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IREIT Global SGD
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IREIT Global
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Joelton
Supreme |
17-Nov-2022 09:08
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With strong balance sheet, IREIT&rsquo s gearing ' among the lowest' for S-REITs, but RHB trims TP
IREIT Global is &ldquo relatively well-shielded&rdquo with a strong balance sheet and no debts maturing until November 2026, notes RHB Group Research analyst Vijay Natarajan.
IREIT&rsquo s 3QFY2022 ended September update shows that it continues to rise above market challenges, with occupancy rate growth and rental rate escalations kicking in, says Natarajan in a Nov 14 note.
While its occupancy rate should drop by some 11% in 4QFY2022 due to the exit of a tenant, management is in talks with several tenants and expects to backfill some space, he adds. &ldquo IREIT is the best positioned among S-REITs against rate hikes, with no debt maturity and a near-full hedge until November 2026.&rdquo
Natarajan is maintaining his &ldquo buy&rdquo call on IREIT with a lower target price of 63 cents from 72 cents previously due to higher market risk premiums. The new target price represents an upside of 24%.
IREIT&rsquo s mandate is investing in Europe real estate, including office, retail and industrial purposes. It has in its portfolio 37 assets valued at over EUR1 billion ($1.42 billion).
Backfilling is underway at IREIT&rsquo s Darmstadt Campus, writes Natarajan. Deutsche Telekom, the sole tenant at Darmstadt Campus (contributing some 11% of overall income) will vacate the premises this month.
Management says there has been active interest from 12 potential tenants from both the public and private sector. Management expects to convert some of this interest, but acknowledged that economic conditions have made it slightly challenging, writes Natarajan.
According to Natarajan, the REIT&rsquo s preference is to multi-let the asset and reduce tenant concentration risks, a strategy it has been actively been embarking on of late. &ldquo We have assumed occupancy rates for this asset to be 50% and 75% over 2023 and 2024, in our model.&rdquo
IREIT&rsquo s portfolio occupancy rate improved to 96.5% in 3QFY2022 from 95% in the previous quarter. This was mainly due to the German government body commencing its lease for four floors at Munster Campus and lease signings at Delta Nova IV and VI.
IREIT&rsquo s rental rate escalation of 4.2% y-o-y kicks in due to step-up rents and CPI indexation at its assets and current high inflation across the Eurozone. Rental collection is at 100%, highlighting its blue-chip tenant profile, notes Natarajan.
IREIT is not exposed to the steep rise in utility charges across Europe, as this is fully passed through and borne by tenants.
For new leases signed in 3QFY2022, rental reversion was slightly positive at 0.3%. For Darmstadt Campus, asking rental rates are currently in line with expiring and market rates, says Natarajan, and he expects mostly flattish rental reversions for this asset.
Finally, IREIT has a strong balance sheet, says Natarajan. &ldquo IREIT has no debts maturing until November 2026, and has substantially hedged its Euro-denominated debt until then, with interest rate swaps and interest rate caps. As such, the impact of the sharp rise in interest rates should be minimal for the next three years.&rdquo
Its gearing of 30.6% is among the lowest for S-REITs, and provides debt headroom to pounce on good opportunities, writes Natarajan. &ldquo Management noted that it is starting to see some cap rate expansion in the market, but will remain cautious and prudent on any acquisitions it is prepared to wait for the right asset and price.&rdquo
Natarajan trims IREIT&rsquo s FY2023/2024 distribution per unit (DPU) by 6% and 2% respectively to reflect lower occupancy rates at Darmstadt Campus and his adjusted financing cost estimates. &ldquo We lift IREIT&rsquo s cost of equity by 60 basis points to 8.1% on higher market risk premiums, resulting in a lower target price.&rdquo
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Joelton
Supreme |
15-Nov-2022 09:19
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Analysts cut target prices for IReit Global on leasing slowdowns
RHB Research and DBS Group Research have lowered their target prices for IReit Global : UD1U +2.94% on an expected slowdown in the trust&rsquo s leasing momentum, following the exit of a key tenant in November.
