• STARHILL GLOBAL REIT (SGX:P40U)'s FY19 DPU of 4.48 Scts came in below at 95% of our full-year forecast.
• Weaker Singapore and Australia operations offset improvement in Malaysia.
• Downgrade to HOLD with a lower Target Price of S$0.79. Lacks major catalysts.

FY19 Results Highlights

• Starhill Global REIT posted FY6/19 DPU of 4.48 Scts (-1.5% y-o-y), coming in below at 95% of our full-year forecast. FY19 revenue declined 1.3% y-o-y to S$206.2m while NPI dropped 1.7% y-o-y to S$159.4m. The weaker FY19 topline performance was mainly due to lower contribution from Singapore and Australia which offset the better performance from Malaysia.

Wisma Atria Retail Continued to be Weak

• Wisma Atria’s FY19 retail declined 8.9% y-o-y despite
  1. higher occupancy rate of 99.6% as at Jun 2018 versus 97.1% in the previous year and
  2. tenant sales, indicating negative rental reversion.
• Wisma Atria’s office NPI also dropped by 4.2% y-o-y due to lower occupancy and rent. Ngee Ann City performed better. Although retail NPI declined 0.8% y-o-y, office NPI increased 18.1% y-o-y in FY19, boosted by higher occupancy.

Australia Affected by Weaker AU$

• Australia’s FY19 revenue and NPI declined by 0.4% and 1.4% y-o-y, respectively, due to the depreciation of the AU$ against S$ and higher operating expenses. The underlying performance continued to be healthy with a high occupancy rate.
• Committed occupancy of Australia’s office segment improved 12.5% pts q-o-q to 87.1% while its retail segment’s occupancy rate stood at 95% as at Jun 2019.

Source: CGS-CIMB Research - 31 Jul 2019