Suntec REIT

[shanrui_91]

But if we were to compare with other REITs which are also heavy on Office assets, we see their NAV discount / premium,

KepREIT : +3.5%
FCOT : -8.3%
CCT : -8.95%

So, could it be a case of Suntec being too aggressive in their valuations? Or market is giving it a higher discount due to the massive size of their few assets, which may be harder to sell??

Given Keppel REIT's rich history, I don't think the market will give it any premium for the new "Keppel" name now.

I have compiled some data below, and have excluded most of those that have yet to contribute full year NPI data.

FCOT has a business park in Alexandra Techno-Park and 2 Australia properties which have higher cap rate compared to the 3% used for China Square Central and 55 Market Street.

CCT has a 60% interest in Raffles City which is part retail part office, as well as Golden Shoe Car Park. Twenty Anson and Six Battery Road Cap Rate are around 3%, while Capital Tower and HSBC Building are around 4%.

Keppel REIT has 2 Australia properties which is yielding higher too. Keppel REIT has rental support for OFC, MBFC and One Raffles Quay which might make the cap rate less accurate. I believe the reason why Keppel REIT trades at a premium is because of the higher gearing ratio and leverage employed.

For Suntec Reit, it is clear that Suntec City Mall is pulling down the cap rate. I supposed that when the AEI is completed it should yield another 40-50 million NPI. Post-AEI, overall cap rate for Suntec Reit should be around 4.2%.

It seem like Retail REITs are so much simpler than Office REITs which have rental support, more varied cap rate and other kind of properties like retail, carpark and industrial. I suppose it is harder for Office REITs trading at 5-6% to do yield accretive acquisition where market cap rate is around 3-4%.