Suntec's profit up by 5% to S$49m
High occupancy rates and additional income from Suntec Singapore drove revenue up.
However, a decrease in DPU is expected with the loss in income from the divestment of CHIJMES. Proceeds from the deal will be used to partially fund the AEI at Suntec Singapore and Suntec City Mall.
Here's more from DMG Research:
Suntec released its 1Q12 results, posting gross revenue and distributable income of S$73.3m and S$54.9m respectively. DPU for the period came in at 2.45S¢, accounting for 25.3% of the FY12 DPU forecast. NPI increased by 5.0% YoY bringing it to S$49.0m on the back of high occupancy rates and additional income from Suntec Singapore. Going forward, SUN’s DPU is expected to drop slightly amid the loss in income from the divestment of CHIJMES and lower income contribution from Suntec City as a result of the AEI which will begin in June.
Proceeds from CHIJMES used for AEI and mitigate dips in DPU
As part of the company’s proactive asset management strategies in maximising returns from the portfolio, Suntec divested CHIJMES for a price of S$177.0 million, 23.2% higher than valuation. According to management, the proceeds will be deployed to partially fund the AEI at Suntec Singapore and Suntec City Mall, and to mitigate any temporary dip in distribution per unit during the execution of the AEI from June onwards.
Gain in revenue offset by lost in income
Going forward, as ORQ and MBFC continue to outperform the general office market, together with additional income from Suntec Singapore in the 1H12, SUN’s DPU may drop mildly by 2.8% in FY12. Most of the lost in income due to the divestment at CHIJMES and the AEI at Suntec City may be offset by the gain in income from the abovementioned.