Daniel Lee

Nov 55 min read

Starhill Global VS Lendlease REIT

In our previous article, we compared the poster child, first and second runners-up of Singapore’s Retail REITs. In this article, we’ll conduct a 1-vs-1 comparison between the two Singapore retail REITs that are trading above 6% dividend yield — Starhill Global REIT and Lendlease 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:

*Join the channel → click on the channel name → under files → download the report you want!

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

1. Underlying Property Allocation

Lendlease REIT

Lendlease is a retail and office REIT whose flagship property is Jem, a popular suburban retail mall that is connected to Jurong MRT. Apart from Jem, which accounts for around 60% of the portfolio, the REIT has two other properties – 313 @ Somerset and Sky Complex in Italy.

In 2024, Lendlease also acquired a minority stake (10%) of Parkway Parade – which is another sub-urban retail mall located in Marine Parade, Singapore.

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.

Outside of the flagship properties, which account for over 70% of the portfolio, Starhill Global's remaining portfolio is located overseas with a higher emphasis on retail properties and a minority allocation to office properties.

Winner: Lendlease REIT

For the metrics of underlying properties, I would prefer Lendlease REIT over Starhill Global REIT.

Although Lendlease REIT invests in a smaller number of properties, the type of Singapore property it focuses on is more varied and distributed across central and suburban malls, unlike Starhill Global, which primarily concentrates its Singapore property investments in the central region.

This provides investors with a more diversified behaviour as the malls in the central region typically serve a different type of tenants and attract a different type of shoppers as opposed to suburban malls. As such, they may perform differently during the different stages of the economic cycle.

2. Occupancy Rate & WALE

Lendlease REIT

On a portfolio level, Lendlease occupancy rate has suffered from a sharp decline in 2024 due to the ongoing lease restructuring of Sky Complex. Locally, the malls the Lendlease invest in are operating near 100% occupancy rate based on the latest annual report figures

The weighted average lease expiry (WALE) for Lendlease is considered to be healthy as far as retail REITs go as it is largely supported by the long lease expiry of the tenants in Sky Complex (Buildings 1 & 2 are leased to Sky Italia until 2033).

Starhill Global REIT

Following the Covid pandemic, Starhill Global's occupancy rate is on the rise, and the Weighted Average Lease Expiry (WALE) has notably increased thanks to the renewal of their master lease agreement for Ngee Ann City.

On the topic of tenant agreements, an interesting fact for Starhill Global is that on a portfolio level, 53.1% of Starhill Global’s revenue is derived from master leases and anchor leases which provide a higher level of rental stability as opposed to the usual multi-tenant leases.

Winner: Starhill Global

For the metrics of property resiliency, I would prefer Starhill Global largely due to the ongoing headwinds experienced by Lendlease’s sky complex. However, should Lendlease complete its lease restructuring, the results would be a tie between both REITs.

Starhill Global's distinctive master lease agreement may offer an advantage to investors looking for stability in the REIT's rental income. Nevertheless, considering the defensive characteristics of domestic retail properties, I believe it is not a significant enough factor to determine whether Starhill Global is superior to Lendlease REIT.

3. Distribution Behaviour & Breakdown

Lendlease REIT

Looking at the distribution breakdown of Lendlease REIT, it is evident that the reported dividend yield is supported heavily by non-operational items – in particular management fees paid in units. In fact as of 2024, up to 27% of the distribution comes from non-operational items.

The DPU from operations has also experienced severe headwinds – largely due to the impact of a higher interest rate environment - which has pushed the cost of borrowing up severely for Lendlease REIT, thereby causing bottom-line performances to deteriorate.

Starhill Global REIT

A different story is told for Starhill Global REIT.

Firstly, Starhill Global's DPU from operations has stabilized post-COVID. Secondly, since 2021, the management of Starhill Global REIT has also opted to receive a significantly lower percentage of their management fees in units after the share price experienced a drop of around 40% since its 2019 peak.

Winner: Starhill Global

For the metrics of distribution behaviour and breakdown, Starhill Global has exhibited clear signs of being a better REIT as their bottom line performances are significantly more stable compared to that of Lendlease REIT.

Furthermore, Starhill Global has been unwinding its decision to pay its management fees in units which is a more sustainable practice that would avoid diluting the existing unitholder base in the long run while providing a more transparent data point for valuation.

4. Balance Sheet Health

Lendlease REIT

The financial health of Lendlease REIT has deteriorated largely due to the higher borrowings associated with their acquisitions.

Furthermore, as Lendlease uses a considerable proportion of perpetual bonds, their actual gearing and cost of borrowing are higher than what is being disclosed.

If we were to treat the use of perpetual bonds as part of their debt, the current balance sheet health of Lendlease would be considered unsatisfactory as per my standard.

Starhill Global REIT

Even though Starhill Global utilizes perpetual securities for capital management, their balance sheet health remains satisfactory and has remained relatively stable for the past 5 years.

Winner: Starhill Global

In terms of financial health metrics, I believe that Starhill Global's position is considerably stronger than that of Lendlease REIT.

According to the figures provided, Lendlease REIT's health is in a precarious state. If additional financing is needed, the management's sole recourse would be to issue new units to secure capital. This move would have a detrimental effect on their share price due to significant dilution.

Overall Winner: Starhill Global REIT

If I had to choose between investing in Lendlease REIT or Starhill Global, I would opt for Starhill Global given their management track record and balance sheet health.

Even though I’d prefer the underlying properties of Lendlease, the current health and track record of the management are not satisfactory enough to justify starting a position.

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:

If you are looking for personalized financial advice, I offer a 1-to-1, fee-only consultation where you will receive personalized strategies to design, implement and manage a profitable REIT portfolio. You can find out more about it here: