Starhill Global REIT (SGREIT) reported its 2QFY16 results which met our expectations. Gross revenue jumped 13.8% YoY to S$55.6m. This was underpinned by contribution from Myer Centre Adelaide which was acquired in May 2015 and better performance from its Singapore portfolio, but partially offset by weakness from Malaysia and China. DPU grew 2.3% to 1.32 S cents.

On a 1HFY16 basis, SGREIT’s gross revenue rose 15.3% to S$112.4m, making up 73.9% of our full-year estimate. DPU of 2.63 S cents translated into a steady growth of 2.7% and formed 73.5% of our FY16 forecast. SGREIT’s overall portfolio occupancy declined slightly by 0.3 ppt to 98.0%, as at 31 Dec 2015.

Flat rental reversions were recorded for its Singapore retail assets, while its Singapore office portfolio achieved a mild rental uplift of 1.7% for leases committed in 2QFY16. We will have more details after the analyst briefing later. Maintain BUY on SGREIT, but we will be reviewing our S$0.93 fair value estimate.

Source: OCBC Research - 27 Jan 2016