CGS International
July 29, 2025

Suntec REIT Shines in Singapore: 1H25 Results, Peer Review, and ESG Insights for Investors

Introduction: Suntec REIT’s Singapore Operations Power Ahead

Suntec REIT (SUN), a leading Singapore-based real estate investment trust, continues to demonstrate robust performance in its home market. The latest 1H25 results reveal resilient distributable income and stable operational metrics, even as overseas assets face macro headwinds. This report provides a comprehensive analysis of Suntec REIT’s financials, operational highlights, competitive positioning within the REIT sector, and ESG performance, delivering actionable insights for investors.

1H25 Performance: Solid Numbers Driven by Core Singapore Assets

• Distributable income for 1H25 rose 4.6% year-on-year to S\$92.8 million, translating to a DPU of 3.155 cents (+3.7% yoy).
• Results were in line with expectations, achieving 50.3% of the FY25 forecast.
• Aggregate leverage stood at 41.1% as of end-1H25.
• All-in financing cost dipped 14 basis points quarter-on-quarter to 3.82%, with 65% of borrowings hedged at fixed rates.
• Lower financing costs and robust Singapore operations offset higher withholding tax provisions in Australia, following the loss of Managed Investment Trust (MIT) status.

Segment Highlights: Office, Retail, and Convention Performance

Singapore Office: Robust Rental Reversions and High Occupancy

• Committed occupancy in Singapore offices stood at an impressive 99% at end-1H25.
• Rental reversion for Suntec Office was +6.9% in 1H25 (2Q: +8.3%).
• Marina Bay Financial Centre (MBFC) Towers 1 & 2 and One Raffles Quay (ORQ) posted even higher rental reversions at +13% (2Q: +16.2%).
• 206,300 sqft of office space was renewed, with 79% being renewals.
• Management expects FY25 rent reversion to mirror 1H25 levels, despite cautious demand amid macro uncertainties.
• Australia office occupancy dipped to 88.6%, dragged down by 55 Currie St (52.4% take-up). Adelaide’s leasing environment remains challenging but has slightly improved since 1Q25.
• UK office portfolio occupancy was 92.2% at end-1H25.

Retail: Suntec Mall Maintains Strength Amid Minor Traffic Declines

• Suntec Mall’s occupancy remained robust at 98%.
• Rental reversion hit a strong +18%.
• Shopper traffic and tenant sales both saw modest 2% yoy declines in 1H25.
• Management foresees continued positive rental reversions, although at a slower pace for FY25.

Convention: Strong NPI Growth on MICE Recovery

• Suntec Convention Centre’s NPI soared 64.4% yoy to S\$7.4 million in 1H25.
• Growth was driven by a surge in large- and mid-scale events, plus improved NPI margins on higher-yielding events and lower utilities costs.

Valuation, Risks, and Outlook: Hold Rating Maintained

• CGS International reiterates a Hold rating with a DDM-based target price of S\$1.26.
• Key upside risks include faster-than-expected balance sheet strengthening via capital recycling, a rapid decline in funding costs, and quick backfilling of overseas vacancies.
• Key downside risks are further interest rate hikes and prolonged macroeconomic weakness impacting office demand.

Shareholder Structure and Trading Dynamics

• Major shareholders: The Straits Trading Company (8%), Blackrock (5%).
• Market cap: S\$3,496 million (US\$2,723 million).
• Current shares outstanding: 2,934 million; Free float: 92.0%.
• 1M/3M/12M price performance: +5.3%, +4.4%, +0.8% (absolute); -0.3%, -7.9%, -36.0% (relative).

Financial Summary: Key Metrics and Projections

Peer Comparison: Suntec REIT in the Wider REIT Landscape

Office REIT Peers

Retail, Industrial, Hospitality, Overseas-centric, and Healthcare REITs

• Retail REITs (e.g., CapitaLand Integrated Commercial, Frasers Centrepoint, Mapletree Pan Asia) show dividend yields ranging from 5.0% to 7.3%, with leverage between 36% and 43%.
• Industrial peers such as Ascendas REIT, ESR-REIT, and Mapletree Logistics display dividend yields from 4.3% up to 8.9% and leverage up to 43%.
• Hospitality trusts like CapitaLand Ascott Trust and CDL Hospitality Trusts offer yields from 4.6% to 7.4% and leverage up to 41.8%.
• Overseas-centric REITs, including CapitaLand China Trust and Elite UK REIT, often present higher yields (up to 9.7%) but with higher leverage and risk exposures.
• Parkway Life REIT in healthcare has a lower yield of 3.8%–4.3% but stands out for its defensive asset class.

ESG Performance: Ambitious Targets, Steady Progress

• LSEG ESG Combined Score: C+ for FY23, with Environmental at B-, Social at C, and Governance at C.
• ESG controversies score: A+, indicating minimal controversies.
• Sun’s goals: Carbon neutrality for all Australia and UK assets and net zero for all wholly owned assets by 2030. Full net zero (including Scope 3) by 2050.
• FY24 target: 3% reduction in energy intensity (vs. FY19); maintain water intensity.
• GRESB: Achieved highest 5-star rating and ‘A’ for public disclosure in 2023.
• Environmental initiatives: WELL Platinum Certification for 477 Collins St and Nova Properties; 100% renewable energy at 21 Harris St, 477 Collins St, Nova Properties, and The Minster Building.
• Green finance: 70% of debt as of June 2024 is green or sustainability-linked.
• Social initiatives: Toy collection drive at Suntec City benefiting 2,000 underprivileged children; support for the Lee Kuan Yew Centennial Fund.
• ESG rating trend: Unchanged at C since 2019; Environmental and Governance scores have weakened slightly.

Detailed Financials: Profit, Cash Flow, and Balance Sheet Highlights

Profit & Loss (S\$ Million)

Balance Sheet (S\$ Million)

Key Ratios and Drivers

• Net Property Income Margin: Stable at 67–68% over the forecast period.
• DPS Growth: -19.7% (2023), -13.2% (2024), rebounding to +1.2% (2025F), +6.1% (2026F), +4.8% (2027F).
• Gross Interest Cover: Improving from 1.39 (2023) to 1.50 (2027F).
• Current Ratio: Rises from 0.31 (2024A) to 0.59 (2027F).
• Rental Rate: Growing from S\$9.6 psf (2023) to S\$10.5 psf (2027F).
• Net Lettable Area: Steady at ~3.3 million sqft.
• Occupancy: Maintained near full for Singapore, with improvement needed for overseas assets.

Conclusion: Suntec REIT’s Competitive Edge and Future Focus

Suntec REIT’s 1H25 results underscore the strength of its Singapore core assets. While headwinds persist in Australia and UK markets, and overseas occupancy lags, the trust’s healthy rental reversions, high occupancy, and prudent capital management provide a solid foundation. ESG ambitions, especially in environmental and social domains, may offer long-term upside as the group continues to invest in operational efficiency and sustainability.
With a Hold recommendation and limited near-term catalysts, Suntec REIT remains a key watch for investors seeking exposure to quality Singapore commercial real estate with balanced risk and stable yields. Investors are encouraged to monitor potential developments in overseas leasing, funding cost trends, and further ESG advancements.