Starhill Global REIT

Starhill Global REIT: Announced 3Q13 DPU of 1.21¢ (+9% y/y) with distributable income of $26.1m (+20.8%), in line with street estimates. Excluding the one-time payout of 0.19¢ from Toshin's accumulated rental arrears in 1Q13, Starhill recorded a 9M13 DPU of 3.58¢, translating to an annualized yield of 5.8%. NPI improved 4.4% to $38m, while gross revenue increased 5.5% to $48.8m on the back of full-quarter contributions of the 6.7% rental uplift and 10% increase in base rent from master tenant Toshin and the ongoing asset repositioning of Wisma Atria. Overall portfolio occupancy improved 0.1ppts to 99.7% with average lease term of 6.6 years by NLA. At a gearing of 30.6%, Starhill has a debt headroom of $450m before hitting 40% leverage. Overall average interest cost is at 3.02%, with weighted average debt maturity of 3.4 years. StanChart reckons central area retail rents may start to outperform suburban retail rents, given significantly lower supply in the pipeline and healthy demand from robust tourism arrival growth. Orchard retail rents are still 12% below 2008 levels, while suburban retail rents are back at 2008 levels. As at 30 Sep, Starhill reported a NAV per unit of $0.87. At $0.82, StanChart estimates that Starhill trades at 13% discount to RNAV. Latest broker ratings: StanChart upgraded to Outperform with TP $0.91 Daiwa has an Outperform with TP $0.87 UOB KayHian has a Buy with TP $0.93