Suntec REIT has announced a favourable ruling from the Australian tax authorities, allowing it to continue benefiting from a concessionary withholding tax rate. This development is expected to enhance the real estate investment trust’s distribution per unit (DPU) by approximately 4% in the first half of 2025, RHB said in a note. The announcement comes amidst a backdrop of declining domestic interest rates, which have reduced Suntec REIT’s finance costs by 6% during the same period.
The tax concession is a significant advantage for Suntec REIT, which is already trading at a substantial 35% discount to its book value. This discount, combined with the high-quality nature of its portfolio, positions Suntec REIT as a potential candidate for mergers and acquisitions or internalisation. The RHB’s analyst, Vijay Natarajan, has reiterated a “BUY” recommendation, raising the target price from SGD1.35 to SGD1.48, indicating a 13% upside potential.
The strategic positioning of Suntec REIT, coupled with the recent tax ruling, underscores its potential for growth and stability in the current market. The trust’s ability to maintain a competitive edge through financial efficiencies and strategic tax advantages highlights its resilience and attractiveness to investors. As the market continues to evolve, Suntec REIT’s proactive measures and robust portfolio are likely to sustain its performance and investor interest.
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