- Gross revenue for 1Q24 inched up 1% YoY to S$109.8mn and NPI contracted by 3.8% YoY to 73.4mn underpained by the stronger-performing Suntec Center, forming 23%/22% of our FY24 estimate respectively. DPU decreased by 13% in 1Q24 to S$1.51 cents, in the absence of capital distribution (FY23: S$5.8mn), and was within our expectations. If the capital top-up is excluded, DPU will decline slightly by 1.8% YoY.
- High rental reversion continued in FY24 with Singapore office generated 11.4% for 1Q24 and Suntec City Mall contributing 21.7%. We expect rental reversion of mid-teens for retail and high-single-digit for office in FY24.
- We reiterate our BUY recommendation with a lower DDM-TP of S$1.41 (prev: S$1.47) and FY24e-25e DPU forecasts of S$6.2 to S$7.49 cents after factoring in the higher-for-longer interest rate and longer-than-expected leasing downtime of oversea properties. We expect FY24e DPU to be eroded by the high interest rate since only hedged 57% of its borrowing to fixed-rate. Nevertheless, earings will be supported by high rental reversions of the Singapore side and divestment of strata office assets in Suntec reduce to lower interest expense.
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