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SGREIT has been supported by
the resilient performance of its
Singapore and Malaysia portfolios.
Looking ahead, the REIT has been
reinvesting and rejuvenating its
assets while continuing to seek out
new opportunities.
right
/
TAN SRI DATO’ (DR)
FRANCIS YEOH SOCK PING
CHAIRMAN
left
/
MR HO SING
CHIEF EXECUTIVE OFFICER
& EXECUTIVE DIRECTOR
We are pleased to report that Starhill
Global REIT (SGREIT) has delivered
a resilient financial performance
despite a challenging global
economic environment. Distribution
Per Unit (DPU) for FY 2016/17 was
4.92 cents. This translates to a yield
of 6.31% based on SGREIT’s closing
unit price of 78 cents on 30 June 2017,
which is approximately 4% higher than
the 10-year Singapore Government
bond yield as at 30 June 2017.
CHALLENGING GLOBAL ECONOMIC
ENVIRONMENT
Global economic growth was weak
for most of 2016. Apart from structural
adjustments in many countries
to reduce overcapacity, we also
witnessed geopolitical events such
as Brexit, the civil war in Syria and
the US presidential election. In 2017,
the global economy started to
improve on the back of a broad-
based recovery.
Singapore’s economic performance
in 2016 reflected these global
challenges, recording a growth of just
1.8%. A rebound in the manufacturing
sector in 1H 2017 helped the city
state avoid a technical recession.
Islandwide retail occupancy rate has
been stable at slightly above 92% in
1Q 2017. Although tourist arrivals for
2016 rose 8% and tourism receipts
rose 13% to reach S$24.6 billion, retail
and wholesale trade continued
to be soft, registering a growth of
0.6%. The retail landscape remained
challenging amidst rising labour costs,
competition from new retail malls
and e-commerce.
DELIVERING SUSTAINABLE RETURNS
Notwithstanding the macroeconomic
weakness, occupancy rate for SGREIT’s
portfolio stood at a healthy 95.5% as
at 30 June 2017. For FY 2016/17,
SGREIT’s revenue and net property
income (NPI) inched down by 1.5%
and 2.0% respectively over the
corresponding period last year.
This was largely supported by
the resilient performance of its
Singapore Properties and Malaysia
Properties, but was offset mainly by
the disruption in revenue largely from
the mall repositioning in China, asset
redevelopment in Australia, weaker
office performance, as well as loss of
income from the divestments in Japan.
SGREIT’s largest market, Singapore,
which contributed 62.2% of its revenue
in FY 2016/17, continued to benefit from
higher rents secured from the master
tenant at Ngee Ann City Property
(Retail) from June 2016. The Singapore
retail portfolio, which comprises
Ngee Ann City Property and Wisma
Atria Property, achieved a stable
occupancy rate of 99.2% as at
30 June 2017. Revenue and NPI for
the Singapore Properties was up
0.2% and 0.3% respectively over the
corresponding period last year. This
was despite lower occupancies for
the Singapore office portfolio of
92.9% on the back of islandwide
oversupply, the exit of some oil and
gas tenants, as well as generally softer
trading conditions.
Wisma Atria Property (Retail) recorded
a resilient performance as it achieved
positive rental reversion of 0.5% while
tenant sales and shopper traffic for
FY 2016/17 inched marginally lower by
2.3% and 0.4% yoy respectively.
Australia, which accounted for 22.7%
of SGREIT’s revenue in FY 2016/17,
recorded 1.6% and 4.9% contraction
in revenue and NPI. This was partly
due to the disruption in income from
the redevelopment of Plaza Arcade
and lower contribution from Myer
Centre Adelaide, but was partially
offset by higher occupancy at David
Jones Building and appreciation
of the Australian dollar against the
Singapore dollar. Occupancy in
Australia improved to 91.1% as at
30 June 2017 and continued to be
supported by long-term leases with
its two main tenants, David Jones
Limited and Myer Pty Ltd. Myer Centre
Adelaide’s office occupancy was
affected by the softer Adelaide office
market but contributes less than 1%
of SGREIT’s revenue for FY 2016/17.
Looking ahead, contribution from
Australia in the coming financial year
will benefit from the next upward-only
rent review with long-term tenant
David Jones Limited in August 2017.
The Malaysia portfolio comprises
Starhill Gallery and Lot 10 Property
along Jalan Bukit Bintang in Kuala
Lumpur. In total, these accounted
for 12.6% of SGREIT’s revenue in
FY 2016/17. For FY 2016/17, revenue
and NPI for the Malaysia Properties
rose 6.0% and 6.4% respectively over
the corresponding period last year,
mainly as a result of the rental
step-up of approximately 6.7% on
its master leases from June 2016.
DEAR UNITHOLDERS,
OVERVIEW
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