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REITs investment & personal finance


Wednesday, November 10, 2021

Starhill Global REIT Review @ 10 November 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

Performance improved YoY mainly due to lower rental assistance to tenants and lower expenses.

Both tenant sales and shopper traffic of Wisma Atria have improved as compared to the previous quarter.

AEI for The Starhill is expected to be completed by December while the retail podium is partially operational.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 37.798%
  • REIT manager's shareholding is high at 1.906%
  • Directors of REIT manager's shareholding is low at 0.007%

Lease Profile

  • Occupancy is slightly high at 96.8%
  • WALE is long at 5.1 years
  • Highest lease expiry within 5 years is high at 33.6% which falls in FY24/25, without breakdown
  • Weighted average land lease expiry is moderate at 62.01 years

Debt Profile

  • Gearing ratio is moderate at 36.3%. Include perpetual securities, gearing is at 39.8%.
  • Cost of debt is high at 3.18%
  • Fixed rate debt % is high at 96%
  • Unsecured debt % is slightly high at 84.6%
  • WADM is long at 3.7 years
  • Highest debt maturity within 5 years is low at 23% which falls in FY25/26
  • Interest coverage ratio is low at 3 times
  • Preferred/Perpetual Securities over Debts is moderate at 8.3%

Diversification Profile

  • Top geographical contribution is high at 62.8% 
  • Top property contribution is high at 35.3% 
  • Top 5 properties contribution is high at 91.3% 
  • Top tenant contribution is high at 22.4% 
  • Top 10 tenants contribution is high at 59.1%
  • Top 3 countries contribution is from Singapore, Australia and Malaysia which contribute more than 95% of GRI

Key Financial Metrics

  • Property yield is slightly low at 4.7% 
  • 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 48.2%

Trends

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

Relative Valuation

  • P/NAV - Above +1SD for 1y; Above average for 3y and 5y
  • Dividend Yield - Average for 1y, 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
Well Spread Debt MaturityNon-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

The gross revenue has dropped slightly as compared to the previous quarter but the NPI is similar. The COVID-19 restriction (stabilization phase from 27 Sep to 21 Nov) in Singapore is expected to continue to affect the performance. However, with the possible easing of restriction and border re-opening to more countries, performance should be improved moving forward.


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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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