Starhill Global REIT invests in retail space at prime location. Based on her 2009 annual report, there are 10 properties in the portfolio. Locally, the REIT has Ngee Ann City (27.33%) and Wisma Atria (74.23%). 7 of the properties are in Tokyo and 1 in Chengdu. They just acquired David Jones Building in Perth and intend to acquire 2 prime retail space in Kuala Lumpur. A rights issue was underwritten in 2009 to raised cash. See what the executive Chairman said:
“In 2009, Starhill Global REIT successfully raised S$337.3 million through a fully-underwritten and renounceable 1-for-1 rights issue. The fund-raising exercise was carried out from a position of financial strength and with a long-term strategic perspective, to achieve the REIT’s three-pronged objectives of paring down debt, asset enhancement and seizing attractive acquisition opportunities… As a further reflection of the Starhill Global REIT’s resilience, the REIT was able to seize opportunities to boost its portfolio with more asset gems overseas at attractive capitalisation rates resulting from the global economic slump. We seized the opportunity to acquire the David Jones Building in Perth at the trough of the Australian property cycle and entered into a heads of agreement for Starhill Gallery and Lot 10, two high quality malls in Kuala Lumpur’s ‘golden triangle’, the city’s premier shopping, entertainment and business district. These proposed acquisitions will grow Starhill Global REIT’s total portfolio size to S$2.5 billion [S$2 billion as of 31 Dec 2009] and further transform the REIT into an investment platform for prime retail/commercial properties in Singapore and overseas whilst concurrently moderating geographical concentration risks. Our acquisition of the David Jones Building was completed in January 2010 and the property is expected to contribute to the Starhill Global REIT’s revenue for the 2010 financial year.”
Financial Figures
- Net Asset Value per share is S$0.82. Closing price since time of writing is S$0.565. Hence, the price to book ratio is 0.69, or 31% discount.
- To be strict, let’s just consider the value of the 2 Singapore properties and cash at hand for Net Tangible Asset (NTA) value. The NTA per share would be S$0.665 which is still higher than the current stock price.
- Debt to asset ratio is 31.4% (healthy for a REIT)
- The dividend yield is around 7.24%
Looks good to me. I’ll queue for it (update: just got in at $0.57).
Disclaimer: This is not an investment advice or an invitation to invest in the above mentioned stock. It is about sharing my perspective.
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{ 10 comments… read them below or add one }
Hi Alvin,
I own Starhill too and I feel it has lots of potential especially since YTL corp is involved in this. Starhill has a very competent management.
Hi Alvin,
I own Starhill too and I feel it has lots of potential especially since YTL corp is involved in this. Starhill has a very competent management.
Hi Alvin,
How does it stack up to other reits? What’s the compelling factor for Starhill?
Hi Alvin,
How does it stack up to other reits? What’s the compelling factor for Starhill?
Starhill invests in premium commercial property. Occupancy in these areas are high and offer consistent rental income. In addition, these properties hold their value well during economy ups and downs since they are exclusive. Of course, this factor is over and above the healthy financials and stock price of the REIT.
Starhill invests in premium commercial property. Occupancy in these areas are high and offer consistent rental income. In addition, these properties hold their value well during economy ups and downs since they are exclusive. Of course, this factor is over and above the healthy financials and stock price of the REIT.
Great analysis. And this is a safe bet buy – at 7% pa, it’s the next best alternative than to put our savings in Savings or FD. Plus at a “good price” of less than $1, the risks are even lowered. REIT always pay out quarterly. So again, another winner with a constant steady stream of “cashback” that the investor can see physically.
Great analysis. And this is a safe bet buy – at 7% pa, it’s the next best alternative than to put our savings in Savings or FD. Plus at a “good price” of less than $1, the risks are even lowered. REIT always pay out quarterly. So again, another winner with a constant steady stream of “cashback” that the investor can see physically.
Hello Alvin
How are things with this counter these days ?
Thanks
SnOOpy168
Hello Alvin
How are things with this counter these days ?
Thanks
SnOOpy168
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