Suntec Real Estate Investment Trust’s (Suntec Reit) distribution per unit (DPU) fell by 9.7 per cent to S$0.04074 for the second half of 2022 ended December, from S$0.04512 a year ago. 

Higher interest expense for the period resulted in a 27.8 per cent rise in finance costs for the Reit, its manager said in a regulatory filing on Friday (Jan 20).

Gross revenue was up 16.9 per cent to S$223.7 million for the half-year period, from S$191.3 million a year ago. Net property income grew 14.7 per cent to S$162.8 million from S$142 million in H2 FY2021.

The Reit’s Singapore and United Kingdom portfolios remained resilient, while contribution from the Australia portfolio was lower year on year due to leasing downtime and absence of surrender fee received a year ago.

Distributable income in H2 slipped 9 per cent to S$117.3 million, from S$129 million a year ago.

For the full year ended Dec 31, 2022, DPU was up 2.5 per cent to S$0.08884 from S$0.08666 a year ago. The Reit’s manager attributed this to capital distribution of S$23.0 million, with improvement in distributable income from better operating performance being eroded by higher financing costs.

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Distributable income for FY2022 rose 3.4 per cent to S$255.5 million from S$247.2 million a year ago.

The Reit’s gross revenue rose 19.3 per cent to S$427.3 million from S$358.1 million in the year-ago period, while net property income grew 24 per cent to S$315.8 million from S$254.6 million from a year ago.

Chong Kee Hiong, chief executiveof the manager, expects continued rising interest rates, weaker exchange rates and higher energy costs to erode operational gains and impact distributions “significantly” in the near term. This is despite the manager increasing the Reit’s fixed interest rate borrowing and foreign currency income hedge. 

“We are also actively looking at the potential divestment of our mature assets to strengthen our balance sheet,” he added.

Units of Suntec Reit closed up S$0.02 or 1.5 per cent at S$1.39 on Friday.