Suntec Reit

Suntec Reit: FY11 results better than expected.
4Q DPU came in at 2.48 cts, +7% yoy, -2.1% qoq. FY11 DPU was 9.93 cts, +0.7% yoy.
Contribution from Suntec SG drove the 30% and 10% increase in 4Q revenue and NPI rptvly, excluding which both would have declined 2% yoy on negative rent reversions.
However interest cost savings (avg cost of 2.81%) and better performance from MBFC led to a 3% increase in distributable income.

On operating metrics, Suntec Office occupancy rose from 98% to 99.2% as space surrendered by IDA was filled. Leases were secured at an avg of $8.72psf in 4Q vs $8.41 psf qoq.
Suntec City Mall appears to have stabilized with flattish rents and occupancy. The portfolio was revalued +9.3% on avg with the largest percentage increase from Suntec City Mall (+13% to $2095 psf), bringing aggregate leverage down to 39%.

Deutsche keeps at Hold, with TP $1.23 (from $1.21). Notes downside risk from the 28.5% of retail NLA expiring this year, mainly from Suntec City Mall and disruption from AEI works.
HSBC maintains Underweight with TP $1.05.
Citi maintains Buy with TP $1.52, says the Reit is highly attractive with its current yield of >8%.