Starhill Global REIT (SGREIT) reported its 4Q14 results which met our expectations. Revenue slipped slightly by 0.4% YoY to S$48.9, but NPI rose 2.0% YoY to S$39.6m and DPU was up 4.9% to 1.29 S cents. The brightest development during 4Q14 came from the 17% positive rental reversions accomplished for leases committed at Wisma Atria (retail). This was underpinned by the renewals and new leases signed for the prime façade units. SGREIT’s overall portfolio occupancy improved from 99.1% to 99.6% due to recovery in its Japan occupancy rates. We continue to like SGREIT for its healthy financial position (gearing of 28.6% as at 31 Dec 2014) and attractive valuations and distribution yields vis-à-vis its peers. The stock is trading at FY15F P/B and yield of 0.88x and 6.3%, respectively. Maintain BUY, with a higher fair value estimate of S$0.93 (previously S$0.90) as we roll forward our valuations.
4Q14 DPU came in within expectations
Starhill Global REIT (SGREIT) reported its 4Q14 results which met our expectations. Revenue slipped slightly by 0.4% YoY to S$48.9 due to weaker contribution from its China and Japan assets (partly due to FX impact), but this was partially mitigated by stronger performance from its Singapore properties. Despite the lower revenue, NPI rose 2.0% YoY to S$39.6m, resulting in an improvement in NPI margin by 1.9 ppt to 81.0%. 4Q14 DPU was up 4.9% to 1.29 S cents. For FY14, revenue fell 2.7% to S$195.1m, forming 98.2% of our full year forecast. DPU of 5.05 S cents represented an increase of 5.0% (excluding a one-off 0.19 S cents Toshin payout in 1Q13) and constituted 99.3% of our FY14 projection.
Robust rental uplift attained at Wisma Atria (retail)
The brightest development during 4Q14 came from the 17% positive rental reversions accomplished for leases committed at Wisma Atria (retail). This was underpinned by the renewals and new leases signed for the prime façade units. Management remains positive on the outlook of rental reversions at Wisma Atria (retail) over the next 3-6 months. Although shopper traffic and tenants’ sales at this mall fell 3.1% and 5.6% YoY to 7.2m and S$139 psf in 4Q14, respectively, which reflects headwinds in the retail sector, we believe assets which are strategically located in prime areas will continue to be a draw for international retailers. SGREIT’s overall portfolio occupancy improved from 99.1% to 99.6% due to recovery in its Japan occupancy rates.
Maintain BUY
SGREIT’s financial position remains healthy, with a comfortable gearing ratio of 28.6%, as at 31 Dec 2014. Its borrowings are 100% hedged via a combination of fixed rate debt and interest rate derivatives. We fine-tune our assumptions marginally and roll forward our valuations, thus deriving a higher fair value estimate of S$0.93 (previously S$0.90). We continue to like SGREIT for its attractive valuations and distribution yields vis-à-vis its peers. The stock is trading at FY15F P/B and yield of 0.88x and 6.3%, respectively. Maintain BUY.
Starhill Global REIT (SGREIT) reported its 4Q14 results which met our expectations. Revenue slipped slightly by 0.4% YoY to S$48.9 due to weaker contribution from its China and Japan assets (partly due to FX impact), but this was partially mitigated by stronger performance from its Singapore properties. Despite the lower revenue, NPI rose 2.0% YoY to S$39.6m, resulting in an improvement in NPI margin by 1.9 ppt to 81.0%. 4Q14 DPU was up 4.9% to 1.29 S cents. For FY14, revenue fell 2.7% to S$195.1m, forming 98.2% of our full year forecast. DPU of 5.05 S cents represented an increase of 5.0% (excluding a one-off 0.19 S cents Toshin payout in 1Q13) and constituted 99.3% of our FY14 projection.
Robust rental uplift attained at Wisma Atria (retail)
The brightest development during 4Q14 came from the 17% positive rental reversions accomplished for leases committed at Wisma Atria (retail). This was underpinned by the renewals and new leases signed for the prime façade units. Management remains positive on the outlook of rental reversions at Wisma Atria (retail) over the next 3-6 months. Although shopper traffic and tenants’ sales at this mall fell 3.1% and 5.6% YoY to 7.2m and S$139 psf in 4Q14, respectively, which reflects headwinds in the retail sector, we believe assets which are strategically located in prime areas will continue to be a draw for international retailers. SGREIT’s overall portfolio occupancy improved from 99.1% to 99.6% due to recovery in its Japan occupancy rates.
Maintain BUY
SGREIT’s financial position remains healthy, with a comfortable gearing ratio of 28.6%, as at 31 Dec 2014. Its borrowings are 100% hedged via a combination of fixed rate debt and interest rate derivatives. We fine-tune our assumptions marginally and roll forward our valuations, thus deriving a higher fair value estimate of S$0.93 (previously S$0.90). We continue to like SGREIT for its attractive valuations and distribution yields vis-à-vis its peers. The stock is trading at FY15F P/B and yield of 0.88x and 6.3%, respectively. Maintain BUY.
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