SGREIT’s earnings jump 7% YoY to $41.6m in Q3

Thanks to Myer Centre Adelaide’s contributions.

Starhill Global REIT (SGREIT)’s net property income climbed 7% YoY to $41.6m, while gross revenue for the quarter surged 12% YoY to $53.6m in Q3.

According to a report by OCBC, the increase was driven by Myer Centre Adelaide (MCA), which was acquired in May 2015. This was partially offset, though, by weaker revenue from Wisma Atria (Retail); Japan and China assets; as well as forex movements.

In Q1, SGREIT saw a portfolio occupancy of 95.6%, which was a pullback of 3.5 ppt YoY and 2.4 ppt QoQ. The sequential decline was mainly on back of a lease expiry of one office tenant at MCA and leases termination in relation to planned enhancement work for Plaza Arcade.

As a result, SGREIT’s Australia occupancy dipped from 95.8% to 89.5%. Wisma Atria’s (Retail) occupancy tumbled from 98.1% to 96.8% YoY. However, this was an improvement from the 94.9% registered in the previous quarter. OCBC also notes that shopper traffic at Wisma Atria (Retail) inched up 0.3% YoY, after five consecutive quarters of YoY decline. The mall’s tenant sales also inched up 1.7% YoY.

SGREIT’s Singapore office portfolio remained strong during Q1, as it posted positive rental reversions of 8.5% achieved and both properties are fully occupied.

Looking ahead, management will have to set its sights on its rent review negotiation for the Toshin master lease at Ngee Ann City which is due in June this year.

In terms of financial position, SGREIT’s balance sheet remains healthy. The company’s net gearing ratio of 35.4% as at 31 Mar 2016, and 100% of its borrowings fully hedged with no major refinancing requirements until FY18.

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