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NOTICE OF RECORD & DISTRIBUTION PAYMENT DATE NOTICE IS HEREBY GIVEN that the Transfer Books and Register of Unitholders of Suntec Real Estate Investment Trust (&ldquo Suntec REIT&rdquo ) will be closed at 5.00 p.m. on 6 May 2024 being the Record Date for the purpose of determining unitholders' entitlements to Suntec REIT&rsquo s distribution. Suntec REIT has announced a distribution of 1.511 cents per unit in Suntec REIT (&ldquo Unit&rdquo ) for the period of 1 January 2024 to 31 March 2024 (the &ldquo Distribution&rdquo ), comprising a taxable income component of 1.450 cents per unit and a tax-exempt income component of 0.061 cents. Holders of Units (&ldquo Unitholders&rdquo ) whose securities accounts with The Central Depository (Pte) Limited are credited with Suntec REIT Units as at Record Date will be entitled to the Distribution that will be paid on Thursday, 30 May 2024
1.10 reclaimed.
The Board of Directors of ARA Trust Management (Suntec) Limited, the Manager of Suntec REIT, is pleased to announce that Suntec REIT&rsquo s Business Updates for first quarter ended 31 March 2024 will be released on Thursday, 25 April 2024 before market opens. BY ORDER OF THE BOARD ARA Trust Management (Suntec) Limited (as Manager of Suntec Real Estate Investment Trust).
Annex A Please refer to The Manager&rsquo s responses to the questions as set out in the table below: Capital Management Questions
Responses 1. What is the impact of the $94.4 million divestment of strata units at Suntec City Office? Proceeds from the divestments were used to pare down debt, reducing our aggregate leverage ratio (&ldquo ALR&rdquo ) to 42.3%. The divestments were accretive to Suntec REIT&rsquo s earnings as the units were divested at the Net Property Income (&ldquo NPI&rdquo ) yield of approximately 3.0% which is lower than the borrowing cost of 4.0% for 4Q 2023. 2. What is Suntec REIT&rsquo s target ALR? Our current target ALR is in the range of 40% as the elevated interest rate environment is expected to persist. 3. Is the all-in financing cost expected to rise further in FY 2024? The financing cost for 2024 is expected to be above 4.0% compared to 3.84% in FY 2023 as interest rates swaps and hedges that were locked in at lower rates in previous years will progressively drop off in 2024. Management is mindful of the uncertainty in timing for lower interest rates and has been proactively managing the balance between our fixed and floating interest rates.
Divestments Questions Responses 1. What is Suntec REIT&rsquo s divestment plan, and what will be the impact of the potential divestment on Distribution per Unit (&ldquo DPU&rdquo )? We will continue with our active portfolio management strategy of divesting mature assets and re-investing in good quality, accretive assets. In Australia, the office capital market has been quiet. In 2023, the transacted value of Australia office assets was 50% below the 10-year historical average. Transactions are expected to pick up when interest rates come down and economic conditions improve. In 2023, Suntec REIT divested $94.4 million of strata units at Suntec City Office at 31% above the book value of $2,555 psf. We plan to continue with the divestment of strata units at Suntec City Office in 2024. 3 Any potential divestment is not expected to be DPU dilutive as the loss of Net Property Income (&ldquo NPI&rdquo ) is expected to be less than interest savings when the sales proceeds are used to pare down debts.
Valuation Questions Responses 1. The valuation for the United Kingdom (&ldquo UK&rdquo ) properties have decreased. Why is this so? Valuation is impacted by property market conditions as well as macroeconomic factors such as the interest rate, GDP growth and inflation rate. The decline in valuation was due to the expansion of cap rates of more than 50 basis points (i.e 0.5%) as a result of the higher interest rates for the British Pound. Management maintains the view that London will continue to be a key global market that will enhance Suntec REIT&rsquo s income diversification and unitholders&rsquo value.
