Starhill Global REIT posts fiscal 1H net property income rose 7 percent, missing Daiwa forecast

Starhill Global REIT mall Wisma AtriaStarhill Global REIT mall Wisma Atria. Note: Photo taken pre-Covid

Starhill Global REIT reported Tuesday its fiscal first half net property income rose 7.2 percent on-year to S$69.6 million, with the results missing forecasts from Daiwa.

Gross revenue for the six months ended 31 December increased 2.9 percent on-year to S$91 million, the REIT said in a filing to SGX. 

“The increase in revenue and NPI were mainly due to the lower rental assistance for eligible tenants of the group including allowance for rental arrears and rebates for Australia properties, as well as cessation of rental rebates in Malaysia following the completion of asset enhancement works at The Starhill in December 2021, partially offset by the weaker contributions from the Wisma Atria Property (Retail),” Starhill Global REIT said.

The distribution per unit (DPU) for the six-month period was 1.78 Singapore cents, down 5.3 percent form 1.88 Singapore cents in the year-ago period including the effects of a deferred amount, but up 2.3 percent from 1.74 Singapore cents in the year-earlier period excluding the effects of the deferred amount, the filing said. 

Around S$3.1 million, or 0.14 Singapore cent per unit, from the year-earlier period was deferred distributable income, the filing said. 

Daiwa had forecast net property income of S$71.5 million, revenue of S$92.1 million and DPU of 2.055 Singapore cents. 

Singapore portfolio

The Singapore portfolio — which includes interests in Wisma Atria and Ngee Ann City on Orchard Road — contributed 61.6 percent of total revenue for the fiscal first half, the REIT said.

Net property income for the Singapore portfolio rose 4.4 percent on-year to S$43.9 million, mainly on lower rental assistance to tenants and lower allowances for rental arrears, partially offset by lower rent form the Wisma Atria property, Starhill Global REIT said.

Despite muted leasing sentiment, the Singapore retail portfolio’s occupancy was high at 99.5 percent at end-December, the REIT said. Shopper traffic at the Wisma Atria property continued to recover, rising nearly 19 percent on-year on the gradual easing of safe distancing measures and the opening of vaccinated travel lanes in September, the filing said. 

“Recovery of the retail sector will depend on the successful control of subsequent Covid-19 outbreaks and the
continued relaxation of safe distancing measures,” the REIT said.

The Singapore office portfolio’s committed occupancy was at 94.7 percent, while the actual occupancy was at 90.4 percent at end-December, the REIT said.

Australian portfolio

For the Australian portfolio, which contributed 24.1 percent of revenue, net property income for the fiscal first half rose 10.6 percent on-year to S$13.7 million, mainly on lower allowance for rental arrears and rebates to assist tenants, the REIT said. 

The Australian retail portfolio’s occupancy was at 95.3 percent at end-December, the REIT said. 

The Malaysia portfolio, which contributed 11.7 percent of total revenue, posted fiscal first half net property income rose 17.8 percent on-year to S$10.3 million, mainly on cessation of rental rebates and completion of asset enhancement works at The Starhill. 

Outlook

The REIT issued a cautious outlook. 

“While the overall outlook appears to be positive, recovery of the retail sector will be gradual, and will depend on how subsequent outbreaks are controlled globally. As the pandemic situation remains fluid with uncertainties, we will continue to adapt and work closely with our tenants and stakeholders.

Building on our portfolio which is characterised by quality master retail leases, we will continue to focus on maintaining a healthy portfolio occupancy and delivering a quality tenant mix. Going forward, we will maintain a prudent capital structure in the event of a prolonged pandemic, whilst focusing on asset rejuvenation so as to be ready for post-Covid-19 recovery.”

Starhill Global REIT’s portfolio includes mainly retail assets, with 10 properties over six cities, including Adelaide and Perth in Australia, Kuala Lumpur in Malaysia, Singapore, Tokyo in Japan, and Chengdu in China. 

Read more about Starhill Global REIT’s financial results