Suntec REIT (SUN) is a commercial real estate investment trust (REIT) with office and retail assets. It owns several Grade-A office buildings such as Suntec Office, a one-third stake in One Raffles Quay and a one-third stake in MBFC Towers 1 and 2. With 66.3% interest in Suntec Singapore Convention & Exhibition Centre and full ownership of Suntec City Mall, SUN owns an integrated commercial development known as Suntec City. ARA Trust Management (Suntec) Limited is the appointed manager. SUN has a diversified portfolio across geographies with 69% of revenue contributed from Singapore, 20% Australia and 13% UK.
Key Investment Merits
We initiate coverage with a BUY rating and a target price of S$1.47 based on DDM valuation, COE of 10.4% and terminal growth of 1%. We expect DPU of 6.83 cents for FY23e and 7.29 cents for FY24e, translating into yields of 5.64% and 6.03%, respectively. FY23e NPI yield is c.4.2%