Suntec REIT

Suntec REIT: 3Q13 results were in line with consensus, with DPU at 2.29¢ (-2.6 y/y, +1.8% q/q) while distributable income to unit holders was $36.9m (+10.2% y/y, -33.0% q/q). Gross revenue was $65.9m (+5.3% y/y, +40.5% q/q) with increase mainly due to opening of Suntec Singapore following AEI works, higher revenue from Suntec City Office, offset by closure of Suntec City Mall (Phase 2). NPI was $40.3m (+4.7 y/y, +44.1%). Phase 1 of AEI is completed and occupancy was 99.6% while Phase 2 of Suntec City AEI is expected to complete by end Jan 14, and is now 84% pre-leased (+14ppt q/q). Suntec City office’s occupancy was 99.7% on top of increased signing rent of $8.55psfpm (+1.5%). Aggregate leverage ratio was 38.6% at end of 3Q13. Net asset value is $2.053. We notice the street feels that good news had already been priced in. Suntec REIT has an annualized yield of 5.3%, and is trading at 0.84x P/B Latest broker calls as follows: Credit Suisse: maintains Underperform, TP: $1.63 (from $1.65) Standard Chartered: downgrade to In-Line, TP: $ 1.69 Nomura: maintains Netural, TP: $1.59 Deutsche: maintains Hold, TP: $1.77