Key Facts FY 2023/24:
- Company: Starhill Global REIT (SGREIT), managed by YTL Starhill Global REIT Management Limited.
- Financial Year: FY 2023/24 (ended 30 June 2024).
- Gross Revenue: S$189.8 million (a 1.1% increase from FY 2022/23).
- Net Property Income: S$149.0 million (a 0.8% increase).
- Distribution Per Unit (DPU): 3.63 cents for FY 2023/24 (down 4.5% from 3.80 cents in FY 2022/23).
- Net Asset Value: S$0.71 per unit as of 30 June 2024 (a 2.7% decrease).
- Gearing Ratio: 36.8% as of 30 June 2024.
- Occupancy: 97.7% across the portfolio, with key properties such as Wisma Atria and Ngee Ann City in Singapore achieving 99.2%.
- Portfolio Valuation: S$2.8 billion as of 30 June 2024 (a slight 0.2% decline due to foreign exchange movements and capitalisation rate expansion in Australia).
Dividend Information:
- Distribution Per Unit (DPU): 3.63 cents for FY 2023/24, yielding about 7.5% based on a closing unit price of S$0.485 as of 30 June 2024.
Special Activities/Actions to Improve Profitability:
- Asset Enhancements: Significant portfolio rejuvenation during the pandemic, including:
- Upgrading works at Wisma Atria to refresh the mall’s interior and reposition its retail offerings.
- Façade renovation at Myer Centre Adelaide and additional solar energy installations.
- Master Lease Renewal: SGREIT renewed its master lease for Ngee Ann City with Toshin Development Singapore Pte. Ltd., providing long-term income stability with an initial 12-year term, starting from June 2025, with profit-sharing potential.
- Sustainability Efforts: Green certifications for six out of nine properties and the introduction of solar panels and Cooling-as-a-Service (CaaS) systems to enhance energy efficiency.
Recommendations for Investors:
- For Current Holders of Starhill Global REIT:
- Recommendation: Hold or cautiously accumulate. SGREIT maintains a stable portfolio with resilient occupancy rates, long-term income visibility due to the Toshin lease renewal, and a healthy gearing ratio. Investors benefit from a stable dividend yield, supported by prudent capital management and sustainability-driven upgrades.
- Rationale: Despite macroeconomic challenges, the REIT has shown resilience through strategic asset management, with moderate risk due to hedging policies and strong occupancy levels. The 7.5% yield is attractive, and asset enhancements will likely bolster future rental income.
- For Investors Not Holding the Stock:
- Recommendation: Consider accumulating, especially if seeking a stable REIT with moderate yield and long-term growth potential.
- Rationale: SGREIT offers an appealing risk-adjusted yield amid global uncertainty, bolstered by high occupancy and strategic efforts to enhance portfolio value. With its focus on sustainability and asset rejuvenation, the REIT is positioned to benefit from any economic recovery, particularly in the Singapore market.
Disclaimer:
This analysis is based solely on the contents of the company’s financial report and letter to unitholders. The recommendations should not be construed as financial advice. Investors should consult their financial advisors before making any investment decisions, considering their risk profile and market conditions. Past performance is not indicative of future results.
