Starhill Global ( former McQ Prime )

[tonylim]

http://info.sgx.com/webcoranncatth.nsf/ ... penelement

( vested )

[winston]

Not vested. From DBS:-

Starhill Global Reit has proposed to embark on some asset enhancement plans for Wisma Atria. While the impact is yield accretive, it is likely to be felt in the medium term when the enhancement works are completed.

FY11 and FY12 DPU estimates have been lowered marginally to account for the
vacancy of 3% during the asset enhancement period.

Maintain buy with a slightly lower TP of $0.73 (PrevS$ 0.78)

[winston]

Starhill Global REIT: Positive on Wisma’s facelift but Japan Earthquake created a dent

Summary: Starhill Global REIT announced its plan to embark on asset redevelopment of Wisma Atria to boost the mall’s positioning along Singapore’s Orchard Road. The redevelopment will commence in 1Q11 and complete by 3Q12.

We view this positively, in terms of both higher occupancy and rental rates after the enhancements.

Starhill has seven retail malls located in central Tokyo, which contributed 4.6% of total gross revenue and 6.6% of portfolio value as at 31 Dec 2010. We expect retail sales in Japan to be impacted after the earthquake.

We thus revised our FY11/FY12 gross revenue estimates down by 5% to adjust for the declining sales and rental income. Our sensitivity analysis also shows a 5% drop in the rental income of Starhill’s Japan assets will decrease its fair value by 0.4 S-cents.

Starhill is currently trading at a PBR of 0.66x, which is lower than its historical PBR of 0.73x since listing. Notwithstanding that the Japan crisis has bitten into Starhill’s earnings, we still believe in its prime assets positioning, strong sponsor and sound financials. Maintain BUY with a decreased fair value estimate of S$0.69. (Ong Kian Lin)


Source: OCBC

[winston]

Not vested. From Lim & Tan:-

The key point in The Edge’s story on Starhill Global is its high dependence on master leases, which essentially means there is little direct benefit from asset enhancement initiatives to be undertaken.

Starhill’s 4 key assets are: 27% of Ngee Ann City (NAC; and accounting for 31% of group Net Property Income), Starhill Gallery, Lot 10 (two retail malls in Malaysia acquired from YTL in 2010 / 21% of NPI) and 74% of Wisma Atria (27%).

Only the last does not have a master lease, and the one that is undergoing refurbishment presently at a cost of $30 mln.

Take NAC: while Toshin of Japan’s current lease may run out in 2013, it has the option to renew for another 12 years. And why should it not renew, given the popularity of the Takashiyama store.

Starhill also has assets in China (9% of NPI), Australia (8%) and Japan (4%)

In the retail reit sector, we maintain our preference for CapitaMall Trust ($1.88 on Friday, unch) and Fraser Centrepoint Trust ($1.48, up 2), even though Starhill offers higher yield of 6.3%, and the lower price-to-book of 0.7x.

Corresponding numbers for CMT and FCT are 4.9% / 1.23x and 5.3% and 1.23x respectively.

Starhill Global is controlled by Francis Yeoh ’s YTL.

[winston]

Not vested. From UOBKH:-

Starhill Global: KL Mall Starhill Gallery to undergo RM25m makeover.

Starhill Gallery, a mall that is part of Starhill Global REIT’s portfolio, will undergo a RM25m makeover that will create about 8,100 sqf in additional net lettable area (NLA).

The asset redevelopment for the mall is expected to add RM1.7m per annum in net property income (NPI), representing a return on investment of about 7%.

Work should be completed by the second quarter of this year. Renovation is being funded by the remaining proceeds of the rights issue completed in 2009, as well as working capital. (Source: The Business Times)


Comments: The asset enhancement initiative (AEI) is expected to add 8,100 sqf to Starhill Gallery’s NLA and is expected to enhance the mall’s visibility and attractiveness.

The additional NPI of S$0.7m per annum represents approximately 0.5% of Starhill Global's 2011 NPI and is not expected to have a significant impact on the distribution per unit (DPU) of Starhill Global.

[winston]

Not vested

Valuation still compelling.

With compressing capitalization rates, we understand that it is increasingly more difficult to acquire prime malls at attractive prices. We thus view Starhill's asset enhancements initiatives positively.

According to our estimates, Starhill's existing NPI yield in FY10 was approximately 4.9%. With a ROI of 6.7%, this makes the Starhill Gallery redevelopment work yield-accretive.

Starhill is currently trading at a PBR of 0.67x, which is lower than its historical PBR of 0.73x since listing. We continue to like Starhill's prime assets positioning, strong sponsor and sound financials.

Reiterate BUY with an increased fair value of S$0.70 (Prev: S$0.69). (Ong Kian Lin)


Source: OCBC

[winston]

Not vested

Starhill Global Reit's Q1 DPU at 1.07 cts By ANGELA TAN

YTL Starhill Global announced on Tuesday that Starhill Global Reit Distribution Per Unit (DPU) for the period 1 January 2011 to 31 March 2011 was 1.07 cents, 12.6 per cent higher compared to the 0.95 cents achieved a year ago.

On an annualised basis, the latest distribution represents a yield of 7 per cent.

Revenue for the first quarterwas S$45.8 million, 21.9 per cent higher than that achieved a year ago.

Net property income was higher at S$37.1 million, representing an increase of 27.2 per cent, primarily due to the contribution from Starhill Gallery and Lot 10 in Malaysia, which were acquired in June 2010.

Income to be distributed to unitholders in the first quarter is S$20.8 million, 13.1 per cent higher than a year ago.

http://www.businesstimes.com.sg/sub/lat ... 89,00.html?

[winston]

Not vested. From OCBC:-

Investment thesis intact.

Starhill is poised to capitalize on the rental upside ahead, especially given that one of its major tenants at Ngee Ann City, Toshin Development is up for rental review (with upwards only provision) in Jun 2011.

The asset redevelopment of Wisma Atria and Starhill Gallery also demonstrate the depth of its asset management expertise by generating a ROI of 7%-8%.

Maintain BUY with an unchanged fair value estimate of S$0.70. (Ong Kian Lin)

[winston]

Not vested

Starhill Global REIT [ PDF]
Attractive yields for well-heeled retail malls - by Tan Siew Ling
(SGREIT SP / STHL.SI, OUTPERFORM, S$0.64 - Tgt. S$0.74, REIT)

--------------------------------------------------------------------------------

Starhill's portfolio is dominated by mid-to-high-end retail properties located in prime shopping districts in countries including Singapore and Malaysia.

While its overseas exposure could increase risks and the Orchard Road retail outlook is less positive, we believe these could be somewhat mitigated by master leases and long leases in its portfolio.

Near-term organic growth could come from upward rental reviews for its Toshin and David Jones master leases this year and asset-enhancement plans while low asset leverage at 30% leaves room for acquisitions without the need for substantial equity fund-raising.

At FY11 DPU yields of 6.7% and P/BV of 0.7x, Starhill is also the cheapest retail REIT under our coverage.

We initiate coverage with a DDM-based target price of S$0.74 (discount rate 8.4%). We see catalysts from higher rental revisions, AEI and accretive acquisitions.


Source: CIMB

[winston]

Not vested

No news yet on whether the area around Takashimaya or Wisma Atria is flooded.

So far, only "waterfall" at Tanglin Mall