Suntec City

Suntec REIT DPU Fell 27.7% Due to COVID-19

On 22nd April 2020, Suntec REIT had released their financial results for 1Q2020 (1st January 2020 to 31st March 2020). Gross revenue fell 3.1% to S$86.9 million and distributable income fell 6.5% to S$55.1 million.

The decline was due to lower advertising and promotion income at Suntec City Mall and postponement or cancellation of events at Suntec Convention due to COVID-19. The decline of revenue due to the impact of COVID-19 was cushioned by better performance from Suntec City Office, Suntec City Mall, Southgate Complex and contribution from 55 Currie Street.

Distribution Per Unit (“DPU”) fell 27.7% to 1.76 cents from 2.192 cents. The manager had decided to retain 10% (S$5.5 million) of the distributable income in order to build cash reserve to assist the tenants to tide over the COVID-19 period. I am not surprise as this is the same strategy as what other retail REITs (same as SPH REIT) will do.

1Q2020 Financial Results

Gross Revenue86.989.7(3.1)%
Net Property Income54.058.2(7.2)%
Distributable Amount55.158.9(6.5)%
Distribution Per Unit (“DPU”) (cents)1.762.192(27.7)%


As of 31st March 2020, the occupancy for Suntec City Mall stood at 98.3%. The overall committed occupancy for Singapore office portfolio stood at 98.8% while its Australia office portfolio stood at 97.7%.

I have noticed a slight decline in occupancy for both retail and its offices as compared to my last review. (Read more: Suntec REIT FY19 Distribution Per Unit Fell 4.8%)


As of 31st March 2020, the gearing ratio stood at 39%. Do note that due to the COVID-19 situation, the upper limit had increased from 45% to 50%. (Read more: New Measures To Help SREITs During COVID-19 )

Current Dividend Yield

Given the full year distribution of 9.507 cents pay out in FY19, this translate to a current dividend yield of 7.49%.

However, we all know that dividends will sure be cut in FY20. Thus, assuming Suntec REIT pays out a flat 1.76 cents for each quarter in FY20, this translates to an estimated dividend yield of 5.54% (1.76 cents x 4 quarters then divide by S$1.27).


I have noted that Suntec City will be waiving the rents of all its retail tenants in April 2020. I am not sure if rental will be waived in May or June as well since Circuit Breaker has been extended to 1st June 2020. This does have an impact on distributable income in next quarter.

On a positive note, the office portfolio is less likely to be impacted by COVID-19 and passing rent is on the uptrend. From the chart below, you can see that the office portfolio makes up the bulk of the revenue as compared to retail.

I have read about institutional investors buying Suntec REIT. I believe they also spotted the positive side of Suntec REIT which is the office segment. Without the COVID-19 situation, I believe Suntec REIT will perform well in FY20.

Nevertheless, taking situation of the price weakness (S$1.27), there is definitely a certain margin of safety and REITs such as Suntec REIT will recover over the long run.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.