Daniel Lee
- Jul 31
- 5 min read

Paragon REIT vs Starhill Global REIT

In our previous article, we compared the poster child of Singapore’s Retail REIT, in this article, we’ll be doing a 1-vs-1 comparison between two of Singapore’s first and second runners when it comes to retail REITs selection – Paragon REIT and Starhill Global REIT.

I will be comparing these two REITs based on the following criteria and coming out with a conclusion based on the assumption that I can only invest in either one of the REITs without any consideration of valuation:

Type and Location of Underlying Property Allocation
Occupancy Rate & Weighted Average Lease Expiry (WALE)
Distribution Behaviour and Breakdown
Balance Sheet Health

If you are interested in a more in-depth analysis of either of the REITs, you can assess my independent analysis reports on my telegram channel:

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The article is best viewed on a desktop. Without further ado let’s get started.

1. Type and Location of Underlying Property Allocation

Paragon REIT

Paragon is a retail and office REIT whose flagship property is Paragon Mall, a premier upscale retail mall and medical suites/office property. Apart from Paragon Mall, which accounts for over 60% of the portfolio, the REIT also has other retail exposure in Singapore and Australia.

Starhill Global REIT

Starhill Global is a retail and office REIT whose flagship property is Ngee Ann City and Wismar Atria, an iconic shopping located in the central district (opposite Paragon Mall). Outside of the flagship properties, which account for over 70% of the portfolio, Starhill Global's remaining portfolio is located overseas.

Winner: Paragon REIT

For the metrics of underlying properties, I would prefer Paragon REIT over Starhill Global REIT given that the majority of the portfolio is located in Singapore and the qualities of their local malls are high (except The Rail Mall but it is to be liquidated at a premium as of the latest news in June 2024).

While some might prefer Starhill Global due to their diversified nature – by location of properties – I’d view it more as a liability as it exposes an investor to unnecessary foreign exchange risk which is not ideal for an income investor in Singapore.

2. Occupancy Rate & WALE

Paragon REIT

Paragon’s occupancy rate has been resilient and is operating near 100% occupancy rate based on the latest annual report figures. While the occupancy rate for its Australia portfolio had suffered a slight dip post covid, its Singapore portfolio had exhibited high levels of resilience throughout the Covid period.

Their weighted lease expiry has also experienced an improvement over the years of which, I’d reckon much of the contribution of a higher WALE comes from their office renewals as opposed to their retail properties.

Starhill Global REIT

Starhill Global's occupancy rate has remained relatively unchanged throughout the COVID-19 episode. On the other hand, the REIT’s wale had experienced a decrease post-COVID.

An interesting fact for Starhill Global is that the nature of the tenant profile for their flagship property – Ngee Ann City – is operated based on a master lease arrangement, unlike traditional retail properties which operate on a multi-tenant arrangement.

Winner: Paragon

For the metrics of property resiliency, I would prefer Paragon over Starhill Global as while both REITs had exhibited high levels of operating resiliency via their relatively unchanged occupancy rate, it also points to the neutral operating track record for both REITs of which Paragon REIT was able to command a higher level of occupancy rate for a longer duration of time as opposed to Starhill Global.

While Starhill Global’s unique master lease arrangement might be a plus point for investors seeking some form of rental stability, I feel that given the defensive nature of local retail properties, it is not a factor that is strong enough for me to accept a lower occupancy rate track record as a trade-off.

3. Distribution Behaviour & Breakdown

Paragon REIT

Excluding the figures in 2022 (which includes the operating figures over 16 months due to changes in the accounting period), we see that the DPU from operations of Paragon REIT has yet to recover back to its pre-covid levels largely as a result of an enlarged units in issue coupled with the impacts of higher interest rate environment.

It is also interesting that the management has opted to receive lesser management fees paid in units which had contributed to a lower reported distributable income for the year.

Starhill Global REIT

A similar story can also be said for Starhill Global REIT where the DPU from operations have yet to recover back to its pre-Covid levels at the back of an enlarged units in issue and the impacts of a higher interest rate environment.

Similar to Paragon REIT, the management of Starhill Global REIT has also opted to receive a significantly lower percentage of their management fees in units as the share price experienced a drop of around 40% since its 2019 peak.

Winner: Tie

For the metrics of distribution behaviour and breakdown, both REITs exhibited similar levels of behaviour – probably due to the closeness of the profile of their underlying properties. As such, I’d say that both REITs are equally matched (or equally bad) when it comes to the distribution behaviour.

4. Balance Sheet Health

Paragon REIT

The financial health of Paragon REIT has deteriorated largely as a result of the higher borrowing cost. However, the gearing ratio remained very healthy at below 30% which is ideal in a high interest rate environment.

Starhill Global REIT

Interestingly, the financial health of Starhill Global REIT remained relatively unchanged despite the incremental increase in their borrowing cost. The gearing ratio and interest coverage ratio remained at around the same levels which is surprising.

Winner: Starhill Global

For the metrics of financial health, I would say that Starhill Global’s situation is marginally better despite having a higher gearing ratio. This is because their debt maturity profile is better positioned as compared to Paragon REIT to navigate this higher for longer interest rate environment.

Overall Winner: Paragon REIT

If I had to choose between investing in Paragon REIT or Starhill Global, my preference would lean towards Paragon REIT due to the profile of their underlying properties and their performances.

That being said, I’d pay close attention to both their financial health and their distribution behaviour moving forward and would only start a position if the REIT is undervalued to ensure an ample amount of margin of safety.

All things considered, when designing a REIT portfolio, things aint as simple as choosing one REIT over another, investors need to understand how each REIT will perform and contribute at a portfolio level to determine whether a REIT is investible and if so what should be the ideal allocation on a portfolio level.

I’ve written more extensively on my REIT investment methodology and how I go about designing, implementing and managing a profitable REIT portfolio for myself which you can grab a copy of for free here: