SUNTEC Real Estate Investment Trust : T82U 0% (Reit)’s distribution per unit (DPU) fell 27.7 per cent to S$0.03476 for its first half ended Jun 30, from S$0.04810 in the same period a year earlier.

Although the Reit’s operational performance continued to improve, higher financing costs and a weaker Australian dollar and pound weighed on distributable income, the Reit’s manager said on Wednesday (Jul 26).

Gross revenue was up 10.2 per cent to S$224.3 million for the half-year period, from S$203.5 million in the year-earlier period. This was mainly due to higher revenue from Suntec City, Suntec Singapore and The Minster Building.

However, it was partially offset by a drop in revenue from Australian properties 177 Pacific Highway, 21 Harris Street, 55 Currie Street and Olderfleet, 477 Collins Street, as a result of a weaker Australian dollar.

Net property income grew 0.3 per cent on the year to S$153.3 million for the half year, from S$152.9 million.

Distributable income declined 27.2 per cent year on year to S$100.5 million, from S$138.1 million previously.

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The distribution will be paid out on or about Aug 29, after books closure on Aug 3.

Chong Kee Hiong, chief executive of the Reit’s manager, said interest rates and energy costs are likely to remain high, which will impact distributable income for the rest of the year.

However, he added that the Reit will continue to explore potential divestment of its mature assets and strata office units at Suntec City to unlock value and strengthen its balance sheet.

The weighted average lease expiry (Wale) for the Reit’s office portfolio stands at 4.3 years, while its retail portfolio has a Wale of 2.2 years.

The manager said that revenue from its Suntec City Mall is likely to strengthen on higher occupancy, rent and marketing communications revenue.

It expects its UK properties to remain resilient, underpinned by high portfolio occupancy and long Wale.

Meanwhile revenue from its Australian office portfolio is likely to be impacted by leasing downtime and incentives despite positive rent reversion. Retail rents also continued to show weakness, registering negative growth in Q1 2023.

The counter closed Tuesday up 1.5 per cent or S$0.02 at S$1.32.