Natarajan's optimism is based on how the REIT, which is 70% exposed to Singapore, will benefit from falling domestic rates and economic recovery.
Specifically for the REIT, there's upside potential from asset enhancements being done at Wisma Atria, where car park space at level 7 is being converted to office space of some 3,250 sq ft.
The work for this project is largely completed and it is set to become operational this quarter. The REIT is expecting an ROI of more than 8% on the estimated $4 million project cost.
This move comes as the REIT rationalises its Wisma Atria office exposure with the divestment of Level 12 office strata lots for $16.1 million, which is a 22% premium to valuation.
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The REIT manager is also revamping the taxi drop-off point at Wisma Atria to create more shopfront for tenants.
Next, a new 12-year master lease with Toshin for Ngee Ann City has been signed and has taken effect since June. Rental contribution from Toshin is seen to make up 24% of StarHill Global REIT's 2HFY2025 total and is set for a minimum 1% increase, with additional upside from the annual profit-sharing arrangement.
Portfolio-wide, Natarajan figures that the REIT is set to fetch rent reversion in the low to mid single digits for its Singapore office and retail spaces, which is some moderation from double digits thus far this year.
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Over at Adelaide, where the REIT owns the Myer Centre, a key tenant Technicolor, which accounted for 0.9% of 2HFY2025 net property income, has terminated its lease in April.
StarHill Global REIT has secured a new tenant, taking up two-thirds of the vacated space, for ten years.
Natarajan has tweaked his FY2026 and FY2027 DPU assumptions by 0 to 1% by factoring lower cost of equity assumptions, modest gearing and divestment efforts.
StarHill Global REIT changed hands at 54 cents as at 2.35 pm, down 0.92% for the day and up 5.88% year to date.
