Starhill Global REIT

Starhill Global REIT: Announced good set of 1Q12 results which was in-line with expectations. NPI at $37.3m, +0.8% yoy and +2.2% qoq while DPU at 1.07c, flat yoy and +5.9% qoq. Good performance attributed to increased occupancy in grp’s office properties, with SG’s contribution at 61% of total rev, and occupancy levels for Wisma Atria and Ngee Ann City offices rising to 96.8% and 97.0% respectively and start of rental collection for some Wisma Atria asset redevelopment affected units in 1Q12. Demand for retail space in SG properties remains strong with positive rental reversions secured. REIT’s Msia portfolio contributed 17.1% of total rev, or $7.9 m in 1Q12, with additional NPI generated from the completion of redevelopment work at Starhill Gallery. Grp’s properties in China which contributes 9.2% of rev respectively saw NPI for 1Q12 -9.2% yoy due to tenants’ remix and renovation and competition from newly opened malls, while Aus which contributes 8.1% of rev, saw NPI +6.7% yoy due to higher rental income from rent reviews and appreciation of AUD vs SGD. Going forward, grp remains confident of prospects, noting that said asset redevelopment at Wisma Atria remains on track for completion in 3Q12. With the completion of the asset redevelopment at Starhill Gallery, grp continues to embark on repositioning the tenant mix of its Malaysian malls that will introduce new brands and exciting concept stores this year. We note that overall fundamentals remain strong, with leverage ratio at 30.4% and no major debt refinancing this year, while occupancy for grp’s total portfolio remains high at 99%. At current price, grp trades at an annualized 6.6% yield and 0.68x P/B Ratings as follow: Merrill Lynch maintains In-line with $0.70 TP