STARHILL GLOBAL REIT
P40.SI
Starhill Global REIT - Well-Supported By Its Australian Asset
- Starhill Global REIT’s 1QFY15/16 results were in line, as it announced DPU growth of 3.1% YoY, meeting c.25% of our full-year estimate.
- We reiterate BUY, with a DDM-derived TP of SGD0.93 implying an upside of 16.3%.
- The results were mainly well-cushioned by the recently-acquired Myer Centre Adelaide, while the performance of its core Singapore portfolio remained robust.
Results in line.
- Starhill Global REIT’s 1QFY15/16 results were within our expectations as its distribution per unit (DPU) of 1.31 cents met c.25% of our full-year estimate. It reported increases in distributable income and DPU by 4.5% and 3.1% YoY respectively. The growth was mainly driven by the full-quarter contribution from the recently-acquired Myer Centre Adelaide, and a strong performance from its Singapore portfolio.
- The REIT’s borrowings are fully hedged, while its gearing level remained healthy at 35.7% with interest coverage of 4.5x. According to a sensitivity test conducted by the REIT, a 1.0% pa increase on floating rates would have resulted in a -1.3% change in its latest quarter’s DPU.
Singapore occupancy levels remain robust, while rental reversion was impacted by a small group of tenants.
- On its Singapore portfolio front, occupancy inched up slightly to 99.7%, while retail space was fully occupied. Although a negative rental reversion of 7.3% was registered for its Singapore retail space, we are not overly concerned as:
- leases that are committed accounted for 3% of its retail portfolio’s revenue (this excludes the Toshin master lease at Ngee Ann City Retail),
- these leases were modified to complement new retail concepts, and
- we remain optimistic, as tenant sales increased 1.1% YoY.
Maintain BUY, with an unchanged TP of SGD0.93.
- We remain optimistic on the REIT’s long-term growth plans, which include projects like the AUD10m redevelopment plan to optimise the upper-storey space at Plaza Arcade – it is currently in discussions with prospective anchor tenants on this matter.
- In addition, there is also potential for leasable area to be expanded (~100,000 sq ft) when Wisma Atria is linked up with the new Thomson Line Orchard MRT in 2021.
- Reiterate BUY with an unchanged TP of SGD0.93.
Ivan Looi
RHB Research
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Ong Kian Lin
RHB Research
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http://www.rhbinvest.com.sg/
2015-10-28
RHB Research
SGX Stock
Analyst Report
0.93
Same
0.93
