Starhill Global REIT (SGREIT) announced that it has secured the extension of the master tenancy agreements for Starhill Gallery and Lot 10 Property in Malaysia for a third three-year lease term. This would commence on 28 Jun this year, and the total annual rent payable to SGREIT under the Master Tenancy Agreements comes in at MYR84.4m, which is ~6.67% above the total annual rent for the previous three-year term.

In addition, the payment obligations of the master tenant under the agreements are guaranteed by SGREIT’s sponsor, YTL Corporation Bhd. We are positive on this development, given the rental uplift to SGREIT and added earnings visibility and stability to its unitholders. As we had previously assumed the extension of the master tenancy agreements in our model, we maintain our forecasts, BUY rating and S$0.84 fair value on the stock.

Source: OCBC Research - 16 Mar 2016