Starhill Global ( former McQ Prime )

[winston]

vested

Positives priced in

NEUTRAL - Downgrade
Share Price S$0.70
Tgt. S$0.75

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2Q12 was a steady quarter with positives at renovated Wisma’s space and rental reversions largely priced in.

The share price has done well YTD in the search for yield.

Lack of growth is our key grouse, with the Toshin dispute in limbo and acquisition opportunities hard to come by.

2Q/1H12 DPU met expectations at 25/49% of our FY12 numbers (22%/47% of consensus).

We raise DPUs and DDM target price (8.4% disc rate) for stronger occupancy and rents.

Downgrade to Neutral on valuations, with strategic acquisitions and better-than-expected Toshin rent review as rerating catalysts.

Source: CIMB

[winston]

not vested

Starhill Global REIT: Consistent set of 2QFY12 results

Summary: Starhill Global REIT (SGREIT) announced DPU of 1.08 S cents for 2QFY12 (+3.8% YoY), in line with our projections.

Together with the distribution in 1Q, 1HFY12 DPU amounted to 2.15 S cents, meeting 49.6% of our FY12 DPU forecast (50.0% of consensus).

Wisma Atria was the key driver for the quarterly performance, thanks to improved office occupancy and positive rental reversions following the asset redevelopment on its retail segment.

Management updated that the asset enhancement initiative at Wisma Atria was substantially completed in the quarter and that the ROI of 12.8% based on annualized NPI has exceeded its initial target of 8%.

As at 30 Jun, we note that SGREIT’s portfolio occupancy rate stood at 99.5%, an improvement of 50bps from 99.0% seen in previous quarter.

In addition, aggregate leverage remained healthy at 30.5% (30.4% in 1Q), with no debt refinancing until Jan 2013.

We will be attending the analyst briefing later at noon to get more details on its outlook. For now, we place our Buy rating and S$0.70 fair value UNDER REVIEW.


Source: OCBC

[winston]

vested

How we differ

Although our DPU forecasts do not differ much from those of the Bloomberg consensus, Starhill is our top pick among the retail S-REITs
for its superior valuation, with higher DPU yields (based on our forecasts) than its peers and trading at a discount to its book value and
our estimated NAV of S$0.75.

With AEI risks diminishing and a stable Orchard Road market, Starhill’s discount to book could narrow further.


Source: Daiwa

[winston]

Starhill Global REIT - 2Q12: Reaping the rewards

(SGREIT SP/BUY/S$0.71/Target: S$0.83)

FY12F DPU (S cents): 4.4
FY13F DPU (S cents): 4.7


Results in line with expectations. Starhill Global REIT (SGREIT) reported a 2Q12 distributable income of S$21.0m (up 2% yoy, 5.9% qoq) and a DPU of 1.08 S cents (up 3.8% yoy, 0.9% qoq).

The 1H12 DPU is in line with our expectations, accounting for 48.9% of our full year forecast of 4.4 S cents. The 2Q12 revenues increased 4.8% yoy to S$46.4m and net property income (NPI) increased 4.4% yoy to S$37.1m.

This was driven by positive rental reversions resulting from Wisma Atria retail asset enhancement initiative (AEI), higher office occupancy for Wisma Atria office, higher occupancy for Japan properties and appreciation of the yen and renminbi against the Singapore dollar, partially offset by higher operating expenses.

Gearing remains conservative at 30.5%, up 0.1ppt qoq, while average interest rates (excluding upfront costs) dropped 0.1ppt to 3.16% p.a. SGREIT has no major refinancing requirements until 2013.


We maintain BUY with an unchanged target price of S$0.83. We use the dividend discount model (required rate of return: 7.2%, terminal growth: 2.0%) to value Starhill Global REIT.

Share Price Catalyst includes positive resolution of Toshin court case and positive news flow on rentals, occupancies, yield-accretive acquisitions, and AEI.

Source: UOBKH

[tonylim]

Attracting more attention lately.

[winston]

not vested

AIA increased their stake from 9.9868 % To 10.0105 %

[tonylim]

Trading at a forward dividend yield of 6.3%, according to Bloomberg consensus estimate, SGREIT continues to offer a decent yield, particularly amid the current low interest rate climate.

The company has a price‐to‐book ratio of 0.85.

http://www.remisiers.org/cms_images/res ... Fraser.pdf

[winston]

not vested

Starhill Global Reit: To seek SISV help to appoint valuers. The Court of Appeal has ordered Starhill Global Reit (Starhill) and its master tenant in Ngee Ann City to seek the help of the Singapore Institute of Surveyors and Valuers (SISV) to resolve their rental dispute.

While dismissing Starhill's request for the court to set new rental retail rates, the Court of Appeal said that the dispute should have been resolved through mediation rather than through an adversarial process. (Source: The Business Times)

Comment: We view the decision to seek the independent opinion of the president of the SISV to appoint the three new valuers as the most equitable outcome going forward.

Starhill has succeeded in its goal to put the valuers on notice about the accuracy of the valuations, and given that Toshin has agreed to renew its lease at Ngee Ann City for a further 12 years, any rental upside would be positive for Starhill.

On the cost issue, the Court of Appeal reversed the High Court’s decision to award costs against Starhill, and instead directed that both parties bear their own costs in the High Court and for the appeal.


Source: UOBKH

[winston]

not vested

Starhill Global REIT: Valuations still attractive

Summary: Starhill Global REIT (SGREIT) recently entered into an agreement with its lender ANZ Bank for a A$63m term loan maturing in June 2017.

The new facility will be used to refinance its existing A$63m loan taken up by SGREIT in Jan 2010 to partially fund the acquisition of David Jones Building.

Based on our estimates, SGREIT’s weighted average debt maturity will likely be extended from 1.8 years to ~2.0 years as at end Sep.

In a separate announcement, SGREIT also updated the outcome of its appeal relating to the master lease with Toshin Development Singapore. According to management, the Court of Appeal did not find that the rent review mechanism had been rendered inoperable, as SGREIT had previously declared.

Nevertheless, the Court ordered SGREIT and Toshin to jointly request the President of Singapore Institute of Surveyors and Valuers to appoint three valuation firms to determine the prevailing market rental rates.

Our take on this development is neutral, as we have not factor in any rental upside resulting from a favourable outcome.

We are adjusting our forecasts to reflect the refinancing activity. Our fair value stays unchanged at S$0.79. Maintain BUY.


Source: OCBC

[tonylim]

not vested

Starhill Global REIT: Valuations still attractive

Summary: Starhill Global REIT (SGREIT) recently entered into an agreement with its lender ANZ Bank for a A$63m term loan maturing in June 2017.

Hi Winston,

What do they mean by 'Term loan ' ? Is it the same as car loan ?

Thanks/Tony