Suntec REIT FY19 Distribution Per Unit Fell 4.8%

Suntec REIT FY19 Distribution Per Unit Fell 4.8%

It has almost been 2 years since I divested Suntec REIT. Recently, I visited Suntec City mall and I decided to take a look how Suntec REIT is performing over the 2 years. In the latest 4Q2019 financial results, gross revenue increased by 3.5% to S$96.7 million as compared with 4Q2018. The improve in revenue was due to contributions from 55 Currie Street (acquired in September 2019) as well as increase in retail and office revenue from Suntec City which was partially offset by lower revenue from Suntec Convention.

The below bar chart shows the improvement in gross revenue broken down by the assets under Suntec REIT. The lower revenue contribution from 177 Pacific Highway was due to weakened Australian Dollar (AUD).

Suntec REIT FY19 Distribution Per Unit Fell 4.8%

4Q2019 Financial Results

4Q2019
(S$’000)
4Q2018
(S$’000)
YoY(%)
Gross Revenue96,71893,4533.5%
Net Property Income63,26960,7264.2%
Distributable Amount65,98669,459(5.0)%
Distribution Per Unit (“DPU”) (cents)2.3472.590(9.4)%

FY2019 Financial Results

FY2019
(S$’000)
FY2018
(S$’000)
YoY(%)
Gross Revenue366,730363,5040.9%
Net Property Income236,187240,977(2.0)%
Distributable Amount262,730266,811(1.5)%
Distribution Per Unit (“DPU”) (cents)9.5079.988(4.8)%

Occupancy

The overall committed occupancy for Singapore office portfolio stood at 99.1% while its Australia office portfolio stood at 97.8%

The occupancy for the retail mall stood at 99.6% as of 31st December 2019.

Debt

The gearing ratio stood at 37.7% and weighted average debt maturity stood at 3.06 years. My personal opinion is that there is still room for further acquistions since the maximum gearing allowed is 45%.

Current Dividend Yield

I am using 5 years chart so we know how far the current share price has fallen. The current share price is not super attractive but at a reasonable range. Given the full year distribution of 9.507 cents pay out in FY19, this translate to a current dividend yield of 5.25% which is reasonable (Based of my criteria for a least 5% yield).

Suntec REIT FY19 Distribution Per Unit Fell 4.8%

You might probably be worried given that shopper traffic at retail malls are affected by the COVID-19 virus. Income contribution from Retail segment only makes up 27% of its total income contribution.

 

Suntec REIT FY19 Distribution Per Unit Fell 4.8%

The bulk of income comes from the office segment. The passing rent for Suntec City has picked up over the past few quarters and office segment are less likely to be impacted by the COVID-19 virus situation (at least for now).

Suntec REIT FY19 Distribution Per Unit Fell 4.8%

 

CapitaLand Retail China Trust and Sasseur REIT Closes Malls Due to Wuhan Virus

CapitaLand Retail China Trust and Sasseur REIT Closes Malls Due to Wuhan Virus

With the outbreak of the 2019 Novel Coronavirus (CoV) in Wuhan, there are two REITs that I have found that the share price was impacted by the virus outbreak. They are CapitaLand Retail China Trust and Sasseur REIT.

CapitaLand Retail China Trust has 13 malls in China. CapitaMall Minzhongleyuan in Wuhan is closed and will reopen when local conditions permit. The mall represented less than 3% of CRCT’s portfolio value as at 30 September 2019 and contributed approximately 0.5% of CRCT’s net property income for the first nine months of 2019. The remaining 12 malls located in various cities such as Beijing, Shanghai, Guangzhou and Chengdu are operating shorter hours, in line with local government guidelines.

The share price of CapitaRetail China Trust has fell to as low as S$1.53 on 28 Jan 2020.

CapitaLand Retail China Trust and Sasseur REIT Closes Malls Due to Wuhan Virus

Sasseur REIT, which has 4 malls in China has implemented temporary closure of the malls in Chongqing, Bishan, Hefei and Kunming. Chongqing and Bishan Outlet Malls have been temporarily closed from 26 January 2020 while Hefei and Kunming Outlet Malls have been temporarily closed from 27 January 2020. The Manager has mentioned that due to the unique business model of Sasseur REIT, the Manager is of the view that the financial impact, if any, to Sasseur REIT should not be material if the crisis is resolved in the short term.

The share price of Sasseur REIT has fell to as low as S$0.79 on 28 Jan 2020.

CapitaLand Retail China Trust and Sasseur REIT Closes Malls Due to Wuhan Virus

My take is that the share price has not plunged too much yet. If you have noticed, both the share price has not broken their 52 week low.

Crisis or Opportunity?

Investors should do your own diligence before catching the falling knife.