Starhill Global REIT Review @ 10 August 2022

Basic Profile & Key Statistics

• Main Sector(s): Retail & Office
  
• Country(s) with Assets: Singapore, Australia, Malaysia, Japan & China
  
• No. of Properties (exclude development/associate/fund): 10

Key Indicators

Performance Highlight

Gross revenue NPI, income available for distribution and DPU (exclude the 0.21 cent DPU of 2H FY20/21 relating to FY19/20’s deferred amount) have improved yoy mainly due to the cessation of rental rebates following the completion of asset enhancement works at The Starhill. 

Tenant Sales and Shopper Traffic

For Wisma Atria, both tenant sales and shopper traffic have improved after the easing of restriction in April. 

Asset Enhancement Initiative

Facade work for Myer Centre Adelaide has started and is expected to complete by 2022 (1H FY22/23), while the upgrading work for Wisma Atria is target to be completed by end 2022.

Sensitivity to Interest Rate

For every 1% increase in interest rate, the DPU impact would be 0.04 cent per annum, around 1.1%.

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE: Above median for more than 10%
• Highest lease expiry within 5 years: Above median for more than 20%; Falls in FY24/25
• Weighted average land lease expiry: Below median for more than 10%

Debt Profile

• Gearing ratio: ± 10% from median
• Gearing including perps: ± 10% from median
• Cost of debt: Above median for more than 20%
• Fixed rate debt %: Above median for more than 20%
• Unsecured debt %: ± 10% from median
• WADM: Above median for more than 20%
• Highest debt maturity within 5 years: Below median for more than 10%; Falls in FY25/26
• Interest coverage ratio: Below median for more than 20%

Diversification Profile

• Top geographical contribution: Above median for more than 10%
• Top property contribution: Above median for more than 20%
• Top 5 properties' contribution: Above median for more than 20%
• Top tenant contribution: Above median for more than 20%
• Top 10 tenants' contribution: Above median for more than 20%

Key Financial Metrics

• Property yield: ± 10% from median
• Management fees over distribution: Above median for more than 10%; $5.56 distribution for every dollar paid 
• Distribution on capital: Below median for more than 10%
• Distribution margin: ± 10% from median

Trends

• Slight Uptrend: Occupancy
• Downtrend: DPU, NAV per Unit, Property Yield, Interest Coverage Ratio, Distribution on Capital, Distribution Margin

* Interest coverage ratios between 1Q 2021 to 3Q 2021 are estimated to include perpetual securities.

Relative Valuation

• P/NAV: Below average for 1y; Average for 3y & 5y
• Dividend Yield: Above average for 1y; Average for 3y & 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low Directors of REIT Manager's Shareholding
High REIT Sponsor's Shareholding	Concentrated Lease Expiry
High REIT Manager's Shareholding	High Cost of Debt
Long WALE	Low Interest Coverage Ratio
High Fixed Rate Debt %	High Top Geographical Contribution
Long WADM	High Top Property & Top 5 Properties Contributions
Well Spread Debt Maturity	High Top Tenant & Top 10 Tenants Contributions
	Non Competitve Management Fees
	Low Distribution on Capital
	DPU Downtrend
	NAV per Unit Downtrend
	Property Yield Downtrend
	Interest Coverage Ratio Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

The performance has improved after the completion of asset enhancement works at The Starhill. The interest coverage ratio has also been gradually improving since 2Q 2021. 

You could also refer below for more information:

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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Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

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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 and loss or damage due to 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.