Operations Questions Responses 1. The committed occupancies at 55 Currie Street, Southgate Complex and The Minster Building dropped. What is the progress of the backfilling? 55 Currie Street Backfilling of the vacant space at 55 Currie Street has been slow as the demand for office space in Adelaide has not caught up with the large increase in office supply in 2023. Southgate Complex Melbourne office market was impacted by a lack of expansionary demand in 2023 due to macroeconomic conditions. To improve marketability, the Manager embarked on several asset enhancement initiatives such as refurbishment of the main office lobby, auditorium and roof terrace. Fully fitted office suites were also created to meet the varied demand of tenants. The Minster Building A third of the space has been committed in the first quarter of 2024, with the remaining spaces being in negotiations with several interested prospects. 4 2. What is the current utilisation rate for Suntec Convention, and how does it compare to pre COVID levels? Suntec Convention business has recovered earlier in 2023 than projected to be by 2024. Gross Revenue and NPI in FY 23 surpassed pre-COVID levels by +3% and +11% respectively. Singapore&rsquo s MICE industry will continue to drive and benefit from the country&rsquo s tourism recovery. Future growth will continue to be driven by MICE, consumer events and long-term licences. 3. With the change in visa policy for Chinese tourists, has that impacted the profile of shoppers at Suntec City? The Singapore-China mutual visa exemption kicked in only on 9 Feb 24. Whilst we are unable to determine the tourist footfall by nationality, we observed an increase in tourist spend of about 40% at Suntec City in 1Q 24 compared to last year.
Others Questions Responses 1. Suntec REIT unit price had declined around 10% in 2023 and is trading at a steep discount to Net Asset Value per unit (&ldquo NAV&rdquo ), will Suntec REIT remain fundamentally sound and what actions can be taken so that Suntec REIT is more appropriately valued by the market? In FY 2023, Suntec REIT&rsquo s unit price declined by 10.9% while comparable peers&rsquo unit price change were within the range of -6% to +2.2%. Suntec REIT&rsquo s discount to NAV was 41.4% while comparable peers&rsquo discount to NAV were between -3.3% to -27.9%. The improved operating performance of our portfolio of assets had resulted in steady NPI throughout 2023. However, the better operating performance was eroded by higher financing costs amid the high interest rate environment. Management will continue to focus its efforts on improving operating performance of our diversified portfolio of high-quality assets in Singapore, Australia and UK, as well as the divestment of mature assets at market value.
Responses 1. What is the impact of the $94.4 million divestment of strata units at Suntec City Office? Proceeds from the divestments were used to pare down debt, reducing our aggregate leverage ratio (&ldquo ALR&rdquo ) to 42.3%. The divestments were accretive to Suntec REIT&rsquo s earnings as the units were divested at the Net Property Income (&ldquo NPI&rdquo ) yield of approximately 3.0% which is lower than the borrowing cost of 4.0% for 4Q 2023. 2. What is Suntec REIT&rsquo s target ALR? Our current target ALR is in the range of 40% as the elevated interest rate environment is expected to persist. 3. Is the all-in financing cost expected to rise further in FY 2024? The financing cost for 2024 is expected to be above 4.0% compared to 3.84% in FY 2023 as interest rates swaps and hedges that were locked in at lower rates in previous years will progressively drop off in 2024. Management is mindful of the uncertainty in timing for lower interest rates and has been proactively managing the balance between our fixed and floating interest rates.
Divestments Questions Responses 1. What is Suntec REIT&rsquo s divestment plan, and what will be the impact of the potential divestment on Distribution per Unit (&ldquo DPU&rdquo )? We will continue with our active portfolio management strategy of divesting mature assets and re-investing in good quality, accretive assets. In Australia, the office capital market has been quiet. In 2023, the transacted value of Australia office assets was 50% below the 10-year historical average. Transactions are expected to pick up when interest rates come down and economic conditions improve. In 2023, Suntec REIT divested $94.4 million of strata units at Suntec City Office at 31% above the book value of $2,555 psf. We plan to continue with the divestment of strata units at Suntec City Office in 2024. 3 Any potential divestment is not expected to be DPU dilutive as the loss of Net Property Income (&ldquo NPI&rdquo ) is expected to be less than interest savings when the sales proceeds are used to pare down debts.
Valuation Questions Responses 1. The valuation for the United Kingdom (&ldquo UK&rdquo ) properties have decreased. Why is this so? Valuation is impacted by property market conditions as well as macroeconomic factors such as the interest rate, GDP growth and inflation rate. The decline in valuation was due to the expansion of cap rates of more than 50 basis points (i.e 0.5%) as a result of the higher interest rates for the British Pound. Management maintains the view that London will continue to be a key global market that will enhance Suntec REIT&rsquo s income diversification and unitholders&rsquo value.