RHB maintained &ldquo buy&rdquo but slashed its target price for the Singapore-headquartered real estate investment trust (Reit) to S$0.63 from S$0.72, after lowering its distribution per unit (DPU) projections for FY2023 and FY2024 by 6 per cent and 2 per cent respectively.
The revised DPU projections reflect lower occupancy rates at IReit&rsquo s Darmstadt Campus in Germany as well as adjusted financing cost estimates, said RHB analyst Vijay Natarajan on Monday (Nov 14).
He noted that the sole tenant of Darmstadt Campus &ndash which will be vacating the premises this month &ndash contributes roughly 11 per cent of IReit&rsquo s overall income. In Natarajan&rsquo s view, market conditions will make backfilling the property challenging, and he has therefore assumed occupancy rates for this asset to stand at just 50 per cent and 75 per cent over 2023 and 2024.
Moreover, the analyst expects &ldquo mostly flattish&rdquo rental reversions for the Darmstadt asset, as asking rental rates are in line with expiring and market rates rather than the escalations of 4.2 per cent seen with IReit&rsquo s other assets in the eurozone.
In the light of higher market risk premiums, Natarajan lifted the cost of equity by 60 basis points to 8.1 per cent to arrive at the lower target price of S$0.63.
He nonetheless continues to like IReit for being &ldquo the best positioned&rdquo among Singapore-listed Reits (S-Reits) to shield itself against interest rate hikes. The trust has no debts maturing until November 2026, and almost all of its borrowings are hedged to fixed rates.
&ldquo Its gearing of 30.6 per cent is among the lowest for S-Reits, and provides debt headroom to pounce on good opportunities,&rdquo said Natarajan.
DBS has also reiterated &ldquo buy&rdquo on the stock, but cut its target price from S$0.68 to S$0.60 on Nov 10, as IReit&rsquo s upcoming lease expiries and &ldquo lumpy&rdquo debt expiry profile compelled the research team to choose a more conservative valuation method.
The revised target price reflects this approach by assuming a higher risk-free rate of 3.5 per cent, as well as a slight increase in financing costs. It implies a potential share price upside of more than 21 per cent.
While the DBS analysts have acknowledged that IReit&rsquo s gearing is &ldquo very healthy&rdquo with no debt maturity until FY2026, they pointed out that 281.3 million euros (S$398.2 million) in borrowings or nearly 85 per cent of the trust&rsquo s entire loan book will expire that year.
Said the analysts: &ldquo We have taken the conservative approach of assuming a slight increase in overall financing costs, especially if new loans are required to fund any capital expenditure or working capital needs.&rdquo
The analysts also anticipate that the interest rate hikes and leasing slowdowns will put &ldquo some downward pressure&rdquo on IReit&rsquo s portfolio revaluation in December.
The trust will see 12.4 per cent of its leases expiring in Q4 FY2022 besides the Darmstadt Campus, the Il-lumina property in Spain will see tenants vacating the space. The DBS analysts nonetheless see potential in IReit&rsquo s medium-term income stability, as its portfolio has a &ldquo relatively long&rdquo weighted average lease expiry of 4.6 years and a high occupancy rate of 96.5 per cent.
In their view, the trust is also poised to benefit from the rental escalations in the European market.
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Joelton
Supreme |
12-Nov-2022 09:57
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DBS cuts iREIT target price but notes low gearing, hedged loans
DBS Group Research analysts Dale Lai and Derek Tan have maintained their &ldquo buy&rdquo call on iREIT Global, but have trimmed their target price from 68 cents to 60 cents.
The analysts note that the REIT has reported higher portfolio occupancy in 3QFY2022 ended Sept 30, up 1.5% q-o-q to 96.5%.
This was mainly due to higher occupancy at Munster Campus in Germany, where the German federal government commenced a lease of four floors in the property.
However, moving forward, the analysts expect a slowdown in leasing momentum. Lai and Tan point out that there are 12.4% of leases expected to expire in 4QFY2022.
While there are some enquiries for the space, they note that there are no commitments so far, and expect backfilling to be slow given market uncertainties.
On a whole, iREIT&rsquo s acquisition of its Spanish portfolio and the recent acquisition of 27 retail properties in France reduce its key tenant, geographical and sector concentration risks, the analysts think, adding that the REIT&rsquo s leases are stable and expected to rise gradually, as they are mostly pegged to consumer price indices (CPIs).
