STARHILL GLOBAL REIT (SGX:P40U)
Starhill Global REIT - Resilient Occupancy But Rental Rebates Weigh
- Starhill Global REIT's 1QFY21 NPI fell 19.2% y-o-y to S$29.8m due largely to rental assistance to tenants.
- Portfolio occupancy rose 0.4 ppt q-o-q to 96.6%.
- Tenant sales and footfall at Wisma Atria recovered to two-thirds and almost half of pre-COVID-19 levels, respectively.
Starhill Global REIT's 1QFY21 tracking in-line with expectations
- Starhill Global REIT (SGX:P40U) provided a business update for 1QFY21. Gross revenue declined 10.3% y-o-y to S$43.1m but NPI fell by a larger magnitude of 19.2% to S$29.8m. This was attributed largely to rental assistance of S$7.3m granted to eligible tenants affected by the COVID-19 pandemic, including allowance for rental arrears and rebates mainly for its tenants in Australia.
- Starhill Global REIT's 1QFY21 NPI constituted 23.6% of our FY21 forecast.
Occupancy inched up to 96.6% due to Singapore retail and office
- Starhill Global REIT managed to keep its portfolio occupancy rate healthy at 96.6%, which was a slight improvement of 0.4 ppt q-o-q despite the tough operating environment. This was underpinned by Singapore, which registered an uptick for both its retail (+0.6 ppt to 99.5%) and office (+2.7 ppt to 90.3%) segments. However, the outlook remains uncertain and Starhill Global REIT still has 25.8% and 37.2% of leases expiring (by gross rent) at Wisma Atria’s retail and office component for the remaining three quarters of FY21.
- No rental reversion figures were provided, but this would likely be negative as management prioritises defending its occupancy.
- Tenant sales and footfall traffic at Wisma Atria (retail) dipped 33.5% and 54.4% y-o-y in 1QFY21, respectively, and showed a marked improvement as compared to declines of 80.0% in tenant sales and 86.9% in footfall in 4QFY20, which included the circuit breaker period.
Fair Value lowered marginally to S$0.52
- In terms of financial position, Starhill Global REIT’s gearing ratio declined from 39.7% (as at end-FY20) to 39.1%. It secured new committed revolving credit facilities (RCF) of up to S$90m recently and current undrawn and committed RCF on hand is more than sufficient to cover the S$250m of term borrowings maturing in the next 12 months.
- We cut our Starhill Global REIT's FY22 DPU forecast by 4.4% as we factor in further rental rebates at The Starhill property (formerly known as Starhill Gallery) due to a delay in timeline for the completion of asset enhancement works at the property by two months to Dec 2021. Our fair value estimate is lowered marginally from S$0.53 to S$0.52. BUY.
- See Starhill Global REIT Share Price; Starhill Global REIT Target Price; Starhill Global REIT Analyst Reports; Starhill Global REIT Dividend History; Starhill Global REIT Announcements; Starhill Global REIT Latest News.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2020-10-29
SGX Stock
Analyst Report
0.52
DOWN
0.530
