Suntec REIT’s Distributable Income Buoyed By Higher Contributions from Aussie Offices & One Raffles Quay
SINGAPORE – While Suntec REIT’s distributable income from operations dropped by 12.6 percent year-on-year to S$52.2 million in Q3 2020, the decline was mitigated by better performance and higher contributions from its office properties, according to Singapore Exchange (SGX) filings released on Thursday morning (22 October).
In fact, net property income (NPI) and joint venture (JV) income contribution from its entire office portfolio during the three-month period rose by 11.3 percent to S$64.9 million on an annual basis.
“The Q3 results are underpinned by the resilience of our office portfolio in Singapore and Australia,” said Chong Kee Hiong, CEO of the trust’s manager, ARA Trust Management (SUNTEC) Ltd.
The biggest contributing Singapore office property was Suntec City’s office component at S$24.4 million. Although the property recorded a higher revenue, its contribution slightly declined from S$24.9 million in Q3 2019 due to higher property tax provisions.
This is followed by MBFC Towers 1 & 2 at S$12.5 million. While the commercial property saw higher occupancy, the contribution is lower than the S$14.6 million seen during the same period a year ago as a one-off compensation was received from the property back then.
The third largest contributing Singapore office property was One Raffles Quay, where contribution rose from S$6.1 million to S$6.9 million year-on-year thanks to higher occupancy and rent.
In Australia, all office properties gave higher contributions. The lion’s share came from 177 Pacific Highway (S$8.8 million), followed by Southgate Office (S$3.9 million), 55 Currie (S$3.1 million), 477 Collins (S$3 million), and 21 Harris (S$2.3 million).
Looking ahead, Suntec REIT’s manager said that positive rental reversions from past 10 quarters will continue to provide stable rental revenue. However, demand for its office space is projected to remain subdued amidst economic uncertainties. And with businesses focusing on cost reductions, positive rent reversion is likely to moderate in the fourth quarter.
“Portfolio occupancy is expected to remain above market range of 93 percent (based on JLL’s Q3 market data) notwithstanding moderate increase in vacancy going forward. Tenant retention, proactive arrears and lease management, deferment of non-critical expenditure and prudent cost management become key focus in the quarter ahead,” it added.
Suntec REIT’s Singapore office portfolio consists of Suntec City’s office component, plus a 33 percent stake in all of One Raffles Quay and MBFC Towers 1 & 2.
In Australia, the trust fully owns a commercial building at 177 Pacific Highway and 21 Harris Street, both of which are located in Sydney. In Adelaide, it entirely owns a commercial building at 55 Currie Street. In Melbourne, it holds a 50 percent interest in both the Southgate Complex and a commercial building in Olderfleet, 477 Collins Street.