Starhill Global

Starhill Global: REIT announced that the rent review process relating to Toshin master lease at Ngee Ann City has been completed on last Thur and that it has been awarded a 10.0% increase in base rent. Assuming the accumulated rental arrears owing as a result of the rental increase from 8 Jun 2011 to 31 Dec 2012 were paid in FY12 (after deducting expenses), mgt estimates an increase of 0.19c or 4.3% in its FY12 DPU. SGREIT intends to distribute substantially the net arrears received from Toshin in 1Q13, on top of the regular distributable income generated for the quarter. Also understand that the new rate will serve as the base rent for the next lease renewal exercise in Jun. Mgt expects the renewal rent to be determined before the commencement of the lease period. Believe further upside in rent is still possible. However, choose to incorporate only the new rate and distribution for now. This raises OCBC fair value from $0.95 to $0.98. House maintains BUY.