In the year 2016, I wrote about Starhill Global REIT ( My Dividend Yield of Starhill Global REIT ) giving a dividend yield of 6.56% at the stock price of $0.79. Recently, the share price of Starhill Global REIT has fallen to $0.74. Recently, Starhill Global REIT has announced its 4Q FY16/17 results. Distribution Per Unit has fallen by 8.5% to 1.18 cents compared to a year ago of 1.29 cents.
The annualized distribution per unit for 12 months ended FY16/17 is 4.92 cents compared to 5.18 cents a year ago. Below shows the current share price of Starhill Global REIT. At $0.74 cents, the current dividend yield will be (0.0492/0.74) x 100 = 6.65%.
We can see from the financial results that Starhill Global REIT is enjoying a higher revenue from Ngee Ann City retail due to the higher base rent from master tenant. Ngee Ann City Property Retail (Singapore) expires 2025 with a 5.5% increase in base rent from 8 June 2016. The next rent review in June 2019.
The Malaysia assets are also performing well. To be honest I was surprise. I have been to Kuala Lumpur recently and notice how run down Lot 10 is comparing to newer malls like Mid Valley. The brands in Starhill Gallery can also be found in other malls such as KLCC. However, Starhill Gallery and Lot 10 (KL, Malaysia) extended another three-year term from 28 June 2016 with a rental step-up of 6.67%.
I consider the above two Singapore and Malaysia assets to be the gems in Starhill Global REIT portfolio.
Starhill Global REIT is converting Renhe Spring Zongbei, Chengdu, China to a fixed rent structure with periodic rental step-up. The handover was completed in April 2017. This will provide some sort of income stability for Starhill Global REIT.
The risk of investing in Starhill Global REIT is that Toshin Development Singapore Pte Ltd makes up majority of the portfolio gross rent. Should they pull out of Singapore or move out of Ngee Ann City, the income will be greatly impacted.
On the other hand, YTL Group, the sponsor for Starhill Global REIT makes up the second largest portfolio gross rent. This is a positive and income is well supported by the sponsor.