Tag: Starhill Global REIT

Screening For Dividend Stocks In March 2020

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The stock market crashed this week on further news of the spread of the COVID-19 virus and also the oil price war between Saudi Arabia and Russia. Due to the continued bad news, the Straits Times Index (STI) fell as much as 6.03% on Monday, 9th March 2020. As you can see from the chart below, the Straits Times Index (STI) crashed further on Friday, 13th Mar 2020 before rebounding slightly at the end of the day.

During such crisis, there is an opportunity to start picking up quality stocks that can climb back and continue its growth when the stock market normalize in 1 or 2 years time (I guess).

If you had followed my blog, you know that I always have my stock screener ready to identify stocks that gives me a good dividend yield. When stock price goes down, the current dividend yield goes up.

The stock screener offered by Stocks Café allows me to save the conditions that I can pre-set. You can check out my review here on the Stocks Café Dividend Stocks Screener (Read more: Screening For Dividend Stocks Using Stocks Cafe Stock Screener).

Below are the top dividend yielding stocks as of 14th March 2020.

Name Current Yield % P/E P/B Market Cap
Cromwell REIT SGD 9.494 9.32 0.848 1.7B
Mapletree NAC Trust 8.651 5.11 0.703 3.2B
OUE Commercial REIT 8.487 13.73 0.633 2.1B
Ascendas-iTrust 8.361 5.47 1.121 1.4B
CapitaRetail China Trust 8.25 7.75 0.774 1.5B
CDL Hospitality Trust 8.054 12.04 0.735 1.4B
Starhill Global REIT 7.757 19.36 0.651 1.3B
Far East Hospitality Trust 7.189 16.77 0.613 1B
Frasers Commercial Trust 6.809 8.58 0.861 1.3B
Yanlord Land 6.733 2.97 0.358 2B
Frasers Logistics & Industrial Trust 6.667 10.27 1.106 2.4B
Ascendas REIT 6.524 19.1 1.392 10.9B
UOB 6.455 7.73 0.848 33.4B
SPH 6.383 15.02 0.88 3B
DBS 6.357 7.74 1.009 49.2B
Yangzijiang Shipbuilding SGD 6.289 5.1 0.519 3.1B
Suntec REIT 6.255 10.85 0.712 4.3B
Hong Leong Finance 6.25 10.4 0.561 1.1B
SPH REIT 6.164 14.57 0.97 2.5B
TCIL HK$ 6.117 10.78 0.34 3.8B
OCBC Bank 5.843 8.02 0.874 39.9B
ComfortDelgro 5.725 13.97 1.427 3.7B
SIA Engineering 5.556 11.61 1.435 2.2B
CapitaMall Trust 5.491 11.53 1.035 8B
Jardine Cycle & Carriage 5.409 7.45 0.971 9B
Bukit Sembawang 5.379 13.45 0.791 1.1B
Olam International 5.298 9.45 0.893 4.8B
SATS 5.278 17.89 2.487 4B
Genting Singapore 5.147 11.91 1.018 8.2B

Last, I just want to mention again that the above list is for reference only and we should do our homework before buying into the stock simply for the dividend yield.

Starhill Global REIT Downgraded To BBB

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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).

Starhill Global REIT Decides Not To Increase Toshin New Base Rent

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Starhill Global REIT Logo

This is one piece of news that disappoints investors of Starhill Global REIT. As highlighted in my previous post (Starhill Global REIT High Dividend Yield Can Buy?), Ngee Ann City Property Retail (Singapore) expires 2025 with a 5.5% increase in base rent from 8 June 2016. The rent review is this month June 2019. Toshin is the master tenant occupying all the retail areas except level five of the Ngee Ann City Property (as hereinafter defined) for the period of 12 years from 8 June 2013.

The manager of Starhill Global REIT has announced that the new base rent will remain the same as the current rent. This will remain 3 years from 8 June 2019. As at 31 March 2019, the Toshin Master Lease contributed to approximately 21.9% of Starhill Global REIT’s portfolio gross rent. Perhaps due to the weak retail sentiments, my opinion is that Starhill Global REIT is afraid Toshin might pull out of its Ngee Ann City Property if Starhill Global REIT increases the new base rent.

Below are Starhill Global REIT’s 3rd Quarter FY18/19 Financial Results.

Third Quarter FY 2018/19 Financial Results

3QFY18/19 3QFY17/18 Change
Gross Revenue $51.3 mil $51.7 mil (0.9%)
Net Property Income $39.6 mil $40.3 mil (1.8%)
Distributable Income $25.0 mil $25.4 mil (1.4%)
Income to be Distributed to Unitholders $24.0 mil $23.8 mil 0.9%
Distribution Per Unit (“DPU”) (cents) 1.10 1.09 0.9%
  • Higher contributions y-o-y from Myer Centre Adelaide, Plaza Arcade and Ngee Ann City Property (Office) were offset by lower contributions from the retail portfolio in Singapore and the depreciation of the Australian dollar against the Singapore dollar.
  • DPU for 3Q FY18/19 was higher by 0.9% y-o-y mainly due to lower tax expenses and distributable income retained, partially offset by lower NPI and higher interest costs.
  • Annualised 3Q FY18/19 yield is 6.11%, based on closing unit price of S$0.73 as at 31 March 2019.

Debt

Gearing stood at 35.7% and about 91% of its borrowings are fixed/hedged as at 31 March 2019.

Conclusion

My opinion is that Starhill Global REIT is afraid Toshin might pull out of its Ngee Ann City Property if Starhill Global REIT increases the new base rent. The Toshin Master Lease contributed to approximately 21.9% of Starhill Global REIT’s portfolio gross rent and it will be disastrous if Toshin pulls out.