Suntec REIT share price is enjoying some sort of bullish form in recent months. The share price hit a 2-year high in July after the announcement of a 50% interest in Premium Grade office in Melbourne. However, a look at the recent financial results indicated things may not be so rosy after all for the venerable REIT. Total return for 2Q17 was actually a decrease of 23% compared to last year. So why did the share price rise and is Suntec REIT a value trap?
Suntec REIT portfolio
Being one of the first REITs to be established in Singapore, Suntec REIT was listed on the SGX mainboard on 9 December 2004. Besides having a respectable history, the real estate investment trust also boosts a unique portfolio of properties comprising office and retail spaces.
Suntec REIT owns Suntec City mall and certain office units in Suntec Towers One, Two and Three and the whole of Suntec Towers Four and Five, which form part of the integrated commercial development known as “Suntec City”. The property portfolio also comprises 60.8 per cent effective interest in Suntec Singapore Convention & Exhibition Centre (“Suntec Singapore”), a one-third interest in One Raffles Quay (“ORQ”) and a one-third interest in Marina Bay Financial Centre Towers 1 and 2, and the Marina Bay Link Mall (collectively known as “MBFC Properties”) and 30.0 per cent interest in 9 Penang Road (formerly known as Park Mall).
Business expansion in Australia
Since 2016, Suntec REIT has embarked on an overseas expansion drive and made several strategic acquisitions in Australia. The move to diversify revenue from Suntec City Mall and Marine Bay office is a positive strategy by management as it helps to reduce concentration risk in Singapore market. Suntec REIT holds a 100 per cent interest in the commercial building located at 177 Pacific Highway, Sydney and a 25.0 per cent indirect interest in Southgate complex in Melbourne, Australia.
Faced with a slowing retail market in Singapore, Suntec REIT recently [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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