RHB Research has upgraded its call on Starhill Global Real Estate Investment Trust : P40U +1.01% (Starhill Global Reit) to &ldquo buy&rdquo from &ldquo neutral&rdquo , with a slightly higher target price of S$0.56 versus S$0.55 previously.

 

This comes after the Reit&rsquo s FY2023 results exceeded the brokerage&rsquo s expectations.

 

In a report on Thursday (Aug 10), analyst Vijay Natarajan said Starhill Global Reit&rsquo s operating metrics now show a &ldquo much stronger resilience&rdquo , given its fully committed occupancy and positive outlook for rents.

 

RHB has raised its distribution per unit forecasts for FY2024 by 4 per cent and FY2025 by 3 per cent, to factor in higher occupancy assumptions and tweaks to interest cost projections.

 

In particular, Natarajan expects the Reit&rsquo s positive rent reversions for Wisma Atria to continue.

 

The Reit&rsquo s recent divestment of its Daikanyama asset in Japan at a healthy premium to valuation, along with its modest gearing, puts it in a better position against rising interest rates, said the analyst.

 

He also believes discussions on the renewal of master leases for the Reit&rsquo s largest tenant Toshin Development are progressing well, with the resultant extension and rental terms likely to be better than the existing terms.

 

&ldquo A likely positive outcome (on Toshin&rsquo s master leases) could remove uncertainties and act as a positive near-term rerating catalyst, in our view.&rdquo

 

As for the arbitration proceedings by Myer &ndash the anchor tenant of the Reit&rsquo s mall in South Australia &ndash to claim unspecified damages and seek entitlement to terminate its lease, he noted that the Reit&rsquo s management sees limited financial downside from it.

THE manager of Starhill Global real estate investment trust : P40U +0.98% (Reit) has declared a distribution per unit of S$0.0198 for the second half of its current financial year (FY2022/2023), a 2 per cent drop from the DPU of S$0.0202 in the year-ago period.

 

Distributable income fell 3.7 per cent to S$45.4 million for the reporting period ended Jun 30, driven by a lower net property income and higher net finance costs, said the manager in a bourse filing on Thursday (Jul 27). It also said that it would retain S$0.7 million of distributable income for H2 as working capital.

 

For the full FY, DPU came in at S$0.038 &ndash unchanged from the previous FY &ndash representing an annual yield of 7.4 per cent based on the Jun 30 closing price of S$0.515.

 

Unitholders can expect to receive their dividend for H2 on Aug 29.

 

Net property income for H2 went down 2 per cent to S$73.6 million, mainly due to net movement in foreign currencies and the divestment of the Daikanyama mall in Tokyo, Japan, though this was partially offset by higher contributions from its Singapore properties.

 

Gross revenue was also down 2.5 per cent to S$93 million.

 

For the full year, net property income rose 2.2 per cent to S$147.8 million, from S$144.7 million in the previous FY. This was mainly due to its Singapore portfolio, the completion of asset-enhancement works at The Starhill in Kuala Lumpur and lower rental assistance, despite foreign-exchange weakness and loss of income from divestment.

 

Gross revenue for the full year went up by 0.7 per cent year on year to S$187.8, from S$186.4 million last FY.

 

The group&rsquo s portfolio valuation of S$2.8 billion as at Jun 30 was 4.3 per cent lower than a year ago, mainly due to the downward revaluation of its Australia assets and Wisma Atria mall in Orchard, the divestment of Daikanyama, as well as net movement in foreign currencies.

 

Francis Yeoh, the manager&rsquo s chairman, said that the Reit has benefited from the post-pandemic recovery with strong improvement in occupancy and shopper traffic for the portfolio. \

 

&ldquo However, the global macro environment has become more uncertain in recent times, as geopolitical tensions and inflationary pressures threaten to derail economic growth. Notwithstanding that, our disciplined and proactive execution during the pandemic coupled with our quality portfolio has enabled us to emerge from the pandemic with renewed strength,&rdquo he said.

 

The occupancy rate of its total portfolio remained stable at 96.8 per cent as at Jun 30.

 

Tenant sales at Wisma Atria in the second half rose by 4.5 per cent, and shopper traffic, by 17 per cent year on year.

 

STARHILL Global Reit : P40U +0.85% posted a distribution per unit (DPU) that was 2.2 per cent higher at S$0.0182 for the first half of FY2022/2023 ended Dec 31, 2022 &ndash higher than the S$0.0178 in the corresponding year-ago period.

 

The gross revenue of the real estate investment trust (Reit) rose 4.1 per cent on the year to S$94.7 million, from S$91 million in H1 FY21/22, the Reit said in a Friday (Jan 27) bourse filing.

 

Net property income (NPI) was up 6.7 per cent year on year at S$74.3 million, from the year-ago period&rsquo s S$69.6 million.

 

The manager attributed the NPI increase for the half-year to the completion of asset-enhancement works at The Starhill, lower rental assistance and higher rental contribution from its Singapore office. This was partially offset by lower rental contribution from its retail Wisma Atria property, and net movement in foreign currencies, it added.

