Starhill Global REIT: A Steady Player in the Real Estate Market

Starhill Global REIT (SGREIT) has built a reputation as a key player in the Asia-Pacific real estate investment sector. With a portfolio of nine mid-to-high-end properties spread across Singapore, Australia, Malaysia, China, and Japan, SGREIT predominantly focuses on retail and office properties. Its flagship assets, Wisma Atria and Ngee Ann City, are situated in the heart of Singapore’s Orchard Road, a prime retail belt.

Key Highlights

• 1HFY25 Performance: SGREIT reported a 1.1% year-on-year (YoY) increase in its distribution per unit (DPU) to 1.80 Singapore cents, supported by a 1.7% rise in gross revenue to SGD 96.3 million and a 1.6% increase in net property income (NPI) to SGD 75.6 million.
• Portfolio Updates: The portfolio maintained a stable committed occupancy of 97.7%. Improvements were noted in the Singapore and Australia segments, with full recovery of retail occupancy in Singapore and a 0.2 percentage-point increase in Australia.
• Capital Management: SGREIT reduced its gearing from 37.2% to 36.2% as of December 31, 2024. It secured a SGD 75 million 6.6-year unsecured sustainability-linked revolving credit facility, extending its debt maturity to 3 years and maintaining 83% of its debt at fixed or hedged rates.

Challenges and Risks

Despite its strong portfolio, SGREIT faces medium-term uncertainties, including its high exposure to departmental store tenants and ongoing arbitration with Myer Pty Ltd for its lease at Myer Centre Adelaide. Additionally, foreign exchange headwinds from the depreciation of JPY and CNY, along with elevated rental assistance in China and higher operating expenses in Australia, pose challenges.

Fair Value and Recommendation

OCBC Investment Research maintains a HOLD rating for SGREIT with a revised fair value estimate of SGD 0.50, down from SGD 0.55, reflecting adjustments to the risk-free rate assumption and expectations of fewer U.S. Federal Reserve rate cuts.

Frasers Centrepoint Trust: A Solid Performer

Frasers Centrepoint Trust (FCRT) stands out for its strong portfolio of suburban retail assets in Singapore. With a market capitalization of SGD 4.2 billion, it remains one of the top retail-focused REITs in the region.

Valuation Highlights

• Price-to-Book Ratio: 0.9x
• Dividend Yield: 5.7% to 5.9% over FY25E and FY26E
• Return on Equity (ROE): 4.8% to 5.1%

Investment Outlook

FCRT is well-positioned to benefit from robust suburban retail demand in Singapore. However, potential headwinds include macroeconomic slowdowns and rising borrowing costs.

Mapletree Pan Asia Commercial Trust: A Diversified Contender

Mapletree Pan Asia Commercial Trust (MACT) boasts a diversified portfolio spanning office and retail properties across Singapore, Hong Kong, and China. Its market capitalization of SGD 4.7 billion underscores its significant presence in the sector.

Valuation Highlights

• Price-to-Book Ratio: 0.7x
• Dividend Yield: 6.8% to 7.0% over FY25E and FY26E
• Return on Equity (ROE): 4.1% to 4.7%

Investment Outlook

MACT’s diversified portfolio and strong dividend yield make it an appealing choice for income-focused investors. However, currency depreciation risks and economic uncertainties in Hong Kong and China could weigh on performance.

CapitaLand Integrated Commercial Trust: A Market Leader

CapitaLand Integrated Commercial Trust (CICT) is the largest REIT in Singapore, with a market capitalization of SGD 14.2 billion. Its portfolio of integrated developments and retail properties highlights its dominance in the sector.

Valuation Highlights

• Price-to-Book Ratio: 0.9x
• Dividend Yield: 5.6% to 5.7% over FY25E and FY26E
• Return on Equity (ROE): 5.1% to 5.3%

Investment Outlook

CICT remains a top choice for investors seeking exposure to the Singapore real estate market. Its robust portfolio and stable dividend yield provide a solid foundation for long-term growth.

Paragon REIT: Focused on Premier Retail

Paragon REIT is renowned for its focus on premier retail properties in Singapore, including its flagship Paragon mall. With a market capitalization of SGD 3.1 billion, it continues to attract investor interest.

Valuation Highlights

• Price-to-Book Ratio: 1.0x
• Dividend Yield: 4.8% to 5.1% over FY25E and FY26E
• Return on Equity (ROE): 5.1%

Investment Outlook

Paragon REIT’s focus on high-end retail properties positions it well to capitalize on Singapore’s growing affluence and luxury retail demand. However, macroeconomic headwinds and rising interest rates could temper growth prospects.

Conclusion

The REITs covered in this report offer a mix of growth, stability, and income opportunities for investors. Starhill Global REIT’s steady performance, coupled with its challenges, reflects the broader dynamics of the real estate investment sector. Meanwhile, its peers like Frasers Centrepoint Trust, Mapletree Pan Asia Commercial Trust, CapitaLand Integrated Commercial Trust, and Paragon REIT, each present unique value propositions and risks. Investors should carefully consider their investment objectives and risk tolerance before making decisions in this space.