Australian boost for SGREIT
Singapore-based real estate investment trust Starhill Global REIT’s SGREIT group credits its acquisition of Myer Centre Adelaide, in Australia, as the main driver of its revenue growth for the three months ended December 31.
Its revenue grew 13.8 per cent over the previous corresponding period to S$55.6 million ($42.3 million), while net property income (NPI) grew 10.4 per cent.
As well as the contribution from Australian Myer Centre Adelaide, acquired in May, the resilience of the Singapore portfolio performance – partially offset by lower contributions from China and net foreign currency movements – helped boost the group’s strong earnings growth.
“While Asia’s economic growth is expected to ease, we are confident our prime assets in key Asia-Pacific cities will remain resilient in an evolving retail landscape,” says Starhill Global non-executive chairman Dr Francis Yeoh.
This month the company divested one of its five Tokyo properties. “This is the third property we have divested in Tokyo in the past three years, while we have reinvested in two high-yielding Australian properties as we continue to sharpen and improve the quality of our portfolio,” says CEO Ho Sing.
SGREIT’s Singapore portfolio, comprising interests in Wisma Atria and Ngee Ann City on Orchard Rd, contributed 60.8 per cent of total revenue, or S$33.8 million. NPI grew by 2.7 per cent year-on-year to S$27.3 million.
Wisma Atria had fewer committed occupancies at the mall and there were tenant transitions. Shopper traffic was down 2.5 per cent as most of Isetan’s strata-owned space has been closed for renovations since April.
SGREIT’s Australia portfolio, comprising Myer Centre Adelaide in Adelaide, South Australia, and the David Jones building and adjoining Plaza Arcade in Perth, Western Australia, contributed 22.8 per cent of total revenue, or S$12.7 million, for the second quarter. NPI was S$8.6 million, 121.6 per cent higher. This was helped by the depreciation of the Australian dollar against the Singapore dollar, and lower occupancies.
SGREIT says talks with a prospective international tenant regarding redevelopment plans at Plaza Arcade are progressing well. The plans include anchor tenants and an optimisation of upper-storey space.
SGREIT’s Malaysia portfolio, comprising Starhill Gallery and interest in Lot 10 along Bukit Bintang in Kuala Lumpur, contributed 11.3 per cent of total revenue, or S$6.3 million, while NPI was about S$6.1 million, 14.8 per cent down, mainly because of depreciation of the Malaysian ringgit against the Singapore dollar.
Renhe Spring Zongbei in Chengdu, China, contributed 3 per cent of total revenue, S$1.7 million, while the NPI was S$0.8 million, a decline of 37.5 per cent. This is largely attributed to lower revenue as the luxury retail segment continues to be impacted by government austerity measures, as well as growing competition from new and upcoming malls.
SGREIT’s Japan portfolio, which comprises five central properties (including Roppongi Terzo that was divested this month), contributed 2.1 per cent of total revenue, with an NPI of S$1 million, up 27.7 per cent. This was largely because of higher occupancies and appreciation of the Japanese yen against the Singapore dollar.
SGREIT sold Roppongi Terzo for JPY2500 million (about S$29.9 5 million) compared to its independent valuation of JPY2440 million as at December 31. It four remaining properties were fully occupied at year end.
Starhill Global REIT invests primarily in real estate for retail and offices. Its initial portfolio of two landmark properties on Orchard Rd in 2005 has grown to 12 properties in Singapore, Australia, Malaysia, China and Japan, valued at about S$3 billion.