Starhill Global REIT’s (SGREIT) 1Q13 results came in within our expectations. DPU for the quarter stood at 1.37 S cents, representing 27.0% of our FY13F DPU. Excluding the Toshin arrears payout, we note that DPU would have increased 10.3% YoY to 1.18 cents, still impressive in our view. Noteworthy was the strong operational performance at its Singapore portfolio, which contributed 66.3% to 1Q13 NPI. For the first time, both Ngee Ann City and Wisma Atria achieved full occupancy for both its office and retail segments, while positive rental reversions were secured. This helped to offset the decline in NPI at its Japan and Chengdu properties. We are currently maintaining our view that SGREIT is likely to perform well going forward, as it continues to ride on the strength of its Singapore portfolio, gain from its newly acquired Plaza Arcade, and a 7.2% rent increase from its Malaysia master leases. Maintain BUY with a higher fair value of S$1.05 (before: S$0.98) as we lower our cost of equity to 6.7% from 7.0%.
Commendable set of 1Q13 results
Starhill Global REIT’s (SGREIT) 1Q13 results came in within our expectations. Revenue and NPI grew by 16.5% and 12.3% YoY to S$53.6m and S$41.9m respectively, due mainly to the 10% increase in base rent for Toshin master lease at Ngee Ann City (NAC), receipt of the resulting rental arrears, and stronger performance at Wisma Atria (WA) post redevelopment. The impact from the accumulated net arrears (S$3.8m or 0.19 S cents) was more apparent on the distributable income, which saw a 28.0% jump to S$26.6m. As such, DPU for the quarter stood at 1.37 S cents, representing 27.0% of our FY13F DPU. Excluding the arrears payout, we note that DPU would have increased 10.3% YoY to 1.18 cents, still impressive in our view.
Singapore portfolio delivered strongly
Noteworthy was the strong operational performance at its Singapore portfolio, which contributed 66.3% to 1Q13 NPI. For the first time, both NAC and WA achieved full occupancy for both its office and retail segments, while positive rental reversions were secured. Management noted that the centre sales at WA increased 49% in 1Q as the new tenant mix created an uplifting effect on the sales efficiency. This helped to offset the decline in NPI at its Japan (-37.8% YoY) and Chengdu properties (-12.8%), which suffered from a loss of income from asset disposal, weakening JPY and increased competition.
Maintain BUY
SGREIT also updated that the next rent review with Toshin for the period from Jun 2013 to Jun 2016 is still in progress. We do not rule out the possibility that SGREIT may again benefit from further upside. We are currently maintaining our view that SGREIT is likely to perform well going forward, as it continues to ride on the strength of its Singapore portfolio, gain from its newly acquired Plaza Arcade, and a 7.2% rent increase from its Malaysia master leases. We also understand that SGREIT has obtained loan facilities to fully refinance its debts due 2013, leaving it with no refinancing needs until 2015 (30.5% gearing). Maintain BUY with a higher fair value of S$1.05 (before: S$0.98) as we lower our cost of equity to 6.7% from 7.0%.
Starhill Global REIT’s (SGREIT) 1Q13 results came in within our expectations. Revenue and NPI grew by 16.5% and 12.3% YoY to S$53.6m and S$41.9m respectively, due mainly to the 10% increase in base rent for Toshin master lease at Ngee Ann City (NAC), receipt of the resulting rental arrears, and stronger performance at Wisma Atria (WA) post redevelopment. The impact from the accumulated net arrears (S$3.8m or 0.19 S cents) was more apparent on the distributable income, which saw a 28.0% jump to S$26.6m. As such, DPU for the quarter stood at 1.37 S cents, representing 27.0% of our FY13F DPU. Excluding the arrears payout, we note that DPU would have increased 10.3% YoY to 1.18 cents, still impressive in our view.
Singapore portfolio delivered strongly
Noteworthy was the strong operational performance at its Singapore portfolio, which contributed 66.3% to 1Q13 NPI. For the first time, both NAC and WA achieved full occupancy for both its office and retail segments, while positive rental reversions were secured. Management noted that the centre sales at WA increased 49% in 1Q as the new tenant mix created an uplifting effect on the sales efficiency. This helped to offset the decline in NPI at its Japan (-37.8% YoY) and Chengdu properties (-12.8%), which suffered from a loss of income from asset disposal, weakening JPY and increased competition.
Maintain BUY
SGREIT also updated that the next rent review with Toshin for the period from Jun 2013 to Jun 2016 is still in progress. We do not rule out the possibility that SGREIT may again benefit from further upside. We are currently maintaining our view that SGREIT is likely to perform well going forward, as it continues to ride on the strength of its Singapore portfolio, gain from its newly acquired Plaza Arcade, and a 7.2% rent increase from its Malaysia master leases. We also understand that SGREIT has obtained loan facilities to fully refinance its debts due 2013, leaving it with no refinancing needs until 2015 (30.5% gearing). Maintain BUY with a higher fair value of S$1.05 (before: S$0.98) as we lower our cost of equity to 6.7% from 7.0%.
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