Company Coverage
Suntec REIT: 1H26: Divestment Gains Importance With Uptick In Leverage
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$1.52
S$1.75
+15.1%
S$1.71
Analyst
Highlights
- NPI from Suntec City Mall increased 13.6% yoy in 1H26, supported by higher occupancy and completion of AEI. Tenant sales psf rose 5% yoy.
- Aggregate leverage rose 1.4ppt qoq to 43.0% following the redemption of S$150m perpetual securities. SUN’s one-third stake of ORQ has become a potential candidate for divestment.
- SUN is a beneficiary of tight vacancy in core CDB with the divestment of ORQ on the cards. Maintain BUY with target price at S$1.75.
Analysis
- Suntec REIT (SUN) reported DPU of 3.936 S cents (24.8% yoy), which is ahead of our expectation. The improvement was driven by stronger operating performance across the Singapore office and retail portfolios, lower financing costs, and the absence of additional Australian withholding tax provisions following confirmation of its Managed Investment Trust (MIT) status.
- Singapore Office: Benefitting from limited CBD supply. Committed occupancy at Suntec City Office improved 0.9ppt qoq to 100%. Occupancies at One Raffles Quay (ORQ) and Marina Bay Financial Centre (MBFC) Towers 1 & 2 also edged slightly higher to 99.1% and 98.7% respectively. Rental reversion picked up to 11% at Suntec City Office in 2Q26. NPI and JV income from Singapore office portfolio increased 2.3% and 9.3% yoy respectively. Management expects occupancy to remain high and rental reversion is likely to remain around 5% for 2026.
- Suntec City Mall: Boost from AEI. Occupancy improved 0.6ppt qoq to 99.6% while rental reversion remained healthy at 8.5% in 1H26. NPI increased 13.6% yoy respectively, supported by higher occupancy and rents, as well as incremental income from the completed AEI. Tenant sales psf rose 5% yoy in 1H26 with growth from F&B, supermarkets and leisure & entertainment. Resilient consumer spending is supported by rising visitor arrivals and major events, including the F1 Singapore Grand Prix and BTS concert. Rental reversion should be close to 10%.
Highlights
- NPI from Suntec City Mall increased 13.6% yoy in 1H26, supported by higher occupancy and completion of AEI. Tenant sales psf rose 5% yoy.
- Aggregate leverage rose 1.4ppt qoq to 43.0% following the redemption of S$150m perpetual securities. SUN’s one-third stake of ORQ has become a potential candidate for divestment.
- SUN is a beneficiary of tight vacancy in core CDB with the divestment of ORQ on the cards. Maintain BUY with target price at S$1.75.
Analysis
- Suntec REIT (SUN) reported DPU of 3.936 S cents (24.8% yoy), which is ahead of our expectation. The improvement was driven by stronger operating performance across the Singapore office and retail portfolios, lower financing costs, and the absence of additional Australian withholding tax provisions following confirmation of its Managed Investment Trust (MIT) status.
- Singapore Office: Benefitting from limited CBD supply. Committed occupancy at Suntec City Office improved 0.9ppt qoq to 100%. Occupancies at One Raffles Quay (ORQ) and Marina Bay Financial Centre (MBFC) Towers 1 & 2 also edged slightly higher to 99.1% and 98.7% respectively. Rental reversion picked up to 11% at Suntec City Office in 2Q26. NPI and JV income from Singapore office portfolio increased 2.3% and 9.3% yoy respectively. Management expects occupancy to remain high and rental reversion is likely to remain around 5% for 2026.
- Suntec City Mall: Boost from AEI. Occupancy improved 0.6ppt qoq to 99.6% while rental reversion remained healthy at 8.5% in 1H26. NPI increased 13.6% yoy respectively, supported by higher occupancy and rents, as well as incremental income from the completed AEI. Tenant sales psf rose 5% yoy in 1H26 with growth from F&B, supermarkets and leisure & entertainment. Resilient consumer spending is supported by rising visitor arrivals and major events, including the F1 Singapore Grand Prix and BTS concert. Rental reversion should be close to 10%.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$1.52
S$1.75
+15.1%
S$1.71
Analyst
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