Should You Invest In Starhill Global REIT [Fundamental Analysis]

In this article, we'll be conducting a fundamental analysis of Starhill Global REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having a high degree of capital preservation ability.

Information Is Accurate Up To Oct 2023

Business Description

Starhill Global REIT is a Retail REIT that was listed in 2005 and owns a total of 9 properties.

What I Like About Starhill Global REIT

• Historically high levels of dividend yield (Average: 6.51%) – largely due to lower underlying lease expiry and the “unattractiveness” of the REIT.
  

• Management is very conservative with their debt management and often has a high degree of hedged borrowings

What I Do Not Like About Starhill Global REIT

• Poor management which resulted in regular capital destruction
  

• Poor track record in foreign property investments
  

• Portfolio is not diversified & largely concentrated in Ngee Ann City & Wisma Atria (Fig 10)
  

• Lease expiry of flagship properties is relatively lower as compared to other retail REITs (Ngee Ann City – 2072 Wisma Atria – 2061)

Updates From Recent Performance (FY 2022/2023)

General Comments:

• The market has already priced in the headwinds for Starhill Global REIT’s foreign property and the price is now trading at a heavy discount from book value.

Positive Headwinds:

• Majority of the debt that is due for refinancing comes in 2025 and beyond of which interest rates are expected to start trending downwards.

Negative Headwinds:

• Further deterioration in foreign property values is to be expected given a stronger Singapore Dollar and a global economic slowdown.
  

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- Work In Progress -

Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®). Connect with me on social media platforms to receive updates on future content! You can also slide into my DMs if you have any questions :)

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Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore