Suntec REIT

Suntec REIT: 3Q14 DPU climbed 1.7% y/y to 2.33¢, while distributable income rose 12.4% to $58.3m. Revenue rose 8.5% to $71.5m, while NPI increased 21.1% to $48.8m, mainly thanks to the completion of Phase 2 of Suntec City AEI. Occupancy for office and retail were 100% and 98.4% respectively. Aggregate leverage stood at 35.5%, with all-in financing cost of 2.42%. There seems increasing risk for Phase 3 of Suntec City AEI to miss its December deadline, management says. Nomura highlights slow leasing momentum for Phase 3 AEI might be a downside risk to FY15 forecast. Nevertheless, the house opines FY15 DPU already priced in. A more bearish Deutsche also notes the weaker than expected leasing status of Phase 3 AEI, but underscores Suntec REIT’s above average valuation, citing market is overestimating growth prospects. BVPS of $2.056 translates to 0.9x P/B. Annualized 3Q14 yield is 5.1% Latest broker ratings: Nomura maintains neutral with TP Daiwa downgrades to Hold from Buy with TP cut to $1.88 from $1.92 Deutsche maintains Sell with TP of $1.65