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%
- In terms of financial position, Starhill Global REIT’s gearing ratio declined from 39.1% (as at end-1QFY20) to 35.8%. We believe this was due to the issuance of S$100m of perpetual securities (classified as equity) in Dec 2020, proceeds of which could have been used to repay some of its borrowings.
- 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.
- After fine-tuning our assumptions, our fair value estimate for Starhill Global REIT is raised slightly from S$0.52 to S$0.53.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2021-02-01
SGX Stock
Analyst Report
0.53
UP
0.520
