Starhill REIT warns David Jones administration may cut payout 10.6%

The REIT’s manager has asked for written confirmation. It says no notice of lease termination has arrived, and it is taking advice on its rights under the lease.

The numbers

The lease brings in about S$9 million a year. In the year to 30 June 2026 that was 4.7 per cent of portfolio revenue and 6 per cent of net property income.

The manager ran a pro forma case in which the lease ended on 1 July 2025 and the space stayed empty for 12 months. On that basis FY2025/26 distribution per unit (DPU) would have been about S$0.0329, against an actual S$0.0368, a drop of roughly 10.6 per cent. Committed occupancy across the portfolio would drop to about 86.1 per cent from 97.4 per cent at 30 September 2026.

The building carried a valuation of S$106.4 million at 30 June, about 3.9 per cent of the REIT’s portfolio. As at October the tenant owed about S$1.3 million in rent, and about S$500,000 of that was already covered by provisions. Rent was paid regularly up to September 2026.

On Wednesday evening the manager had said David Jones asked to change its lease terms, including taking less space. Those changes were still being negotiated.

What’s next

The manager says it has been preparing contingency plans for the Perth property. These include seeking replacement tenants and looking at ways to reposition or repurpose the building for several tenants, efforts it says have gained positive traction.

Redevelopment feasibility studies are also under way, covering market demand, capital needs and expected returns. The manager may pay out part of the gains from recent divestments to soften any DPU hit, and promises updates on material developments.

The Business Times said the situation raises uncertainty over the department store’s future and its lease arrangements. See also: David Jones in Sydney.