&ldquo Based on our estimates, we believe iREIT is positioned to benefit from rental escalations that are well spread out over the next few years and has the potential to optimise occupancy rates at several properties,&rdquo the analysts say.
In addition, Lai and Tan highlight that iREIT has an investment mandate for logistics properties, which it could explore, given its enlarged debt headroom of more than EUR371 million ($595.8 million)
iREIT&rsquo s sponsor has also demonstrated its willingness to incubate portfolios while the REIT grows, and this gives it the flexibility to pursue larger acquisitions despite its relatively small size.
Another bright spot for iREIT is that its borrowing costs remained stable at 1.8% as substantially all of its bank borrowings have been hedged with interest rate swaps and caps, and it does not face any debt maturity until FY2026. Gearing for iREIT stands at 30.6% as of 3QFY2022.
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HVRRVH
Elite |
19-Sep-2022 13:25
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Very unusual trading volumes since last Thursday. I think someone is supporting the price from going below 50 cents. Keeping this in watchlist. | ||||
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HVRRVH
Elite |
17-Sep-2022 12:22
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Slight correction. Market expected .75% but more and more are expecting 1% now.
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HVRRVH
Elite |
17-Sep-2022 12:09
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AK is rigfht most of the time, but he can be wrong too. I read almost all his stuff and have attended his ' AK meets the friends' events a couple of time too. He was dead against KDC and I almost get influence and when I did take a position, it was a bit late. I do think yes, below 50 cents this may worth a look. I hope for a big negative reaction in overall market soon after Fed rate decision so that can pick up some good cheap stocks. However, so far it is widely anticipated that Fed will hike 1% so not sure how market will react to something that it is already so well known. Shall wait and see.
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WongKheeKai
Member |
16-Sep-2022 20:44
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1) AT Investments Limited , a SSH, ceased to be one around 15 Aug 22. Supposed they are continuing to dump this stock till now. 2) Concern seems to be the lost of a major tenant. You may read this article by AK: http://singaporeanstocksinvestor.blogspot.com/2022/09/ireit-global-is-bargain-short-term-pain.html FYI |
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Plantoretire
Member |
16-Sep-2022 19:35
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Anyone knows why it dropped 5,7% today? | ||||
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Noob12
Member |
03-Sep-2022 16:14
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Thanks! Mine also credited but strangly via PayNow and does not reflect Ireit Div.
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OngSengHuat
Member |
02-Sep-2022 19:10
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Credited | ||||
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Noob12
Member |
02-Sep-2022 15:34
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How come dividend still not credicted? | ||||
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Mussel
Member |
14-Aug-2022 15:59
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All good! I believe IREIT is under-valued and even more under-priced, even in the current market environment. Hope your other investments perform well! | ||||
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HVRRVH
Elite |
12-Aug-2022 14:35
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You sound a tad defensive but well, people invest and people come and go. No doubt iReit is a high yield reit but I have given it couple of years to growth, and was confident when CDL came on board but I have mainly shifted my fund to Fraser L& C, Lendlease and MPACT. Can' t have them all and it is my choice to let go iReit based on my own preference. I am sure there are investors doing opposite of what I am doing for good reasons too. Just sharing.
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prophetjul
Master |
12-Aug-2022 12:04
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Unfortunately EURO is vrey weak. In EURO terms DPU ius OK. But in SGD, it is bad.
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Plantoretire
Member |
12-Aug-2022 10:03
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Disappointed on the payout performance, March payout was 1.51cent, euro to sg exhange was higher like 1:1.47, literally translate to 10% less payout in sgd.
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Joelton
Supreme |
12-Aug-2022 09:42
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IREIT Global reports 1.4% drop in 1HFY2022 DPU of 1.41 Euro cents
The manager of IREIT Global, which is jointly owned by Tikehau Capital and City Developments Limited (CDL), has reported a distribution per unit (DPU) of 1.41 Euro cents (1.99 cents) in the 1HFY2022 ended June, down by 1.4% y-o-y.
The lower DPU was due to the larger base of 1.16 billion units during the same period compared to the 951.3 million units in the same period the year before.
