Starhill Global REIT

Starhill Global REIT: 4Q13 results was in-line with expectations, as distributable income of $26.5m (+21% y/y, +2% q/q) and DPU of 1.23¢ (+9% y/y, +2% q/q) took FY13 DPU to a record 5.00¢ (+14% y/y), representing an FY13 yield of 6.5%. Net property income (NPI) was up 3% to $38.8m, in tandem with a 4% rise in gross revenue of $49.1m, led by the continued strong performance of the REIT’s Singapore portfolio, comprising interests in Wisma Atria and Ngee Ann City, which saw high occupancies and positive rental reversions. Meanwhile further contributions from Plaza Arcade in Perth which was acquired in 1Q13, contributed positively to top-line, although this was partially offset by lower NPI from the REIT’s remaining overseas properties in China, Japan and Malaysia. Starhill’s future growth drivers include the potential asset redevelopment of David Jones Building and Plaza Arcade in heart of Perth CBD. In addition, there will be an upward-only lease review for David Jones Building in Aug’14, which Starhill guides for a possible 6% positive rental reversion. Heading into 2014, Starhill guides that the US and European economies are showing positive signs of a turnaround and Asia should benefit from the positive knock-on effect, as well as through macroeconomic trends including tourism growth and rising consumption in the region, enabling the group to refine its portfolio and tap on emerging opportunities. Overall portfolio occupancy stood was robust at 99.4% with a weighted lease to expiry of 3.2 years, while aggregate leverage stood at a comfortable 29% with an average financing cost of 3.03%. A net revaluation gain of $137.5m was also recorded in FY13, largely driven by Starhill’s Singapore portfolio, bumping up NAV by 7% q/q to $0.93 At current price, Starhill trades at an annualized 6.4% yield and 0.82x P/B versus its local peers average of 6.5% current yield and 0.93x P/B. Latest broker ratings as follows: Maybank-KE maintains Hold with TP $0.84 CIMB maintains Hold with TP $0.80 OCBC maintains Buy with TP $0.90 UOB Kay Hian maintains Buy with TP $0.93