Operations Questions Responses 1. The committed occupancies at 55 Currie Street, Southgate Complex and The Minster Building dropped. What is the progress of the backfilling? 55 Currie Street Backfilling of the vacant space at 55 Currie Street has been slow as the demand for office space in Adelaide has not caught up with the large increase in office supply in 2023. Southgate Complex Melbourne office market was impacted by a lack of expansionary demand in 2023 due to macroeconomic conditions. To improve marketability, the Manager embarked on several asset enhancement initiatives such as refurbishment of the main office lobby, auditorium and roof terrace. Fully fitted office suites were also created to meet the varied demand of tenants. The Minster Building A third of the space has been committed in the first quarter of 2024, with the remaining spaces being in negotiations with several interested prospects. 4 2. What is the current utilisation rate for Suntec Convention, and how does it compare to pre COVID levels? Suntec Convention business has recovered earlier in 2023 than projected to be by 2024. Gross Revenue and NPI in FY 23 surpassed pre-COVID levels by +3% and +11% respectively. Singapore&rsquo s MICE industry will continue to drive and benefit from the country&rsquo s tourism recovery. Future growth will continue to be driven by MICE, consumer events and long-term licences. 3. With the change in visa policy for Chinese tourists, has that impacted the profile of shoppers at Suntec City? The Singapore-China mutual visa exemption kicked in only on 9 Feb 24. Whilst we are unable to determine the tourist footfall by nationality, we observed an increase in tourist spend of about 40% at Suntec City in 1Q 24 compared to last year.
Others Questions Responses 1. Suntec REIT unit price had declined around 10% in 2023 and is trading at a steep discount to Net Asset Value per unit (&ldquo NAV&rdquo ), will Suntec REIT remain fundamentally sound and what actions can be taken so that Suntec REIT is more appropriately valued by the market? In FY 2023, Suntec REIT&rsquo s unit price declined by 10.9% while comparable peers&rsquo unit price change were within the range of -6% to +2.2%. Suntec REIT&rsquo s discount to NAV was 41.4% while comparable peers&rsquo discount to NAV were between -3.3% to -27.9%. The improved operating performance of our portfolio of assets had resulted in steady NPI throughout 2023. However, the better operating performance was eroded by higher financing costs amid the high interest rate environment. Management will continue to focus its efforts on improving operating performance of our diversified portfolio of high-quality assets in Singapore, Australia and UK, as well as the divestment of mature assets at market value.
Reminder AGM details below.
Today is the day.
This is the day He has made
Let us rejoice, be glad and attend
Today is the day.
This is the day He has made
Let us rejoice, be glad and attend
MrBear12 ( Date: 01-Apr-2024 20:39) Posted:
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I found this REITS Symposium on investingnote
and there are discounts for early birds 1 or 2 pax.
HURRY!
While places last.
The best place to learn about REITs.
What are you waiting for?
SIGN UP Below
REITs Symposium (reitsymposium.com)
and learn why Suntec Reits is currently not doing so well but has potential to recover its glory days.
and there are discounts for early birds 1 or 2 pax.
HURRY!
While places last.
The best place to learn about REITs.
What are you waiting for?
SIGN UP Below
REITs Symposium (reitsymposium.com)
and learn why Suntec Reits is currently not doing so well but has potential to recover its glory days.
Not anytime soon
12 series coming?
Should Suntec Reit internalise its manager?
If there is a lesson from the Sabana Reit experience, it is perhaps that aligning the interests of all stakeholders is difficult but absolutely crucial
THE board of Suntec Real Estate Investment Trust&rsquo s (Reit) manager should probably be prepared to field some questions from unitholders at the coming annual general meeting (AGM) on Apr 18 about whether it is time to consider internalising the management function of the trust.
This past week, RHB said in a report that Suntec Reit is uniquely positioned to benefit from such an internalisation &ndash given the relatively large size of its property portfolio and its limited reliance on its sponsor group for acquisitions and funding.
RHB is specifically suggesting that Suntec Reit acquire its manager for between S$307 million and S$430 million, by issuing new shares to its sponsor group.
The research house figures this could boost Suntec Reit&rsquo s distribution per unit (DPU) by as much as 6 per cent.
RHB added that an internalisation exercise is unlikely to have much impact on Suntec Reit&rsquo s overall debt cost, and could potentially lower its cost of equity.
&ldquo We believe that internalisation could be a win-win for all stakeholders and result in a healthy DPU uplift over the long run,&rdquo RHB said in its report.
Suntec Reit was among the earliest Reits to list in Singapore &ndash it hit the market in late 2004. Its manager ARA Asset Management is today owned by Hong Kong-listed ESR Group.
Suntec Reit holds real estate assets worth S$12.2 billion. More than three-quarters of these assets consist of offices, shops and convention space in Singapore. The Reit also holds offices and retail properties in Australia and the United Kingdom.
RHB noted in its report that Suntec Reit&rsquo s concentration on commercial properties stands in contrast to ESR Group&rsquo s focus on &ldquo new economy&rdquo properties that support the e-commerce sphere.
