Suntec REIT DPU Fell 27.7% Due to COVID-19

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

1Q2020
(S$’mil)
1Q2019
(S$’mil)
YoY(%)
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)%

Occupancy

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%)

Debt

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).

Suntec REIT DPU Fell 27.7% Due to COVID-19

Summary

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.

Suntec REIT DPU Fell 27.7% Due to COVID-19

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.

Screening For Dividend Stocks In April 2020

Screening For Dividend Stocks In April 2020

Last month, the stock market had crashed due to the impact of COVID-19. Since then, the stock market has started its recovery when news of government from different countries started to provide stimulus budget to revive the economy. During the crisis, I have picked up OCBC Bank, Singtel, US Manulife REIT and added more of CapitaMall Trust when their stock prices fell. If you didn’t know, I am a dividend investor. Thus, I usually look out for stocks with attractive dividend yield that provides me with endless dividends many years ahead. The stock market crash has provided me with such an opportunity.

I will run the Stocks Café stock screener every month which gives me a list of stocks that fulfill my dividend criteria. I fall into the medium risk type of investor and thus I never looked at stocks with dividend yield more than 10%. Below are the criteria that I used to identify dividend stocks.

  • Current Yield (%) >= 5 and <= 10
  • Price / Earnings <=20
  • Price / Book <= 3
  • Market Capitalization >= 1B

Below are the top dividend yielding stocks as of 10th April 2020. I believe you will see some REITs that you have been eyeing for before the stock market had crashed. Even though the stock prices have started the recovery, the current yield is still attractive.

NameCurrent Yield %P/EP/BMarket Cap
Mapletree NAC Trust9.9814.440.6112.8B
OUE Commercial REIT8.71113.380.6182B
Ascendas-iTrust8.6445.291.0841.4B
DBS7.8377.650.99848.7B
Frasers Logistics and Industrial Trust7.5689.050.9742.1B
CapitaRetail China Trust7.5578.460.8451.6B
Frasers Commercial Trust7.3857.910.7941.2B
Suntec REIT7.379.210.6053.6B
CapitaMall Trust7.1258.890.7986.2B
Ascendas REIT7.03817.71.2910.1B
Yanlord Land6.7332.970.3582B
ComfortDelgro6.52712.251.2523.2B
Frasers Centrepoint Trust6.2759.410.872.2B
UOB6.1977.740.84933.4B
SIA Engineering6.1810.441.292B
CapitaCommercial Trust6.08212.770.7845.6B
SPH REIT6.08111.840.7862.1B
TCIL HK$6.04417.20.3293.7B
SATS5.93815.92.2113.6B
OCBC Bank5.9227.910.86339.4B
Jardine Cycle & Carriage5.8336.710.8758.1B
Mapletree Commercial Trust5.5955.450.9555.6B
Yangzijiang Ship Building5.4355.90.6013.6B
Guocoland5.3855.720.3741.4B
Olam International5.2089.010.8524.6B
SPH5.19512.190.722.5B
Frasers Property5.1287.320.4533.4B
Lonza5.0425.720.6595.9B

Last, I just want to mention again that the above list is for reference only and we should do our homework before buying into the stock simply for the dividend yield.

Screening For Dividend Stocks In March 2020

Screening For Dividend Stocks In March 2020

The stock market crashed this week on further news of the spread of the COVID-19 virus and also the oil price war between Saudi Arabia and Russia. Due to the continued bad news, the Straits Times Index (STI) fell as much as 6.03% on Monday, 9th March 2020. As you can see from the chart below, the Straits Times Index (STI) crashed further on Friday, 13th Mar 2020 before rebounding slightly at the end of the day.

During such crisis, there is an opportunity to start picking up quality stocks that can climb back and continue its growth when the stock market normalize in 1 or 2 years time (I guess).

If you had followed my blog, you know that I always have my stock screener ready to identify stocks that gives me a good dividend yield. When stock price goes down, the current dividend yield goes up.

The stock screener offered by Stocks Café allows me to save the conditions that I can pre-set. You can check out my review here on the Stocks Café Dividend Stocks Screener (Read more: Screening For Dividend Stocks Using Stocks Cafe Stock Screener).

Screening For Dividend Stocks In March 2020

Below are the top dividend yielding stocks as of 14th March 2020.

NameCurrent Yield %P/EP/BMarket Cap
Cromwell REIT SGD9.4949.320.8481.7B
Mapletree NAC Trust8.6515.110.7033.2B
OUE Commercial REIT8.48713.730.6332.1B
Ascendas-iTrust8.3615.471.1211.4B
CapitaRetail China Trust8.257.750.7741.5B
CDL Hospitality Trust8.05412.040.7351.4B
Starhill Global REIT7.75719.360.6511.3B
Far East Hospitality Trust7.18916.770.6131B
Frasers Commercial Trust6.8098.580.8611.3B
Yanlord Land6.7332.970.3582B
Frasers Logistics & Industrial Trust6.66710.271.1062.4B
Ascendas REIT6.52419.11.39210.9B
UOB6.4557.730.84833.4B
SPH6.38315.020.883B
DBS6.3577.741.00949.2B
Yangzijiang Shipbuilding SGD6.2895.10.5193.1B
Suntec REIT6.25510.850.7124.3B
Hong Leong Finance6.2510.40.5611.1B
SPH REIT6.16414.570.972.5B
TCIL HK$6.11710.780.343.8B
OCBC Bank5.8438.020.87439.9B
ComfortDelgro5.72513.971.4273.7B
SIA Engineering5.55611.611.4352.2B
CapitaMall Trust5.49111.531.0358B
Jardine Cycle & Carriage5.4097.450.9719B
Bukit Sembawang5.37913.450.7911.1B
Olam International5.2989.450.8934.8B
SATS5.27817.892.4874B
Genting Singapore5.14711.911.0188.2B

Last, I just want to mention again that the above list is for reference only and we should do our homework before buying into the stock simply for the dividend yield.