10 things I learned from the 2019 Starhill Global REIT AGM

Starhill Global REIT (SGREIT) owns a property portfolio of retail malls and office buildings located in Singapore, Malaysia, Australia, China, and Japan. As at 30 June 2019, its portfolio was valued at S$3.06 billion.

Amid a challenging retail environment, SGREIT’s revenue and net property income (NPI) have been slowly falling since FY2016. As a result, SGREIT’s unit price has been trending sideways over the last four years.

As a long-timer unitholder, I attended SGREIT’s recent annual general meeting to learn about the management’s plans to reboot the REIT’s performance and navigate the tough times ahead.

Here are 10 things I learned from the 2019 Starhill Global REIT AGM:

1. Gross revenue fell 1.2% year-on-year to S$206.2 million in FY2019. Likewise, NPI fell 1.7% y-o-y to S%159.4 million. This was mainly due to lower contributions from Wisma Atria and the weakness of the Australian dollar against the Singapore dollar. Two malls – Wisma Atria and Ngee Ann City – contributed 61.7% of SGREIT’s gross revenue.

Source: Starhill Global REIT 2019 annual report

2. Distributable income fell 1.7% y-o-y to S$101.3 million, while DPU fell 1.5% y-o-y to 4.48 cents. Based on SGREIT’s FY2019 DPU and closing share price of 72 cents (as at 22 November 2019), its distribution yield is 6.2%, which is higher than other comparable retail/commercial REITs in Singapore.

3. Portfolio occupancy improved to 96.3% as of 30 June 2019, up from 94.2% a year ago. The improvement was mainly due to a recovering office portfolio which saw occupancy rates improve to 87.9% from 73.2% a year ago. In particular, office occupancy at Myer Centre Adelaide more than doubled to 75.2%. SGREIT’s retail portfolio remained resilient with a 97.8% occupancy rate. Overall weighted average lease expiry by net lettable area is 9.4 years.

Source: Starhill Global REIT 2019 annual report

4. Gearing ratio increased slightly to 36.1% as at 30 June 2019 from 35.5% a year ago. Average cost of debt is 3.28% and 90% of SGREIT’s debt is hedged at fixed interest rates. The average debt maturity profile is 2.8 years.

5. SGREIT’s Kuala Lumpur mall, Starhill Gallery, is undergoing asset enhancement works that will revamp the property’s interior and convert its top three floors into 160 hotel rooms operated by JW Marriot. CEO Ho Sing said that the hotel extension would help boost footfall to the retail mall. The project is expected to cost RM175 million (S$58 million) and be completed around July 2021.

6. Chairman Tan Sri Dato’ Francis Yeoh said that the management is pursuing a deal to buy over the remaining 25.8% stake at Wisma Atria from Isetan Singapore. The management has approached Isetan every 3-4 years on the possibility of a sale but has been unsuccessful so far. He added that Isetan Singapore isn’t doing well and dilutes the average rent at Wisma Atria by leasing space to tenants at a lower rate than SGREIT. The chairman revealed that a major hotel group had already approached the management about the possibility of adding a hotel component to Wisma Atria and owning 100% of the property would give SGREIT the opportunity to explore that option. Developing a brand-new hotel from the ground up would normally take years but refurbishing an existing building would take less time. Coupled with its prime location along Orchard Road, Wisma Atria would be an attractive site for a premium hotel operator.

7. CEO Ho Sing warned that a Wisma Atria acquisition would not be immediately yield accretive; Isetan Singapore generates a property yield of just 1.5% at Wisma Atria compared to 6.3% for SGREIT. However, he is confident that the rents will match SGREIT’s in 2-3 years and a potential acquisition would be accretive over the long term.

8. A unitholder highlighted that China and Japan only amounted to 2.3% of SGREIT’s gross revenue and asked if the management was looking to divest its assets there. The CEO confirmed that they are looking to sell the properties in China and Japan at the right valuation, and focus on the core markets of Singapore, Malaysia, and Australia.

9. Another unitholder asked if the management would consider entering Hong Kong once the protests die down. The chairman said that Hong Kong is an extremely competitive market and property prices there are still too high despite the ongoing protests; a single carpark lot was recently sold in the city for almost US$1 million. SGREIT has no plans to enter Hong Kong.

10. Chairman Tan Sri Dato’ (Dr) Francis Yeoh can add another accolade to his long list of titles. In October 2019, he was awarded the Knight Commander of the Most Excellent Order of the British Empire by Her Majesty Queen Elizabeth II. A few unitholders sportingly addressed the chairman as ‘Sir’ at the AGM, while one joked that it was a quite a mouthful to greet the chairman before he could ask his questions.

Liked our analysis of this AGM? Click here to view a complete list of AGMs we’ve attended »

Adam Wong

Adam Wong is the editor-in-chief of The Fifth Person and author of the national bestseller Lucky Bastard! which made the Sunday Times Top 10 Bestseller's List in 2009 and Value Investing Made Easy which made the Kinokuniya Business Bestseller's List in 2013. In 2010, he appeared on U.S. national television on the morning show The Balancing Act. An avid investor himself, Adam shares his personal thoughts and opinions as he journals his investing journey online.


  1. Five key points:

    1. There’s a global negative trend when it comes to retail property, it started in the US, and has spread to other places like the UK and Australia. I often walk around shopping centres and count the number of empty units (they’re often well camouflaged). In the US they already have empty malls all over the place. Sure there are some places where they’re doing OK, but the trend is clear. It’s started to happen here in Singapore too!

    2. Retail leases tend to be short. So retail REITs are intrinsically exposed to bigger risks.

    3. The trend towards online retailing is obvious. Just think about how much you might be spending online yourself. Not just that there’s a limit as to how many of the gaps (empty units) can go over to F&B.

    4. Office leases tend to be short (2 years is common), and moving offices is relatively easy to do.

    5. Manufacturing and healthcare facilities are more complex and generally have longer leases, so industrial and healthcare REITs have significantly longer WALE (Weighted Average Lease Expiry). Moving massive capital equipment disrupts operations and comes with high costs, so relocations are rarer.

    About 4 years ago I attended one of the Fifth Person’s training courses with a focus on REITs (I think it was Dividend Machines”). I’ve applied those principles I learned and have done very nicely. I’ve generally avoided REITs with a high proportion of retail and office space. Better to focus on industrial and healthcare REITs, which often perform better as investments over the longer-term than their tenants!

    1. Thanks for sharing, Jonathan. Great insights as always! Glad to know you’ve done nicely for your portfolio after going through Dividend Machines.

      Yes, the retail landscape has indeed shifted. Malls that possess unique qualities that allow them to continue to attract shoppers despite the growth of e-commerce are still around. Mapletree Commercial and VivoCity is a good example. But if not, then the mall faces a tough time staying relevant as we move our shopping dollars online.

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