DBS Group Research has upgraded Suntec REIT from “hold” to “buy,” setting a new target price of SGD1.40, reflecting a 17% upside from its last traded price of SGD1.20 on 6 August 2025. The upgrade is driven by anticipated tailwinds from declining interest rates and a strategic review that could unlock significant value for the real estate investment trust.
Suntec REIT, which owns key office assets in Singapore’s Central Business District, is poised to benefit from a potential 10% increase in distribution per unit (DPU) with every 50 basis point reduction in financing costs. The REIT’s current price-to-book ratio stands at 0.6x, with forward yields of approximately 5.3%.
The strategic review is expected to be a major catalyst for re-rating Suntec REIT. Analysts suggest that divesting certain assets, such as its one-third stake in Marina Bay Financial Centre and One Raffles Quay, could raise over SGD1 billion, strengthening the REIT’s balance sheet and setting it back on a growth path. Additionally, the potential reinstatement of the Managed Investment Trust (MIT) structure in Australia could reduce withholding tax rates from 30-45% to 10-15%, providing further financial relief.
Despite challenges in its overseas markets, Suntec REIT’s Singapore portfolio has shown resilience, with office and retail rents experiencing positive reversions. The REIT’s strategic review could address its higher-than-peer leverage ratio and close the current price-to-book gap, enhancing its market valuation.
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