Suntec Real Estate Investment Trust (T82U) H2 2023 earnings summary

Executive summary

• FY23 distributable income was S$206.8m, down 19.1% YoY; operating distribution income was S$183.8m, down 21.0%, as financing costs and AUD weakness offset operating gains.

• Gross revenue rose 8.3% to S$462.7m, supported by stronger Singapore operations and The Minster Building; portfolio AUM was S$12.2b.

• Investment property value increased 0.7% to S$11.9b, as Singapore gains offset declines in Australia and the UK.

• Singapore office, retail and convention operations improved, while overseas vacancies, leasing incentives and a weaker AUD weighed on results.

Financial highlights

• FY23 DPU was 7.135 cents, down 19.7% YoY; operating DPU was 6.341 cents, down 21.6%, with capital distribution of 0.794 cents.

• FY23 distributable income comprised S$183.8m from operations and S$23.0m of capital distribution.

• Financing costs were S$55.7m; AUD weakness against SGD reduced results by S$6.0m, while maintenance fund contributions increased by S$9.2m.

Outlook and guidance

• Singapore office rent reversions are expected to remain positive but moderate; higher occupancy, rents and MICE activity support the outlook, while retail sales growth is approached cautiously.

• Suntec City Mall revenue is expected to benefit from higher occupancy, rent and marcoms revenue; tenant sales above pre-COVID levels and positive rent reversions are expected to continue.

• Convention growth is expected from MICE, consumer events and long-term licences, with higher dividend contributions anticipated.

• Australia faces leasing downtime and higher incentives; UK revenue is expected to be affected by vacancies and leasing downtime at The Minster Building.

• Interest rates are expected to remain elevated despite Federal Reserve signals of rate cuts in 2024, keeping earnings under pressure.