Suntec REIT faces $20m income vacuum after Park Mall divestment

Its DPU will be under pressure.

Analysts warn that Suntec REIT will face an income vacuum after its divestment of Park Mall, but this loss might be mitigated by interest savings.

“We estimate that FY16 NPI could be shaved by SGD19.5m.REIT's maximum pro-rata share of committed capital, we estimate that SGD292.8m will be available for debt repayment. We think the loss of income from Park Mall will be offset by interest savings from the cash proceeds,” said Maybank Kim Eng analyst Derrick Heng.

The group’s DPU will also be under pressure for the current financial year.

“We have assumed that contribution from Park Mall will cease from 3Q15 onwards, and we forecast a 4% dip in FY16 DPU. The Manager has indicated a willingness to use proceeds to mitigate this decline, and any capital distribution will present an upside to our estimates,” said DBS analysts Rachel Tan and Derek Tan.

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