Suntec Reit

Suntec Reit: OSK upgrade to Buy with TP $2.10. Note that the pre-commitment rate for Suntec City Mall’s Phase 1 AEI reached 83% in 4Q12 and house speculate that the rate is now over 90%, as Phase 1 of the AEI is near to completion and prepares to commence operations in about 1.5 mths. REIT is trading at a dividend yield of 5.2% and 5.7% of FY13’s and FY14’s forecasted yields respectively. Concurrently, given a lower average dividend yield of 5.0% (4.8% if Keppel REIT is stripped out) among the Grade A office and retail REITs space, believe SUN is due to re-rate once positive income starts flowing in when Phase 1 AEI is completed in about 1.5mths.