 

Income available for distribution was up 2.2 per cent to S$43.6 million, on the back of higher NPI and lower net finance costs, and partially offset by higher income taxes and lower management fees paid or payable in units. Income for distribution to unitholders was S$40.9 million, up 3 per cent on the year.

 

For working capital requirements, the manager will retain S$2.6 million of income available for distribution for H1, it said.

 

The Reit will continue with its distribution reinvestment plan. Unitholders can expect to receive their H1 FY21/22 DPU on Mar 23, with the record date at 5 pm on Feb 6.

 

Starhill Global Reit also gave the update that, as at Dec 31, 2022, its portfolio occupancy was stable at 97.1 per cent. Its office portfolio occupancy rose to 95.5 per cent in H1 FY22/23, from 91.5 per cent in H1 FY21/22 the Wisma Atria retail property also recorded higher tenant sales and shopper traffic, following eased Covid-19 restrictions.

 

It continues to upgrade existing assets and has introduced new-to-market brands in its malls. It also entered into a sale-and-purchase agreement to divest Daikanyama in Japan on Dec 30, 2022, with the transaction expected to be completed early this year.

 

As at end-December, the Reit&rsquo s gearing stood at 36.3 per cent, with about 84 per cent of debts on a fixed or hedged basis. The average debt maturity profile &ldquo remains healthy&rdquo at three years, and it &ldquo has sufficient long-term committed and undrawn revolving credit-facility lines to cover the remaining debts maturing in FY22/23 and FY23/24&rdquo .

 

Francis Yeoh, chairman of Starhill Global Reit&rsquo s manager, said: &ldquo The Asia-Pacific retail market is expected to benefit from the further recovery of international travel, despite an uncertain economic climate resulting from global inflation.&rdquo

 

The manager&rsquo s chief executive officer, Ho Sing, added: &ldquo We have been vigilant over the past three years by strengthening our balance sheet and rejuvenating our portfolio.&rdquo

STARHILL Global Real Estate Investment Trust (Reit) has agreed to sell its entire beneficial interests in a Tokyo property for 1.88 billion yen (S$18.9 million), its manager said in a statement on Friday (Dec 30).

 

The sale consideration is a 39 per cent premium to its latest valuation and 2.9 per cent premium to its acquisition price, in what the Reit manager described as &ldquo attractive&rdquo . The Reit acquired the property in 2007.

 

The manager added that the amount would translate to a yield of 2.77 per cent, based on the net property income for the financial year ended Jun 30, 2022.

 

The property &ndash a three-storey retail and office building &ndash is located in the Ebisu district in the Shibuya ward, and has a net lettable area of 8,087 square feet. It is a three-minute walk from Daikanyama station.

 

It accounts for about 0.5 per cent of Starhill Global Reit&rsquo s asset value as at Sep 30, and 0.4 per cent of its portfolio net property income based on what was reported for the financial year ended Jun 30.

 

The sale is expected to complete early next year.

 

The manager said the sale is consistent with the Reit&rsquo s capital recycling strategy. 

 

Starhill Global Reit&rsquo s gearing is expected to drop from 36.5 per cent to 36.1 per cent after the divestment, assuming that the net sales proceeds are substantially used to repay yen borrowings.

 

Meanwhile, the manager said the pro forma financial effects of the sale on the distribution per unit of the Reit and the net asset value per unit are not expected to be material.

 

It was also disclosed that the manager will take a divestment fee of 0.5 per cent of the sale consideration pursuant to the trust deed constituting the Reit. The manager has elected for it to be paid in cash. 

 

After the sale, the Reit would be left with one asset in Japan, Ebisu Fort, which has an asset value of 3.62 billion yen. This property represents 1.3 per cent of the Reit&rsquo s asset value.

 

Ho Sing, chief executive officer of the Reit&rsquo s manager, said regardless of the Reit&rsquo s Tokyo divestments in the past few years, Japan remains one of its key markets of interest.

 

&ldquo We will continue to explore potential investment opportunities,&rdquo he said. The ongoing divestment is meant to unlock value, pare down debt and provide it with greater financial flexibility and capacity to focus on new assets that align with its growth strategy, Ho added.

STARHILL Global Real Estate Investment Trust&rsquo s (Reit) net property income rose 8.4 per cent to S$37.2 million in its first fiscal quarter ended Sep 30, from S$34.3 million a year ago.

 

Gross revenue was up at S$47.6 million, from S$44.8 million over the same period &mdash an increase of 6.2 per cent.

 

Starhill Global Reit : P40U +0.98% said in a bourse filing on Thursday (Oct 27) the increase in both revenue and net property income was because it had stopped providing rental rebates to tenants and lowered its rental assistance after the completion of asset enhancement works in December 2021.

 

This was partially offset by the depreciation of the Australian dollar and the Malaysian Ringgit, as well as lower contribution from one of its retail asset, Wisma Atria.

