Increase mainly driven by appreciation of the Malaysian ringgit against the Singapore dollar

THE manager of Starhill Global real estate investment trust (Reit) posted a net property income (NPI) of S$37.9 million for Q3 FY2025 ended Mar 31, up 0.5 per cent from S$37.7 million in the previous corresponding period.

 

The slight increase in NPI was mainly driven by appreciation of the Malaysian ringgit against the Singapore dollar and lower operating expenses, said the manager in a bourse filing on Tuesday (Apr 29). This was largely offset by the higher rental provision for China property, loss of contribution from divestment of some Wisma Atria office units and depreciation of the Australian dollar against the Singapore dollar.

 

Revenue for Q3 FY2025 remained flat at S$47.6 million. Gearing at the end of Mar 31 stood at 36.6 per cent.

 

Occupancy across Starhill Global&rsquo s portfolio for the quarter dipped slightly to 97.4 per cent as at Mar 31, from 97.7 per cent as at Jun 30, 2024. The weighted average lease expiry stood at 7.2 years.

 

Technicolor Creative Studios Australia, a tenant at Myer Centre Adelaide, Australia, entered liquidation in April, with the liquidators effectively terminating the leases on Apr 24. The outstanding arrears of S$900,000 as at Mar 31 were fully covered by bank guarantees of S$1.4 million.

 

Technicolor contributed about 0.8 and 1 per cent of FY2024 revenue and NPI, respectively.

 

Leasing agents have been engaged to market the premises and preliminary discussions have commenced for part of the space. The manager plans to subdivide the space to mitigate concentration risk with a single tenancy.

 

Markor International Home Furnishings, the tenant at the China property, has been in arrears and unable to fulfil its obligations. As at Mar 31, it has racked up arrears of about S$1.1 million, which was partially covered by security deposits of S$400,000 and rental provision.

 

Letters of demand have been served on the tenant and the manager is taking steps to recover the arrears. Leasing agents are marketing the space.

 

Markor contributed about 0.8 and 1 per cent of FY2024 revenue and NPI, respectively.

 

Geopolitical tensions and trade uncertainty are expected to weigh on economic activity, with spillover effects on retail sales and other sectors. The manager said that it will continue to maintain a prudent capital management strategy backed by the resilient master leasers for the Singapore and Malaysia assets.

 

New asset enhancement initiatives will be rolled out to future proof the Reit&rsquo s malls.

 

Starhill Global REIT (SGREIT) is &ldquo underappreciated&rdquo despite delivering &ldquo steady operational performance over the last five years&rdquo in a challenging environment, says RHB Bank Singapore analyst Vijay Natarajan. 

 

The REIT remains &ldquo well-poised&rdquo to navigate an evolving retail landscape with a balanced mix of master leases and an actively managed portfolio, along with strong sponsor support, adds Natarajan in an April 1 note.

 

&ldquo Management has been prudent on capital management, keeping gearing below 40% and refraining from acquisitions. The stock is trading at attractive levels at 30% below book, while offering stable dividend yields of [more than] 7%,&rdquo he writes. 

 

SGREIT&rsquo s gearing remains &ldquo comfortable&rdquo at 36%, with a 83% debt hedge and interest costs will likely peak at the current 3.7% level, Natarajan adds. 

 

For these reasons, Natarajan is keeping his &ldquo buy&rdquo call and 57-cent target price on SGREIT, which represents some 14% upside and a 2% ESG premium based on RHB&rsquo s proprietary methodology. 

 

Leasing highlights

 

SGREIT invests in retail and office buildings in Singapore, Australia, Japan and China. 

 

The upside from SGREIT&rsquo s master lease extensions will kick in from FY2026, notes Natarajan. Katagreen (a wholly-owned subsidiary of its sponsor, YTL Corp) has exercised a call option to extend master leases at its Lot 10 asset in Kuala Lumpur for another three-year term starting July. 

 

The total rental income for the new three-year term will be 6% higher than the existing figure. This follows the earlier-announced Toshin master lease extension for an initial period of 12 years commencing June. Toshin is the largest tenant accounting for 23% of income in 1HFY2025. 

