Suntec

Suntec: Management reaffirmed their guidance that they are well on track to achieving their 10.1% ROI target based on $12.59 psf average rents. Phase 1 (96.7% precommitted) together with the convention center is expected to open next month with income contribution from 3Q. Mgmt is positive that the anchor tenants will pull in traffic, particularly H&M and Uniqlo. As Phase 2 works (53% pre-commited) have also commenced, mgmt expects a larger impact to underlying distributions this year, partly mitigated by capital distribution from the Chijmes divestment proceeds. Phase 2 is skewed towards entertainment and family and anchors include Golden Village and Polliwogs, a children entertainment and recreational facility. The amount of space allocated to the hypermart has been downsized from 140k sf (previously occupied by Carrefour) to 60k sf (now taken up by Giant) and mgmt is hence able to achieve significantly higher rents. Suntec City Office continues to perform well at almost full occupancy (99.4%). While there was a dip in contracted rents in 1Q (-5% to $8.55psf), this is still above market and mgmt attributed it to larger space signed in the quarter. For smaller spaces (1-2k sf), Suntec is able to achieve rents >$9psf ($8+psf for larger spaces). Mgmt has been actively renewing leases with only a balance of 10.3% expiring in 9M13. DB has a HOLD rating, TP of $1.87;