Suntec REIT

Suntec REIT: 1Q14 DPU was in line and flattish at 2.229¢, due to the absence of capital distribution from the sales proceeds of CHIJMES (additional 0.12¢) and income loss following start of Phase 3 AEI at Suntec City. Otherwise, 1Q14 DPU would have been higher by 5.7% y/y. Distributable income inched 1.2% to $50.9m. Revenue rose 32.8% to $66m while NPI shot up 42.7% to $43.8m, mainly due to the opening of Suntec Singapore Convention & Exhibition Centre following AEI. Gross office revenue was 4.1% higher at $33.2m from positive rental reversions but retail revenue fell 4.3% due to ongoing AEI. Portfolio occupancy was 99.4% for Office and 98.7% for Retail. Aggregate leverage stood at 38.4% at end March, but would have dropped to 35.1% upon prepaying the $350 loan facility on 11 Apr using private placement proceeds. Phase 3 AEI commenced Feb’14, and TOP is expected by end FY14, with full opening in 1Q14. NAV at end Mar was $2.076, translating to 0.84x P/B. Annualized 1Q14 yield is 5.1%. Latest broker ratings as follows: Maybank KE maintains Hold with TP increased to $1.70 (from $1.63) Daiwa maintains Buy with TP $1.92 CLSA maintains O/PF with $1.80 Deutsche maintains Hold with TP $1.68