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An expensive reit that underperforms for such a long time.
Sell.
Sell.
Starhill Global Reit posts 0.9% lower Q3 net property income of S$37.7 million
Overall portfolio occupancy is 98 per cent as at Mar 31
STARHILL Global Real Estate Investment Trust&rsquo s (Reit) net property income for the third quarter ended March declined 0.9 per cent to S$37.7 million, versus S$38 million in the same period the year before.
On Monday (Apr 29), the Reit manager said this was largely due to weaker foreign currencies and a loss of income from the Reit&rsquo s recent divestment of its Daikanyama asset.
The decline was also attributed to higher operating expenses that stemmed mainly from Wisma Atria and Myer Centre Adelaide Retail.
On the other hand, gross revenue rose 0.7 per cent to S$47.6 million from S$47.3 million the prior year, mainly due to higher contributions from the Reit&rsquo s Singapore properties.
Overall portfolio occupancy was 98 per cent as at Mar 31, with the Singapore properties maintaining full occupancy on a committed basis.
At the Wisma Atria property, tenant sales improved 6.5 per cent year on year, while shopper traffic grew 12.7 per cent. The manager noted that this was despite ongoing interior enhancement works in the basement, which was completed in February.
The Reit&rsquo s gearing as at end-March stood at 37.2 per cent, with a weighted average debt maturity of 2.7 years and about 77 per cent of total borrowings fixed or hedged.
Its manager said Starhill Global Reit has sufficient undrawn, long-term committed revolving credit facility lines to cover its remaining debts maturing till June 2025.
In its view, the global economic outlook remains uncertain given elevated interest rates, geopolitical conflicts and financial market volatility.
The manager aims to &ldquo ensure the malls remain relevant for shoppers and healthy occupancies are maintained, as well as exercise prudence in its capital management approach amid high interest rates and foreign exchange volatility&rdquo .
If you compare Starhill to its closest comparator Paragon, Starhill is as cheap as chips.
The Myers case is so bo chap. Blaming how the mall is run when you control over half yourself is not credible. Once the case goes away then blue skies.
The Myers case is so bo chap. Blaming how the mall is run when you control over half yourself is not credible. Once the case goes away then blue skies.
This blogger say this is the reit to buy.
https://www.tubinvesting.com/2024/03/riding-reit-recovery-why-starhill.html
https://www.tubinvesting.com/2024/03/riding-reit-recovery-why-starhill.html
Starhill Global REIT' s 1HFY2023/2024 DPU down 2.2% y-o-y to 1.78 centsStarhill Global REIT P40U -0.98% has reported a distribution per unit (DPU) of 1.78 cents for the 1HFY2023/2024 ended Dec 31, 2023, 2.2% lower than the DPU of 1.82 cents for the same period the year before.For the half-year period, the REIT&rsquo s gross revenue dipped marginally by 0.1% y-o-y to $94.6 million while net property income (NPI) increased by 0.3% y-o-y to $74.5 million.The improved NPI was mainly due to the REIT&rsquo s properties in Singapore and Myer Centre Adelaide Retail in Australia, and was partially offset by net movement in foreign currencies and a loss of income from its Japanese divestment.Distributable income for the 1HFY2023/2024 fell by 3.8% y-o-y to $41.9 million, mainly due to higher net financing costs and one-off leasing commission fee in relation to the master lease renewal with Toshin Development Singapore at Ngee Ann City Property (Retail) during the period.According to the manager, the REIT will resume its distribution reinvestment plan (DRP) for the 1HFY2023/2024 distribution. The issue price of new units for the DRP will be announced on or around Feb 6, while unitholders will be paid on March 25.As at June 30, the REIT&rsquo s committed portfolio occupancy stood at 98.7%. Meanwhile, following the renewal of the Toshin master lease, its portfolio weighted average lease expiry (WALE) stood at 7.9 years by net lettable area (NLA).The REIT&rsquo s gearing as at end-December 2023 stood at 36.8% while its portfolio valuation stood at $2.8 billion.Cash and cash equivalents as at the same date stood at $62.7 million.&ldquo The global economic outlook remains uncertain with elevated interest rates, geopolitical conflicts and volatility in financial markets. Despite these challenges, Starhill Global REIT mitigated headwinds with its portfolio of quality assets backed by master/anchor leases and prudent capital management,&rdquo says Tan Sri Francis Yeoh, chairman of the manager.&ldquo The manager will continue its proactive asset management strategy to ensure the malls remain relevant for shoppers and healthy occupancies are maintained, as well as exercise prudence in its capital management approach amid high interest rates and foreign exchange volatility,&rdquo he adds.&ldquo Our Singapore portfolio achieved full committed occupancy with higher tenants&rsquo sales at Wisma Atria despite ongoing renovation works. During the period, we successfully renewed our master lease with Toshin which provided certainty and continuity to both Toshin and us. The renewed master lease will allow Starhill Global REIT to also participate on the upside with a new profit-sharing arrangement,&rdquo says Ho Sing, CEO of the manager.
this is for half year payout. full year yield close to 7% at current rate.
kt3152 ( Date: 30-Jan-2024 09:31) Posted:
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Reit price gone down due to high interest rate. Should be good to buy for long term for capital gain....1.78c dpu is 3.49% which is not too bad......
