Wolf Money(Starhill Global REIT)

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(Ngee Ann City)


As mention in my year end review,I am looking for opportunities in the REIT sector in 2023 since they are one of worst performing sector in Singapore.

Before the year is up I have already decided on my first purchase due to China changing their travel policy. Starhill Global Reit own iconic properties in Singapore, Malaysia and Australia. They are manager for Ngee Ann City and Wisma Atria. I bought a small position only just in case the sector goes through more correction. The few merits of the Starhill Global Reit are listed below.


(Wisma Atria)


1.) 68 percent of the REIT properties portfolio are in Singapore with Ngee Ann City and Wisma Atria making up much of the value. Malaysia, Australia, China and Japan properties making up the rest.

2.) The Chinese government had decided to allow citizens to fly again without the need to quarantine. This is one the major incentive for people to travel outside of China. I am expecting revenge traveling and shopping to start very soon. High end malls in Singapore, Malaysia and Australia might get a boost.

3.) 84% of their debt is hedge at fixed rate which is high by any standard for reit listed in Singapore. They are mostly locked in at a weighted average interest rate of 3.18% for the next 3.2 years. This will take away near term refinancing risk. A 1% increase in financing rate will only decrease dpu by 0.04c vs some of other retail REIT which may experience up to 5% dip in dpu with every 1% increase in loan interest.

4.) Overall gearing is at 36% which is not too high or too low. Most reits fall within the 30% to 40% range

5.) Their properties are well located in high human traffic.

6.) Tenants revenue in Singapore Ngee Ann and Wisma are experiencing strong growth due to increasing tourism. They contributed to the bulk of the net property income.

7.) Forward estimated yield is around 7.5%. That is a 4.4% gap between Singapore government 10 years bond of 3.025%. The gap on historical norm is around 3% for local retail reit or reit with high percentage of Singapore assets.

8.) The Starhill and Wisma Atria had just completed their AEI. The timing is impeccable for an upswing in retail sale from travel starved Chinese tourists. 

Base on industry knowledge, branded boutiques in Orchard area had one of the best Dec month in decades. Landlord pricing power is coming back after two years of below trend line rental increase due to covid 19. Trading of the Starhill Global reit range from 49c to 65c over the past year. 


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Disclaimers 

All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for education only. Buyer beware,do you own due diligence.




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