 

Annual base rent for the first three years will be higher at 1% above the existing base rental rate and the prevailing annual rental value at the start of lease as agreed upon by both parties. 

 

Failing this, the rate will be based on average market rental values as determined by three valuers but not exceeding 125% of the first option. 

 

In addition, there will be a profit-sharing agreement if revenue and profit margin thresholds are met, thereby providing additional upside, says Natarajan.

 

Overall, SGREIT&rsquo s portfolio committed occupancy rate remains high at a stable 97.7%, with near-full occupancy for the Singapore assets. This has been achieved by expanding its array of renowned featured fashion brands such as Burberry, Tod&rsquo s and Risis Atelier. 

 

Management expects rent reversion to be in healthy double digits for retail and office lease renewals, notes Natarajan. 

 

Wisma Atria improvements

 

SGREIT divested some 7,653 sq ft of net lettable area (NLA) on Wisma Atria&rsquo s 12th level for $16.1 million, or $2,100 psf, in December 2024. 

 

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Management remains open to further such strata divestments if it receives good offer prices, says Natarajan. 

 

Wisma Atria&rsquo s retail business has been benefitting from the ongoing asset enhancements. SGREIT will embark on more asset enhancement initiatives at Wisma Atria, which includes repurposing the level 7 car park for office use (some 3,250 sq ft) with an estimated return on investment of more than 8%. Management will also enhance drop-off points and tenant shopfronts.  

 

&ldquo We expect these steps to boost the overall valuation of the asset,&rdquo says Natarajan.

 

SGREIT posted its results for 1HFY2024/2025 ended Dec 31, 2024 on Jan 23. For the half-year period, the REIT&rsquo s gross revenue increased by 1.7% y-o-y to $96.3 million while net property income (NPI) rose by 1.6% y-o-y to $75.6 million.

 

The 5-year unsecured facility agreement is for term and revolving credit facilities, of S$300 million each

[SINGAPORE] Starhill Global Real Estate Investment Trust&rsquo s : P40U +1% (Reit) manager on Friday (Mar 21) said that the Reit has obtained a S$600 million loan from &ldquo a club of banks&rdquo .

 

The five-year unsecured facility agreement is for sustainability-linked term facilities of S$300 million, as well as sustainability-linked revolving credit facilities of S$300 million.

 

The term facilities are intended to be used to refinance the S$100 million unsecured medium-term notes maturing in June, as well as the Reit&rsquo s unsecured term loans in September ahead of their maturities in 2026 and 2027, said the manager in a bourse filing.

 

It added that this is part of its &ldquo proactive capital management strategy&rdquo .

 

The revolving credit facilities will be available for working capital requirements and general corporate funding purposes of the Reit, of which a committed portion of S$200 million will replace the S$200 million committed existing revolving credit facilities expiring on Feb 16, 2026, added the manager.

 

The use of these term facilities and the refinancing are expected to take place from June to September.

 

The manager added that with the refinancing, the transaction is not expected to have a material impact on the gearing of the Reit.

 

Its revenue increases mainly due to higher contributions from its Singapore properties

STARHILL Global Real Estate Investment Trust&rsquo s (Reit) distribution per unit (DPU) rose 1.1 per cent to S$0.018 for its first half ended Dec 31, 2024, from S$0.0178 in the year-ago period.

 

Revenue was up 1.7 per cent at S$96.3 million for the half-year period, from S$94.6 million in the corresponding period in the prior year.

 

This was in line with higher contributions from its properties in Singapore and Perth, Australia, as well as the appreciation of the Malaysian ringgit against the Singapore dollar, the Reit&rsquo s manager said on Thursday (Jan 23).

 

However, this was partially offset by a weaker contribution from its property Myer Centre Adelaide, and higher operating expenses for its Australia properties, it added.

 

Net property income (NPI) for the half year grew 1.6 per cent on year to S$75.6 million, from S$74.5 million.

 

The income available for distribution rose 3.3 per cent on year to S$43.3 million. The manager said that it will retain S$2 million of income available for distribution for the period for working capital requirements.

