Starhill Global REIT Delivers Stable Q1 FY25/26 Results: Strategic Asset Enhancements and Debt Extension Could Drive Share Price Momentum

Key Highlights from 1Q FY25/26

Starhill Global Real Estate Investment Trust (SGREIT) has reported a steady set of results for the first quarter of FY25/26, demonstrating the resilience of its diversified Asia Pacific portfolio and proactive capital management. The REIT, with approximately S\$2.8 billion of mid- to high-end retail and office assets across six major Asia Pacific cities, remains firmly anchored in prime locations including Singapore, Australia, and Malaysia.

• Gross Revenue: S\$48.3 million, up 0.7% year-on-year.
• Net Property Income (NPI): S\$37.9 million, up 0.2% year-on-year.
• Portfolio Occupancy: 94.8% (Retail: 97.6%).
• Gearing: 36.7%, with a weighted average debt maturity of 3.9 years.
• Master/Anchor Leases: 52.9% of gross rental income, providing income visibility and stability.
• Strong Sponsor: YTL Group holds approximately 37.9% of SGREIT.

Operational and Financial Details for Investors

• Prime Asset Locations: The portfolio spans key shopping belts, ensuring strong footfall and high appeal to both local and international brands.
• Credit Rating: Maintained at “BBB” with a stable outlook by Fitch Ratings.
• Portfolio Diversification: Singapore assets contribute 62.7% of 1Q revenue, Australia 20%, Malaysia 15.5%, and other markets 1.8%.

Income and Occupancy

Despite headwinds from currency depreciation (notably the A\$), and divestment of Wisma Atria office strata units, SGREIT has largely offset these impacts through stronger contributions from Singapore retail and Malaysian properties. Excluding the effects of divestments, NPI would have increased by 1.3% year-on-year.

Debt Profile and Capital Management

A key positive development is the proactive refinancing and extension of the debt maturity profile:

• SGREIT refinanced its 6-year A\$100 million unsecured sustainability-linked debt facility ahead of its 2026 maturity.
• It also drew down \$200 million from 5-year unsecured sustainability-linked club debt facilities, refinancing debt due in 2026 and 2027.
• The average debt maturity now stands at a healthy 3.9 years.
• The fixed/hedged debt ratio is 77%, and the interest cover ratio is 2.9x.

Importantly, the \$100 million perpetual securities (3.85% coupon) issued in 2020 are expected to be redeemed in December 2025 using proceeds from new perpetual securities issued in October 2025 at a lower fixed rate of 3.25% per annum. This refinancing is likely to reduce future interest costs, supporting distributable income and potentially boosting DPU.

Leasing and Portfolio Strength

• Weighted Average Lease Expiry (WALE) is long at 7.4 years by GRI, with major expiries well spread out, limiting near-term income risk.
• Master/anchor leases, especially for major assets like Ngee Ann City (Singapore), The Starhill and Lot 10 (Malaysia), and key Australian sites, are secured until at least 2032-2043, with periodic rent reviews and step-ups.
• Retail occupancy is robust at 97.6%, with Singapore and Malaysia assets effectively fully occupied.

Asset Enhancement Initiatives: Value Creation in Progress

• Wisma Atria: Upgrading the taxi stand (S\$0.8 million investment) to enhance arrival experience, completion expected in 2026.
• Level 7 Car Park Conversion: Repurposing part of Wisma Atria’s car park into commercial (office) space at Ngee Ann City, adding 3,250 sq ft of productive NLA with an ROI above 8%.
• Myer Centre Adelaide: UNIQLO has expanded its flagship store into a duplex, nearly doubling its size to 19,000 sq ft. However, the planned gym (Derrimut 24:7) on Level 5 has been aborted due to the lease not being signed, and management is exploring alternative options for this space.

Operational Metrics: Positive Retail Trends

• Wisma Atria Retail: Shopper traffic was stable (+0.1% y-o-y), but tenant sales jumped 7.5% y-o-y, reflecting strong trade performance and successful tenant remixing.
• New and unique tenants added across the portfolio (Joocyee, LeTAO le chocolat, Sugarfina, Cinnabon, Montigo, etc.) are expected to refresh the tenant mix and drive future footfall.
• High-profile marketing activities and pop-ups (e.g., Rituals Cosmetics, TOD’S, K-pop star JENNIE’s Rubify) continue to draw traffic and boost asset branding.

Macroeconomic and Sector Outlook

• Singapore: Prime Orchard Road retail rents grew for the thirteenth consecutive quarter (+2.4% y-o-y in 3Q25), underpinned by tourism recovery, resilient office demand, and new attractions boosting visitor arrivals (expected 17-18.5 million in 2025).
• Australia: Retail markets show mixed trends: Adelaide’s CBD retail vacancy rose to 9.3% but is positioned for rent growth due to tight supply and anticipated rate cuts; Perth’s CBD retail vacancy improved to 21.7% amid higher footfall and stronger demand.
• Malaysia: GDP and retail sales growth remain supportive for the REIT’s assets there.

Potential Price-Sensitive Information & Shareholder Actions to Watch

• Debt Refinancing at Lower Rates: The planned redemption of \$100 million perpetual securities (3.85%) with new perpetuals at 3.25% could reduce financing costs and enhance DPU. This financial engineering is positive for distributions and could lift share price sentiment.
• Asset Enhancement Returns: The conversion of car park space to commercial use at Ngee Ann City is expected to deliver >8% ROI, directly adding to income with minimal capex outlay.
• Anchor Tenant Expansion: The UNIQLO duplex expansion at Myer Centre Adelaide strengthens the asset’s draw and rental profile, offsetting some concerns from the aborted gym lease on Level 5. Management’s flexibility to reconfigure assets to meet market demand is a clear positive.
• Robust Lease Expiry Profile: A long WALE protects near-term income and offers stability amid macro uncertainty.
• Portfolio Resilience: Despite some softness in Australian office, overall portfolio occupancy and diversification remain strong, supporting stable income streams.

Conclusion: Share Price on Firm Ground with Upside Catalysts

Starhill Global REIT’s resilient Q1 performance, proactive capital management, and ongoing asset enhancement initiatives collectively strengthen its defensive qualities and income visibility. With refinancing set to lower interest costs and fresh asset upgrades poised to drive higher returns, the REIT is well-positioned to capitalise on the ongoing retail recovery in Asia Pacific. Investors should monitor the successful execution of these initiatives as potential share price catalysts in the coming quarters.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer or solicitation to acquire or dispose of any securities. Please consult your financial advisor before making any investment decisions. All information is based on publicly available sources and the latest company disclosures as of the date of writing. The author assumes no responsibility for errors or omissions.

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