Starhill Global REIT (SGREIT) reported its 5QFY15 result (financial year end changed to 30 Jun such that financial year 2014/15 will comprise six quarters) which met our expectations. Gross revenue fell 2.7% YoY to S$47.9m, as growth from Singapore was offset by weaker performance from its overseas assets.

This was partly attributed to the depreciation of the MYR, AUD and JPY against the SGD during the quarter. However, DPU grew 1.6% YoY to 1.26 S cents, driven by a higher NPI margin of 81.2% (+1.7 ppt) and hedges put in place. This formed 23.9% of our initial CY15 forecast.

Overall occupancy rate was healthy at 99.1% (versus 99.6% as at 31 Dec 2014), while other bright spots came from the 13.3% rental reversion achieved at Wisma Atria (retail). However, the still challenging operating environment was reflected in the 2% and 9% YoY fall in shopper traffic and tenant sales at Wisma Atria, respectively. We will provide more details after the analyst briefing. Maintain BUY on SGREIT but our S$0.93 fair value estimate is under review.

Source: OCBC Research - 30 Apr 2015