What’s the first thing that comes to mind when mentioning about Singapore-listed Suntec REIT (SGX:T82U)?

No prizes for guessing it right – it is the REIT’s namesake shopping mall (Suntec City Mall, which is one of the largest in Singapore), offices (Suntec City Offices), and its convention centre (Suntec Singapore Convention & Exhibition Centre, where many of the Meetings, Incentives, Conventions, and Exhibition [or MICE for short] events are held in).

On top of that, the REIT also has a part-ownership in One Raffles Quay, Marina Bay Financial Centre Towers 1 and 2, and Marina Bay Link Mall in Singapore.

Outside of its home country, the Suntec REIT also has 5 properties in Australia (2 in Sydney, 2 in Melbourne, and 1 in Adelaide), and 2 properties in the United Kingdom (both of them in London).

Among the things I like about the REIT include its stable financial and portfolio occupancy performances, and its quarterly distribution payout frequency. On the other hand, its debt profile (particularly its high aggregate leverage and low interest coverage ratio) is something I am wary about.

The REIT released its results for the full year ended 31 December 2023 (i.e., FY2023) early this morning (24 January 2024), and in this post, you will find a review of its latest financial figures, portfolio occupancy and debt profile, as well as its distribution payout to unitholders.

Let’s begin:

Financial Performance (FY2022 vs. FY2023)

The following is the REIT’s results posted for the full-year ended 31 December 2023 (i.e., FY2023), compared against that posted in the same time period last year (i.e., FY2022 ended 31 December 2022):

FY2022FY2023% Variance
Gross Revenue
Property Operating
Expenses (S$’mil)
Net Property
Income (S$’mil)
Distributable Income
to Unitholders

My Observations: Gross revenue was up by 8.3%, mainly attributed to higher revenue from Suntec City (as its office recorded higher occupancy and rent, and its retail saw an improvement in its occupancy, rent, and marcom revenue), Suntec Singapore (from higher revenue from MICE, long-term licenses, and advertising), as well as The Minster Building, partially offset by lower revenue from its Australian properties (namely 177 Pacific Highway, 21 Harris Street, 55 Currie Street, and Olderfleet, 477 Collins Street) due to a weaker Australian dollar and incentives given for new leases and renewals at 177 Pacific Highway.

However, as a result of a 34.1% jump in property operating expenses, its net property income saw a 0.8% decline.

Finally, due to higher financing costs, weaker Australian dollar (against the Singapore dollar), and higher maintenance fund contribution, its distributable income for FY2023 fell by 19.1% (compared to FY2022).

Portfolio Occupancy Profile (Q3 FY2023 vs. Q4 FY2023)

The following table is a comparison of Suntec REIT’s occupancy profile of the different property types in different geographical locations recorded for the 4th quarter of FY2023 (ended 31 December 2023) compared against that recorded in the previous quarter 3 months ago (i.e., 3rd quarter of FY2023 ended 30 September 2023) to find out if it has continued to remain resilient just like in the previous quarters (where it has been maintained at above 95.0%):

Q3 FY2023Q4 FY2023
(Office & Retail)
United Kingdom

My Observations: One significant thing to note about the REIT’s latest occupancy profile is the 6.8 percentage point (pp) drop in the occupancy rate of its Australian properties – which is mainly attributed to a sharp fall in the occupancy rate of 55 Currie Street (from 96.4% in Q3 FY2023 to 56.2% in Q4 FY2023), along with a slight decline in the occupancy rate of Southgate Complex (from 85.8% in Q3 FY2023 to 85.1% in Q4 FY2023).

The occupancy rate of its retail spaces in Singapore also saw a 3.0pp decline – as result of a fall in the occupancy of Suntec City Mall (from 98.7% in Q3 FY2023 to 95.6% in Q4 FY2023), as well as Marina Bay Link Mall (from 97.0% in Q3 FY2023 to 96.5% in Q4 FY2023).

However, the occupancy rate of its Singapore office properties edged up by 0.2pp, due to an improvement in the occupancy rate of MBFC Towers 1 & 2 (from 98.2% in Q3 FY2023 to 99.2% in Q4 FY2023), slightly offset by a 0.3pp dip in occupancy in One Raffles Quay (from 99.7% in Q3 FY2023 to 99.4% in Q4 FY2023).

Finally, in terms of rental reversion, its also a positive for the REIT, as they managed to record a double-digit percentage rental reversion for new and/or renewed leases in its Singapore and Australia office properties, as well as in its retail spaces in Singapore.

Debt Profile (Q3 FY2023 vs. Q4 FY2023)

If there is one thing about Suntec REIT I do not quite like, it is the REIT’s high aggregate leverage and its low interest coverage ratio recorded in the previous quarters. Hence, its debt profile is one I tend to focus more attention on, to monitor if the figures have shown an improvement, or if it has continued to deteriorate.

