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Real Estate Industry: A Dive Into Starhill Global Real Estate Investment Trust (SGX:P40U)

Starhill Global Real Estate Investment Trust (SGX:P40U) is a S$1.52b real estate investment trust (REIT), which is a collective vehicle for investing in real estate that began in the US and has since been adopted worldwide as an investment asset. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the Singapore stock market as a whole. Today, I’ll take you through the real estate sector outlook, and also determine whether Starhill Global Real Estate Investment Trust is a laggard or leader relative to its real estate sector peers.

See our latest analysis for Starhill Global Real Estate Investment Trust

What’s the catalyst for Starhill Global Real Estate Investment Trust’s sector growth?

SGX:P40U Past Future Earnings September 28th 18

The capacity for REITs to absorb a rate hike should be considered, hence, factors such as lease durations and pricing power in the market would require a deeper dive. Over the past year, the industry saw growth in the twenties, beating the Singapore market growth of 11.5%. Starhill Global Real Estate Investment Trust lags the pack with its negative growth rate of -6.6% over the past year, which indicates the company has been growing at a slower pace than its REIT peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 10.2% in the upcoming year. This future growth may make Starhill Global Real Estate Investment Trust a more expensive stock relative to its peers.

Is Starhill Global Real Estate Investment Trust and the sector relatively cheap?

SGX:P40U PE PEG Gauge September 28th 18

The REIT sector’s PE is currently hovering around 14.47x, relatively similar to the rest of the Singapore stock market PE of 12.14x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 6.6% on equities compared to the market’s 7.7%. On the stock-level, Starhill Global Real Estate Investment Trust is trading at a PE ratio of 14.59x, which is relatively in-line with the average REIT stock. In terms of returns, Starhill Global Real Estate Investment Trust generated 5.2% in the past year, which is 1.4% below the REIT sector.

Next Steps:

Starhill Global Real Estate Investment Trust’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Starhill Global Real Estate Investment Trust has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Starhill Global Real Estate Investment Trust’s fundamentals in order to build a holistic investment thesis.

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Historical Track Record: What has P40U’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Starhill Global Real Estate Investment Trust? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.