Starhill Global Reit

Hi,

the following is my outdated views on Starhill since I bought it quite a long time ago...

On the Malaysian Malls
http://wealthbuch.blogspot.com/2009/11/s...ldown.html

On David Jones Building
http://wealthbuch.blogspot.com/2009/12/s...jones.html


I'm vested, initially for technically reasons, then continue for fundamental reasons. My average price is 0.525.

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(13-12-2010, 02:51 PM)Nick Wrote: At 6+% yield, dilution with conversion of CPPU unit in the future and gearing exceeding 30% is this REIT still attractive ?

There's already an amount being paid to the CPPU holders. When they are converted to Starhill Glob units in the future, dividends are still paid to them. The yield shouldn't drop much (if it does) by then, because cash is still being paid to them at the moment anyway.

As a small-time retail unit holder who does not aim to be a substantial shareholder, I'm not that concerned about dilution as long as NAV and dividends yield are not eroded much.

Finally!! I have been waiting for this day for a long long time.

STARHILL GLOBAL REIT ANNOUNCES ASSET REDEVELOPMENT OF WISMA ATRIA

Some quick summary:

1) The first phase of the redevelopment will commence in 1Q 2011 and is expected to complete by 3Q 2012. [That seems to be quite a long redevelopment. I hope impact to current rental would be minimal]

2) Key features include full width steps spanning the facade of Wisma Atria. These steps improve accessibility, and also provide a permanent flood control measure, doing away with mechanical flood barriers. Strategically located ramps and walkways leading to the new shop fronts optimize the pedestrian network from the surrounding malls and the Orchard Road MRT station, elevating the shopping experience.

3) Phase one of Wisma Atria’s asset redevelopment is expected to incur capital expenditure of about S$31 million and generate an additional net property income of approximately S$2.5 million per annum when stabilized, representing a return on investment of approximately 8.0%.

Another reit with Japanese assets, all located in Tokyo. Till date there are no updates from the management, no doubt due to the chaos, power cuts, aftershocks and massive disaster efforts that must be taking place as the latest death toll indicate possibly 10,000 fatalities or more. I can imagine the usually defensive nature of retail being undeniably shaken badly.

With the possibility of nuclear irradiation, the damage is going to be compounded as entire plots of affected lands can even be rendered useless in the severe cases. This is indeed a horrendous catastrophe for the Japanese people. If this triple whammy of earthquake, tsunami and nuclear leak happen in Singapore, I am pretty sure our civil defence force will not be able to handle this.

No damage to any of its properties.

http://info.sgx.com/webcoranncatth.nsf/V...300194D1A/$file/StarhillGbl_UpdateOnJapanQuake_14Mar2011.pdf?openelement

Still no news on their appeal on rental revision against Toshin on NAC's lease ?


Published March 1, 2012

Starhill-Toshin rent case goes to Court of Appeal


Starhill-Toshin rent case goes to Court of Appeal
Independence of valuers is the bone of contention

By GRACE LEONG


A DISPUTE between Starhill Global Reit and its master tenant in Ngee Ann City over whether a process used to set retail rents is still operable has gone before the Singapore Court of Appeal.


The issue is whether the valuers are perceived by the parties as not biased.

