Brokers' take

Starhill Global Reit | Buy Target price: S$0.81 May 26 close: S$0.76 OCBC Investment Research, May 26

Starhill Global REIT (SGREIT) recently divested its entire beneficial interests in the Harajuku Secondo Property for a cash consideration of 410.2 million yen (S$5.1 million), which is at an attractive premium of 22.4 per cent to the property's latest independent valuation.

Management has been seeking opportunities to streamline its portfolio and pare its non-core assets. Looking ahead, we expect operational challenges to persist in the near-term, although we believe this would be mitigated by a higher rental uplift of 6.12 per cent from August 2017 as a result of the next lease review with David Jones. We pare our FY17 and FY18 distribution per unit forecasts by 2.4 per cent and 1.5 per cent, respectively, as we factor in lower rental assumptions in our model.