The following table is the commercial REIT’s latest debt profile recorded for the 4th quarter of FY2023 ended 31 December 2023, compared against that recorded in the previous quarter (i.e., 3rd quarter of FY2023 ended 30 September 2023) to find out if it has further improved or deteriorated:

Q3 FY2023Q4 FY2023
Aggregate Leverage
Interest Coverage
Ratio (times)
Average Term to
Debt Maturity (year)
2.72 years3.00 years
Average Cost of
Debt (%)
% of Borrowings Hedged
to Fixed Rates (%)

My Observations: After successive quarters of weakening, the REIT’s debt profile have saw some slight improvements – particularly in its aggregate leverage (which edged down by 0.4pp, as the REIT pared down debts using proceeds from the divestment of strata units at Suntec City Office Towers), as well as an increase in the percentage of borrowings hedged to fixed rates (up from ~51% in Q3 FY2023 to ~61% in Q4 FY2023; however, it is still on the low side).

Looking at its debt maturity, it only have 9.4% (or S$400m) of borrowings due for refinancing in FY2024 (which is quite minimal in my opinion). In the next few financial years, the REIT have 15.7% (or S$670m) of borrowings due for refinancing in FY2025, 24.8% (or S$1,061m) of borrowings due for refinancing in FY2026, and 50.1% (or S$2,146m) of borrowings due for refinancing only in FY2027 and beyond.

Distribution Payout to Unitholders

Suntec REIT is one of the few Singapore-listed REITs that has continued to pay out a distribution to its unitholders on a quarterly basis – which is something I desire.

For the 4th quarter of FY2023, a distribution payout of 1.866 cents/unit was declared. Compared to its distribution payout of 1.99 cents/unit, it represents a 6.2% decline. However, if you compare it with the distribution payouts declared in the previous 3 quarters this financial year, the payout declared this quarter is the highest among the 4 quarters.

If you are a unitholder of Suntec REIT, do take note of the following dates on its distribution payout:

Ex-Date: 31 January 2024
Payout Date: 01 February 2024
Distribution Date: 28 February 2024

Together with its distribution payout made in the 1st 3 quarters (1.737 cents/unit in the 1st quarter, 1.739 cents/unit in the 2nd quarter, and 1.793 cents/unit in the 3rd quarter), the REIT’s management have paid out a total of 7.135 cents/unit for the entire year. Compared to its distribution payout of 8.884 cents/unit in the previous financial year (i.e., FY2022 ended 31 December 2022), this represents a 19.7% drop.

CEO Mr Chong Kee Hiong’s Comments & Outlook (from the REIT’s Press Release)

“On the operating front, the Singapore Office and Retail portfolios continued to post better revenue performance, achieving strong double-digit rent reversions across all the quarters of the year. The recovery of the convention business was another bright spot, with revenue and income both surpassing pre-COVID levels, and earlier than expected. Going forward, though we expect better operating performances from the Singapore portfolio, the elevated interest rates and leasing downtime for the vacancies at 55 Currie Street, Southgate Complex and The Minster Building would continue to impact our distributable income. Suntec REIT will continue to focus on divestment of our mature assets and strata units at Suntec City Office to deliver accretive earnings, lower our gearing and deliver long-term value to our unitholders.”

Closing Thoughts

By and large, FY2023 was a weaker one as far as its financial results (due to higher financing costs, weaker Australian dollar, and higher vacancies in the occupancy rates in its Australian properties), and portfolio occupancy (I noted the huge decline in the occupancy rate in 55 Currie Street – which fell from 96.4% in Q3 FY2023 to just 56.2% in Q4 FY2023) are concerned.

However, there are some positives to note, including the distribution payout in the 4th quarter is the highest among the 4 quarters in FY2023 (at 1.866 cents/unit). Rental reversions for new and/or renewed leases in its Singapore and Australian office properties, as well as its Singapore retail properties are at double digit percentages. Finally, I see some positives in its debt profile in terms of its aggregate leverage (which have declined slightly, even though its still on the high side), and in its percentage of borrowings hedged to fixed rates (which went up slightly to 61%, even though it is still slightly low – on the other hand, should the US Federal Reserve start to cut interest rates, then the REIT will be one of those that will benefit from the lower borrowing costs earlier than those that have a high percentage of borrowings hedged at fixed rates).

With that, I have come to the end of my review of Suntec REIT’s latest full year results. Please note that all the opinions above are purely mine, which I am sharing for educational purposes only. They do not constitute any buy or sell calls for the REIT’s units. As always, you are strongly encouaged to do your own due diligence before making any investment decisions.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Suntec REIT.

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