Starhill Global REIT: Stable Investment Grade Bonds

Phillip Bonds  |   03 Sep 2021  |    107 views

Starhill Global REIT is positioned for retail recovery as Singapore reopens. While the outlook remains uncertain, Starhill’s anchor and master leases, comprising 52% of its portfolio, provides the company a long weighted average lease expiry of 5 years and high occupancy of 99% to ride through the recovery. Investors can consider the SGREIT 3.85% perpetual (SGD) bond with a yield to worst of 4.2% callable on 15 December 2025, or the senior unsecured SGREIT 3.4% 26May2023 Corp (SGD) bond with a yield to maturity of 1.0%.

Operations to recover as Singapore reopens

Starhill’s rental assistance to tenants is expected to taper off as Singapore eases social distancing measures. Starhill’s retail properties Wisma Atria and Ngee Ann City are poised to be key beneficiaries of Singapore’s reopening. We expect shopper footfall to recover gradually and retail sales to pick up. While Singapore’s retail REIT rental reversion rates are expected to continue seeing downward pressure over the coming months, the number of shoppers and foreign travellers may surprise to the upside in the medium term, a potential positive catalyst.

Stable outlook by Fitch, BBB investment grade rating

Sighting the strong push for vaccination in the region, especially in Singapore, Fitch sees improved cash flows and easing of lockdown restrictions as key reasons for its stable investment grade rating of Starhill Global REIT. Starhill’s balance sheet is healthy, with debt including perpetual securities to total assets at 39%, well below the MAS ceiling of 50%. Its debt maturity profile is 3.3 years and there are no debt maturing for the next 12 months.

Half of Starhill’s portfolio is secured by anchor tenants or master leases

Anchor and master leases make up 52% of Starhill’s portfolio. This has allowed the REIT to maintain stability amidst the downturn. The company’s weighted average lease expiry stands at 5.3 years as at 30 June 2021 and its portfolio maintains a high occupancy rate of 98.6%, among the highest in Singapore’s retail REIT sector. We believe these strong metrics will allow Starhill to ride through the uncertainty of the soft retail market towards recovery.

Summary

For investors looking for exposure in Singapore’s retail recovery, they may consider the SGREIT 3.85% perpetual (SGD) bond with a yield to worst of 4.2% and callable on 15 December 2025, or the senior unsecured SGREIT 3.4% 26May2023 Corp (SGD) bond with a yield to maturity of 1.0%.

 

 

Related Articles

Sembcorp Industries 4.6% 7Yr Senior Green Bonds

Sembcorp Industries (SCI) recently announced the issuance of its Senior unsubordinated Green bonds at a final price guidance of 4.6%.

Shawn Sng  |   09 Mar 2023

Hotel Properties Limited 5.25% 5Yr Senior SGD

Hotel Properties recently announced the issuance of its Senior unsubordinated bonds at a final price guidance of 5.25%.

Shawn Sng  |   02 Mar 2023

Barclays PLC 7.3% AT1 Perpetual SGD

Barclays PLC recently announced the issuance of its additional tier 1 perpetual notes at a final price guidance of 7.3%.

Shawn Sng  |   01 Mar 2023

Recent Articles

Sembcorp Industries 4.6% 7Yr Senior Green Bonds

Sembcorp Industries (SCI) recently announced the issuance of its Senior unsubordinated Green bonds at a final price guidance of 4.6%.

Shawn Sng  |   09 Mar 2023

Hotel Properties Limited 5.25% 5Yr Senior SGD

Hotel Properties recently announced the issuance of its Senior unsubordinated bonds at a final price guidance of 5.25%.

Shawn Sng  |   02 Mar 2023

Barclays PLC 7.3% AT1 Perpetual SGD

Barclays PLC recently announced the issuance of its additional tier 1 perpetual notes at a final price guidance of 7.3%.

Shawn Sng  |   01 Mar 2023

Disclaimers

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

?>