Starhill Global ( former McQ Prime )

[tonylim]

By OCBC Investment Research Pte Ltd
Ong Kian Lin
Tue, 9 Nov 2010, 09:02:48 SGT

At 3QCY10 results, we found a few common themes in the guidance given by the Retail REIT managers: strengthening rents, increased DPUs and asset enhancement/acquisitions. The unifying message was to capitalise on the recovery cycle that will both strengthen the REITs and also grow distributable income. Prospects for the retail property market, barring any unforeseen external shocks, are expected to remain positive in the last two months of 2010, leading up to the year-end festivities and school holidays which traditionally is a peak season for the retail sector. Nonetheless, in view of slower economic growth and weaker demand from the west, we expect retailers to remain cost-sensitive. Any potential quarterly upside in prime rents is forecasted to be kept within 3%-5%. We thus have a NEUTRAL rating on the Retail REITs subsector. Top of our pick is StarHill Global [BUY, FV:S$0.66].

Common themes. At 3QCY10 results, we found a few common themes in the guidance given by the Retail REIT managers: strengthening rents, increased DPUs and asset enhancement/acquisitions. The unifying message was to capitalise on the recovery-cycle that will both strengthen the REITs and also grow distributable income.

Retail rents strengthening. According to CBRE, Prime-Orchard rents remained stable in 3Q10, after seven quarters of contraction, averaging $31.10psf/month. Suburban malls continued to strengthen, underpinned by strong catchment demand, rising 1.8% QoQ to $29.00psf/month. The supply pressure along Orchard/Scotts Roads is also expected to ease as the increase in retail space from 2009/10 is eventually absorbed. With limited supply expected in 2011 and 2012, retail rents there should increase gradually next year, particularly if the nascent recovery in retail sales, which grew 2.3% MoM in July, continues.

Increased DPU. Most Retail REITs reported higher DPU for 3QCY10. We see an average increase of 3.6% QoQ but a decline of -1.7% YoY. The YoY growth was pulled down mostly by Suntec REIT (more issued units) and LMIRT (forex losses and rental guarantees expiry). The remaining Retail REITs, however, were able to ride on the recovery cycle.

Asset-enhancements/Acquisitions. On the organic-growth front, most REITs stepped up or continued their asset-enhancement plans. CMT will complete its asset-enhancements for Raffles City by Nov while works for JCube and The Atrium are on track to finish in 1Q2012 and 3Q2012 respectively. FCOT has completed 3.4% of its refurbishment for Causeway Point. The $72m facelift, announced in July, for the 12-year-old mall will be carried out over a 30-month period. StarHill Global is also looking at enhancements for Wisma Atria, which will add about 40,000sf in 2011. On the acquisition side, Suntec REIT has announced the proposed acquisition of a one-third interest in Marina Bay Link Mall, with approx. 94,464 sq ft of NLA.

Valuations. Retail REITs are trading at an average price-to-book of 0.96x, similar to the broader S-REIT sector. Barring any unforeseen external shocks, prospects for the retail property market are expected to remain positive in the last two months of 2010, leading up to the year-end festivities and school holidays, which traditionally is a peak season for the retail sector. Nonetheless, in view of slower economic growth and weaker demand from the west, we expect retailers to remain cost-sensitive. Any potential quarterly upside in retail rents in 2011-2012 is forecasted to be kept within 3%-5%. We thus have a NEUTRAL rating on the Retail REITs subsector. Top of our pick is StarHill Global with a fair value estimate of S$0.66.

(Vested )

[winston]

Not vested. From Kim Eng:-

Sharp discount hard to ignore; initiate with BUY

Starhill is trading at a steep 30% discount to its NAV in stark contrast to the 10‐30% premium commanded by its peers. We think this could be because of the lack of asset enhancement initiatives on its part.

Its FY11F DPU yield of 6.8% offers a yield spread as high as 160bps over the yield of some of its retail peers.

We initiate coverage with a BUY recommendation and target price of $0.80/share, based on the Dividend Discount Model.

http://www.remisiers.org/cms_images/Sta ... 2010ke.pdf

[winston]

Not vested. From OCBC:-

Valuations still compelling.

Starhill offers an estimated FY10F and FY11F yields of 6.3% and 6.6%, and trades at a significant 31.4% discount to book value.

Stepping into 2011, we think there are still investment opportunities among the smaller but still credible REITs. These are S-REITs that have high-quality assets, strong sponsors and sound financials but are trading at significant discount to their NAVs.

Starhill Global REIT certainly ticks all these boxes, in our opinion. With a strong sponsor (YTL) and potential further acquisitions, we maintain our BUY rating with an unchanged
fair value estimate of S$0.66.