Focusing on the DPU misses a number of key points.
First, the DPU this HY was impacted by a commission paid for the Toshin master lease renewal, which is a one off. If it wasnt for this the DPU would have been higher than YoY.
Second, the DPU is always distorted by the amount the company chooses to retain for WC purposes - it happened to be quite large this HY, relative to say the previous HY.
First, the DPU this HY was impacted by a commission paid for the Toshin master lease renewal, which is a one off. If it wasnt for this the DPU would have been higher than YoY.
Second, the DPU is always distorted by the amount the company chooses to retain for WC purposes - it happened to be quite large this HY, relative to say the previous HY.
Declared dividend 1.78cents. Dividend lower yty and there will be distribution reinvestment plan which will dilute the share. Also reits will be Diluted by the payment of management fee. Think no good for DIP. It may benefit those who participate in the reinvestment in terms of next distribution but the share prices may be going down as it will be diluted.
That is great news for the company. They' ve extended the contract for a long time and at better terms. Not only will this improve the DPU in itself in future years, but it means they will find it much easier to refinance, and at better terms which will also ultimately push up DPU.
Not sure the wider market has realised the implications of this deal.
Not sure the wider market has realised the implications of this deal.
RHB raises target price for Starhill Global REIT following master lease renewal with anchor tenant
RHB Bank Singapore' s Vijay Natarajan has kept his " buy" call on Starhill Global REIT P40U -1% , along with a raised target price, after it renewed a long-term lease with its anchor tenant on what has been seen as favourable terms.
Toshin, which operates the Takashimaya department store within Ngee Ann City, a key asset of the REIT, has signed a new 12-year master lease starting from June 2025.
Upon expiry on June 2037, there is an option for either party to renew for six years and thereafter, at the option of Toshin, extend for another three years.
Toshin contributes 24% of the gross rent to the REIT.
Under the terms of the new leasing agreement, the base rent for the first three years will be higher of either 1% above existing base rents and the prevailing annual rental value at the start of the lease as agreed by both parties.
Failing which, the base rent shall be based on average market rental values determined by three valuers but not exceeding 125% of the first option.
The annual fixed rent will be subject to review every three years during the lease term and comes with downside protection, similar to the existing agreement.
In addition, Toshin has agreed to a profit-sharing agreement based on an annual turnover if revenue and profit margin thresholds are met.
On the other hand, as part of the master lease agreement, the REIT will contribute up to $5.2 million to Toshin for asset enhancements, which, in Natarajan' s view, is " reasonable."
" Based on our discussions and anecdotal evidence, the favourable new lease comes amid a strong rebound in tenant sales across the Toshin space in Ngee Ann City on the back of revamped concepts and the return of tourists. We also expect the deal to provide a valuation uplift for the largest asset in Starhill Global REIT' s portfolio," he says.
That aside, the REIT' s portfolio occupancy rose to 98.4%, up 0.7ppt q-o-q as at 1QFY2024 ended Sept, aided by occupancy uplift for its Australian assets.
Natarajan also notes that tenant sales at Wisma Atria, another mall owned by the REIT, is up 15% y-o-y in the latest quarter.
Coupled with the next phase of asset enhancements expected to be completed by Mar 2024, the REIT should be able to eke out more positive rent reversions.
Natarajan has raised his FY2026 DPU by 3% and FY2027 DPU by 5% to factor in the new master lease structure and to also lower his interest cost estimates.
Starhill Global Reit renews master lease with Ngee Ann City&rsquo s Toshin for initial 12 years
It will also contribute up to S$5.2 million for renovation and upgrading works
STARHILL Global Reit : P40U 0% has renewed its current master lease with Takashimaya manager Toshin Development Singapore due to expire in June 2025 for an initial term of 12 years.
The Reit manager announced this in a bourse filing on Thursday (Nov 30).
Beyond its expiry on Jun 7, 2037, the master lease may be further renewed by either party for an additional six years, and for a further three years thereafter, at the option of Toshin.
Under the current master lease, Toshin is the master tenant occupying all the retail areas of the Ngee Ann City property owned by the real estate investment trust (Reit), except Level 5. The current lease contributed about 23.6 per cent of Starhill&rsquo s portfolio gross rent as at Sep 30, 2023.
The renewal will extend Starhill&rsquo s portfolio-weighted average lease expiry to 8.1 years from 6.3 years by net lettable area, and to 8.4 years from 4.2 years by gross rent, as at the same date.
For the first three years, the annual fixed rent of the new master lease will be the higher of an agreed sum that is approximately 1 per cent above the existing base rent under the current lease, and the prevailing market annual rental value as at the commencement of the renewed lease.
The latter value will be agreed to by both parties, or failing which will be based on the average market rental values determined by three licensed valuers, but not exceeding 125 per cent of the agreed sum in the first method.
