UOB Kay Hian Private Limited
Date of Report: 19 August 2025
Suntec REIT 1H25 Results: Resilient Singapore Performance, Australia Compensation Boost, and UK Stability
Overview: Suntec REIT Delivers Mixed Results on Global Portfolio Strength
Suntec REIT (SUN SP), a prominent real estate investment trust listed on the Singapore Exchange, reported its first half 2025 results, showing robust performance in its Singapore assets, a notable one-off boost in Australia, and operational stability in the UK. The trust owns landmark assets including Suntec City (Office and Mall), a majority stake in Suntec Convention & Exhibition Centre, and significant holdings in Marina Bay Financial Centre, Marina Bay Link Mall, and One Raffles Quay. Internationally, Suntec REIT holds commercial properties in Australia and the UK.
UOB Kay Hian maintains a HOLD rating on Suntec REIT, with a target price of S$1.31, reflecting a modest upside potential of 4.8%. The REIT trades at a significant discount to its NAV, suggesting attractive value for investors seeking stable income and exposure to prime office and retail assets.
Key Financial Highlights: 1H25 Performance Metrics
| Metric |
1H25 |
YoY % Change |
Remarks |
| Gross Revenue (S\$M) |
234.5 |
+3.3% |
Growth from Singapore Office and Australia portfolios |
| Net Property Income (S\$M) |
159.5 |
+5.6% |
|
| Income from JVs (S\$M) |
51.2 |
+3.2% |
Higher rent from One Raffles Quay |
| Distributable Income (S\$M) |
92.8 |
+4.6% |
Finance costs declined 7.4% yoy |
| DPU (S cents) |
3.155 |
+3.7% |
Slightly below expectations due to higher Australian tax |
Singapore Portfolio: Office, Retail, and Convention Segments Drive Recovery
- Office Portfolio: High occupancy rates of 99.0% overall, with Suntec City Office at 99.5%, One Raffles Quay at 97.2%, and MBFC Tower 1 & 2 at 99.0%. Positive rent reversions reached 10.0% in 1H25, reflecting strong tenant demand.
- Retail Portfolio: Suntec City Mall’s committed occupancy improved by 2.4 percentage points year-on-year to 98.0%. The mall achieved a strong rental reversion of 17.2% in 1H25, although the retention rate remains modest at 69%. Recovery is supported by tourism and MICE activities, with a new link bridge to Guoco Midtown scheduled for completion in 3Q25, expected to boost weekday footfall.
- Convention Centre: Stable performance, focusing on higher-yield and public sector events despite budget tightening among event organisers.
Australia Portfolio: One-Off Compensation and Leasing Challenges
- Received a one-off compensation of A\$10 million from a tenant at 177 Pacific Highway, Sydney who surrendered three floors in 2Q25. Replacement tenants from consumer goods and construction sectors have already taken up the space.
- 55 Currie Street (Adelaide) faces competition from new premium-grade developments. Incentives remain high (40-45%) in both Adelaide and Melbourne, indicating a competitive leasing market. Occupancy at 55 Currie Street dropped 9ppt quarter-on-quarter to 52.4%, but advanced negotiations with a government agency could lift occupancy back to 70% by 4Q25.
- Australia accounts for 12.4% of Suntec REIT’s portfolio valuation. The REIT expects to regain MIT status for Australia in 2026, potentially improving tax efficiency.
UK Portfolio: Nova Properties Hold Steady Amid Market Uncertainty
- 100% occupancy at Nova properties, supported by employees returning to work and demand driven by large space requirements in new builds.
- Occupancy at The Minster Building declined 5.9ppt quarter-on-quarter to 84.9%. Suntec REIT is in advanced negotiations with a non-bank financial institution to take up 25,000 square feet, potentially raising occupancy to 94%.
Capital Management: Debt Cost, Leverage, and Deleveraging Strategy
- Interest coverage ratio improved to 2.0x, above MAS’ minimum requirement of 1.5x. All-in cost of debt decreased by 24 basis points to 3.82% in 2Q25. The impact of lower benchmark rates is offset by new hedges at higher rates.
- Issued S\$250m perpetual securities at 4.48% to refinance S\$200m perpetual securities at 3.8% due in October 2025, improving aggregate leverage by 1.3ppt to 41.1% as of June 2025.
