Starhill Global REIT (SGREIT) reported FY11 DPU of 4.12 S cents, roughly in line with both our and consensus DPU forecast of 4.2 S cents. While performance in 4Q11 was partially impacted by negative rental office reversions and rental disruption from the asset redevelopment from its Singapore portfolio, we note that take-up rate for its office space continues to be healthy, while higher rentals were achieved for new and renewed leases for its retail segment. Management also reiterated that the asset redevelopment at Wisma Atria is on track for completion by 3Q12. As at 31 Dec 2011, SGREIT is in a comfortable financial position, with aggregate leverage at 30.8% and no major debt refinancing until 2013. It also enjoys a long weighted average lease term of 6.5 years by NLA. We keep our fair value unchanged at S$0.70, based on a DDM valuation method. Maintain BUY.
Consistent set of 4Q11 results. Starhill Global REIT (SGREIT) reported 4Q11 NPI of S$36.5m and distributable income of S$22.2m, down 0.6% and 4.7% YoY respectively. The slight decline in earnings was mainly due to lower contribution from Singapore properties and higher expenses at China and Japan properties. 4Q DPU came in at 1.01 S cents (-2.9% YoY), bringing the full-year DPU to 4.12 S cents (6.9% DPU yield). This is roughly in line with both our and consensus DPU forecast of 4.2 S cents.
Demand remains strong. Singapore portfolio, which formed 58.9% (S$27.1m) of 4Q revenue, registered a slight 0.9% decline in NPI to S$21.1m. The softer performance, we note, was mainly attributed to negative rental office reversions and rental disruption from the asset redevelopment at Wisma Atria (WA). However, take-up rate showed that its office space continues to be in good demand, as evidenced by a 1.2ppt and 3.1ppt QoQ increase in occupancy at WA and Ngee Ann City (NAC), respectively, to 95.8% and 94.9%. In addition, higher rentals were achieved for new and renewed leases for its retail segment. As some of these leases were secured at end-2011, we expect the positive impact to show in 2012.
Sound fundamentals. Management also reiterated that the asset redevelopment at Wisma Atria is on track for completion by 3Q12 and intends to minimize the disruption with a two-phase handover in 1Q12 and 2Q12. We note that pre-commitment for the redeveloped space was maintained at 75%. As at 31 Dec 2011, SGREIT is in a comfortable financial position, with aggregate leverage at 30.8% and no major debt refinancing until 2013. It also enjoys a long weighted average lease term of 6.5 years by NLA. We now introduce our FY13 forecasts. Our fair value remains unchanged at S$0.70, based on a DDM valuation method. Maintain BUY.
Demand remains strong. Singapore portfolio, which formed 58.9% (S$27.1m) of 4Q revenue, registered a slight 0.9% decline in NPI to S$21.1m. The softer performance, we note, was mainly attributed to negative rental office reversions and rental disruption from the asset redevelopment at Wisma Atria (WA). However, take-up rate showed that its office space continues to be in good demand, as evidenced by a 1.2ppt and 3.1ppt QoQ increase in occupancy at WA and Ngee Ann City (NAC), respectively, to 95.8% and 94.9%. In addition, higher rentals were achieved for new and renewed leases for its retail segment. As some of these leases were secured at end-2011, we expect the positive impact to show in 2012.
Sound fundamentals. Management also reiterated that the asset redevelopment at Wisma Atria is on track for completion by 3Q12 and intends to minimize the disruption with a two-phase handover in 1Q12 and 2Q12. We note that pre-commitment for the redeveloped space was maintained at 75%. As at 31 Dec 2011, SGREIT is in a comfortable financial position, with aggregate leverage at 30.8% and no major debt refinancing until 2013. It also enjoys a long weighted average lease term of 6.5 years by NLA. We now introduce our FY13 forecasts. Our fair value remains unchanged at S$0.70, based on a DDM valuation method. Maintain BUY.
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