Toshin will also need to pay an annual turnover rent to Starhill, which will comprise a portion of Toshin&rsquo s annual operating income over and above agreed revenue and profit margin thresholds.
&ldquo This profit-sharing arrangement provides potential upside for Starhill Global Reit while taking into consideration Toshin&rsquo s profit margin,&rdquo said the manager, noting that the current master lease does not include a profit-sharing component.
The annual fixed rent will be reviewed every three years during the renewed lease&rsquo s term and upon the exercise of options to renew.
Starhill has also agreed to contribute up to S$5.2 million for Toshin to carry out renovation and upgrading works &ldquo on the demised premises&rdquo during the initial 12-year term to maintain the property&rsquo s prestige.
Yes, still ongoing. Myer still paying rental. Unlikely Myer will win.
eddyeddy ( Date: 28-Oct-2023 10:12) Posted:
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The law suit with Myar is ongoing ?
Starhill Global Reit reports 0.4% rise in Q1 NPI to S$37.4m
STARHILL Global Reit : P40U 0% reported net property income (NPI) of S$37.4 million for the first quarter ended Sep 30, 2023, up 0.4 per cent from S$37.2 million a year earlier.
This was due mainly to higher contributions from Starhill&rsquo s properties in Singapore and from the Myer Centre Adelaide mall in Australia, the manager said in a business update on Friday (Oct 27).
However, it was partially offset by the depreciation of foreign currency and the loss of income from the divestment of a property in Japan, the manager added.
Gross revenue for the real estate investment trust (Reit) dipped 1 per cent to S$47.1 million, from S$47.6 million in the previous year.
Starhill&rsquo s core assets in Singapore include Ngee Ann City and Wisma Atria, which both posted higher gross revenue contributions during the quarter.
Gross revenue for Ngee Ann City came in at S$16.3 million, compared with S$15.9 million in the same period a year ago.
Wisma Astria, meanwhile, registered a gross revenue of S$12.9 million in Q1, up from S$12.7 million in the previous year.
Tenant sales and shopper traffic at Wisma Atria improved by 14.5 per cent and 6.5 per cent respectively in Q1, the manager said.
Renovation works in the mall&rsquo s basement, which commenced in August this year, are expected to conclude by March 2024.
As at end-September, the Reit&rsquo s portfolio occupancy stood at 98.4 per cent, up from 97.7 per cent as at end-June.
Back to covid level ?
The perps is only 3% of total asset value - not a significant size.
As to how they should be classed, I think what' s important is to look at the specific terms of the instrument as these can vary widely between perps. In Starhill' s case there is a reset in Dec 25 from the current 3.85% rate to the prevailing SGD 5yr SOR plus the initial spread of 3.292%, assuming Starhill does not refinance or otherwise pay off this perp. Hence if the SOR in Dec 25 is higher than 0.56% then the cost of this instrument will go up. Realistically this is likely to be the case, but by Dec 25 the increase may not be so much as it would have been if the reset date was today. Also, critically, there is no step up margin for this perp which would otherwise incentivise an issuer to refinance at the reset date or suffer the consequences of a much more expensive interest rate - hence in Starhill' s case the cost of not repaying at the reset date is a lot less than it might have been with a step up margin. I therefore think perps like this without a step up margin are effectively equity. For the same reason, I would only consider investing in a perp that did have a step up margin - makes me much more likely to be repaid at the reset date.
As to how they should be classed, I think what' s important is to look at the specific terms of the instrument as these can vary widely between perps. In Starhill' s case there is a reset in Dec 25 from the current 3.85% rate to the prevailing SGD 5yr SOR plus the initial spread of 3.292%, assuming Starhill does not refinance or otherwise pay off this perp. Hence if the SOR in Dec 25 is higher than 0.56% then the cost of this instrument will go up. Realistically this is likely to be the case, but by Dec 25 the increase may not be so much as it would have been if the reset date was today. Also, critically, there is no step up margin for this perp which would otherwise incentivise an issuer to refinance at the reset date or suffer the consequences of a much more expensive interest rate - hence in Starhill' s case the cost of not repaying at the reset date is a lot less than it might have been with a step up margin. I therefore think perps like this without a step up margin are effectively equity. For the same reason, I would only consider investing in a perp that did have a step up margin - makes me much more likely to be repaid at the reset date.
Gearing is not that low because there are few perpetual notes which are being classified as equity.
Alignment ( Date: 06-Oct-2023 08:59) Posted:
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This REIT has a lower gearing, more spread out debt profile and higher fixed rate hedged ratio than many of the other REITs in this space.
To my mind the only significant risk is the Toshin renewal - if the renewal will happen then I think prospects for steadily increasing dividends into the long term are very good.
To my mind the only significant risk is the Toshin renewal - if the renewal will happen then I think prospects for steadily increasing dividends into the long term are very good.
The TTM of this stock suggests a potential annual return of 9.28%. Is it a good idea to keep the stock for earning dividends?