Suntec Real Estate Investment Trust (T82U) H1 2023 earnings summary

Executive summary

• 1H23 gross revenue rose 10.2% YoY to S$224.3m and NPI increased 0.3% to S$153.3m, while distributable income fell 27.2% to S$100.5m.

• Higher financing costs, weaker AUD/GBP and lower JV income outweighed improving property operations; DPU declined 27.7% to 3.476 cents.

• Total return after tax fell 74.5% to S$71.3m, reflecting lower JV profits, smaller fair-value gains and higher finance costs.

Financial highlights

• Distributable income from operations was S$89.0m, down 29.7% YoY; capital distribution was S$11.5m and DPU from operations was 3.078 cents.

• H1 distribution was 3.476 cents per unit; the 1.739 cents for April–June was scheduled for payment on 29 August 2023.

• Net income fell 52.4% to S$85.5m; total return before tax was S$78.8m, down 72.7%, and basic EPS was 2.257 cents, down 75.9%.

• Finance costs rose 31.7% YoY to S$84.9m; operating improvement and higher Singapore property income were offset by weaker JV contributions and currencies.

Outlook and guidance

• Singapore office rents are expected to plateau amid muted demand, while positive rent reversion and limited new Core CBD Grade A supply support the outlook; tenant retention remains a priority.

• Australia faces slower leasing momentum, potential vacancy increases, downtime and incentives; UK earnings are expected to remain resilient with high occupancy, long WALE and active lease-break management.

• Retail sales growth is expected to slow but remain above pre-COVID levels; MICE recovery and tourism should support mall traffic and tenant sales.

• Convention income is expected to remain impacted in 2023, with full recovery anticipated in 2024; international events and easing China travel restrictions may support 2H23.

• High interest rates and energy costs are expected to continue weighing on distributable income for the remainder of 2023.