I am catching up on Starhill Global REIT 1QFY22/23 Business Updates that was released on 27th October 2022.
Starhill Global REIT’s portfolio has not changed much since I added it to my wife’s stock portfolio many years back. As of today, the portfolio still consist of properties in Singapore, Malaysia, Australia, Japan and China.
1Q FY22/23 Financial Performance
Gross Revenue and Net Property Income (NPI) for 1Q FY22/23 rose 6.2% and 8.4% year-on-year respectively. The increase was mainly due to the cessation of rental rebates following the completion of The Starhill’s asset enhancement works and lower rental assistance being rendered. The gain was partially offset by depreciation of Australian Dollar and Malaysian Ringgit and lower contribution from Wisma Atria Property (Retail).
As of 30th September 2022, the gearing ratio stood at 36.5%. Similar to other REITs, 84% of the debt are hedged at fixed interest rates to mitigate against sudden hikes in interest rates.
Weight Average Debt to Maturity also stood at 3.2 years. If you look at the chart below, the $125 million MTN maturing in May 2023 is expected to be partly refinanced by the proceeds from the utilisation of a new 5-year $50 million unsecured term loan facility in first half of 2023.
Overall portfolio occupancy stood at 6.9%. In my opinion, this is pretty resilient. Starhill Global REIT has also benefited from the relaxation of COVID-19 measures.
Weighted average lease expiry stood at 7 years in terms of Net Lettable Area and 4.6 years if by gross rent. This is pretty long and somehow provides income stability to Starhill Global REIT.
Current Dividend Yield
As a dividend investor, I am sure you are keen to know what is the current dividend yield.
Based on the current share price of S$0.50 and FY21/22 distribution of 3.80 cents, this translate to a current dividend yield of 7.6%.
If you wonder why Starhill Global REIT is not in the Attractive REITs To Buy In November 2022, this is because the Price to Earnings is estimated to be around 22.991 which failed my criteria of P/E below 20.
Summary of Starhill Global REIT 1QFY22/23 Business Updates
I like the way the manager shared that geopolitical tensions, elevated inflation and rising interest rates continue to temper post-pandemic economic recovery.
In Singapore, Singapore Tourism Board (STB) expects 4 to 6 million international visitor arrivals for 2022, which will benefit the Orchard Road retail belt. The relaxation of COVID-19 measures will continue to benefit shopper traffic and tenant sales.
In Australia, mandatory isolation for individuals who have tested positive for COVID-19 has been removed from 14 October 2022. However, recent hikes in interest rates are likely to slow spending in 2H 2022. Monthly retail sales fell 0.2% for Western Australia and grew 1.3% for South Australia.
Regarding Malaysia, Retail Group Malaysia has revised the Malaysia retail industry growth forecast for 2022 to 31.7% from 13.1%, on the back of firm
recovery for the industry since the beginning of 2022.
If you wonder why there isn’t much mention of China and Japan, this is because the properties in these 2 countries are not core gross revenue contributors (~ 2.1%).