Starhill Global REIT 1H FY25/26 Financial Results: Stability Amid Strategic Transitions

Starhill Global REIT (SGREIT) reported its financial results for the first half of FY2025/26, highlighting resilient performance despite ongoing portfolio reshaping and a challenging macroeconomic environment. The REIT focuses on mid- to high-end retail and office assets across six key Asia Pacific cities, with a diversified portfolio valued at approximately S\$2.8 billion.

Key Financial Metrics and Performance

*Previous half/year figures inferred as not disclosed separately.

Dividends

SGREIT maintained a stable Distribution Per Unit (DPU) of 1.80 cents for 1H FY25/26, unchanged from the previous half and the same period last year. This demonstrates the REIT’s commitment to delivering steady returns to unitholders despite headwinds.

Portfolio and Operational Highlights

• Portfolio Value: Approximately S\$2.8 billion, diversified across Singapore, Australia, Malaysia, China, and Japan.
• Committed Portfolio Occupancy: 91.9% (expected to rebound to 96.5% following new leasing in China).
• Weighted Average Lease Expiry (WALE): 7.4 years by gross rental income (GRI), offering high income visibility.
• Master/Anchor Leases: Represent 53.4% of GRI, reducing short-term leasing risks.
• Top 10 Tenants: Account for 62.5% of portfolio GRI, demonstrating tenant concentration but with mostly high-quality, long-term tenants.

Notable Corporate Actions and Events

• Divestment: Some strata units at Wisma Atria Office were divested, resulting in a slight reduction in NPI, but offset by higher contributions from other assets.
• Fundraising: Issuance of S\$100 million perpetual securities at 3.25% to redeem existing securities at 3.85%, lowering financing costs.
• Asset Enhancement: Initiated works at Myer Centre Adelaide’s food court and amenities (A\$6 million capex); Wisma Atria taxi stand upgrades underway.
• Leasing Recovery: Substantially filled vacancies in Adelaide Office and China; new long-term lease secured in Adelaide, and a new tenant signed for the China property.

Macroeconomic and Market Outlook

• Singapore’s retail and office market outlook is positive, supported by tourism recovery, resilient demand for prime space, and limited new supply in core shopping belts through 2027.
• Australia’s retail outlook is buoyant, with rent growth expected in prime CBD locations, particularly in Perth and Adelaide.
• Malaysia and other markets are stable, with no significant negative events reported.

Balance Sheet and Capital Management

• Gearing remains healthy at 35.4%, with about 80% of debt fixed or hedged, mitigating interest rate volatility.
• Interest cover ratio is strong at 2.9x, with sufficient liquidity and undrawn facilities to cover near-term maturities.
• Net Asset Value (NAV) per unit stands at \$0.72, with units trading at a 17.4% discount to NAV as at 31 December 2025.

Exceptional Items and Risks

• China Risk: The termination of Markor’s lease created a temporary vacancy and required a rental arrears provision, but the property’s portfolio valuation impact is minor (<1%).
• FX Exposure: About 38% of revenue is foreign currency-denominated, with partial natural hedges and FX contracts in place.
• Legal/Other Risks: No significant legal disputes or natural disasters reported.

Dividend Timetable

• Distribution payment date for 1H FY25/26 is 27 March 2026, for unitholders on record as of 6 February 2026.

Conclusion & Recommendations

Starhill Global REIT delivered stable financial results in 1H FY25/26, maintaining its DPU and occupancy rates despite portfolio transitions and macroeconomic pressures. The REIT’s proactive asset management, healthy balance sheet, and long lease structure underpin its resilience. The trading discount to NAV may offer some upside potential, especially if asset enhancement and re-leasing efforts drive incremental NPI growth in the coming periods.

• For Current Holders: Maintain position. The REIT’s stable distribution, manageable gearing, and positive market outlook support a hold recommendation. Monitor execution of asset enhancements and lease-up of vacated spaces for further upside.
• For Non-Holders: Consider accumulating on dips. The REIT’s units are trading at a notable discount to NAV, and the risk-reward appears attractive for income-focused investors seeking exposure to prime Asia Pacific retail and office assets. However, be mindful of ongoing tenant risk in China and any delays in asset enhancement ROI.

Disclaimer: This analysis is based solely on information disclosed in the Starhill Global REIT 1H FY25/26 report. It does not constitute investment advice. Investors should perform their own due diligence and consider their risk tolerance before making any investment decisions.

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