REIT-TIREMENT - REIT Investing and Personal Finance

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Wednesday, September 09, 2020

IGB REIT Analysis @ 9 September 2020

All this while I have been writing post for Singapore REITs, today would like to try post for one of the Malaysia REIT - IGB REIT. Malaysia REIT reporting is quite different from Singapore, generally not many would provide a presentation and a lot of information can only be found in the annual reports.


Basic Profile

IGB REIT (IGB) is a retail REIT that owns 2 properties in Kuala Lumpur. One is Mid-Valley Megamall and the other is The Gardens Mall.


Key Statistics

With market cap at RM 6.5 Billions, IGB is the second largest REIT in Malaysia after KLCC Property Holdings Berhad, which is a stapled group.


Lease Profile

Occupancy is high at 99%. WALE (estimated) is slightly short at 1.61 years where the highest least expiry of 39.2% is in this year, as per the latest annual report. Weighted average land lease expiry is slightly short at 83 years.

  

Debt Profile

Gearing ratio is low at 23.4%. Cost of debt is moderate at 4.4%. All of IGB debts are fixed and secured. Interest cover ratio is high at 5.6 times. WADE is long at 4.2 years where the highest debt maturity of 98.8% falls in the year 2022.


Diversification Profile

Top geographical and top property contributions are high at 100% and 70.1%. Top tenant contribution is low at 9.5%. Top 10 tenants contribution by NLA is moderate at 49%.


Key Financial Metrics

Property yield, distribution on capital and distribution margin are high at 6.5%, 5% and 54.2% respectively. Management fee is competitive in which unitholders receive $7.90 distribution for every dollar paid. 


Trend

If we look at pre-COVID time, DPU is quite stable from 2017 to 2019. NAV per unit maintains throughout the 5 years. Interest cover ratio is improved since the issuance of medium term notes in 3Q 2017. Due to the usage of medium term note to repay term loan in 3Q 2017, therefore interest cover surges in that quarter. Property yield is improving since 2016 but start dropping in 2020 due to COVID. Distribution margin started to drop slightly since 2018.


Relative Valuation

i) Average Dividend Yield  - Average yield at 5.15 %, apply the past 4 quarters DPU of 7.06 cents will get RM 1.37. 

ii) Average Price/NAV - Average value is at 1.53, apply the latest NAV of S$ 1.073 will get RM 1.64.


Author's Opinion

FavorableLess Favorable
OccupancyWALE
Gearing RatioConcentrated Debt Maturity
Interest Cover RatioTop Geographical Contribution
WADETop Property Contribution
Top Tenant Contribution 
Property Yield 
Management Fee 
Distribution on Capital 
Distribution Margin

The recent performance has been greatly impacted due to COVID and MCO. In the current RMCO period, the retail crowd has seen returning which should help in improving IGB performance in the coming quarters.


For more information, you could refer:

SREITs Dashboard - Detailed information on individual Singapore REIT as well as summary

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*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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