Saturday, August 4, 2012

Starhill Global REIT

One of the major real estate investment trusts based in Singapore is known as Starhill Global REIT. It got listed on Singapore exchange securities trading limited in September 2005. Trust is mainly investing in real estate which is being used for office and retail purposes.  At the time of listing, it had only two huge properties in Singapore. Although it is a Singapore based trust, its investment is not confined to Singapore as it has started acquiring properties in other countries as well. YTL Starhill Global REIT Management Ltd. is managing Starhill Global REIT as an external manager.


Since it got listed in 2005 it has increased its investment from two properties to 13 and only from Singapore to China, Malaysia, Japan and Australia. The detail of its investment in all the countries is given below:

Name of the Country No. of Properties
Singapore                              2
China                              1
Malaysia                                2
Australia                              1
Japan                              7

The table shows that the largest number of investments is made in Japan. The trust kept progressing through acquiring valuable property and in return today its assets are valued at S$2.7 million.

Financial Performance

Starhill Global REIT reported its earning distribution per unit for the second quarter 2012. It reported an increase of 3.8% to make a DPU of 1.08cents which include both out of taxable and non taxable income. On the basis of the closing price of S$0.653 on 30th June that makes an annualized yield of 6.53%. Although a redevelopment work was already there at Wasim Atria, yet an increase in the yield is a positive sign for the company.

Share Price Performance

The total shares issued are 1,943 million and its current share price is S$0.695. Total market capitalization is US$ 1, 0696 million. 28.7 % of its shares are held by YTL Corporation Bhd. Starhill Global REIT’s annualized return on equity is 5.2%. As compared to 2010 its Return on equity and return on assets are both falling about 40%. Although it does not seem to be a good sign but it did not have much effect on its share price. A continuous increase in the gross revenue over the year and a growth in the distributable income did not let the price fall.

Future Prospects

The share price is expected to increase and analysts recommend the hold strategy for the stock. Analysts are positive about the company as it is showing a stable and steady growth.  Although Starhill Global REIT is valued at 20% discount of its book value compared to its peers. Its targeted share price is forecasted at S$0.74. It has great bargaining power over its leasing business due to the strict policy for the new entrants in the business. It has stable income in Australia and Malaysia while its great assets in Singapore make it one of the most favorite for the investors.

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