Is STAREIT a good buy at 0.8x cents?

hmmm.. this is a tough question.

Since they will under rationalisation proposal, until new properties being injected, it is hard to predict anything.

But personally, expect no less than 6.x cents DPU which is equivalent to around 8% yield (on 0.8x price), so my view is that if I am satisfy with yield 7.x%, then I would buy. (which I am doing now)
While don't expect too much price appreciation on the share. <-- which should be the main mindset in investing in local reit.

Don't treat it is a recommendation, judge your own, I might be wrong.

Zack Styler,

At 8% yield, I would rather invest in other counters with the similar yield (i.e. HEKTAR, UOAREIT and AXREIT). You get better value and security than STAREIT.

Probably not directly related - but whats the outlook on KLCCP ? Not a REIT per se but a property management company. Its been rather flatish for some time now.

This post has been edited by RJdio: Dec 23 2009, 08:33 AM

Cannot compare directly with properties stock and reit although they are related. As reit is more towards having a property, rent it out, that's all and 90% of the income being disributed.
While properties stock can range from development of properties, rental (like reit) etc while there is no obgligation for them to give dividend, which depended on willingness of the company.

What happened to STAREIT P&L? It said something like decreased 90+%! Is that right?

No, previously year Q profit surge is because of properties revaluation (properties value/worth increase), operation income wise is somehow steady or stagnant.

Tiba-tiba UOAREIT is down to 1.25 from 1.31..

Oh, rupa-rupa macam tu. Thanks for the information.

It shocked me as it coincides with the current disposal and I thought STAREIT price and evaluation will be affected big time. *phew* *phew*

Current disposal of properties will lead to less income (as Starhill and Lot 10 contributred more than half of the income), so if they don't inject properties after the disposal, then expect to see its income dropping quite significantly.

Having said that, the disposal of properties will realise the properties valuation gain, which lead to the reit having high cash position (the disposal is expected to be around 1 billion, while only got 180 million of borrowing) which enable they to acquire new properties.

Atrium up 1 sen to 90sen.
Hope it break 90sen.

time to stop accumulating Atrium, looking at other REIT at more attractive price.

Got the below info from one blog, www.horizon.my

"The Heads of Agreement between vendor & purchaser provides for a proposed sale price of RM629 million and RM401 million for Starhill Gallery and Lot 10 respectively to be satisfied by cash and/or Convertible Preference Shares in Starhill Global REIT. The selling prices are pretty near current book value. This is what the Manager says:
The adjusted net book value of the Properties based on the audited financial statements as at 30 June 2009 and after adjusting for the value of 42% or 490 of the existing car park bays in Starhill Gallery to be retained by J.W. Marriott Hotel Kuala Lumpur is RM1,055.5 million. Accordingly, on completion of the Proposed Disposal, Starhill REIT is expected to realise a net loss on disposal of RM25.5 million for the financial year ending 30 June 2010. The original cost of investment of Starhill Gallery and the Lot 10 Property by Starhill REIT was RM480.0 million and RM341.0 million, respectively. Starhill REIT completed the acquisition of the Properties on 16 December 2005 on the listing of Starhill REIT on the Main Board of Bursa Malaysia Securities Berhad. The Proposed Disposal will unlock the value of the Properties as it is expected to realise an estimated distributable income of RM228.9 million for the financial year ending 30 June 2010."

So is it a loss or gain for STAREIT ?
Also, what properties can be potentially be injected ? I presume its other YTL Hotels.

The issue of loss and gain come from which I guess is (if I am not mistaken, as not read through the whole proposal nor the deal is finalised yet)

Previously your own a property that worth RM500 million, after 3 years, revalue then become RM600 million, so now your NAV in book is RM600 million, but now you dispose at the price of RM580 million, so in this deal, you suffer RM20 million loss, but realise the 80 million gain.

Well, the transactions between REITS always involve RPTs.

The general practice is, the buyers would get a certain % discount to the fair market price or the costs, so to make the deals not so RPT, fairness to buyers.

The sellers would get Cash or preference shares on the other hand.

Still Win-win for both, rather on fairness issue.

This post has been edited by SKY 1809: Dec 23 2009, 02:42 PM

i hope they will keep some money from the sales to distribute in order to maintain DPU... possible ka ?

Whats going on with UOA ? Seriously considering it

Possible, even can pay you one off special dividend through realised gain on the properties disposal. But this is not good for long term, as you want quality properties with good rental yield to sustain the DPU.

Hmm. Seems like nobody selling. Only got 1 lot joker @ 1.25

Both buyer and seller need to suffer the min commission if like that.