Wednesday, January 30, 2019

Recent Action - Starhill Global Reit

Just a quick update.

After my previous incident covering back my position on UMS, I have some cash that I can allocate my position to and decide to further increase my position in Starhill Reit by purchasing an additional 130,000 shares at a price of 71.5 cents.

My last purchase for Starhill was on the 7th Jan when the share price was still at 68 cents, and my average price before this purchase was at 70 cents, so this additional purchase was a case of averaging up.

My total position for Starhill has now increased to 377,000 shares.

This consideration comes on the back of their recently announced Q2FY19 results, which seems like quite a disappointment to many as DPU for the quarter dropped to 1.13 cents, as compared to 1.15 cents last quarter and 1.17 cents year on year.

In the overall scheme of things, it wasn't any of a big deal because those who pays attention to closely would have realized that things will not bottom out until this quarter where the retail occupancy is at one of its lowest, and that the committed occupancy for next quarter is going to get a lot better (and hence better DPU expected).

The office occupancy has increased to 93.6% this quarter from 89.4% last quarter while the office in Adelaide has also secured a higher occupancy.

This quarter results was largely impacted by their SG portfolio, which took up 62% of the overall, and in particular the retail side especially on Wisma, which had its occupancy down this quarter.

If we compare across year on year, we can understand why DPU is down because there was a few tenants that move out of Wisma in the quarter, hence occupancy was lower at 93.5% as compared to 95.9%.

The good news is that from next quarter onwards, Wisma has a committed occupancy of 97.6%, out of which new retail brands such as Love & Bravery, AW Lab, Mujosh Lab and the F&B by Paradise Dynasty is commencing in early this year.

The lease is likely to be rented out at the current base rate.

Together with the upcoming Master Lease Toshin review at Ngee Ann in mid 2019, I think we'll see a rebound back in their performance in the next 2 quarters.

At the current share price, Starhill is trading at a P/BV of around 0.8x and a dividend yield of about 6.3%.

Thanks for reading.

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  1. This comment has been removed by the author.

  2. Wow B, I’m the small time retail investor selling and you the big boy buying

    1. Hi Yaruzi

      Haha you flatter me too much.

      My positions were also accumulated over time :)

  3. Hi B,

    That's a pretty sizeable position you got there! I'm vested in SGR too, hopefully we will see a recovery soon.

    1. Hi TBWP

      Let's finger cross and hope for things to go our way :)

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  5. Hi B

    What do you think of the facility agreement with Cathay United Bank (CUB) for a three-year unsecured and committed revolving credit facility of SGD 30 million?

    How do it impact on the management side of Starhill?

    1. Hi STI

      Oh to me that one is simply getting an alternate avenue of credit facility first in case they need to fund it when liquidity crunch comes. Since they are unsecured, I assume its easier to get and the interest rate is higher too but it all depends if the management uses it wisely at the end of the day.

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