Distributions Up 13.9% at Starhill Global Real Estate Invmt Trust

Starhill Global REIT (SGX: P40U) released its fourth quarter results last Friday after the markets closed. It is one of the largest real estate investment trusts listed in Singapore with a market capitalization of S$1.7 billion as of 31 December 2013.

The REIT invests mainly in prime retail and office buildings globally with a segment positioning on mid-to-high end shoppers. Its portfolio consists of properties in 5 countries as shown below:

Location Description Annual Gross Revenue (%)
Singapore 257 strata lots representing 74.2% of the total share value of the strata lots in Wisma Atria and 4 strata lots representing 27.2% of the total share value of the strata lots in Ngee Ann City 65.8%
(Kuala Lumpur)
100% interest in Starhill Gallery and 137 strata parcels and two accessory parcels within Lot 10 shopping centre 15.1%
Australia (Perth) 100% interest in David Jones Building and Plaza Arcade 9.3
China (Cheng Du) 100% interest in Renhe Spring Zongbei Department Store 7
Japan (Tokyo) 100% interest in six properties in Tokyo, Japan 2.8

Source: Starhill Global REIT earnings presentation

Financial Performance

YTL Starhill Global REIT Management Limited, the manager of the REIT, said revenue for the  fourth quarter of 2013 inched up 3.6% year-on-year to S$49.1 million compared to a year ago. Net property income rose in tandem, increasing 3.4% to S$38.8, primarily due to the upward rent reversions of the Singapore portfolio.

On an annual basis, revenue was up 7.9% from S$186 million in 2012 to S$200 million in 2013. Net property income for the year was S$157.85 million, indicating an increase of 6.3% from S$148.45 million last year.

Balance Sheet

Starhill Global remains in a robust financial position with a gearing ratio of 29.0% and plenty of debt-headroom to play with considering the maximum legal limit for its gearing is 60%. Besides that, the company also has no refinancing requirement until June 2015 while 94% of the Group’s borrowings are fixed/hedged via interest rate swaps and caps, lowering the impact of interest rate fluctuations on distributions too.


With the economic recovery in the U.S and Europe, Starhill Global stands to benefit from the spill-over effect to the Asia region together with buoyant macroeconomic trends like tourism growth and rising consumption.

Against this positive backdrop, Mr Ho Sing (CEO of YTL Starhill Global) said, “Going forward, we will continue to refine our portfolio through the divestment of non-core assets and reallocate resources to strengthen our position through our portfolio of prime retail assets in the Asia Pacific region. We look forward to asset enhancement opportunities in Singapore and Australia.”

Foolish Bottom-line

At first glance, Starhill Global seems to be similar to Frasers Centrepoint Trust (SGX: J69U) and CapitaMall Trust (SGX: C38U), both of which owns retail shopping malls in Singapore. However, Starhill Global differentiates itself in two ways: 1) Its portfolio stretches across five countries although the bulk of its revenue still comes from the Singapore properties; and 2) It focuses on mid-to-high end shoppers with the prime location of properties.

Its Distribution per unit (DPU) for the whole of 2013 advanced 13.9% year-on-year to 5 Singapore cents, the highest ever achieved since its listing in 2005.

Even when the Toshin Payout is excluded – which refers to a 0.19 cents one-time payout in 2013 due to the collection of accumulated late rental payments from the master tenant of Ngee Ann City, Toshin, from June 2011 to Dec 2012 –  DPU also edged up 9.6% from 4.39  Singapore cents to 4.81 Singapore cents.

The REIT closed at S$0.76 per unit last Friday. At that price, the REIT is selling for 0.9 times book value, and carries a distribution yield of 6.33% based on the 4.81 Singapore cents pay-out.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.