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Thursday, August 12, 2021

Starhill Global REIT Review @ 12 August 2021

Basic Profile & Key Statistics

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

Performance Highlight

The improvement in performance is mainly due to lower rental assistance for eligible tenants.

Tenants' sales and shopper traffic were both affected by phase 2 heightened alert from May. 

AEI for The Starhill is ongoing and expected to be completed by this year end.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 37.37%
  • REIT manager's shareholding is high at 1.76%
  • Directors of REIT manager's shareholding is low at 0.01%

Lease Profile

  • Occupancy is slightly high at 96.7%
  • WALE is long at 5.3 years
  • Highest lease expiry within 5 years is slightly high at 33.4% which falls in FY24/25, without breakdown
  • Weighted average land lease expiry is moderate at 61.44 years

Debt Profile

  • Gearing ratio is moderate at 36.1%
  • Cost of debt is high at 3.28%
  • Fixed rate debt % is high at 91%
  • Unsecured debt % is slightly high at 84.6%
  • WADM is long at 3.3 years
  • Highest debt maturity within 5 years is moderate at 33% which falls in FY22/23
  • Interest coverage ratio is low at 2.8 times
  • Preferred/Perpetual Securities over Debts is moderate at 8.3%

Diversification Profile

  • Top geographical contribution is high at 62.9% 
  • Top property contribution is high at 34.5% 
  • Top 5 properties contribution is high at 91.6% 
  • Top tenant contribution is high at 22.3% 
  • Top 10 tenants contribution is high at 59%
  • Top 3 countries contribution is from Singapore, Australia and Malaysia which contribute more than 95% of GRI

Key Financial Metrics

  • Property yield is low at 4.5% 
  • Management fees over distribution is high at 17.7% in which unitholders receive S$ 5.65 for every dollar paid 
  • Distribution on capital is low at 2.9%
  • Distribution margin is moderate at 48.5%

Trends

  • Downtrend - DPU, NAV per Unit, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

  • P/NAV - Above +2SD for 1y; Average for 3y and 5y
  • Dividend Yield - Above average for 1y; Average for 3y and 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow Directors of REIT Manager's Shareholding
High REIT Sponsor's ShareholdingHigh Cost of Debt
High REIT Manager's ShareholdingLow Interest Coverage Ratio
Long WALEHigh Top Geographical Contribution
High Fixed Rate Debt %High Top Property & Top 5 Properties Contributions
Long WADMHigh Top Tenant & Top 10 Tenants Contributions
 Low Property Yield
 Non-Competitive Management Fees
 Low Distribution on Capital
 DPU Downtrend
 NAV per Unit Downtrend
 Interest Coverage Ratio Downtrend
 Property Yield Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

Despite the impact on phase 2 heightened alert from 16 May to 13 June, SGREIT performance has improved as compared to the previous half-yearly. The re-implementation of phase 2 heightened alert from 22 July to 18 August would again affect the upcoming performance. Now, dining is resumed from 10 August onwards and up to 50% of employees are allowed to return to their workplace. Hopefully, there won't be any re-implementation on restriction moving forward.


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SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*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 and 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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