- Focus on deleveraging via divestments, targeting S\$100 million of strata units at Suntec City Office in 2025.
Market Outlook: Singapore’s Strength, Rental Trends, and Trade Developments
- Office demand is expected to be cautious amid slower economic growth, but rental reversions for offices are projected to be high single digits and 10-15% for retail in 2025. Office occupancy is expected to stay high due to limited supply; retail occupancy projected above 95%.
- Grade A Core CBD office rents rose 1.3% yoy and 0.4% qoq to S\$12.10 psf pm in 2Q25. Vacancy eased to 5.3%. Demand was driven by financial services and pharmaceuticals; manufacturing and transport sectors supported renewals in decentralized locations.
- Singapore’s positioning as a financial and regional hub is reinforced by trade stability and lower tariffs, supporting continued office demand.
Valuation, Earnings Revision, and Share Price Catalysts
- 2026 DPU forecast raised by 1.5% due to lower cost of debt. Target price maintained at S\$1.31 based on DDM (cost of equity: 6.5%, terminal growth: 1.5%).
- Suntec REIT trades at a 39% discount to NAV per unit of S\$2.05.
- Share price catalysts include positive rental reversion for Suntec City Mall, increasing office attendance, and the resumption of events at Suntec Convention Centre.
Key Operating Metrics
| Metric |
2Q24 |
3Q24 |
4Q24 |
1Q25 |
2Q25 |
YoY Change |
QoQ Change |
| DPU (S cents) |
1.53 |
1.58 |
1.57 |
1.563 |
1.592 |
4.0% |
1.9% |
| Office Occupancy |
95.1% |
95.6% |
95.4% |
98.7% |
99.0% |
3.9ppt |
0.3ppt |
| Retail Occupancy |
95.4% |
97.7% |
97.9% |
98.2% |
98.0% |
2.6ppt |
-0.2ppt |
| Aggregate Leverage |
42.3% |
42.3% |
42.4% |
43.4% |
41.1% |
-1.2ppt |
-2.3ppt |
| All-in Financing Cost |
4.02% |
4.06% |
4.06% |
3.96% |
3.82% |
-0.2ppt |
-0.14ppt |
Portfolio Composition by Asset Type
- Singapore – Office: 54.5%
- Singapore – Retail: 21.6%
- Singapore – Convention: 1.9%
- Australia – Office: 12.4%
- United Kingdom – Office: 9.6%
Five-Year Financial Projections
| Year |
Net Turnover (S\$M) |
EBITDA (S\$M) |
Net Profit Adj. (S\$M) |
EPU (S cents) |
DPU (S cents) |
PE (x) |
DPU Yield (%) |
| 2023 |
463 |
242 |
98 |
3.4 |
7.1 |
36.8 |
5.7 |
| 2024 |
464 |
242 |
140 |
4.8 |
6.2 |
25.9 |
5.0 |
| 2025F |
480 |
256 |
65 |
2.2 |
6.4 |
56.0 |
5.1 |
| 2026F |
496 |
265 |
164 |
5.5 |
6.8 |
22.6 |
5.4 |
| 2027F |
500 |
267 |
164 |
5.5 |
6.8 |
22.7 |
5.4 |
Summary: Investment Perspective
Suntec REIT continues to demonstrate resilience in its core Singapore office and retail assets, with positive rental reversions, robust occupancy, and stable convention activity. The Australia portfolio navigates competitive market conditions with the help of one-off compensation and ongoing leasing efforts. The UK portfolio shows operational stability despite market volatility, with targeted leasing expected to restore occupancy levels.
With an attractive P/NAV ratio and a forward yield of approximately 5.4% for 2026, Suntec REIT remains a compelling hold for investors seeking steady income and exposure to premier commercial assets in Singapore and key international markets. The REIT’s disciplined approach to capital management, deleveraging, and asset divestment further strengthens its financial position heading into 2026 and beyond.
Disclosures and Analyst Certification
This report is prepared by UOB Kay Hian Private Limited, with the analyst certifying that the views expressed are independent and accurate, and that no direct compensation linked to recommendations was received. Distribution and regulatory conditions apply as per jurisdiction.