This translates to an estimated total return of 12.7%. (Ong Kian Lin)

http://www.remisiers.org/cms_images/Mar ... 10-OIR.pdf

[tonylim]

CEO, Ho Sing bought 50,000 shares on 24/12 @0.62 . Small gesture with a vote of confidence.

Source: SGX

(Vested)

[winston]

Not vested

We reiterate our BUY recommendation and target price of $0.80, based on an attractive
forward DPU yield of 6.7%.

Moreover, Starhill’s overseas assets remain a source of stable rental income.

Acquisitions and asset enhancements are major catalysts for re‐rating.

http://www.remisiers.org/cms_images/ssu11012011ke.pdf

[winston]

Not vested

Prime rentals growing faster in the Orchard area at 3 to 5 per cent yearly, on the lack of new supply.

Starhill Global REIT, which generates two-thirds of its revenue from Ngee Ann City and Wisma Atria is likely to benefit as well from this, Kim Eng analyst Anni Kum said in a Jan 11 report.

Ms Kum reiterated a "buy" rating on Starhill Global noting that about 20 per cent of its retail leases in Singapore are expiring this year and that so far, the rates of those leases are about 30 per cent below rentals in the fourth quarter of last year. Kim Eng sees a positive rental revision in the next two years.

While rents in the prime Orchard district head north, the scenario for suburban retail rents will come under pressure as new retail spaces come on stream, Ms Kum's report said.

Source: Today Online

[winston]

Not vested. From OCBC:-

Starhill Global Trust: 4Q DPU of 1.04 S-cents

Summary: Starhill Global REIT announced 4Q10 results this morning, which were broadly in line with our expectations.

Gross revenue of S$45.6m was up 33% YoY and 0.9% QoQ, mainly attributed to the contribution from Starhill Gallery and Lot 10 in Malaysia, and David Jones Building in Australia, which were acquired in 2010.

Similarly, net property income increased 37% YoY and 2.7% QoQ to S$36.7.m. Income to be distributed rose 7.6% YoY and 4% QoQ to S$20.2m.

4Q DPU is 1.04 S-cents, which is 7.2% higher than 4Q09 DPU of 0.97 S-cents.

On an annualized basis, the latest distribution represents a yield of 6.47%, based on yesterday’s closing price of S$0.645.

We will be speaking to management later to get more updates. Meantime, we put our BUY rating and S$0.66 fair value estimate under review. (Ong Kian Lin)

[winston]

Not vested. From UOBKH:-

4Q10 Results Flash:[b] DPU up 4.0%qoq to 1.04 cents; results in-line with our expectations[/b]

· Starhill Global REIT (SGREIT) reported a 4Q10 distributable income of S$20.2m (+7.6% yoy, 4.1%qoq) or a DPU of 1.04cents (+7.2% yoy, +4.0% qoq).

The total DPU for FY10 was 3.90 cents (+2.6% yoy). The FY10 DPU is in line with our expectations, accounting for 96% of our full year DPU estimate of 4.05 cents.

· FY10 revenues increased 23.1%yoy to S$165.7m and Net Property Income (NPI) increased 22.0%yoy to S$130.5m, driven by revenue contributions from the new acquisitions of the David Jones property in Perth and the Starhill Gallery and Lot 10 properties in Malaysia.

This was offset by a 16% yoy decline in NPI for Wisma Atria offices and also for the Japan portfolio. This was due to negative rental reversions for Wisma offices and lower occupancy and rentals received for the Japan portfolio.

· We remain cautious on SGREIT due to the continued decline in market rents recorded for Orchard Road, with prime Orchard rentals down 6.8% in 2010 on the back of a large supply of retail space.

Target price of S$0.65 is based on dividend discount model (required rate of return: 7.7%, terminal growth: 2.0%).

[winston]

Not vested

Notice of Books Closure and Distribution Payment Date

NOTICE IS HEREBY GIVEN THAT the Transfer Books and Register of Unitholders and the Transfer Books and Register of CPU holders of Starhill Global Real Estate Investment Trust (“Starhill Global REIT”) will be closed on Monday, 7 February 2011, at 5.00 p.m. (the “Books Closure Date”) to determine:

(i) the entitlements of holders of units in Starhill Global REIT’s (“Units” and holders of Units, “Unitholders”) distributable income of 1.0400 cents per Unit for the period from 1 October 2010 to
31 December 2010 (the “Distribution”), comprising a taxable income component of 0.7500 cents per Unit, a tax-exempt income component of 0.0700 cents per Unit and a capital component of 0.2200 cents per Unit

http://info.sgx.com/webcoranncatth.nsf/ ... penelement

[tonylim]

http://info.sgx.com/webcoranncatth.nsf/ ... penelement

( vested )