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Monday, November 02, 2020

Starhill Global REIT Analysis @ 2 November 2020

Basic Profile & Key Statistics

Starhill Global REIT (SGREIT) invests in Retail and Office properties which currently owns 10 properties across Singapore, Malaysia, Australia, Japan and China.

Quarter Performance Review

Gross revenue and NPI decreased by 10.3% YoY and 19.2% YoY. There is no distributable information provided. 

Tenants' Sales reduced by 33.5% YoY despite all higher reduction of 54.4% in shopper traffic.

AEI for The Starhill is delayed and expected to delayed to December 2021.

Lease Profile
Occupancy is healthy at 96.6%. WALE is long at 5.5 years where the highest lease expiry of 53.5% falls in FY23/24 and beyond, without breakdown. Weighted average land lease expiry is moderate at 62.19 years.

Debt Profile

Gearing ratio is slightly high at 39.1%. Cost of debt is high at 3.3% with a moderate level of 75.6% unsecured debt. Fixed rate debt % is high at 89%. Interest cover ratio is low at 2.6 times. WADE is short at 2.5 years where the highest debt maturity of 32% falls in FY22/23.

Diversification Profile

Top 3 geographical contributions are from Singapore, Australia and Malaysia. Top geographical, top property, top tenant and top 10 tenants contributions are high at 62.4%, 33.4%, 22.1% and 57.6% respectively. 

Key Financial Metrics

Property yield, distribution on capital and distribution margin are low at 4.1%, 2.1% and 30.2%. Management fees over distribution is high at 28.5% in which unitholders receive S$ 3.50 for every dollar paid. Add back retention, the management fees over distribution, distribution on capital and distribution will be 23.9%, 2.4% and 36%.


Slightly Downtrend - NAV per Unit

Downtrend - DPU,  Interest Cover Ratio, Property Yield, Distribution Margin

Relative Valuation

i) Average Dividend Yield  - Average yield at 6.13%,  apply the annualized past 4 quarters DPU of 2.44 cents will get S$ 0.40. Include retention, DPU would be 2.91 cents, which will translate into S$ 0.475.

ii) Average Price/NAV - Average value at 0.79, apply the latest NAV of S$ 0.811 will get S$ 0.64.

Author's Opinion

 Favorable Less Favorable
Long WALEHigh Cost of Debt
 Low Interest Cover Ratio
 Short WADE
 High Top Geographical Contribution
 High Top Property Contribution
 High Top Tenant & Top 10 Tenants Contributions
 Low Property Yield
 Non-Competitive Management Fees
 Low Distribution on Capital
 Low Distribution Margin
 DPU Downtrend
 Interest Cover Ratio Downtrend
 Property Yield Downtrend
 Distribution Margin Downtrend

SGREIT performance has improved as compared to the previous quarter. However, the lack of tourism activities has affected its Singapore properties performance. Coupled with the recent wave of COVID-19 infection in Kuala Lumpur, Malaysia, SGREIT is facing a double whammy. Hopefully, with more green land opening and upcoming phase 3 opening in Singapore as well as post lockdown situation in Australia, SGREIT performance could be improved.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support this blog as a Patron and get SREITs Dashboard PDF

REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a 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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