Suntec Reit

Suntec Reit: Maybank KE raises TP to $1.90 from $1.81, reiterates Buy call. Suntec has issued a $280 convertible bond due 2018 at an interest rate of 1.4% (initial conversion px of $2.15). The bulk of proceeds will be used to refinance its existing debt, which includes redemption of a $270m CB issued in 2008 (coupon interest of 3.25%). This could result in an estimate interest savings of ~$5m pa. Meanwhile, Suntec’s AEI is making good progress -- pre-commitments for Suntec City Mall Phase 1 post-AEI leases hit 83% in 4Q12 were secured, above the target $12.59 psf, while 37% of Phase 2 has been pre-committed. Overall AEI works are likely to wrap up as scheduled by 4Q14. Investors may be comforted that Suntec retains cash from the past sale of Chijmes in 1Q12, and has the flexibility to top up DPU over FY13-14. Suntec trades at 5.2% FY13e yield, vs peers FCT at 5.1% and CMT at 4.9%.