Brokers' take

Starhill Global Reit | Buy Target price: S$0.86 Oct 31 price: S$0.815 OCBC Investment Research, Oct 31

STARHILL Global Reit (SGReit) reported an in-line set of Q1FY17 results. Gross revenue and DPU declined 2.7 per cent and 0.8 per cent year on year to S$55.3 million and 1.30 Singapore cents, respectively. SGReit reported an improved performance for its Singapore Retail portfolio due largely to a full-quarter of contribution from the 5.5 per cent increase in base rent from its master tenant Toshin at its Ngee Ann City property with effect from June 8 this year. However, its Singapore office portfolio had a weaker performance and this was due to lower occupancy rates.

Despite the limited new supply in Orchard Road, we are cautious on this space as SGReit has 20.2 per cent and 30.4 per cent of its Singapore office leases expiring (by gross rent) at Wisma Atria and Ngee Ann City, respectively, for the remainder of FY17. The stock is currently trading at FY17F distribution yield of 6.6 per cent and P/B ratio of 0.87 times.