Suntec REIT

Suntec REIT: Results in line with expectations although DPU declines, 2.361c for the quarter. 2Q Distributable income fell 5.7% yoy -3.6% qoq to $53.0m. 2Q Rev at $71.0m compared to $61.3m +15.8% yoy -3.1% qoq. Excluding accounting gains from consolidation, rev fell 5.7%. Loss in rev was attributed to divestment of Chijmes and lower income for Suntec City Mall due to AEI. NPI saw an decrease 3.1% yoy as well. A bright spark was gross office revenues which grew 5.5% yoy higher due to positive rental reversions and 100% occupancy in Suntec City offices. Mgmt also remains positive on office portfolio performance for the current financial yr. Co revealed that it will be compressing phases 3 and 4 of its AEI program to result in an estimated completion in 4Q14. DPU at 2.36c results in an annualized yield of 6.4% based on last done. Deutsche maintains Hold with TP at $1.46, cites undemanding valuations at 0.74x P/B but believes DPU will remain flat. CIMB maintains Outperform with TP up to $1.59 from $1.51 and also cites low P/B at 0.7x