Starhill Global REIT’s (SGREIT) 4Q12 results came in within our expectations. SGREIT’s Singapore properties contributed 63.0% to 4Q revenue, higher than the 62.3% contribution seen in prior quarter. This was partly fuelled by strong performance from Wisma Atria’s retail segment, which saw its NPI jump 23.5% to S$10.3m amid positive rental reversions, and also a 10.5% growth in Ngee Ann City office segment on higher occupancy and higher secured rentals. Looking ahead, SGREIT is exploring the possibility of an asset redevelopment of Plaza Arcade and David Jones Building to reap any potential synergies between the two buildings. On its capital management front, management is in active discussions with banks to refinance its term loan maturing in Sep, which we believe may lead to improved debt profile and interest savings. We now factor in Plaza Arcade acquisition into our model and roll our valuations to FY13. This bumps up our fair value to S$0.95 from S$0.84 previously. Maintain BUY.
Robust growth in DPU
Starhill Global REIT’s (SGREIT) 4Q12 results came in within our expectations. NPI grew by 2.9% YoY to S$37.5m due primarily to strong contribution from its Singapore portfolio. DPU rose at a faster pace of 11.9% to 1.13 S cents on the back of lower interest costs and lower tax expenses. This set of results almost coincides with our quarterly NPI forecast of S$37.1m and DPU projection of 1.10 S cents. We note that ~S$0.6m from the distributable income will be retained for working capital purposes. For the full-year, DPU amounted to 4.39 S cents, up 6.6%. This translates to a FY12 DPU yield of 5.2%.
Local portfolio overcame softness from overseas
SGREIT’s Singapore properties contributed 63.0% to 4Q revenue, higher than the 62.3% contribution seen in prior quarter. This was partly fuelled by strong performance from Wisma Atria’s retail segment, which saw its NPI jump 23.5% to S$10.3m amid positive rental reversions, and also a 10.5% growth in Ngee Ann City office segment on higher occupancy and higher secured rentals. As a result, the strength from the local scene more that offset the weakness seen across all its overseas assets: Japan (-4.7% in NPI due to weaker JPY), Chengdu (-13.9% due to higher competition and weaker retail market) and Australia (-9.0% due to weaker AUD and vacancies between tenancies).
Maintain BUY
Looking ahead, SGREIT is exploring the possibility of an asset redevelopment of Plaza Arcade and David Jones Building to reap any potential synergies between the two buildings. On its capital management front, management is in active discussions with banks to refinance its term loan maturing in Sep, which we believe may lead to improved debt profile and interest savings. SGREIT also updated that valuers’ work on the rental valuation for Toshin master lease at Ngee Ann City is expected to be finalised by 1Q13. We now factor in Plaza Arcade acquisition and roll our valuations to FY13. This bumps up our fair value to S$0.95 from S$0.84 previously. Maintain BUY.
Starhill Global REIT’s (SGREIT) 4Q12 results came in within our expectations. NPI grew by 2.9% YoY to S$37.5m due primarily to strong contribution from its Singapore portfolio. DPU rose at a faster pace of 11.9% to 1.13 S cents on the back of lower interest costs and lower tax expenses. This set of results almost coincides with our quarterly NPI forecast of S$37.1m and DPU projection of 1.10 S cents. We note that ~S$0.6m from the distributable income will be retained for working capital purposes. For the full-year, DPU amounted to 4.39 S cents, up 6.6%. This translates to a FY12 DPU yield of 5.2%.
Local portfolio overcame softness from overseas
SGREIT’s Singapore properties contributed 63.0% to 4Q revenue, higher than the 62.3% contribution seen in prior quarter. This was partly fuelled by strong performance from Wisma Atria’s retail segment, which saw its NPI jump 23.5% to S$10.3m amid positive rental reversions, and also a 10.5% growth in Ngee Ann City office segment on higher occupancy and higher secured rentals. As a result, the strength from the local scene more that offset the weakness seen across all its overseas assets: Japan (-4.7% in NPI due to weaker JPY), Chengdu (-13.9% due to higher competition and weaker retail market) and Australia (-9.0% due to weaker AUD and vacancies between tenancies).
Maintain BUY
Looking ahead, SGREIT is exploring the possibility of an asset redevelopment of Plaza Arcade and David Jones Building to reap any potential synergies between the two buildings. On its capital management front, management is in active discussions with banks to refinance its term loan maturing in Sep, which we believe may lead to improved debt profile and interest savings. SGREIT also updated that valuers’ work on the rental valuation for Toshin master lease at Ngee Ann City is expected to be finalised by 1Q13. We now factor in Plaza Arcade acquisition and roll our valuations to FY13. This bumps up our fair value to S$0.95 from S$0.84 previously. Maintain BUY.
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