 

Accordingly, the income to be distributed to unitholders was S$41.3 million, up 2.6 per cent on year from S$40.2 million. The distribution will be paid out on Mar 25, 2025, after the record date on Feb 4.

 

The Reit&rsquo s committed portfolio occupancy remained stable at 97.7 per cent as at Dec 31, 2024, with a portfolio weighted average lease term expiry of 7.4 years by net lettable area. Gearing was stable at 36.2 per cent, while the average debt maturity profile &ldquo remains healthy&rdquo at three years, said the manager.

 

The manager&rsquo s chairman Francis Yeoh noted that global economic growth was fragmented amid volatility in interest rates and rising trade tensions.

 

Meanwhile, Ho Sing, chief executive of the manager, said that the Reit&rsquo s operations in Singapore continue to perform well, with almost full occupancy and improved footfall on the back of positive rental reversions. &ldquo We will continue to focus on rejuvenating our assets, particularly in Singapore and Australia,&rdquo Ho added.

The Reit&rsquo s portfolio occupancy stands at 97.6% as at the end of the quarter

 

STARHILL Global Reit : P40U 0% reported a 1.4 per cent rise in its net property income (NPI) to S$37.9 million for its first fiscal quarter ended Sep 30, 2024, from S$37.4 million in the corresponding year-ago period.

 

This was in line with an increase in revenue, partially offset by higher operating expenses at one Australian property, Myer Centre Adelaide, the manager said in a business update on Tuesday (Oct 29).

 

Revenue for the real estate investment trust (Reit) edged up 1.9 per cent to S$48 million, from S$47.1 million in the same quarter a year ago, on account of higher contributions from its Singapore and Perth properties, as well as appreciation of the Malaysian ringgit against the Singapore dollar.

 

Starhill&rsquo s core assets in Singapore include Ngee Ann City and Wisma Atria, both of which posted higher revenue contributions during the quarter.

 

Revenue for Ngee Ann City came in at S$16.5 million, compared with S$16.3 million in the same period a year ago.

 

Similarly, Wisma Atria registered revenue of S$13.3 million in Q1, up from S$12.9 million in the previous year.

At Wisma Atria in particular, shopper traffic improved by 11.7 per cent on year in the first quarter, but tenant sales decreased 7.7 per cent, mainly due to tenant transitions and vacancy.

 

&ldquo The rise in shopper traffic could also be attributed to the influx of tourists, as visitor arrivals in Singapore recorded the highest levels post-pandemic in July and August 2024,&rdquo the manager said.

 

On Oct 28, Starhill Global Reit completed the sale of strata units on Level 12 of its Wisma Atria property office tower, for a cash consideration of about S$16.1 million.

 

As at end-September, the Reit&rsquo s portfolio occupancy stood at 97.6 per cent, marginally lower than the 97.7 per cent recorded as at end-June.

 

Divestment is for a cash consideration of about S$16.1 million or S$2,100 per square foot, says Reit&rsquo s manager

 

STARHILL Global Real Estate Investment Trust : P40U -0.98% (SGReit) is divesting the strata office lots that it owns at Wisma Atria for a cash consideration of about S$16.1 million or S$2,100 per square foot (sq ft), the Reit&rsquo s manager said on Monday (Oct 28).

 

The sale is to an unrelated third party, with the divestment amount at a 22.2 per cent premium to the latest valuation of the property, added the manager.

 

The offices are located on Level 12 of the office tower in Wisma Atria, and have a net lettable area of around 7,653 sq ft.

 

SGReit&rsquo s manager said that the sale consideration was arrived at on a &ldquo willing buyer and willing seller basis&rdquo , after taking into account the current economic environment and the property&rsquo s valuation as at Jun 30, 2024.

 

It added that the divestment is in line with its strategy to rejuvenate SGReit&rsquo s portfolio through selective divestments.

 

Net proceeds may be used to pare down debt, for working capital purposes, for future acquisitions, and/or make distributions to unitholders, it noted.

 

&ldquo The pro forma financial effects of the divestment on the distribution per unit and net asset value per unit of SGReit is not expected to have a material impact,&rdquo said the Reit&rsquo s manager.