Summary: Starhill Global REIT (SGREIT) reported its 4Q14 results which met our expectations. Revenue slipped slightly by 0.4% YoY to S$48.9 due to weaker contribution from its China and Japan assets, but partially mitigated by a stronger performance from its Singapore properties. Despite the lower revenue, NPI rose 2.0% to S$39.6m, while DPU was up 4.9% to 1.29 S cents.

For FY14, revenue fell 2.7% to S$195.1m, forming 98.2% of our full year forecast. DPU of 5.05 S cents represented an increase of 5.0% (excluding a one-off Toshin payout in 1Q13) and constituted 99.3% of our FY14 projection. SGREIT’s financial position remains healthy, with a comfortable gearing ratio of 28.6%, as at 31 Dec 2014. Its borrowings are fully hedged by a combination of fixed rate debt and interest rate derivatives. We will provide more details after the analyst briefing.

Maintain BUY on SGREIT, with our S$0.90 fair value under review.

Source: OCBC Research - 28 Jan 2015