Starhill Global REIT: FY2025/26 DPU higher despite asset divestment

Higher FY2025/26 DPU despite asset divestment

Starhill Global REIT (“SGREIT”) reported full year FY2025/26 DPU of 3.68 Singapore cents, up 0.8% year-on-year. Distributions to Unitholders rose 1.9% year-on-year to S$85.3 million. 

Based on the closing unit price of S$0.53 as at 7 August 2026, this translates to distribution yield of 6.9%.

Gross revenue increased 0.2% year-on-year to S$192.5 million in FY25/26, while net property income (NPI) rose 0.1% year-on-year to S$150.3 million. 

SGREIT divested 14 strata units in Wisma Atria Office in FY2024/25, reducing its strata title interest in Wisma Atria to 64.11%.

Excluding the impact of this divestment, FY25/26 NPI would have grown 1.2% year-on-year. On a like-for-like basis, 2H FY25/26 NPI would have increased 2.3% year-on-year. 

Overall performance was better in 2H FY25/26. The increase in NPI was mainly driven by stronger contributions from Ngee Ann City and Lot 10, as well as the appreciation of the Malaysian ringgit and Australian dollar against the Singapore dollar. 

SGREIT had lower contributions from Wisma Atria Retail, Myer Centre Adelaide Office and its China property portfolio, along with a higher rental arrears provision.

Distributable income grew faster than NPI, up 1.7% year-on-year to S$89.3 million for FY25/26, helped by lower net finance costs and lower legal fees. About S$2.5 million of 2H FY25/26 distributable income was retained for working capital purposes (2H FY24/25: S$2.0 million).

Unitholders can expect to receive the 2H FY25/26 distribution of 1.88 cents per unit on 24 September 2026, with the record date falling on 6 August 2026 at 5.00pm. The distribution reinvestment plan (DRP) will apply, with the issue price of new units to be announced on or around 6 August 2026.

Healthy balance sheet provides flexibility

Starhill Global REIT has confirmed a S$70 million unsecured sustainability-linked committed revolving credit facility.  The revolving credit facility will be drawn in October 2026. The full amount is expected to refinance the outstanding S$70 million unsecured medium-term notes maturing in October 2026.   

Separately, an unsecured sustainability-linked term loan facility of A$70 million was confirmed.  This facility will be utilised to settle the A$ term loan maturing in FY27/28. 

In addition, Starhill Global REIT has S$350 million in available long-term committed and undrawn revolving credit facility (RCF).  This is sufficient to cover the remaining debt maturities through FY28/29. 

This gives the REIT some flexibility to manage upcoming maturities while preserving capacity for acquisitions and asset enhancement initiatives.

SGREIT maintained a relatively stable balance sheet, with gearing at 35.8%, compared with 35.5% in the preceding quarter. 

Interest coverage stood at 3.1x, higher than the peer average of 2.7x and comfortably above the regulatory minimum of 1.5x.

Average debt maturity was 3.3 years. Starhill Global REIT has addressed the debt maturing till FY28/29, reducing the refinancing risks.     

As at 31 March 2026, 80% of debt was fixed or hedged, providing protection against higher interest rates.

With easing interest rates in 2026, Starhill Global REIT could benefit from lower interest expenses as hedges roll off over FY2026 and FY2027.   The three-month compounded SORA (Singapore Overnight Rate Average) is still at a comparatively low level, at 1.15% in July 2026.   

Reflecting the healthy balance sheet, Fitch Ratings affirmed Starhill Global REIT’s credit rating at “BBB” with a stable outlook.

Singapore and Malaysia assets outperformed

Malaysia continued to outperform the rest of the portfolio. Revenue from the Malaysian properties increased 7.6% year-on-year to S$30.9 million, while NPI rose 7.7% to S$30.0 million. The improvement was mainly driven by rental step-ups at Lot 10 and the stronger Malaysian ringgit. 

Singapore remains the largest contributor, accounting for 61.5% of FY25/26 revenue. However, Singapore NPI declined 1.0% year-on-year to S$94.4 million, primarily due to the loss of income from the divested Wisma Atria office units and lower Wisma Atria retail contribution during tenant transition. This was partly offset by stronger Ngee Ann City performance and lower operating expenses. 

Australia remained a mixed performer. FY25/26 revenue increased 0.5% to S$40.3 million, but NPI declined 1.5% to S$24.9 million due mainly to a lower contribution from Myer Centre Adelaide office and higher operating expenses. On a positive note, the long-running Myer arbitration case concluded in SGREIT's favour, with the tribunal ordering Myer Pty Ltd to pay part of the legal and professional fees incurred by the landlord. Payment was received in July 2026.

