Thursday, May 12, 2016

Ireit Global - Q1 FY16 Results Review

Ireit Global has announced their first quarterly results this evening which I thought was pretty good and fell within my expectations.

Readers who are new to the blog can read my recent Ireit AGM review here.

The huge increase year on year and also with the forecast on the revenue and net property income was due to the recent acquisitions of the Berlin properties which yielded an NPI of 7.1% and was funded via debt and equity, but the overall distribution per unit was close to the forecast at EUR 1.04 cents. This was important to me because I wanted to make sure that operationally they were getting the rental they think would make sense and it is important that the amount has to be close to their forecast. 




In terms of their distribution per unit in Singapore dollar, it dropped 9.7% compared to forecast to 1.58 cents, while it was higher by 43.6% if we compare year on year due to absence of recognition of rental from the Berlin acquisitions.

The drop in the distribution in Singapore dollar is attributed to the fall in the Euro which the management has decided to hedge 80% of their income at Eur 1: SGD 1.52 so this falls under their expectations. 

A lot of people will be concerned with the Euro risk but I chose to take a different view. To me, weakening Euro indicates that the Central bank continues with their QE bond buying program and this leads to low cost of debt which will help the company in terms of interest costs.

This also reminds me of my previous holdings in Stamford Land and Ascendas Hospitality Trust where the AUD continues to weaken but it helps their hospitality business because more people would come to Australia if the currency is weak. So it really goes both ways.




The company WALE continues to be strong and long, with quality tenant profile and a long lease extended. The latest news coming out of Munster campus is that the tenant Deutsche Telecom will be exercising their lease extension option which will bring the WALE up from 3.8 to 4.9 years.

With an approximately 9% yield based on current price, a long WALE, an extensive QE program in the EU and a volatile stock market, this looks like a good return for me to park my money.

*Vested with 62,000 shares.


9 comments:

  1. Congratulations B, good buy.

    Any idea what's the news with Kingsmen, 0.63 (dropped 9.4%) as I write.

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    1. Hi An

      Thanks :)

      Yeah, as you might have already found out with Kingsmen, they've made a quarterly loss but it's not with too much surprise. Kingsmen has a typical weak 1st quarter and things should pick up from here. But the gross margin drop does concerned me because they are already operating under very tight net margin but we'll have to see if the dips are temporary or permanent in nature.

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  2. http://kingsmen.listedcompany.com/newsroom/20160512_194504_5MZ_I9TFQ8ZJ39U3B4E7.1.pdf

    Haiz, answer above I guess

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  4. just be vigilant, I am not sure EU QE will extend beyond the current duration announced during the last ECB meetings?

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    1. Hi SMK

      I am predicting it will, but if otherwise, then it'll mean the EU has stronger growth and inflation numbers than expected. Either way, I think it bodes well for the company.

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  5. Hey B, been looking into REITs for my mum's portfolio. I considered IREIT but was put off by the fact that their distributions are unsustainable (per share above EPS, total above FCF). What do you think?

    On a side note, been a fan of your blog for some time. Would like to feature your blog in my blog next week in a piece about investing for non-finance individuals requested by a couple of my friends.. so heads up courtesy call for you (don't worry, it will be a positive feature)!

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    1. Hi Daniel

      Ireit DPU is sustainable and should be maintained since they've gone into the hedging now, so I think it'll be a good investment, at least imo. Not sure though if it will fit your mum profile.

      Thanks a lot for featuring me, appreciate it a lot. Do let me know if you need anymore information from me.

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  6. Awesome work! That is quite appreciated. I hope you’ll get more success.

    Tradeonix Russ Horn

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