Starhill Global REIT (SGREIT) reported a 5.0% YoY growth in its 2Q14 distributable income to S$26.9m and DPU to 1.25 S cents. The results were consistent with our expectations as 1H14 DPU formed 48.5% of our full-year distribution projection. SGREIT’s Singapore portfolio continued to perform well, with NPI up 5.5% YoY on the back of positive rental reversions for both the retail and office units. This helped to offset the weaker overseas contribution due to declining revenue from Renhe Spring Zongbei in China, loss of income from Japan property divestment and unfavourable forex movements.

Looking forward, management remains positive on the outlook and will continue to sharpen its portfolio while seeking investment opportunities. We keep our BUY rating on SGREIT but place our S$0.90 fair value under review pending SGREIT’s analyst briefing later in the morning.

Source: OCBC Research - 30 Jul 2014