30 / 152
PROPERTY PORTFOLIO
SUMMARY
Starhill Global REIT’s portfolio comprises 11 mid- to high-end
retail properties located in six key cities in five countries
across the Asia Pacific region. These properties with strong
fundamentals are strategically located in good to prime
locations. The resilience of the portfolio is demonstrated
by high occupancies since listing in 2005.
Notes:
(1)
CBRE, How Global is the Business of Retail, 2017
(2)
Urban Redevelopment Authority Singapore,
Release of 2
nd
Quarter 2017 Real Estate Estimates,
28 July 2017
(3)
CBRE MarketView Singapore, Q2 2017
DIVERSIFIED RETAIL AND OFFICE
PORTFOLIO
Singapore is Starhill Global REIT’s
largest revenue contributor at 62.2%
in FY 2016/17. Australia is the second
largest revenue contributor at
22.7%, followed by Malaysia at 12.6%.
China and Japan accounted for the
remaining 2.5% of revenue in
FY 2016/17. The retail and office
components contributed 86.9% and
13.1% of the Portfolio’s FY 2016/17
revenue respectively.
As at 30 June 2017, the top 10 tenants
of the Portfolio contributed 56.4%
of the Portfolio’s gross rent. The top
four tenants were mainly master
or long-term leases, namely Toshin
Development Singapore Pte. Ltd.
(Toshin), YTL Group, Myer Pty Ltd and
David Jones Limited, accounting for
20.8%, 14.0%, 6.8% and 4.5% of the
Portfolio’s gross rent respectively. No
other tenant accounted for more than
3% of the Portfolio’s gross rent.
RESILIENT LEASE PROFILE
Master leases and long-term leases
provide rental income stability with
potential upside. Toshin’s lease at
Ngee Ann City Property until June 2025
incorporates a rent review every
three years, with the next review due
in June 2019. The last rent review for
the lease in June 2016 concluded with
an increase of about 5.5% in base
rent for the three years commencing
8 June 2016. The Malaysia Properties
are under master leases with
Katagreen Development Sdn Bhd,
an indirect wholly-owned subsidiary
of YTL Corporation Berhad, which
were extended for a third three-year
term commencing 28 June 2016 at
approximately 6.7% above the annual
rent from the previous three-year
term. The David Jones Building in
Perth, Australia has a long-term lease
expiring in 2032 with anchor tenant
David Jones Limited, with upward-only
rent reviews every three years. The
recent lease review with David Jones
secured a 6.12% rental uplift with effect
from 1 August 2017. Myer department
store has a long-term anchor tenant
lease at Myer Centre Adelaide expiring
in 2032 which provides for an annual
rent review. Collectively, the master
leases and long-term leases for the
Group accounted for approximately
46.7% of the Portfolio’s gross rent as at
30 June 2017.
The Manager actively manages the
remaining leases of the Portfolio, which
are on a short- to medium-term basis.
The weighted average lease term by
gross rent for new leases signed in
FY 2016/17 is 3.2 years regardless of
lease commencement dates. The
proportion of gross rent attributed
to these leases is approximately 14%
of the Portfolio’s committed monthly
gross rental income as at 30 June 2017,
excluding retail turnover rent.
For the Singapore Properties, besides
the Toshin master lease, earnings are
derived from retail leases in Wisma
Atria Property and Ngee Ann City
Level 5, as well as office leases which
are generally contracted for a three-
year period. The Japan Properties
generally have tenancies with three-
to five-year lease terms while the
specialty retail units in the David Jones
Building and Plaza Arcade in Perth,
as well as the Myer Centre Adelaide
in Adelaide generally have one- to
five-year lease terms.
As at 30 June 2017, the weighted
average lease term expiry of the
Portfolio is 6.6 years and 4.9 years
by NLA and gross rent respectively.
STRONG PERFORMANCE BY THE
SINGAPORE PROPERTIES
The Singapore Properties consist of
both retail and office spaces, which
enjoy a combined occupancy of 96.8%
as at 30 June 2017. Prime retail spaces
in Orchard Road continue to attract
international retailers and new-to-
market brands looking to launch their
products in the region. According to
CBRE, Singapore was ranked among
the top target markets in the world for
global retailers in 2016
(1)
. In FY 2016/17,
Wisma Atria Property recorded centre
sales of S$187.3 million and attracted
shopper traffic of 25.2 million. Amidst
the soft retail climate, the retail
portfolio in Singapore sustained a
high occupancy of 99.2% as at 30 June
2017 and achieved 0.5% positive rental
reversion for leases committed in
FY 2016/17.
The office portfolio in Singapore
registered an occupancy of 92.9%
as at 30 June 2017. The portfolio
has been affected by a softer
trading environment and islandwide
competition. As at the second quarter
of 2017, islandwide public and private
office pipeline is approximately 7.3
million sq ft till 2021
(2)
. While the leasing
market has improved, most of the
leasing activity and interest were
concentrated on developments in the
Core CBD
(3)
.
28
STARHILL GLOBAL REIT ANNUAL REPORT FY 2016/17