Starhill Global REIT Is Getting Attractive



Key Highlights:

  • Starhill Global REIT (SGX: P40U)'s 1Q20 DPU dropped 1.7%

  • The annualised yield and price to book ratio are 6.1% and 0.85 respectively


1. Dividends


Net property income fell 8.7% to $36.9m. The was mainly due to:

  • Renovation at Starhill Gallery Malaysia has impacted the income contribution

  • The weaker contribution from its Australia retail portfolio

  • The weaker AUD against SGD


The annualised yield is 6.1%. As compared to other retail REITs, Starhill Global REIT offers a relatively high dividend yield. Besides, it is currently trading at slightly above its historical average yield.



Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy remains stable at 96.2%. The portfolio leverage is currently at the healthy side of 36.2%. The interest cost is 3.31%, with 90% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 0.85.



3. Growth Catalyst


Starhill Global REIT should maintain its DPUs in the next 12 months. In 2021, the Starhill Gallery Mall and hotel will be completed which will boost its DPUs. Besides, its prime property, Wisma Atria at Orchard Road has an unutilised plot ratio of 100k square feet. With the upcoming new MRT line - Thomson-East Coast Line which will cross the Orchard MRT station, the REIT manager is exploring options to unlock the value of the space.


Summary


At its current price and strong portfolio, Starhill Global REIT looks attractive as compared to its peers.



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