Singapore boost for Starhill Global Reit's Q2 earnings

The Straits Times, July 30, 2014
By Rachael Boon
A STRONG Singapore portfolio helped lift second-quarter earnings at Starhill Global Reit, which owns department stores here and abroad.

Distribution per unit (DPU) for the three months to June 30 was 1.25 cents, which was 5 per cent higher than the 1.19 cents a year earlier.

Net property income (NPI) for the period rose 0.2 per cent to $39.2 million, as operating expenses for Singapore, Japan and China properties declined, and gross revenue fell 1.4 per cent to $48.4 million.

Even though the Reit reported higher revenue from the Singapore operations and higher NPI, it said these were offset by weaker overseas contributions.

The Reit faced falling revenue from department store Renhe Spring Zongbei in Chengdu, China; the loss of income contribution from Tokyo project Holon L, which was sold in March; and net foreign currency movements.

YTL Starhill Global manages the Reit, which owns parts of the Wisma Atria and Ngee Ann City shopping malls in Orchard Road.

The Singapore portfolio contributed two-thirds of total revenue in the second quarter.

The Singapore portfolio's NPI rose 5.5 per cent to $25.6 million compared with the previous year, led by positive rental reversions for both the retail and office units.

YTL Starhill Global chairman Francis Yeoh said: ''Tourist arrivals in Singapore have been affected by recent regional events.

''Despite this, our portfolio in Singapore continued to perform well, reflecting the quality of the assets as well as the continuous drive in repositioning our malls.''

Starhill Global Reit units closed flat at 84 cents yesterday.

Starhill Reit's Q2 DPU up despite lower overseas revenue
Business Times, July 30, 2014

BY Lee Mei Xian

STARHILL Global Reit yesterday posted a 5 per cent increase in distribution per unit (DPU) to 1.25 Singapore cents for its second quarter ended June 30.
On an annualised basis, this translates to a yield of 6.07 per cent. This is despite lower contribution from its overseas properties which led revenue to fall 1.4 per cent to S$48.4 million.
Net property income rose marginally by 0.2 per cent to S$39.2 million, however, as operating expenses for its Singapore, Japan and China properties fell.
The Reit's Singapore portfolio - which includes stakes in Orchard Road heavyweights Wisma Atria and Ngee Ann City - contributed two-thirds of its total revenue in Q2.

But while revenue and net property income from its Singapore operations rose 3.6 per cent and 5.5 per cent, respectively, on positive rental reversions, it was offset by weaker overseas contributions.

Notably, revenue from China fell 35.7 per cent on lower sales amid a contraction of the high-end and luxury retail segment. This followed the Chinese government's austerity drive, as well as increased competition from new and upcoming retail developments in the city of Chengdu where its property Renhe Spring Zongbei is located.

Its Japan segment also saw a loss of income contribution from its divestment of Holon L, a Tokyo retail property, in March this year.

Malaysia, its second largest contributing country, also reported lower earnings due to the depreciation of the ringgit against the Singapore dollar (SGD), and higher property taxes in the quarter.

Australia, its third-largest contributor, reported lower income as the Australian dollar depreciated against the SGD as well.

The Reit manager said that tight labour conditions continue to limit the expansion plans of retailers in Singapore, but it sees healthy demand for prime Orchard Road retail space from new-to-market retailers.

But its outlook for its Chengdu business remains bleak as the high-end luxury retail landscape in China continues to be impacted by weakened consumer sentiments and austerity measures.

For its first six months, the Reit's gross revenue has fallen 5 per cent to S$97.6 million, while net property income has dipped 3.4 per cent to S$78.3 million.

Unitholders can expect to receive their latest payout on Aug 28.

Units of the Reit closed unchanged at 84 Singapore cents yesterday before its results were announced.