Stellar Suntec REIT to underperform in 2016 on back of lacklustre office demand

Its lease-expiry profile is least favourable among office REITs.

Suntec REIT’s good run may well be drawing to a close. According to Maybank Kim Eng, Suntec REIT might underperform next year on back of lacklustre office demand and the expected softness in office rentals.

While Suntec REIT offers good exposure to strong office leasing this year, 23.8% of its office leases are expiring in toward the end of 2016 and its lease-expiry profile is least favourable among office REITs.

“We think its positives have been largely priced in after its rally from end-2013. In the retail space, we prefer REITs with smaller exposure to Downtown Core on less favourable supply-demand dynamics than Outside Central Region,” stated the report.
 

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