Starhill Global’s FY17 distributions to be impacted negatively

SINGAPORE (Feb 2): CIMB Research is reiterating its “hold” call on Starhill Global REIT while lowering its target price to 72 cents from 76 cents after the release of the REIT’s 2Q17 results, on expectations of ongoing redevelopment at Plaza Arcade in Perth as well as tenant transition at Renhe Spring Zongbei (RSZ) in China to affect FY17 distributions negatively.

In a Wednesday report, analysts Lock Mun Yee and Yeo Zhi Bin also reduce their estimates for the stock’s FY17 distribution per unit (DPU) to buffer against above effects and higher financing costs.

Noting that occupancy for PA was about 76% in 2Q17, the analysts expect it to trough at 60% as redevelopment works progress. They also project that RSZ is likely to be in the red next quarter as it prepares for handover to Makor in Mar 2017.

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