Straight-line rental adjustments and higher withholding taxes for Malaysia and Australia hit second-quarter revenue for Starhill Global Real Estate Investment Trust (SGREIT).
Revenue for the group, managed by YTL Starhill Global Reit Management (YTL Starhill Global), fell 3 per cent to S$52.5 million (US$40 million) for the three months to the end of December.
This was mainly because of weaker contributions from offices and disruption of income in Australia because of ongoing redevelopment works at Plaza Arcade in Perth and lower revenue at Myer Centre Adelaide.
Net property income (NPI) eased 2.2 per cent to $40.5 million, largely in line with the lower revenue and partially offset by lower expenses, mainly for its property in China.
“Timely” initiatives to rejuvenate the portfolio have set SGREIT in a good position to ride on any retail sector upturn, says YTL Starhill Global chairman Dr Francis Yeoh. “Notwithstanding the improved economic outlook, we remain cautious on the sustainability of the economic growth and the structural changes to consumer preferences.”
CEO Ho Sing says the group’s portfolio has been relatively resilient for the quarter. Singapore’s retail portfolio revenue remained stable, and redevelopment at Plaza Arcade and Lot 10 is on schedule to complete early this year.
SGREIT’s Singapore portfolio, comprising interests in Ngee Ann City and Wisma Atria, contributed 62.5 per cent of total revenue, $32.8 million. However, NPI dropped by 2.6 per cent mainly because of lower office occupancies and higher expenses.
Singapore’s retail revenue growth of 1.9 per cent was in the face of a 6.2 per cent drop in shopper traffic and a 6.3 per cent fall in tenant sales, attributed mainly to the renovation of the food court at Wisma Atria, which has since resumed trading.
Singapore’s retail occupancy remained strong at 98.6 per cent at the end of December. Full occupancy continued at Ngee Ann City while Wisma Atria had 95.9 per cent occupancy.
SGREIT’s Malaysia portfolio, comprising Starhill Gallery and an interest in Lot 10 along Bukit Bintang in Kuala Lumpur, contributed 13.2 per cent of total revenue, or $6.9 million, for the quarter. NPI was up 0.8 per cent to $6.7 million, mainly because of appreciation of the Malaysian ringgit against the Singapore dollar.
Internal rejuvenation works at Lot 10 are largely completed, while the formation of an entrance from the new MRT station has started and is expected to be completed in the next two months.
The balance of SGREIT’s portfolio, comprising a property in Chengdu and three properties in Tokyo, contributed 2.2 per cent of total revenue, S$1.2 million. NPI was $800,000, up from $100,000 million from the same quarter in the previous year. This was mainly the result of lower running costs for the China property following the departmental-store model being converted to a single-tenancy model. The property has been handed over to the tenant, who has started renovations. These are expected to be completed soon.