STARHILL GLOBAL REIT
P40.SI
Starhill Global REIT (SGREIT SP) - Records a Set Of Resilient Results
- Starhill recorded a set of resilient results, while we identified short- and long-term catalysts for the counter.
- We maintain BUY with a lower TP of SGD0.84 (from SGD0.93, 15% upside) implying 0.93x FY15 (Jun) P/BV.
- Its results were within our expectations, as its overall portfolio remained almost fully occupied.
- We think that the REIT’s upcoming master leases rental review could potentially be a short-term catalyst.
Resilient numbers in line with our expectations.
- Starhill Global REIT (Starhill) booked resilient earnings that met c.48% of our full-year estimate.
- 2QFY16/6MFY16 distribution per unit (DPU) rose about 2%/3% YoY, underpinned by c.10% stronger net property income (NPI) for the quarter – mainly driven by the contribution from its latest acquisition, ie a mall in Adelaide, Australia.
- Its gearing level remained healthy at 35.7%, with no significant debt refinancing requirement kicking in until 2018.
Stable portfolio performance with near-term catalysts.
- The REIT’s overall occupancy remained high at 98.0%, while its Singapore assets are almost fully occupied.
- In addition, we think that there are limited downside risks, as the next rental review for the master lease with Toshin Development Singapore is in June.
- Its master lease with Katagreen Development will be up for renewal in June this year, too. These, we think, would provide a near-term catalyst for Starhill.
Strategy moving forward.
- We would describe Starhill’s strategy as opportunistic.
- Despite divesting a Japanese asset earlier this month, Starhill remains interested in both the Japan and Australia markets. However, management has mentioned that competition is tough in these markets.
- Meanwhile, in Singapore, the REIT is looking at potentially expanding its leasable area when Wisma Atria is linked to a new mass rapid transit (MRT) station.
Maintain BUY with a lower TP of SGD0.84.
- We continue to like Starhill as we still see catalysts for both the short and long terms.
- We trim our TP to SGD0.84 as we lift our cost of equity assumption by 50bps to 7.4%.
- The key risk to our estimates would be flattish upward rental review with master leases.
Ivan Looi
RHB Research
|
http://www.rhbinvest.com.sg/
2016-01-28
RHB Research
SGX Stock
Analyst Report
0.84
Down
0.93
