Starhill Global REIT - OCBC Investment 2023-11-02: Relatively Stable Metrics

• Starhill Global REIT (SGX:P40U) provided a business update for 1QFY24 (Jul to Sep 2023). Although gross revenue declined 1.0% y-o-y to S$47.1m, NPI increased 0.4% y-o-y to S$37.4m. This was driven largely by improved contributions from its Singapore properties and Myer Centre Adelaide Retail property in Australia, but partially offset by weaker performance from its Malaysia properties and absence of income from its divested properties.
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Committed portfolio occupancy improved 0.7 ppt q-o-q to 98.4%

• Starhill Global REIT’s overall portfolio committed occupancy came in at 98.4%, as at 30 Sep 2023, representing an increase of 0.7 ppt q-o-q. This was driven by higher committed occupancy for its Australia portfolio from 94.5% (as at 30 Jun 2023) to 96.4%, but partially offset by marginally lower occupancy for its Singapore office portfolio (from 100% to 99.1%).
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Rental reversion likely remained weak

• Other operating metrics that were disclosed by Starhill Global REIT include tenant sales and shopper traffic for Wisma Atria (Retail), which rose 14.5% and 6.5% y-o-y, respectively. Growth was achieved despite the commencement of renovation works at the basement of the mall in Aug 2023.
• No rental reversion figures were given, but this likely remained weak, in our view, notwithstanding continued gradual growth in market rents.
• According to data from CBRE Research, prime Orchard Road rents in Singapore rose 1.6% q-o-q in 3Q23, a sequential acceleration for the third consecutive quarter. This was likely supported by stronger retailers’ confidence in Singapore’s tourism recovery.

Aggregate leverage ratio increased to 37.4%, while average debt cost also rose

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-11-02 SGinvestors.io

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