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Thursday, August 26, 2021

IREIT Global Review @ 26 August 2021

Basic Profile & Key Statistics

IREIT Global invests in office and retail properties which currently owns 36 properties across Germany, Spain and France.

Performance Highlight

The increase in gross revenue, NPI and distributable income is mainly due to the consolidation of the operating results of the Spanish properties after it acquired the remaining 60% interest on 22 Oct 2020. The actual DPU for 1H 2020 before account for the rights issue is at 2.85 cents, in another word, DPU decreased YoY by 19.3% due to an enlarged unitholder base.


On 28 July, IREIT completed the acquisition of 27 retail properties in France which was funded through debts, private placement and preferential offers.

IREIT would divest the multi-storey car park adjacent to Darmstadt Campus at above valuation. This is expected to be completed in 4Q 2021.


Related Parties Shareholding

  • REIT sponsor's shareholding is high at 50.18%
  • REIT manager's shareholding is low at 0.32%
  • Directors of REIT manager's shareholding is high at 0.16%

Lease Profile

  • Occupancy is slightly high at 95.9%
  • WALE is short at 3.1 years
  • Highest lease expiry within 5 years is high at 32.1% which falls in 2024
  • All properties are freehold

Debt Profile

  • Gearing ratio is low at 33.3%
  • Cost of debt is low at 1.8%
  • Fixed rate debt % is low at 25.3%
  • All debts are secured debts
  • WADM is long at 4.8 years
  • Highest debt maturity within 5 years is high at 75%, which falls in January 2026
  • Interest coverage ratio is high at 7.9 times

Diversification Profile

  • Top geographical contribution is low at 27.9% 
  • Top property contribution is high at 27.9% 
  • Top 5 properties contribution is high at 80.2% 
  • Top tenant contribution is high at 38.7% 
  • Top 10 tenants contribution is high at 88.3%

Key Financial Metrics

  • Property yield is moderate at 5% 
  • Management fees over distribution is low at 11.4% in which unitholders receive S$ 8.77 for every dollar paid 
  • Distribution on capital is moderate at 3.7%
  • Distribution margin is high at 60.6%

Trends

  • Uptrend - NAV per Unit, Interest Coverage Ratio
  • Downtrend - DPU, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

  • P/NAV - Average for 1y; Below average for 3y; Below -1SD for 5y
  • Dividend Yield - Below -2SD for 1y and 5y; Below average for 3y

Author's Opinion

 Favorable  Less Favorable
Diversified SectorLow REIT Manager's Shareholding
High REIT Sponsor's ShareholdingShort WALE
High Directors of REIT Manager's ShareholdingConcentrated Lease Expiry
100% Freehold PropertiesLow Fixed Rate Debt %
Low Gearing Ratio0% Unsecured Debt
Low Cost of DebtConcentrated Debt Maturity
Long WADMHigh Top Property & Top 5 Properties Contributions
High Interest Coverage RatioHigh Top Tenant & Top 10 Tenants Contributions
Low Top Geographical ContributionDPU Downtrend
Competitive Management FeesProperty Yield Downtrend
High Distribution MarginDistribution on Capital Downtrend
NAV per Unit UptrendDistribution Margin Downtrend
Interest Coverage Ratio Uptrend

In the coming 2H, IREIT performance would be boosted by the newly acquired Decathlon Portfolio contribution. However, due to the enlarged unitholder base from the rights issue in October 2020 and preferential offers in July 2021 (not yet included in the 1H result), IREIT DPU would be lower if we compare it with the absolute DPU amount for periods before October 2020. Together with the result announcement, IREIT mentioned that with effect from 17th Aug 2021, IREIT can be traded in both in € and S$. The distribution currency would be changed as well, from S$ to € starting for upcoming distribution.


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and 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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