Patience Is Bitter, But Its Fruit Is Sweet: Maybank Kim Eng SUNTEC CITY 3Q13 DPU to fare better. The worst distribution drag by Suntec City Mall’s (SCM) ongoing renovation works is likely over in 1H13, when Phase 1 new tenants have yet to start paying rentals and Phase 2 old tenants are being vacated for the AEI. Nonetheless, we noted that many Phase 1 tenants (H&M, Uniqlo, Giant, Breadtalk Café , Hans etc.) have begun operations in Jun-Sep, but they are likely to be still on rentfree periods (1-2 mths). We thus foresee modest rental uplift last quarter and forecast 3Q13 DPU at 2.28 SG-cts (+1.5% QoQ; -2.8% YoY) and FY13 DPU at 9.23 SG-cts. (-2.7% YoY). Look out for progress update on AEI. Pre-commitments for Phase 1 leases in 2Q13 hit 99.6% (96.7% in 1Q13), with average passing rent of SGD13.09 psf/mth. Suntec also reported that 70.1% of Phase 2 NLA in 2Q13 has been pre-committed (prev. qtr 53%). We think pre-commitments for Phase 2 should hit at least 85% in 3Q13. Looking at the intensity of the refurbishment works, overall AEI is making good progress and works should wrap up as scheduled by 4Q14.
Posted on: Tue, 08 Oct 2013 06:37:00 +0000
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