The Others segment, comprising the Japan and China properties, saw the sharpest decline, reflecting lower contribution and higher operating expenses at the China Property.

 Portfolio performance improved on positive leasing momentum   

Portfolio occupancy improved to 97.2% as at 30 June 2026, from 94.6% as at 30 June 2025.  Singapore, Malaysia, Japan and China all recorded 100% committed occupancy. 

The Singapore portfolio was fully committed as at 30 June 2026. This provides a strong base for earnings, particularly given the limited new retail supply along Orchard Road.

The manager highlighted that Orchard Road prime retail rents increased 2.1% year-on-year in 2Q 2026, while there is no new retail supply is expected along Orchard Road in 2026 and 2027. This should provide a supportive backdrop for Wisma Atria and Ngee Ann City. 

Committed occupancy in Australia improved to 93.3% as at 30 June 2026.   At Myer Centre Adelaide, occupancy improved to 90.6% as at 30 June 2026, from 88.6% in the preceding quarter. 

In Australia, SGREIT has managed to backfill the office space at the Adelaide office property. To recap, around one-third of the office space at the Adelaide office property was unfilled after Technicolor vacated. 

University Senior College commenced a 10-year lease covering approximately 42,000 sq ft in July 2026, while Synergy Construct is scheduled to commence its lease in 2Q FY26/27 for approximately 11,700 sq ft. 

SGREIT's portfolio was valued at S$2.73 billion as at 30 June 2026, down 0.9% year-on-year.  Excluding the Wisma Atria Office strata units divested during the year, portfolio valuation would have risen 0.2% year-on-year.

Weighted average lease expiry (WALE) remains high at 7.0 years, providing higher income visibility than the industry average.  The long-dated lease structure remains unique to SGREIT and could be attributed to the new Toshin master lease which runs to June 2043.  To recap, master and anchor leases account for 54.9% of portfolio GRI.  

Updates on asset enhancement at Wisma Atria 

In FY25/26, shopper traffic increased by 0.4% year-on-year while tenant sales decreased by 3.7% year-on-year. The decline in sales was largely due to tenant transitional downtime from the Level 2 façade units, ahead of the introduction of new luxury tenants.

The incoming tenants include Christian Louboutin, Chow Tai Fook and Kwanpen, which should help refresh the retail mix once the affected units are fully operational.

The manager is also undertaking façade enhancement works at Levels 2 and 3 to create prominent double-height frontages and improve tenant visibility. Most structural and lighting works have been completed and the project should complete by end-2026. 

Maintain BUY and target price at S$0.65.

Starhill Global REIT is trading at S$0.53, implying FY2027E distribution yield of 6.9%.  In comparison, Lendlease Global Commercial REIT and Suntec REIT are trading at FY2026E distribution yield of 6.4% and 5.1%, respectively.   Starhill Global REIT is offering investors a higher, stable distribution yield.

Based on the reported net asset value (NAV) of S$0.71 per unit as at 30 June 2026, SGREIT is trading at P/B ratio of 0.75, below the sector average P/B of 0.9x.   

Starhill Global REIT on Beansprout’s REIT Income Pot framework

We apply Beansprout's REIT screening framework, covering DPU growth, gearing, and yield versus risk-free rates - to assess whether Starhill Global REIT (“SGREIT”) is suitable for an income-focused portfolio.

Check #1:  DPU growth 

FY2025/26 DPU of 3.68 cents was 0.8% higher year-on-year, despite the loss of income from the Wisma Atria office divestment. On a like-for-like basis, NPI grew 1.2% year-on-year.

Check #2: Gearing ratio at an acceptable level

Aggregate leverage stood at 35.8% as at 30 June 2026, well within Beansprout's preferred gearing threshold. 

Interest coverage ratio of 3.1x and a well-balanced debt profile further support balance sheet resilience.   SGREIT has put in place the refinancing plan for debt maturing in the next  18 to 24 months.

Check #3: Distribution yield remains attractive

FY2025/26 DPU of 3.68 cents implies a distribution yield of 6.9% (7 Aug closing price S$0.53). 

Currently, Singapore Savings Bond is offering about 2.1% and 6-month T-bill is offering around 1.6%. 

SGREIT is trading at a spread of 4.8% to 5.3% over risk-free rates.  This is above Beansprout's preferred minimum spread of about 3 percentage points.  

What do we watch out for? 

SGREIT passes the checks for the Income Pot framework.  We would watch for the recovery in retail sales at Wisma Atria, Singapore retail rental growth, occupancy at Myer Centre Adelaide, and progress on acquisitions and capital recycling. 

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Related links:

• Starhill Global REIT share price and share price target
• Starhill Global REIT dividend history and forecast

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