Starhill Global REIT - OCBC Investment 2021-02-01: More Patience Required

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

Starhill Global REIT - More Patience Required

  • Starhill Global REIT's 1HFY21 DPU fell 16.8% y-o-y to S$0.0188/unit.
  • Portfolio occupancy down marginally by 0.6 percentage points (ppt) q-o-q to 96.0%.
  • Tenant sales and footfall at Wisma Atria declined 31.4% and 49.6% y-o-y in 1HFY21, respectively.



Starhill Global REIT's 1HFY21 results in-line with expectations

  • Starhill Global REIT (SGX:P40U) reported its 1HFY21 (Jul 2020 to Dec 2020) results which met our expectations. Gross revenue and NPI declined 8.6% and 12.3% y-o-y to S$88.4m and S$65.0m, respectively.
  • The weaker performance can be attributed largely to rental assistance granted to eligible tenants affected by the COVID-19 pandemic, including allowance for rental arrears and rebates for its tenants in Singapore and Australia. This amounted to S$9.0m.
  • Starhill Global REIT's 1FY21 distribution dipped by a larger magnitude of 16.8% y-o-y to S$0.0188/unit due to higher finance expenses and a larger unit base. This formed 52.0% of our FY21 forecast.


Occupancy fell to 96.0% while decline in footfall and tenants’ sales moderated in 2QFY21

  • Starhill Global REIT’s actual portfolio occupancy rate declined from 96.6% (as at 30 Sep 2020) to 96.0%, due largely to a sharp dip at Wisma Atria (retail) from 96.7% to 88.0%, but partially offset by an improvement for its Singapore office portfolio (+1.9 ppt q-o-q to 89.5%). That said, we note that committed occupancy for Wisma Atria (retail) was 97.9%, which implies that some of the vacant spaces has already been successfully leased out, although some of this could possibly be on short-term leases.
  • Tenants’ sales and footfall traffic at Wisma Atria (retail) slipped 31.4% and 49.6% y-o-y in 1HFY21, as compared to -33.5% and -54.4% in 1QFY21, respectively. This reflects a moderation in y-o-y declines seen in 2QFY21, following Phase 2 and Phase 3 of the re-opening. However, this performance was still weaker than SPH REIT (SGX:SK6U)’s The Paragon, which registered monthly y-o-y declines in tenants’ sales ranging from -15% to -34% from Jul to Nov 2020.

Gearing ratio improved to 35.8%






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-02-01
SGX Stock Analyst Report BUY MAINTAIN BUY 0.53 UP 0.520



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