Bangkok--23 Apr--Moody's Investors
Moody's Investors Service says today that it sees no immediate impact on the Baa2 corporate family rating and Baa3 senior unsecured debt rating of Starhill Global REIT ("Starhill"). This follows Starhill's announcement that it has entered into conditional sales and purchase agreements for the acquisition of two Malaysian properties.
Starhill plans to fund the acquisitions from a combination of senior debt, cash-on-hand and convertible preferred units -- which Moody's considers contain relatively strong equity features. This proposed transaction is subject to, inter alia, Starhill unit holders' approval.
"Starhill's credit metrics in the next 12 months will be moderately weakened to Adjusted Debt/EBITDA of 7.5-8x and EDITDA/Adjusted interest of 3-3.3x following the acquisitions, but they remain within Moody's expectations for the current ratings," says Peter Choy, a Moody's VP/Senior Credit Officer.
Meanwhile, Moody's expects Starhill's sponsorship from YTL Corp Bhd
("YTL") to be strengthened following the announcement of the latter's acquisition upon completion of the remaining 50% stake in YTL Pacific Star REIT Management Holdings Pte Ltd, the holding company of Starhill's REIT Manager. Upon completion of this transaction, the REIT Manager will become wholly owned by YTL.
The outlooks for the ratings are stable, reflecting Starhill's good-quality asset profile, ability to generate stable and recurring income, and sound financial metrics. At the same time, the stable outlook also reflects the strong support Starhill derives from its sponsor, YTL.
Moody's last rating action on Starhill was taken on 19 November, 2009, when its corporate family rating of Baa2 and senior unsecured rating of
Baa3 were affirmed with stable outlooks.
The principal methodology used in rating Starhill was Moody's Rating Methodology for REITs and Other Commercial Property Firms, published in January 2006 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab.
Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
Starhill Global REIT was listed on the main board of the Singapore Stock Exchange in September 2005 (as Macquarie MEAG Prime REIT). Its original portfolio consisted of strata ownership of two parts in two landmark retail/office properties, Wisma Atria and Ngee Ann City, both on Orchard Road, Singapore's premier street for shopping and tourism.
In 2007, the REIT expanded its geographical reach by adding 7 retail properties in Japan and another retail property in Chengdu, China. In January 2010, the REIT acquired David Jones Building in Perth, Australia and its property portfolio is currently valued at S$2.1 billion.
Hong Kong
Peter Choy
VP - Senior Credit Officer
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Hong Kong
Gary Lau
Managing Director
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077