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Brokers' take: Starhill Global Reit upgraded to 'buy' by OCBC
STARHILL Global Reit (SGReit) has been upgraded to a "buy" by OCBC Reseach with a fair value of S$0.74.
In a report on Friday, analyst Andy Wong said he believes that "the worst is likely over" for the retail and office Reit, noting that its committed Singapore office occupancy has moved from a low of 83.5 per cent in its fiscal first quarter ended Sept 30, 2017, to 95 per cent as at June 30, 2018.
Occupancy was buoyed after The Great Room, a co-working operator, commenced its operations in June at Ngee Ann City by taking up 15,000 square feet of space.
Mr Wong wrote: "For retail, challenges will likely remain, but this will be partially buffered by the long-term master lease with Toshin at Ngee Ann City Retail, with the next rent review in June 2019. Meanwhile, in Australia, its Plaza Arcade mall will see new anchor tenant Uniqlo opening its doors in the third quarter of calendar year 2018."
SGReit's share price has fallen 12.9 per cent so far this year, making it one of the worst-performing Reits in Singapore, Mr Wong noted. But he expects the Reit's distribution per unit (DPU) to start growing again over the next 12 months, at a projected growth rate of 4 per cent for the 2019 fiscal year.
The Reit traded at a 2019 forecasted distribution yield of 7 per cent and a price-to-book value of 0.74 times based on its closing price of S$0.675 at the end of Thursday, Mr Wong said.