Category: StarHill
StarHill – SGX
Further to the announcement dated 22 June 2009 made by YTL Pacific Star REIT Management Limited, as manager of Starhill Global Real Estate Investment Trust (“Starhill Global REIT” and as manager of Starhill Global REIT, the “Manager”), in connection with the proposed fully underwritten renounceable rights issue (the “Rights Issue”) of 963,724,106 new units in Starhill Global REIT (“Rights Units”), the Manager wishes to announce that the Transfer Books and Register of unitholders of Starhill Global REIT (“Unitholders”) will be closed on 21 July 2009 at 5.00 p.m. (the “Rights Issue Books Closure Date”) for the purpose of determining the provisional allotments of Rights Units of Eligible Unitholders1 under the Rights Issue.
In connection with the Rights Issue, Eligible Unitholders will receive their provisional allotments of Rights Units on the basis of one Rights Unit for every one existing Unit2 held by each Eligible Unitholder as at the Rights Issue Books Closure Date.
Starhill Global REIT’s current policy is to distribute its distributable income on a quarterly basis to Unitholders. The Rights Units will, upon allotment and issue, rank pari passu in all respects with the existing Units in issue as at the date of issue of the Rights Units, including the right to any distributions which may accrue for the period from 1 July 2009 to 30 September 2009 as well as all distributions thereafter.
StarHill – BT
Starhill falls after unveiling rights issue plan
Moody’s affirms its ratings of the Reit, says the outlook for the ratings is stable
STARHILL Global Reit yesterday fell 3.9 per cent – amid a broad market pullback – a day after the property trust said it will tap the market through a $337.3 million rights issue.
Meanwhile, Moody’s Investor Services affirmed its ‘Baa2’ corporate family and ‘Baa3’ unsecured debt ratings of Starhill Global Reit – which owns stakes in Wisma Atria and Ngee Ann City in Singapore.
Moody’s added that the outlook for the ratings is stable.
The Reit, which is partly owned by Malaysia’s YTL Corp, lost 2.5 cents to close at 61.5 cents. The trust on Monday announced plans to sell new units to raise $337.3 million to reduce debt and get new funds for possible acquisitions.
The Reit does not have any refinancing requirements in 2009, although the bulk of its $670.1 million of borrowings are due in 2010.
The rights issue will improve Starhill Global Reit’s balance sheet, said Franklin Heng, chief executive of the trust’s manager. On Monday, the trust also announced a 7.1 per cent write-down in the value of its property portfolio to $1.95 billion as at June 15, 2009 from $2.1 billion at end-2008.
That would have pushed up its gearing from 31.1 per cent to 33.4 per cent. But with the rights issue and the repayment of some debt, gearing will instead be reduced to 20.7 per cent.
The capital raising should provide the Reit with adequate buffer against further asset write-downs, Moody’s said.
‘If (the rights issue is) completed and used to reduce debts by 35 per cent to $434.3 million, the capital raising would materially enhance Starhill’s credit metrics,’ said Moody’s senior analyst Kathleen Lee.
However, while the initiative will have a positive effect on Starhill’s credit metrics once completed, Moody’s is concerned that further weakening in the operating environment could translate into slower demand for rental space and result in further asset write-downs. This could be exacerbated by the strong supply of new retail space coming on-stream within the Orchard Road precinct between Q3 2009 and 2012, Ms Lee added.
StarHill – UOBKH
Embarking On Campaign For Regional Expansion
Surprised by sudden rights issue. Starhill Global REIT (SGREIT) has announced a fully underwritten renounceable 1-for-1 rights issue at S$0.35 per rights unit to raise S$337.3m. The rights units are priced at a 45.3% discount to the last closing price of S$0.64. Rights units are entitled to distribution accruing starting 1 Jul 09. The joint lead managers and underwriters of the rights issue are DBS, Merrill Lynch and Credit Suisse. YTL Corporation has undertaken to subunderwrite up to 75% of the total rights issue. An EGM will be held on 13 Jul 09 to seek approval from unitholders for a whitewash resolution to waive their rights to receive a mandatory offer from YTL.
Embarking on campaign for regional expansion. SGREIT intends to pursue acquisitions, embark on asset enhancement initiatives and pare down its debts. It is scouting for opportunities to invest in distressed assets in Singapore, Malaysia, China, Japan and Australia, particularly from distressed sellers having difficulties in refinancing debt. In Malaysia, SGREIT could potentially acquire retail assets from Starhill REIT which is listed on Bursa Malaysia. The company targets an asset size of S$3b within two years.
SGREIT plans to invest S$100m for an asset enhancement initiative at Wisma Atria (plans not finalised yet), which will add 40,000sf of retail space fronting Orchard Road. Reducing debt will also help it attain a lower cost of borrowing when refinancing S$617m of debt facilities due next year.
Cut target price. We have cut our 2010 DPU forecast by 40.7% to 3.5 cents due to dilution from the rights issue and trimmed our assumptions for office rentals at Ngee Ann City and Wisma Atria. We cut our target price by 25.2% to S$0.80 based on the Dividend Discount Model (required rate of return: 7.7%, terminal growth: 2.0%).