For 2023, Suntec Reit&rsquo s distributable income fell 19.1 per cent to S$206.8 million, and its DPU declined 19.7 per cent to S$0.07135. This was attributed to higher financing costs as well as a weaker Australian dollar.
Suntec Reit last year divested S$94.4 million of strata units at Suntec City Office Towers, at average prices of 31 per cent above their book value. The proceeds were used to repay debt.
Even so, Suntec Reit ended 2023 with relatively high aggregate leverage of 42.3 per cent. Against the backdrop of higher interest rates, this has resulted in a lot of nervousness in the market.
On Friday (Apr 5), Suntec Reit closed at S$1.13 &ndash an appalling 46.2 per cent discount to its net asset value (NAV) as at Dec 31 of S$2.10 per unit.
Motivations of stakeholders
Suntec Reit would probably garner a higher market valuation if it pursues an internalisation initiative, in my view.
For one thing, it would gain a certain cachet in a market where every other Reit is externally managed. It may also be viewed as an easier takeover target.
The big question is whether the interests of all the parties involved can be sufficiently aligned for a deal to get done.
RHB said past transactions involving Reit managers have been priced at seven to nine times their annual management fees.
For instance, Croesus Retail Trust acquired its manager in 2016 for S$50 million &ndash which was 7.4 times its management fees.
In another transaction, City Developments purchased a 50 per cent stake in IReit Global&rsquo s manager in 2019 for S$18.4 million. This was equivalent to 9.4 times its management fees.
In 2018, ESR Logos Reit (which was then known as ESR-Reit) merged with Viva Industrial Trust (VIT). As part of the deal, VIT&rsquo s manager changed hands for S$62 million &ndash or 7.1 times its management fee.
In 2019, a unit of ESR Group bought 51 per cent of Sabana Reit&rsquo s manager for S$21.8 million &ndash or about 9.3 times its management fees.
RHB said Suntec Reit&rsquo s manager should probably be priced at a discount to these past transactions, considering the Reit&rsquo s large size and mature growth profile. The research house applied a five to seven times multiple to fees earned by Suntec Reit&rsquo s manager to arrive at the price tag of S$307 million to S$430 million mentioned earlier.
So, would a proposal for Suntec Reit to acquire its external manager at such a valuation be viable?
The way I see it, the independent unitholders of Suntec Reit may baulk at having to pay anything for a manager that has not brought much to the table &ndash especially at a time when the market value of Suntec Reit&rsquo s units are in a slump.
However, they might ultimately be persuaded to support an internalisation deal if they are convinced that it will significantly boost Suntec Reit&rsquo s DPU and market value.
As for ESR Group, an internalisation deal would enable it to increase its stake in Suntec Reit at a discount to NAV. This would position ESR Group to ride any market re-rating of Suntec Reit that follows.
Yet, ESR Group might not be interested in giving up the fee income it currently earns from Suntec Reit unless it is more than compensated by an increase in DPU income from its increased stake.
Lessons from Sabana Reit
In the end, an internalisation of Suntec Reit&rsquo s manager may take place &ndash not because it is win-win for the key stakeholders but because it avoids a lose-lose situation.
In August last year, unitholders of Sabana Reit voted to remove its external manager, and direct its trustee to set up a new internal manager. Some eight months on, the process has proven to be expensive, lengthy, rancorous and uncertain.
A key sticking point is whether implementing the internalisation resolutions that were passed last year requires an amendment to Sabana Reit&rsquo s trust deed. Such an amendment would require an extraordinary resolution with a 75 per cent approval threshold, which ESR Group stands a good chance of blocking with its more than 21 per cent stake.
On Jan 9, Sabana Reit&rsquo s trustee filed an Order 32 application with the courts to clear up the matter.
The way I see it, the best way forward for Sabana Reit is for it to acquire its external manager from ESR Group. This will require that Quarz Capital &ndash the activist investor that has led the push for internalisation &ndash and ESR Group put aside their differences and begin serious negotiations.
Quarz and ESR Group both have good reasons to bend a little at this point. For Quarz, there is little point continuing with an expensive campaign that it might not win.
On the other hand, ESR Group has little reason to hold on to the manager of a Reit that is not an effective property securitisation platform anyway &ndash especially with growing investor scrutiny of the benefits that sponsor groups bring.
It would make more sense for the two parties to engineer a market re-rating of Sabana Reit by allowing it to acquire its existing manager &ndash so that they can both eventually exit their positions.
Interestingly, Quarz reached a resolution with ESR Group last week over alleged defamatory statements made in the heat of its fight for internalisation. Whether this leads to them working together remains to be seen, though.
