Starhill Global REIT still attractive due to coveted location

Orchard Road properties still commanding prices.

According to Maybank Kim Eng, "SGREIT’s key assets are in the coveted Orchard Road area, where tight supply and the entry of new international retailers should give it greater bargaining power in terms of leasing its space."

It also noted how SGREIT currently enjoys a rental upside at Wisma Atria and income stability in Malaysia and Australia, which makes it a great investment choice.

Wisma has just completed its AEI works in 2Q12 with all Orchard road fronting stores commencing business. It was officially relaunched on 6 Sep and enjoyed a +2.7% QoQ and +18.6% YoY increase in retail revenue on strong rental reversion and full committed occupancy, says Maybank Kim Eng.

"According to our estimates, average passing rent continues to scale from SGD34.29 psf/mth last quarter to SGD35.04 psf/mth," it added.

This helped SGREIT keep its latest earnings in-line. "3Q12 revenue at SGD46.3m (flat QoQ, +5% YoY), was 25% of ours consensus estimate. 9M12 revenue at SGD138.6m (+3% YoY), was 75% of ours consensus estimate. 3Q12 DPU at 1.11 SGcts (+2.8% QoQ, +11% YoY) was 26% of ours and consensus estimates. 9M12 DPU at 3.26 SG-cts (+5% YoY) was 76% of ours and consensus estimates," said Maybank Kim Eng.

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