Higher costs and vacancies in its Australia and UK properties weighed on income.

Suntec REIT reported a distributable income of $88.7m for the first six months of 2024.

Distribution per unit (DPU) is 3.042 cents for the period, 1.2% lower compared to H1 2023, according to a report filed at the Singapore Exchange (SGX).

With the absence of capital distribution in 1H 24, DPU declined 12.5% year-on-year.

Higher financing costs and vacancies from its properties 55 Currie Street in Adelaide, Australia and The Minister Building in London weighed on distributable income, Suntec REIT said.

Suntec REIT manager CEO Chong Kee Hiong said that they expect The Minister Building to achieve full occupancy in the second half of 2024. However, the leasing pipeline in Adelaide remained weak under existing market conditions.

Operating performance of its Singapore Office, Retail and Convention portfolio continued to strengthen, it added.

On the divestment front, Suntec REIT recently sold $31.5m of strata units at Suntec City Office Towers at an average price of 27% above book value. Suntec REIT will use the proceed for its debts.

Looking ahead, Suntec REIT expect its Singapore office revenue to continue to strengthen on the back of strong occupancies and robust rent reversions in the last quarter. Notably, Suntec City Mall is expected to see stable growth of tenant sales and strong rent reversion.

Suntec Convention is expected to beenfeit from Singapore's efforts to boost MICE in the city, and Suntec REIT eyes higher dividend contribution from this properly.

In contrast, the REIT said that its Australia portfolio will be impacted by vacancies and higher incentives amidst ongoing "weak market conditions."

"Nationwide CBD office market occupancy is expected to decline due to supply coming onstream in the second half of 2024," the REIT said.