occupancy rates for its Singapore and Australia offices have weakened slightly, but they are still above the national averages, and as such, there is still no cause for worry (my personal opinion.)

I continue to remain vested in the REIT, and am confident of a further recovery in the quarters ahead, provided if there are no further outbreaks of the pandemic in countries which the REIT has properties in.

With that, I have come to the end of my review of Suntec REIT’s first quarter business update. Hope you find the information presented above useful, and here’s wishing you a great week ahead!

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Suntec REIT.

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