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Starhill Global REIT: 5 Things to Note From its Latest Earnings

Starhill Global Real Estate Investment Trust (SGX: P40U), a Singapore-based REIT with properties in the retail and office segment, reported a slight increase in distribution per unit (DPU) yesterday.

The latest earnings report was for the third quarter of the fiscal year ending on 30 June 2019 (FY18/19). The REIT’s portfolio consists of 10 properties spread across Singapore, Australia, Malaysia, China and Japan which are valued at S$3.1 billion.

Let’s take a quick look at the results.

  1. Gross revenue for the reporting quarter declined by 0.9% year-on-year to S$51.3 million while net property income declined by 1.8% to S$39.6 million. The decrease in revenue and net property income were on the back of lower contributions from the retail portfolio in Singapore and the depreciation of the Australian dollar which was partially offset by higher contributions from the Ngee Ann City Property, Myer Centre Adelaide and Plaza Arcade.
  2. Distributable income rose by 0.9% to S$24.0 million compared to the same period in the previous year. This resulted in a 0.9% uptick in DPU, which came in at 1.10 Singapore cents.
  3. With regards to the REIT’s debt profile, as of 31 March 2019, Starhill’s gearing stood at 35.7%. The weighted average annualised interest rate came in 3.29% with approximately 91% of its debt on fixed-rate or hedged loans. The average debt duration for the retail REIT stood at 3.0 years.
  4. Let’s now have a look at the REIT’s operational statistics. Starhill’s portfolio had an occupancy rate of 95.7%, increasing slightly from 30 June 2018. The weighted average lease expiry (by gross rental income) for the portfolio stood at 4.1 years at the end of the reporting quarter with 21.7% of the leases expiring in FY18/19.
  5. Lastly, the REIT’s net asset value (NAV) per unit stood at S$0.90.

The Road Ahead

Mr. Ho Sing, CEO of YTL Starhill Global, commented on the outlook:

“Our DPU for 3Q FY18/19 grew by 0.9% y-o-y, boosted by better performance from our office portfolio. The revenue and NPI for the Singapore office portfolio rose 4.2% and 3.8% y-o-y in 3Q FY18/19, while committed occupancy to continue to rise to 94.4%3 as at 31 March 2019 from 90.7%3 as at 31 March 2018. In Australia, the lease for the new anchor tenant for our office asset in Adelaide has commenced, which led to the more than doubling of its actual occupancy to 74.9% as at 31 March 2019, amid an improving office landscape in Adelaide.

Singapore retail occupancy continues to be resilient, achieving a higher committed occupancy of 99.7%3 as at 31 March 2019, even as retail supply islandwide continues to rise amidst soft consumer sentiment. The new master tenancy agreements for Malaysia Properties will provide income certainty and allow us to explore opportunities for the rest of the portfolio going forward.”

Starhill’s unit price closed at S$0.76 apiece yesterday, sporting a price-to-book ratio of 0.84 and an annualised yield of 5.9%.

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Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own shares in Starhill Global. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore writer Tim Phillips does not own shares in any of the companies mentioned.