IREIT Global Has An 8.3% Distribution Yield Now: Here Are 3 Things Investors Should Know

IREIT Global (SGX: UD1U) is the first Singapore-listed real estate investment trust that has a focus on owning commercial real estate in Europe.

Currently, the REIT’s portfolio comprises five freehold properties in Germany that are valued at €449.8 million as of 30 June 2016. This portfolio has an aggregate net lettable area of 200,603 square metres.

In Singapore’s universe of REITs, IREIT Global has one of the highest distribution yields right now at 8.3%. This trait of the REIT could draw the attention of investors. So, here are three important points about IREIT Global’s business that investors may want to pay attention:

1. Strong growth in the first-half of 2016

The table below shows changes in IREIT Global’s gross revenue, net property income, distributable income, and distribution per unit (in both the Singapore dollar and euro) in the first-half of 2016 as compared to the first-half of 2015:

Source: IREIT Global 2016 second-quarter earnings presentation

We can see that all four financial numbers for the REIT have jumped by 43.9% or more in the first-half of 2016. IREIT Global had purchased a property in August 2015 – the Berlin Campus – and new contributions from the acquisition helped boost the REIT’s numbers.

2. Occupancy rate

The occupancy rate for a REIT is an important metric to look at since it gauges the strength of the market demand for the REIT’s properties.

As of 30 June 2016, IREIT Global’s properties are nearly fully occupied as it had an overall portfolio occupancy level of 99.7%.

3. Concentrated tenant base

Having a diversified tenant base helps to lessen concentration risk for a REIT.

The chart below shows IREIT Global’s top five tenants by rental income for the month of June 2016:

Source: IREIT Global 2016 second-quarter earnings presentation

It’s worth noting that the top two tenants of the REIT already collectively account for 86.3% of its rental income. But, the concentration risk is partially offset by the portfolio’s long weighted average lease term to expiry of 6.8 years.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.