- Starhill




At issue is whether the independence of the international valuers that are part of a rent review process has been compromised by alleged bias. This was after Toshin Development Singapore allegedly 'secretly' approached all eight valuers and hired seven in 2010 to do valuations for a period that included a new rental term beginning June 8, 2011, several months before a joint rent review exercise was to have started.
Toshin, a unit of Takashimaya, leases more than 225,000 sq ft in Ngee Ann City, which it then sub-leases to luxury brands such as Chanel, Louis Vuitton, Burberry and Tiffany & Co.
In opening arguments before the appellate court yesterday, Senior Counsel Alvin Yeo of WongPartnership and Starhill's lawyer argued that Toshin had 'in a calculated manner, undermined the rent review mechanism such that it is no longer operable to provide parties with a rent that is objectively determined'.
Starhill would be 'unfairly prejudiced' because Toshin 'knew exactly the prevailing market rent which the valuers would provide ... based on their valuation report in 2010' and would 'be in the position to choose and manipulate the appointment of valuers in their favour', Mr Yeo said.
As such, Starhill wants the court to replace the existing rent review process with another that will 'provide parties with the objective and unbiased evidence of the prevailing market rental of the premises,' he said.
'This can be done, for example, by the court ordering an assessment where parties can call evidence from local valuers,' Mr Yeo said.
Starhill's appeal comes after its request for the court to determine the prevailing market rent of the Toshin lease was rejected in January by High Court Justice Lai Siu Chiu.
In her grounds of decision, she said she had her 'reservations about the legitimacy of this remedy' as it 'would amount to the court substituting its own terms for those in the lease agreement, which was a contract made between the parties'.
She also found that the valuers were 'not involved in a conflict of interest' and that Toshin had 'not obtained any unfair advantage by engaging seven of the eight valuers in 2010'.
But Starhill disagreed. 'Regardless whether the valuers have a conflict of interest, the issue is whether the valuers are perceived by the parties as not biased,' it said.
But Toshin, which is represented by Senior Counsel Cavinder Bull of Drew & Napier LLP, argued that Starhill has 'no legitimate basis to derail the contractual rent review machinery'.
Mr Bull pointed out that five valuers have 'confirmed in writing that they will not have any conflict of interest and that nothing has compromised their ability to objectively carry out professional, fair and independent valuations'.
In hiring the valuers in 2010, Toshin wanted to gauge how rentals had moved in light of a nearly 20 per cent jump in annual rents to $33.9 million at the last review in 2008, and in the aftermath of the financial turmoil later that year, as well as the opening of new shopping malls in Orchard Road.
'This was so that it could estimate the possible impact on its business (eg, sub-tenants' rentals could be affected),' Toshin said. 'Its head office in Japan also needed accurate information for preparing earnings forecasts to shareholders, and there was heightened scrutiny on Toshin's rental rates due to the large hike in 2008.'
Furthermore, Mr Bull argued that Toshin could not demonstrate 'a live conflict of interest' because 18.5 to 19 months had elapsed since most of the valuations were carried out in 2010.
'The price of a three-year lease transacted in June 2010 is not the same as the price of a two-year lease transacted in June 2011; they are based on two different sets of information and circumstances that exist on the two valuation dates, which are a year apart,' he said.

"Toshin, a unit of Takashimaya, leases more than 225,000 sq ft in Ngee Ann City in annual rents to $33.9 million at the last review in 2008 "

33.9/225,000 sq ft/12=S$12.55 . It is too cheap for rental at any part of Ochrad road, let alone retail space in NAC. Believe the rental should be more than S$30.00 per sq ft.
The new lease of this property should bring in more than double of what Starhillis geeting now from the old lease.

DBS ups Starhill Global target price DBS Vickers has raised its target price for Starhill Global Real Estate Investment Trust to S$0.75 from S$0.71 and has retained its 'buy' rating, citing higher rents from its Singapore and Malaysian shopping malls.

Starhill Global units were 0.8 percent higher at S$0.62, and have risen 11 percent since the start of the year, compared to the FT ST Real Estate Investment Trust's <.FTFSTAS8670> 10 percent gain.

After upgrading works are completed on Starhill's Singapore mall Wisma Atria in the third quarter, DBS expects about 20 percent of the property's net leaseable area to see a 50 percent rise in rents.

Starhill's master lease with Malaysia's Katagreen Development Sdn Bhd, which makes up 17 percent of its gross revenue, is expected to see a rent increase of 7 percent next year, which should help lift the REIT's distribution per unit, DBS said.

Source: Reuters

Rental @12.55 PSF give an annual rental of S$33.9 millions.Believe even double the rental to 25.10 PSF is still below market price, it will also double the annual rental to 67.8 M. This will increase dpu to more than 5.5 cents.

(05-06-2012, 10:42 PM)Stocker Wrote: Rental @12.55 PSF give an annual rental of S$33.9 millions.Believe even double the rental to 25.10 PSF is still below market price, it will also double the annual rental to 67.8 M. This will increase dpu to more than 5.5 cents.

I wonder if this NAC rental jump upon the renewal of the Toshin lease will really materialise in 2013. The management seems to be rather quiet on this front, which is weird because you would generally expect them to beat drums and blow trumpets about such good news. Could either be that we investors are missing something important (i.e. calculating something wrongly) or that the lawsuit prevents them from making further comments about the NAC rent issue. Hope it is the latter....

Believe YTL prefers to lie low on this issue until they exercise their CPU in June 2013 to cross the 30% mark , YTL has a white wash clause to excuse them from making a MO, after they cross the 30 % holding, they can buy directly from the open market. Now they cannot do it because if they cross 30%, they would have to make a MO.
It is very clear cut case that the new tenancy agreement will start with new rental at today's market price , not that of 2001.
If Toshin disagree with the new rental rate, Toshin will have to move out from NAC. In today's market condition , tenants are at the mercy of the landlords, but not the other way round.