Gross revenue increased by 27.2% y-o-y to &euro 30.1 million while net property income (NPI) rose by 26.4% y-o-y to &euro 24.4 million in the 1HFY2022.
The higher amounts were mainly due to the contribution from the acquisition of the French portfolio and Parc Cugat in 3QFY2021.
Income available for distribution was up by 20.4% y-o-y to &euro 18.2 million.
As at June 30, the REIT&rsquo s portfolio occupancy stood largely stable at 95.0%, while its weighted average lease expiry (WALE) increased to 4.7 years from 3.7 years in the quarter before.
The sequential improvement in WALE was driven mainly by the six-year lease extension for 100% of Bonn Campus and a 12-year major new lease for approximately 5,300 sqm data centre space at Sant Cugat Green in the 2QFY2022.
The lease extension and new lease also contributed to the increase in the REIT&rsquo s portfolio valuation to surpass the &euro 1.0 billion mark.
As at June 30, IREIT Global&rsquo s aggregate leverage stood at 30.8%. Its net asset value (NAV) per unit stood at 83 cents.
&ldquo Again in 1HFY2022 and despite a challenging environment, we have been able to achieve some major milestones for our unitholders. With the outlook likely to remain challenging due to the significant economic and geopolitical uncertainty, our role is to continue having an active asset management approach to maintain our performance,&rdquo says Louis d&rsquo Estienne d&rsquo Orves, CEO of the manager.
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Joelton
Supreme |
07-Jul-2022 09:43
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IReit CFO resigns to &lsquo pursue other opportunities&rsquo
EUROPE-FOCUSED real estate investment trust IReit Global&rsquo s : UD1U -0.82% manager announced on Wednesday (Jul 6) that its chief financial officer, Choo Boon Poh, will step down on Aug 22, 2022, when his replacement will join the company. Choo will remain employed with the company until Sep 9, 2022.
The manager noted that Choo had previously expressed his intention to leave to &ldquo pursue other opportunities&rdquo and that the board has identified a suitable candidate.
It added that his replacement will be announced at a later date.
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Mussel
Member |
02-Jul-2022 03:25
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I think you' re making a mistake and looking too short-sighted and looking only for quick returns (then REITs in general are not for you). In this environment you want to hold stabilized, long-term cheaply financed, and undervalued real assets. In my opinion this is what you got with IREIT. They recently secured a new long-term lease for Bonn above the last rental rate. The Berlin asset makes up 30% of the portfolio and is severely under-rented (I would say half of current market rent) and the current lease expires in June 2024, according to the manager' s annual reports. The manager writes in its annual report that it is in discussion for early renewal, meaning we could see an increase in DPU soon. The share is trading at a steep discount to NAV, and I believe NAV should actually be higher than reported. The asset neighbouring the Berlin asset traded significantly higher than the Berlin asset' s current book value just a year ago. I' m sitting on this stock waiting for it to realise it' s full value in 2024. In the meantime I' m pocketing a 7%+ yield and enjoying the sweet life! Thank you very much.
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LongXia
Veteran |
22-Jun-2022 16:33
Yells: "BBs never say why when they buy, never tell when they sell!!" |
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This is a true incident... MY friend was alerted by his cousin who said he didn' t received his payout. My friend, who always assume that his dividends ( because he, like me have many many counters and seldom track) will automatically credited to his account, and usually didn' t bother to check When he found out that it was not credited, last month, he called up SGX. SGX after checking, acknowledged that it was not credited, and gave the excuse that it was declared in Euros, and my friend did not advise how it should be paid. My friend fired back, saying there was no letter from SGX or the company asking for such instruction. Also he has Cromwell which declared in Euros and he has been receiving his dpus for years without problem. SGX said she will check with her manager and come back to him. she didn' t called back. But two weeks later, my friend found out that HSBC has credited the amount via PAY NOW. There was no notification of this transaction, and no call from the SGX girl how this slip up happened! Luckily my friend found out from his cousin and called SGX. What happen if it is like my 80year old father in law who relied on cheque payment and has no access to online banking. How would he know? SGX can sue me if this incident is false .
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prophetjul
Master |
22-Jun-2022 13:36
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That is a long time ago!
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