Starhill Global REIT - OCBC Investment 2020-04-30: Uncertainties Galore

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

Starhill Global REIT - Uncertainties Galore

  • 3QFY20 income available for distribution -4.1%.
  • Rental rebates dished out.
  • Australia situation a key overhang.



Starhill Global REIT's 3QFY20 results in-line with our expectations

  • Starhill Global REIT (SGX:P40U) reported its 3QFY20 results which met our expectations.
  • Gross revenue and NPI fell 8.9% and 11.1% y-o-y to S$46.7m and S$35.2m, respectively. This was largely driven by lower income contributions given the AEI at Starhill Gallery in Malaysia, rental assistance extended to eligible tenants in Singapore, Malaysia and China to cushion the impact of the COVID-19 pandemic, coupled with the depreciation of the AUD against the SGD.
  • Income available for distribution declined 4.1% y-o-y to S$24.0m, but no DPU was declared in 3QFY20 as SGREIT had changed its distribution frequency to semi-annual distributions.
  • For 9MFY20, income available for distribution fell 2.5% to S$74.5m and this accounted for 72.7% of our full-year forecast.


Supporting its tenants with rental rebates across most markets

  • As at 31 Mar 2020, ~S$2.1m of rental rebates have been disbursed to tenants, with the remaining S$11.6m to be given subsequently, of which S$10.8m would come from the property tax rebate to be received from the Singapore government.
  • Given the extension of the ‘circuit breaker’ period, we expect further rental rebates to be given by Starhill Global REIT to its retail tenants in Singapore.
  • For Starhill Global REIT’s overseas markets, we understand that rental collection in Australia for the month of Apr has been very sluggish, as tenants are demanding rental rebates from landlords and both parties are awaiting further clarity from the Australian government’s new Mandatory Code of Conduct. Australia contributed 18.1% of Starhill Global REIT’s NPI for 9MFY20.
  • Although some of Starhill Global REIT’s properties are under master leases, the severe and widespread impact of COVID-19 has resulted in management extending, or having the intention to extend some form of rental rebate to its master lessees to share the pain and build a stronger longer-term relationship.


Cut forecasts and DPU to S$0.52 in light of uncertainties and lack of earnings visibility






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-04-30
SGX Stock Analyst Report BUY MAINTAIN BUY 0.52 DOWN 0.810



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