Starhill Global Reit's Q1 revenue down 10.3%

STARHILL Global Real Estate Investment Trust's (SGReit) revenue for the first quarter ended Sept 30 fell 10.3 per cent to S$43.1 million, while its net property income (NPI) dropped 19.2 per cent to S$ 29.8 million.

The fall was mainly due to rental assistance doled out to eligible tenants affected by the pandemic, including allowance for rental arrears and rebates - which were mainly for its Australia properties. The variance in revenue and NPI was also partially offset by higher contributions from The Starhill and the appreciation of the Australian dollar against the Singapore dollar.

As at Sept 30, its Singapore properties contributed about 62.4 per cent of total revenue in Q1 FY20/21; while its properties in Australia contributed 24.3 per cent. Revenue from its Malaysian properties contributed 10.6 per cent. The rest of its revenue came from various other properties in China and Japan.

The Reit manager on Wednesday unveiled a distribution re-investment plan (DRP), which will allow unitholders to receive all or part of their distributions in units instead of cash.

Participation in the DRP is optional, and unitholders may elect to participate in respect of part or all of their unitholdings.

There is no proposed distribution to its unitholders for the first quarter, following SGReit's change of its distribution frequency to semi-annual distributions.

The Reit said it will continue to extend rental relief to eligible tenants in its portfolio, including an allowance for rental arrears and rebates for the Australian tenants. This amounted to approximately S$7.3 million in the first quarter.

SGreit's gearing level stood at 39.1 per cent as at Sept 30, 2020.

Rental portfolio occupancy stood at 96.6 per cent, and long portfolio weighted average lease expiry (WALE) of 8.5 years by net lettable area.

Most tenants across its portfolio had been open for business in the first quarter, with the sales levels of tenants in its Wisma Atria property recovering to about two-thirds of pre-Covid-19 levels in the first quarter. Shopper traffic has also returned to almost half, said the Reit.

Although more businesses have been allowed to operate in the gradual reopening after the "circuit breaker", safe distancing measures and minimal tourist arrivals continued to impact shopper traffic and tenants' sales, it said.

"Occupancy and rents are expected to remain under pressure, although the extent will be mitigated by a limited new retail supply," it added.

In Australia, post-lockdown sales in its Perth assets have already achieved pre-Covid levels in the first quarter. Myer Centre in Adelaide also saw improving sales since lockdown.

Majority of rental assistance negotiations have been concluded for its Australian tenants too, said SGReit.

In its first-quarter business update, the Reit also reported a stable of new "quality tenants", including United Overseas Bank in its Ngee Ann City property, and Unity Pharmacy in its Wisma Atria property. Don Don Donki has also joined its Lot 10 property.

New flagship boutiques at The Starhill include Balmain, Philipp Plein, Tom Ford, Stefano Ricci, Paul & Shark.

In light of the limited visibility on the duration and severity of the pandemic, SGReit said it will strengthen its balance sheet and enhance financial flexibility.

It has secured new committed revolving credit facilities with relationship banks of up to S$90 million.

"Undrawn and committed revolving credit facilities are more than sufficient to cover the S$250 million term borrowings maturing in the next 12 months," it added.

It will also defer non-essential capital expenditure and enhance operational efficiencies, while balancing distributions, cash reserves and rental assistance.

Despite headwinds from the pandemic, the Reit manager will continue to explore and evaluate asset enhancement initiatives on its existing portfolio in order to enhance returns; look at a diversification of income to other commercial sectors such as office space; and focus the search for yield-accretive acquisition opportunities in key gateway cities.

Units in SGReit closed one Singapore cent lower, or 2.33 per cent, on Wednesday at 42 Singapore cents.