STARHILL GLOBAL REIT
P40.SI
Starhill Global REIT: Stable DPU but some softness in occupancy
- 4QFY16 DPU flat YoY at 1.29 S cents.
- Portfolio occupancy fell to 95.1%.
- 3.5% rental reversions for Singapore office.
4QFY16 results in-line with expectations
- Starhill Global REIT’s (SGREIT) 4QFY16 gross revenue rose 3.6% YoY to S$53.6m, driven by a full quarter contribution from Myer Centre Adelaide (MCA) which was acquired in May 2015, but partially offset by weaker performance from its Wisma Atria Property and remaining overseas properties.
- DPU of 1.29 S cents was similar to the same period last year.
- Results were in-line with our expectations.
- On a full-year basis, SGREIT’s gross revenue and DPU grew 11.4% and 1.4% to S$219.7m and 5.18 S cents as compared to the 12 months period ended 30 Jun 2015, and formed 98.2% and 98.6% of our FY16 forecasts, respectively.
Weaker occupancy from Singapore and China
- During the quarter, SGREIT registered a 0.5 ppt QoQ dip in its portfolio occupancy to 95.1%. This was largely attributed to higher vacancies for its Singapore office portfolio and China.
- Nevertheless, management secured positive rental reversions of 3.5% for its Singapore office leases committed in 4QFY16. On its retail front, Wisma Atria’s committed occupancy increased from 96.8% (as at 31 Mar 2016) to 97.7% as new tenants and concepts were introduced. The mall is currently still undergoing tenant mix reconfiguration. Shopper traffic grew 2.3% YoY, although tenant sales fell 2.5% YoY in 4QFY16.
- We expect the situation at Wisma Atria (Retail) to improve ahead, as Isetan’s strata-owned space at the property has progressively reopened for operations after its renovation works since Apr last year. Isetan recently launched Japan Food Town at the mall, a collection of 16 casual dining establishments handpicked from Japan.
Maintain BUY
- In terms of financial position, SGREIT’s balance sheet remains healthy, with a comfortable gearing ratio of 35.0%, as at 30 Jun 2016 (-0.4 ppt QoQ). 99.6% of its borrowings are fixed/hedged.
- We reiterate our BUY rating on SGREIT, but with a higher fair value estimate of S$0.86 (previously S$0.84) as we lower our risk- free assumption from 3.0% to 2.4% and also roll forward our valuations.
Wong Teck Ching Andy CFA
OCBC Securities
|
http://www.ocbcresearch.com/
2016-08-01
OCBC Securities
SGX Stock
Analyst Report
0.86
Up
0.84