If there is a lesson from Sabana Reit&rsquo s manager internalisation experience it is perhaps that aligning the interests of all stakeholders is difficult but absolutely crucial.
The managers and sponsor groups of failing Reits should take appropriate action before disgruntled investors turn mistrustful and militant.
If Suntec Reit is to reap the benefits of internalising its manager, its stakeholders have to be prepared to work together &ndash and the best time to begin doing so is now.
In general, do not average down.
More healthy and normal to average up if you are a long term investor.
After all, the natural phenomenon in life is inflation, and that applies to stocks in general as almost everything in this world has to keep up with inflation. Stocks as an asset class also inflate, and hence a ' good' stock should normally inflate in price under normal economic circumstances.
Invest averaging up not down
More healthy and normal to average up if you are a long term investor.
After all, the natural phenomenon in life is inflation, and that applies to stocks in general as almost everything in this world has to keep up with inflation. Stocks as an asset class also inflate, and hence a ' good' stock should normally inflate in price under normal economic circumstances.
Invest averaging up not down
leemakkie ( Date: 05-Apr-2024 14:15) Posted:
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You mean what about CDG?
Is CDG worth 2 dollars a share? No, of course not! (Shh but don' t tell the CDG thread) Bullish guys there! They are looking at a consensus 1.65-1.80 a share by the brokers whom we should not trust.
Is Suntec worth $2 a share? It already is, based on NAV. But why on earth is it not $2 today, or at least near it? Beats me... ...
That is a question we must pop at their AGM.
Or else some other ' expert' can share?
Trade asking questions before committing
Is CDG worth 2 dollars a share? No, of course not! (Shh but don' t tell the CDG thread) Bullish guys there! They are looking at a consensus 1.65-1.80 a share by the brokers whom we should not trust.
Is Suntec worth $2 a share? It already is, based on NAV. But why on earth is it not $2 today, or at least near it? Beats me... ...
That is a question we must pop at their AGM.
Or else some other ' expert' can share?
Trade asking questions before committing
Am with you for CDG as well.
What are your considerations that this counter will hit $2.00?
Would like to hear from your expert view.
I have been sitting on the sidelines , thinking to deploy some $ to average down from $1.50. I have held it since 2013. At the moment, there are better opportunities in the market.
What are your considerations that this counter will hit $2.00?
Would like to hear from your expert view.
I have been sitting on the sidelines , thinking to deploy some $ to average down from $1.50. I have held it since 2013. At the moment, there are better opportunities in the market.
MrBear12 ( Date: 04-Apr-2024 09:46) Posted:
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The golden dollar
OMG. what was the PIPO price?
MrBear12 ( Date: 05-Apr-2024 11:12) Posted:
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My friend,
I have indeed held it since IPO in Dec 2004, almost 20 years!
In its history, tt has hit 50 or so cents, and passed 2.00.
I am confident the time will come for two golden dollars.
Only thing is inflation will have chewed away any capital gains. Waiting is not entirely free!
One of the best things about this fellow, unlike many other REITS in the game, it has never had to issue rights shares to the general public. It has also tried to lower its gearing by selling off some assets.
However, it has had many preferential offerings and payments in units to its manager. This diluted the share base in favour of the managers.
Trade REITS without rights issues
I have indeed held it since IPO in Dec 2004, almost 20 years!
In its history, tt has hit 50 or so cents, and passed 2.00.
I am confident the time will come for two golden dollars.
Only thing is inflation will have chewed away any capital gains. Waiting is not entirely free!
One of the best things about this fellow, unlike many other REITS in the game, it has never had to issue rights shares to the general public. It has also tried to lower its gearing by selling off some assets.
However, it has had many preferential offerings and payments in units to its manager. This diluted the share base in favour of the managers.
Trade REITS without rights issues
u held suntec very long liao? Im also hoping this bugger hits $2
MrBear12 ( Date: 04-Apr-2024 11:44) Posted:
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Aiyah Vivacious! I am waiting for two golden dollars for suntec. I expect as office rents escalate and interest rates fall hopefully, suntec will soar back to good old days of 2017
Just as I waited for 2 golden dollars from 1 dollar for SPH.
Remember Rocketman? He coined the term golden dollar
He also said something like, waiting is free.
SMILE WIDELY
Just as I waited for 2 golden dollars from 1 dollar for SPH.
Remember Rocketman? He coined the term golden dollar
He also said something like, waiting is free.
SMILE WIDELY
errr
MrBear12 ( Date: 04-Apr-2024 09:46) Posted:
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Give a year or two, you will get two SG legal tender gold coins for a share
vivacious ( Date: 04-Apr-2024 09:34) Posted:
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