Starhill Global REIT - Maybank Kim Eng 2019-10-31: Limited Downside, Limited Growth

STARHILL GLOBAL REIT (SGX:P40U) | SGinvestors.io STARHILL GLOBAL REIT (SGX:P40U)

Starhill Global REIT - Limited Downside, Limited Growth


In line; lacks growth visibility, offers 6.1% yield




Singapore stable, growth outlook weak

  • Starhill Global REIT's Singapore assets stabilised with 1Q20 revenue –down 0.9% y-o-y and NPI up 0.3% y-o-y. This was driven by Wisma Atria – at 32.2% and 32.8% of its total revenue and NPI, which reported a 12.7% y-o-y jump in tenant sales on the back of an 2.8% y-o-y increase in shopper traffic.
  • Together with Ngee Ann City, Starhill Global REIT's retail occupancy rose q-o-q from 99.4% to 99.7%, with committed occupancy at 100.0% as of end-Sep 2019.
  • We see tight Orchard Road supply supporting its prime Singapore retail rents, even as growth will be tempered by lower tourist shopping spending. Management is exploring options for Wisma Atria’s unutilised 100k sf GFA in anticipation of the increase in traffic as the Thomson-East Coast Line will open soon.


Overseas growth engines elusive in near term

  • The NPI of Starhill Global REIT's Australian assets (at 23.1% of revenue, 18.5% of NPI) fell 9.5% y-o-y due to AUD depreciation and lower retail contributions, even as its office occupancies rose q-o-q from 87.1% to 94.2%. Master leases (at David Jones and Myer Centre) contribute 55.6% of the gross rent for its Australian portfolio and limit DPU downside, but retail fundamentals in Perth remain soft.
  • In Malaysia, excluding Starhill Gallery, revenue and NPI were up 0.3% y-o-y and 0.2% y-o-y. Renovation works have commenced - the first phase is scheduled for completion in 2020 while the 160-room hotel opens in 2021.





Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-10-31
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.75 UP 0.700



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