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What Investors Should Know About Starhill Global Real Estate Investment Trust’s Latest Earnings and Valuation

Starhill Global Real Estate Investment Trust (SGX: P40U) focuses on investing in prime real estate used primarily for retail and office purposes. Its portfolio comprises 11 properties in Singapore, Australia, Malaysia, China and Japan.

There are two things about Starhill Global Real Estate Investment Trust that investors may want to know about right now: Its latest financial performance and valuation.

Financial performance

Here’s a table showing Starhill Global REIT’s financial performance for the first quarter of its fiscal year ending 30 June 2018 (FY17/18):


Source: Starhill Global FY17/18 first quarter results announcement

We can see that the reported quarter was not a good one for Starhill Global REIT.

Gross revenue and net property income (NPI) both fell, mainly due to a one-off S$1.9 million pre-termination rental compensation for a retail lease at Wisma Atria that was recorded in the same quarter a year ago. This dragged the REIT’s distribution per unit lower.

One other worrying sign concerns Starhill Global REIT’s portfolio occupancy rate. The REIT ended the reporting quarter with an occupancy rate of 93.4%, the lowest rate since December 2005.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows Starhill Global REIT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 39 REITs that are in Singapore’s stock market.


Source: SGX Stock Facts and Google Finance; data as of 7 November 2017

We can see that Starhill Global REIT is trading at a discount to the market average based on its higher distribution yield and lower price to book ratio.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.