Starhill Global REIT (SGREIT) turned in an encouraging set of 3Q12 results yesterday. While we have expected Wisma Atria retail mall to put on a good showing following the completion of asset redevelopment works, the 24.3% increase in NPI for the segment came in stronger than expected, thanks to positive rental reversions and full committed occupancy at the mall. Wisma Atria office segment, we note, also performed well, raking up 15.2% growth in NPI. In addition, overall portfolio occupancy remained very healthy at 99.4%, with a weighted average lease term (by NLA) of 7.3 years. As mentioned in our Sep report, SGREIT had secured the refinancing for its existing A$63m term loan which matures in Jan 2013. With that, SGREIT has no debt refinancing requirement until Sep 2013. We are tweaking our forecasts to factor in stronger rentals at Wisma Atria. This lifts our fair value from S$0.79 to S$0.84. Maintain BUY.
3Q12 DPU within expectations
Starhill Global REIT (SGREIT) turned in an encouraging set of 3Q12 results yesterday. NPI and distributable income were up 5.7% and 11.0% YoY to S$36.4m and S$21.6m respectively, driven by stronger performance at its Singapore properties. DPU for the quarter similarly grew by 11.0% YoY to 1.11 S cents. Together with 1H12 DPU of 2.15 S cents, 9M12 distribution tallied 3.26 S cents, up 4.8%. This is largely within our expectations, given that it formed 75.1%/75.8% of our/consensus full-year DPU projections.
Wisma Atria surprised on upside
While we have expected Wisma Atria retail mall to put on a good showing following the completion of asset redevelopment works, the 24.3% increase in NPI for the segment came in stronger than expected, thanks to positive rental reversions and full committed occupancy at the mall. Wisma Atria office segment, we note, also performed well, raking up 15.2% growth in NPI. This more than offset the weakness in NPI at its Chengdu (-14.1%) and Australia properties (-3.2%), which were impacted by the softening of the Chinese retail market and higher operating expenses respectively. As a result, its Singapore portfolio contributed 62.3% of 3Q NPI, higher than 61.2% seen in 2Q. Nevertheless, overall portfolio occupancy still remained very healthy at 99.4% (office: 97.9%, retail: 100%), with a weighted average lease term (by NLA) of 7.3 years.
Maintain BUY
As mentioned in our Sep report, SGREIT had secured the refinancing for its existing A$63m term loan which matures in Jan 2013. With that, SGREIT has no debt refinancing requirement until Sep 2013. Its gearing currently stands at a healthy 31.2% (30.5% in 2Q), with financing costs at 3.13%. Regarding the Toshin master lease at Ngee Ann City, SGREIT provided little details except that the President of the Singapore Institute of Surveyors and Valuers is still in the process of designating three independent valuers for the rent valuation. We are tweaking our forecasts to factor in stronger rentals at Wisma Atria. This lifts our fair value from S$0.79 to S$0.84. Maintain BUY.
Starhill Global REIT (SGREIT) turned in an encouraging set of 3Q12 results yesterday. NPI and distributable income were up 5.7% and 11.0% YoY to S$36.4m and S$21.6m respectively, driven by stronger performance at its Singapore properties. DPU for the quarter similarly grew by 11.0% YoY to 1.11 S cents. Together with 1H12 DPU of 2.15 S cents, 9M12 distribution tallied 3.26 S cents, up 4.8%. This is largely within our expectations, given that it formed 75.1%/75.8% of our/consensus full-year DPU projections.
Wisma Atria surprised on upside
While we have expected Wisma Atria retail mall to put on a good showing following the completion of asset redevelopment works, the 24.3% increase in NPI for the segment came in stronger than expected, thanks to positive rental reversions and full committed occupancy at the mall. Wisma Atria office segment, we note, also performed well, raking up 15.2% growth in NPI. This more than offset the weakness in NPI at its Chengdu (-14.1%) and Australia properties (-3.2%), which were impacted by the softening of the Chinese retail market and higher operating expenses respectively. As a result, its Singapore portfolio contributed 62.3% of 3Q NPI, higher than 61.2% seen in 2Q. Nevertheless, overall portfolio occupancy still remained very healthy at 99.4% (office: 97.9%, retail: 100%), with a weighted average lease term (by NLA) of 7.3 years.
Maintain BUY
As mentioned in our Sep report, SGREIT had secured the refinancing for its existing A$63m term loan which matures in Jan 2013. With that, SGREIT has no debt refinancing requirement until Sep 2013. Its gearing currently stands at a healthy 31.2% (30.5% in 2Q), with financing costs at 3.13%. Regarding the Toshin master lease at Ngee Ann City, SGREIT provided little details except that the President of the Singapore Institute of Surveyors and Valuers is still in the process of designating three independent valuers for the rent valuation. We are tweaking our forecasts to factor in stronger rentals at Wisma Atria. This lifts our fair value from S$0.79 to S$0.84. Maintain BUY.
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