Suntec Reit Q1 DPU falls 27.7% to 1.76 S cents

SUNTEC Real Estate Investment Trust (Suntec Reit) on Wednesday posted a 27.7 per cent drop in distribution per unit to 1.76 Singapore cents for the first quarter ended March 31, 2020 from 2.434 cents a year ago.

This was due to lower distributable income from operations, retention of a 10 per cent distribution, absence of capital distribution, as well as an enlarged unit base.

The distribution will be paid on May 28, after books closure on April 30. 

Distributable income from operations fell 6.5 per cent to S$55.1 million, from S$58.9 million a year ago.

While business began well in January, operational performance declined when mandatory measures were put in place to curb the spread of the novel coronavirus, the Reit manager said.

It added that one of the most immediate impact was the postponement and cancellation of events at Suntec Convention, which resulted in a loss of dividend contribution from Suntec Singapore.

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"The steep drop in advertising and promotion income for Suntec City Mall and the weakened Australian dollar added to the decline in distributable income from operations," the manager noted.

Nonetheless, these were partially offset by better performance from Suntec City Office, Suntec City Mall, Southgate Complex and contribution from 55 Currie Street.

For the first quarter, net property income slipped 7.2 per cent to S$54 million, from S$58.2 million a year ago, while gross revenue fell 3.1 per cent to S$86.9 million, from S$89.7 million.

Overall, the manager noted that Suntec Reit's Singapore office portfolio is expected to remain resilient in 2020, given the properties' diverse tenant base and a limited office supply.

Meanwhile, Suntec City Mall is expected to register a "substantial decline in shopper traffic" in Q2 due to safe distancing and circuit-breaker measures, while a gradual recovery from Q3 is expected if the situation improves, the manager said.

It added that rent reversions for the remaining quarters are likely to be in the negative range due to weaker market demand from retailers.

Separately, tenant relief measures will also impact the mall's rental revenue this year. "However, this will be partially offset by the positive rent reversions achieved for the past 11 consecutive quarters and the renewal of one-third of the mall's expiring leases for 2020 in Q1 at strong double-digit rent reversion," the manager said.

Units in Suntec Reit closed at S$1.34 on Tuesday, down S$0.07 or 5 per cent.