WE reiterate our preference for retail Reits in the current uncertain yield environment, especially as Starhill Global Reit's key assets are in the coveted Orchard Road area, where tight supply and the entry of new international retailers give it greater bargaining power in terms of leasing its space.
Looking ahead, the new rental rate from master tenant Toshin at Ngee Ann City Retail, continued repositioning of Wisma Atria and rental uplift from Malaysia portfolio master leases will drive Starhill Global's income in H2 2013 and keep the stock supported for now.
At 5.7 per cent FY2013 forecast yield and 330 basis points yield- spread, we reiterate "buy" with a dividend discount model-derived target price of $0.95.
BUY
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