Starhill Global REIT - DBS Research 2023-01-30: Wisma Atria Sales Going Through The Roof

• Starhill Global REIT (SGX:P40U) reported 1HFY22/23 (Jul-Dec 2022) gross revenue of S$97.4m (+4.1% y-o-y). NPI rose 6.7% y-o-y to S$74.3m.
• Higher topline revenue and NPI were attributable to the completion of AEI works at The Starhill, higher rental contribution from Singapore Office to offset lower rental contribution from Wisma Atria retail which is undergoing AEI. Correspondingly, 1H FY22/23 distributable income at S$43.6m was 2.2% higher y-o-y, before the retention of income of S$2.6m in 1HFY22/23 for working capital requirements.
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Occupancy supported by improvements in both SG retail and SG office components

• Starhill Global REIT's portfolio occupancy increased 1.7 ppts h-o-h to 97.1%. This was led by an improvement in the Singapore retail (+1.0 ppt h-o-h) and Singapore office (+1.8 ppt h-o-h) segments, alongside a 2.7 ppt improvement in occupancy in the Australia assets.
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• Rising operating expenses including utility costs are partly shielded by master and anchor tenants
• Leases up for renewal remains stable at 6.0% / 17.0% for the rest of this financial year (FY22/23) and FY23/24.
• We continue to watch lease renewals for Wisma Atria with a substantial portion of leases up for renewal in the next 1.5 years by GRI (11% in FY22/23 and 43% in FY23/24), with rental upside post the completion of AEI at Wisma Atria by Feb- 23.
• Wisma Atria Shopper sales surged to a new high in the month of Dec-22, at ~S$21m for the month.
• For the recent quarter ending Dec-22, we estimate that average shopper sales of ~S$17m is above pre-COVID average sales of ~S$15.6m (FY18/19).

Capital Management remains stable; Gearing to reduce to 35.0% post divestment

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Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-01-30 SGinvestors.io

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