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REITs investing & personal finance

Friday, May 06, 2022

Digital Core REIT Review @ 6 May 2022

Basic Profile & Key Statistics
  • Main Sector(s): Industrial
  • Country(s) with Assets: United States & Canada
  • No. of Properties (exclude development/associate/fund): 10

Performance Highlight

Despite similar gross revenue as per forecast, the NPI is 6.9% above the forecast figure. Distributable income, on the other hand, is 1.9% above forecast.

Related Parties Shareholding

  • REIT sponsor's shareholding: Above median for more than 20%
  • REIT manager's shareholding: Above median for more than 20%
  • Directors of REIT manager's shareholding: None

Lease Profile

  • Occupancy: 100% Occupied
  • WALE: Above median for more than 20%
  • Highest lease expiry within 5 years: Above median for more than 20%; Falls in 2025
  • Weighted average land lease expiry: 100% Freehold Properties

Debt Profile

  • Gearing ratio: Below median for more than 20%
  • Cost of debt: ± 10% from median
  • Fixed rate debt %: Below median for more than 20%
  • Unsecured debt %: All debts are unsecured debts
  • WADM: Above median for more than 20%
  • Highest debt maturity within 5 years: Above median for more than 20%; Falls in 2026
  • Interest coverage ratio: Above median for more than 20%

Diversification Profile

  • Top geographical contribution: Below median for more than 20%
  • Top property contribution: ± 10% from median
  • Top 5 properties' contribution: Above median for more than 20%
  • Top tenant contribution: Above median for more than 20% 
  • Top 10 tenants' contribution: Above median for more than 20% 

Key Financial Metrics

  • Property yield: ± 10% from median
  • Management fees over distribution: ± 10% from median; $6.62 distribution for every dollar paid 
  • Distribution on capital: ± 10% from median
  • Distribution margin: ± 10% from median

Relative Valuation

  • P/NAV: Below -1SD for 1y
  • Dividend Yield: Above +1SD for 1y

Author's Opinion

FavorableLess Favorable
High REIT Sponsor's ShareholdingLow Directors of REIT Manager's Shareholding
High REIT Manager's ShareholdingConcentrated Lease Expiry
High OccupancyLow Fixed Rate Debt %
Long WALEConcentrated Debt Maturity
100% Freehold PropertiesHigh Top 5 Properties Contribution
Low Gearing RatioHigh Top Tenant & Top 10 Tenants Contributions
100% Unsecured Debt 
Long WADM 
High Interest Coverage Ratio 
Low Top Geographical Contribution

This is the first business update for DCR, and the result is in line with the forecast figure. The recent share price has declined after the announcement of its fifth-largest customer which contributed 7.1% of its income has filed for bankruptcy protection. Manager expected to be able to backfill the space given tight market conditions in Toronto. The sponsor has agreed to guarantee the cash flow to Digital Core REIT in the event of a near-term cash flow shortfall due to the customer bankruptcy. Given all these, this event is not expected to have an impact on DPU.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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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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