In a report released today, Jonathan Koh from UOB Kay Hian maintained a Hold rating on Suntec Real Estate Investment, with a price target of S$1.31.
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Jonathan Koh’s rating is based on a combination of factors influencing Suntec Real Estate Investment’s current and future performance. The company’s net property income from its Australian portfolio saw a significant increase due to a one-off compensation from a tenant, but this boost is not expected to be a recurring event. Additionally, Suntec’s managed investment trust status in Australia, which affects its tax obligations, is temporarily lost and is anticipated to be regained in 2026, impacting its financial results in the short term.
In Singapore, Suntec’s office and retail segments performed robustly with high occupancy rates and positive rent reversions, although the retention rate at Suntec City Mall remains a concern. The competitive leasing environment in Australia, particularly in Adelaide, poses challenges, with high incentive levels and occupancy issues at certain properties. Despite these challenges, the overall distribution yield is considered fair, and the price-to-net asset value ratio is attractive, leading to the Hold recommendation.