 

As at Sep 30, the occupancy rate of its portfolio stood at 96.9 per cent, while the weighted average lease expiry was 7 years.

 

Master and anchor leases, which incorporate rental reviews, make up 53 per cent of gross rent, providing income and occupancy stability for the portfolio.

 

Over 60 per cent of the Reit&rsquo s Q1 revenue came from its Singapore assets, while Australia assets contributed 22.1 per cent, and Malaysia accounted for 15.5 per cent. Retail assets contributed 85.6 per cent of this quarter&rsquo s revenue, while the rest came from office.

 

Shopper traffic at Wisma Atria improved by 40.7 per cent year on year, while tenant sales went up 37.1 per cent, reflecting a gradual recovery from the Covid-19 pandemic.

 

The Reit has an outstanding debt of S$1.1 billion, with a gearing of 36.5 per cent.

 

As for its outlook, Starhill said that geopolitical tensions, elevated inflation and rising interest rates continue to temper post-pandemic economic recovery.

 

It added that proactive interest rate hedging partially mitigates the impact of rising rates on its distribution per unit.

 

Rising operating expenses from higher utility costs are partially mitigated by master and anchor tenants, which make up about half of its leases, as well as utilities contracts that have been locked in.

 

For its Singapore properties, Starhill Global noted that international visitor arrivals are still half of what was recorded in September 2019, even though pandemic-induced travel restrictions have eased.

 

However, it noted that the Singapore Tourism Board expects 4 to 6 million international visitor arrivals for the whole of this year, which will benefit the Orchard Road retail belt.

 

The opening of another Orchard MRT station on the new Thomson-East Coast Line would also enhance accessibility to the area.

 

IN THE current earnings season to-date, 23 S-Reits and property trusts have released their financial results or business updates for period ending Jun 30. Another 15 trusts are expected to announce between Aug 1 to Aug 12.

 

Last week, 14 S-Reits and property trusts unveiled half year or first quarter financial results ending Jun 30 while another 4 released quarterly business updates. Starhill Global Reit : P40U 0% (SGReit) also announced its full year earnings last week.

 

SGReit reported full year net property income (NPI) of S$144.7 million, increasing 7.4 per cent from last year. As a result, income available for distribution grew 1.8 per cent on a full year basis to S$89.8 million. The Reit manager will retain S$1.9 million of the H2 FY21/22 income available for distribution for working capital requirements.

 

The Reit manager noted that its Singapore portfolio, comprising interests in Wisma Atria and Ngee Ann City, continue to contribute the bulk of total revenue at 59.9 per cent of total revenue in H2 FY21/22. During the period, Wisma Atria and Ngee Ann City saw significant improvements in tenant sales and shopper traffic with the arrival of international tourists, as well as increased domestic consumption following the relaxation of Covid-19 safe management measures.

 

For H2 FY21/22, tenant sales and shopper traffic improved 43.6 per cent and 32.1 per cent year on year, respectively. The Reit also noted that tenant sales in Q4 FY21/22 at Wisma Atria even surpassed pre-pandemic sales by 4.8 per cent over the corresponding period in Q4 FY18/19.

 

As of Jun 30, 2022, the gearing ratio of SGReit is maintained at 36.2 per cent with about 93 per cent of its debts on a fixed or hedged basis. The Reit believes that its prudent capital management approach has allowed it to buffer pressures brought about by global inflation concerns and rising interest rates. It remains cautiously optimistic that the Asia-Pacific retail and commercial real estate markets will continue to grow. 

STARHILL Global Reit : P40U +1.71% reported a 1.8 per cent increase in distributable income for FY2021/22 to S$89.8 million from S$88.2 million.

 

In a regulatory filing after market close on Thursday (July 28), the Reit reported a 2.8 per cent increase in revenue for the period to S$186.4 million from S$181.3 million. Net property income for FY2021/22 rose in tandem, up 7.4 per cent to S$144.7 million from S$134.7 million.

 

The growth in net property income was driven by the cessation of rental rebates in Malaysia, lower rental assistance for eligible tenants and lower operating expenses. This was partially offset by lower rental contribution from Wisma Atria in Singapore.

 

Distribution per unit for FY2021/22 dropped 3.8 per cent to S$0.038 due to the deferred distributable income for H2 FY2020/21. Excluding that deferred amount, the distribution per unit would have increased 5.6 per cent instead.

 

&ldquo As the world recovers from the pandemic, tenant sales in Q4 FY21/22 at Wisma Atria surpassed pre-pandemic sales by 4.8 per cent over the corresponding period in Q4 FY18/19. This is despite ongoing rejuvenation works,&rdquo said Ho Sing, chief executive officer of YTL Starhill Global.

 

The Reit manager said that it would be focusing on maintaining healthy portfolio occupancy and a quality tenant mix.

 

&ldquo Ninety three per cent of our borrowings have been fixed or hedged as at Jun 30, 2022, and our average debt maturity stands at 3.5 years, while gearing level remains stable at 36.2 per cent,&rdquo said Ho.