Starhill Global REIT Downgraded To BBB

Three years ago, I wrote about Soilbuild Business Space REIT being given a Baa3 credit rating by Moody’s. (Read more: What is meant by Baa3?) Today, I receive an email notification that Starhill Global REIT has been downgraded from a credit rating of ‘BBB+’ to ‘BBB’ by Standard & Poors (S&P). This is an indication that something isn’t right even though it is not a recommendation to buy or sell.

My wife currently held 9% of Starhill Global REIT in her stock portfolio. In FY2019, Distribution Per Unit (DPU) declined 1.5% from 4.55 cents in FY18 to 4.48 cents in FY19.

Here are a few noteworthy points from the S&P report:

  • Starhill Global REIT is facing pressure in rent reversions in its key Singapore assets amid weakened economic conditions.
  • Funds from operations (FFO) to debt to decline to 7.6%-7.8% in fiscals 2020 and 2021.
  • Ngee Ann City’s master tenant’s rent review in June 2019 resulted in rents remaining flat (Read more: Starhill Global REIT Decides Not To Increase Toshin New Base Rent)
  • Contributions from Starhill Global REIT’s Australia assets were weighed down by the depreciation of the Australian dollar against the Singapore dollar.
  • Starhill Global REIT is performing AEI on Starhill Gallery Mall in Malaysia. The rental rebates agreed by Starhill Global REIT will weigh down rental performance at these assets.

The outlook doesn’t seem good which might place further pressure on the Distribution Per Unit (DPU).

OUE Hospitality Trust 2Q2019 Financial Results Weaker Than Expected

The opening of Jewel this year failed to act as a catalyst for OUE Hospitality Trust.  I am expecting it to attract more tourists which can possibly give the hospitality segment a boost but it didn’t.

OUE Hospitality Trust makes up 4% of my stock portfolio. OUE Hospitality Trust has announced their 2Q2019 financial results on 6th August 2019. Net Property Income (NPI) was lower by S$1.2 million mainly due to lower gross revenue from both the hospitality and retail segments. Distribution Per Unit was 1.06 cents, 9.4% lower y-o-y, mainly due to lower income and higher interest expense.

The current gearing ratio stood at 38.5% which I felt that it is not on the high side but neither is it safe haven. The good thing is that there is no refinancing required until December 2020. Read More

Frasers Commercial Trust Maintain DPU of 2.40 Cents

I currently held 1% of Frasers Commercial Trust in my stock portfolio. I have always wanted to increase my stake in Frasers Commercial Trust and thus here I am monitoring its results closely. Frasers Commercial Trust announced their 3Q2019 financial results on 22nd July 2019.

The distribution per unit (“DPU”) has remained largely unchanged over the past quarters, in fact I noticed they have been maintaining the same distribution over a year or more. That is actually good news for investors but a little growth might even be better. Read More