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Wednesday, August 19, 2020

Starhill Global REIT Analysis @ 19 August 2020

Basic Profile & Key Statistics

Starhill Global REIT (SGREIT) invests in Retail and Office properties. The majority of its income is from Singapore properties.

Lease Profile

Occupancy is healthy at 96.2%. WALE is long at 5.6 years. From the latest presentation, 53.4% of the lease will be expiring in FY23/24 and beyond without breakdown, if we consider before FY23/24, then the highest lease expiry of 15.8% falls in FY20/21. Weighted average land lease expiry is moderate at 63.42 years.

Debt Profile

Gearing is slightly high at 39.7%. Cost of debt is high at 3.2%. Fixed-rate debt % is slightly high at 87.4%. Unsecured debt % is moderate at 75.6%. Interest cover ratio is low at 2.9 times. WADE is moderate at 2.7 years where highest debt maturity of 32% falls in FY22/23.

Diversification Profile

Although SGREIT has multiple properties in multiple countries, it is not diversified enough. Top geographical contribution is slightly high at 63%. Top property, top tenant, and top 10 tenants contribution are high at 34.1%, 22.3%, and 56.8% respectively.

Key Financial Metrics

Property yield is low at 4.3%. Due to the deferment of S$ 7.7 mils distribution, its management fees over distribution, distribution on capital, and distribution margin are greatly affected, which are 23.8%, 2.5% and 35.8% respectively. Without deferment, the values would be 21.3%, 2.7% and 40.1% respectively.

Related Parties Shareholding

As compared to SREITs median, sponsor and manager holding higher stake while directors of REIT manager holding lesser stake.


If we look at pre-COVID time, DPU is on downtrend,  NAV per unit is on a slight downtrend and distribution margin is on a slight downtrend too but improved for 3Q and 4Q 2019.

Relative Valuation

i) Average Dividend Yield  - Apply past 4 quarters DPU of 2.96 cents to average yield of 6.14% will get S$ 0.48. If we consider before deferment, DPU would be 3.31 cents which translates into S$ 0.54.

ii) Average Price/NAV - Average value is at 0.81, apply the latest NAV of S$ 0.808 will get S$ 0.655.

Author's Opinion

Favorable Less Favorable
WALE Cost of Debt
Interest Cover Ratio
Top Property Contribution
Top Tenant & Top 10 Tenants Contribution
Property Yield
Management Fees
Distribution on Capital
Distribution Margin
DPU Downtrend

COVID affected SGREIT performance heavily, where its 2H income available for distribution dropped 46.2% year on year. Its AEI of Starhill Gallery also facing delay and expected to completed by end of 2021. Manager has been receiving part of its management fees in units (since 4Q 2019 calendar year) to reduce the impact on income disruption from Starhill Gallery, in which manager normally receive 100% of its management fees in cash.  

Retail malls are now getting more and more visitors and more crowded, albeit still less than pre-COVID time. With this, SGREIT performance should be able to show improvement for the upcoming quarters.

The above analysis information is extracted from SREITs Dashboard, you are welcome to use the information there for your analysis. You could also refer SREITs Data for an overview of Singapore REITs. If you like my sharing, please join the Facebook group - REIT Investing Community where you could read, share, and discuss REITs related topics. Please also invite your like-minded friends to the group.

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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