Basic Profile & Key Statistics
IREIT Global (IREIT) invests in office properties in Europe. Its portfolio comprises of 5 properties in Germany and 4 in Spain.
Lease Profile
Occupancy is healthy at 95.7%. WALE is short at 3.7 years where the highest lease expiry of 35.1% falls in FY2024. All of IREIT properties are freehold.
Debt Profile
Gearing ratio is slightly high at 39%. Cost of debt is low at 1.8%. Fixed-rate debt % is slightly high at 86.3%. All of IREIT debts are secured debt. Interest cover ratio is high at 7.4 times. WADE is long at 5 years where the highest debt maturity of 86.2% falls in the year 2026, still quite some years away.
Diversification Profile
Top geographical and top property contributions are the same at 34.5%. It is low in terms of geographical but high in terms of property. Top tenant and top 10 tenants are high at 47% and 94.1%.
Key Financial Metrics
Property yield is moderate at 5.4%. Management fee is competitive in which unitholders receive S$ 9 distribution for every dollar paid. Distribution on capital and distribution margin are high at 4% & 63.6% respectively.
Related Parties Shareholding
As compared to SREITs median, sponsor and directors of REIT manager holding higher stake while manager never holds any units. Manager's fee is 100% paid in shares, but most of the time manager sold all of its shareholdings within the same quarter upon receipt.
Trend
IREIT distribute 100% of distributable income from listed to 4Q 2016 and reduced to 90% since 2017. If we look at after 2017, DPU and distribution margin dropped slightly while NAV is on uptrend.
Relative Valuation
i) Average Dividend Yield - Average yield at 7.98%, apply the past 4 quarters DPU of 5.56 cents will get S$ 0.695.
ii) Average Price/NAV - Average value is at 1.06, apply the latest NAV of S$ 0.855 will get S$ 0.905.
Author's Opinion
| Favorable | Less Favorable |
|---|---|
| 100% Freehold Properties | WALE |
| Cost of Debt | Concentrated Lease Expiry |
| Interest Cover Ratio | Unsecured Debt |
| WADE | Top Property Weightage |
| Top Geographical Weightage | Top Tenant & Top 10 Tenants Weightage |
| Management Fee | |
| Distribution on Capital | |
| Distribution Margin | |
| NAV per Unit Uptrend |
IREIT 1H performance is not affected by COVID. Together with the latest result announcement, IREIT has proposed to acquire the remaining 60% stake in Spanish properties. This proposed acquisition is to be funded by rights issues where part of the proceeds would be used to repay €32.0m loan from CDL. From the illustrative pro-forma financial effect, gearing would reduce to 35%, DPU would drop 18.9% and NAV per Unit would drop 14.5%. Manager will announces more detail together with EGM notice to get approval for this acquisition anytime soon as the the target completion is in 4Q 2020.
The above analysis information is extracted from SREITs Dashboard, you are welcome to use the information there for your analysis. You could also refer SREITs Data for an overview of Singapore REITs. If you like my sharing, please join the Facebook group - REIT Investing Community where you could read, share, and discuss REITs related topics. Please also invite your like-minded friends to the group.
*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.
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