Starhill Global REIT (SGREIT) announced last evening that it has divested the Holon L Property, a three-storey building for retail use, in Tokyo, Japan for a cash consideration of JPY1,026.0m (~S$12.8m). The sale price represents a 6.0% premium to the latest independent valuation of JPY968.0m on the property. We note that this is the second divestment in Japan, after the sale of the Roppongi Primo Property in Feb 2013. While the property constitutes only 0.4% of SGREIT’s portfolio by asset value, we like SGREIT’s move to streamline its portfolio and re-focus to be a Singapore-centric landlord. Gearing is also expected to improve from 29.0% as at 31 Dec 2013 to 28.7% as the sale proceeds will be used to repay the JPY loans. We do not rule out more divestment of underperforming/ non-core assets in future. Maintain BUY with unchanged fair value of S$0.90 on SGREIT.

Source: OCBC Research - 20 Mar 2014