Starhill Global REIT reports fiscal 1Q net property income fell 9 percent, missing Daiwa forecast

Ngee Ann City and Wisma Atria malls in Singapore’s Orchard Road shopping beltNgee Ann City and Wisma Atria malls in Singapore’s Orchard Road shopping belt

Starhill Global REIT reported Tuesday its fiscal first quarter net property income dropped 8.7 percent on-year to S$36.9 million, mainly due to income disruption from the planned renovation at Starhill Gallery in Malaysia. The results missed a forecast from Daiwa.

Excluding Starhill Gallery, net property income for the quarter was S$35.6 million, down 1.7 percent on-year from S$36.2 million, the REIT said. The decline was partially due to a weaker Australian dollar against the Singapore dollar during the period, the REIT added.

Gross revenue for the quarter ended 30 September fell 7.8 percent on-year to S$48 million, the REIT said in a filing to SGX.

The distribution per unit (DPU) for the quarter came in at 1.13 Singapore cents, down 1.7 percent from 1.15 Singapore cents in the year-ago quarter, Starhill Global REIT said.

Daiwa had forecast net property income of S$39 million on gross revenue of S$50.9 million, with a DPU of 1.16 Singapore cents.

“Trade uncertainties and geopolitical tensions continue to impact global economic growth, with signs of synchronised slowdown across a majority of the countries in the world. However, this backdrop provides an opportunity for us to revamp our asset in Malaysia, namely Starhill Gallery, which will stand us in good stead when the economy improves,” Francis Yeoh, chairman of YTL Starhill Global, the REIT’s manager, said in the statement.

Starhill Gallery remains partially open during the renovation works, which will convert the mall into an integrated development with both retail and hotel offerings, the filing said.

“The recently concluded new master tenancy agreements for Malaysia properties with their long tenures and built-in periodic rental step-ups will provide income certainty and growth amidst uncertain macroeconomic conditions,” Yeoh added.

For the Singapore assets, net property income increased 0.3 percent on-year in the quarter to S$25.3 million on higher occupancy and lower operating expenses at Wisma Atria Property (retail), the REIT said. The Singapore office portfolio also saw lower operating expenses, the REIT said.

The Singapore portfolio, which includes interests in Wisma Atria and Ngee Ann City on the Orchard Road shopping belt, contributed 65.9 percent of the quarter’s revenue, the filing said.

“Steady tourism growth in the first eight months of 2019, boosted by growth in Chinese and Japanese tourists, helped Wisma Atria Property’s tenant sales to increase by 12.7 percent year-on-year in the first quarter of FY19/20. Singapore retail occupancy continues to exhibit resilience, achieving full occupancy on a committed basis as at 30 September,” Ho Sing, CEO of the REIT’s manager, said in the statement.

Starhill Global REIT’s portfolio includes 10 properties across Singapore, Malaysia, Australia, China and Japan.

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