Starhill Global REIT (SGREIT) reported its 6QFY14/15 results (financial year end changed to 30 Jun such that financial year 2014/15 comprises six quarters) which met our expectations. Gross revenue rose 3.7% YoY to S$51.8m, aided by the contribution from Myer Centre Adelaide which was acquired in May 2015 and better performance from its Singapore properties, but partially offset by a weaker showing from its other overseas assets.

DPU grew 3.2% YoY to 1.29 S cents, and formed 25% of our initial CY15 forecast. Overall occupancy rate remained healthy at 98.2%, albeit being slightly lower than the 99.1% recorded as at 31 Mar 2015. Wisma Atria (retail) achieved positive rental reversions of 3.9%, while SGREIT’s Singapore office portfolio saw rental uplifts of 4.5% for leases committed in 6QFY14/15.

Nevertheless, the still challenging operating environment was reflected in the 6.6% and 6.7% YoY fall in shopper traffic and tenant sales at Wisma Atria, respectively. We will provide more details after speaking with management. Maintain BUY and S$0.93 fair value estimate on SGREIT.

Source: OCBC Research - 30 Jul 2015