10 Quick Things That Investors Should Know About IREIT Global’s Latest Earnings

IREIT Global (SGX: UD1U) focuses mainly in investing in a portfolio of income-producing real estate in Europe.

Its portfolio comprises five freehold properties in Germany. These properties are located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich.

The REIT recently announced its 2017 third-quarter results. Here, we will look at 10 things that investors should know about from the announcement:

1. Quarterly gross revenue grew 1.7% year-on-year while net property income improved by 2.3% year-on-year.

2. Distribution per unit (DPU) declined 9.6% (in Singapore dollar terms) as compared to the same period last year to 1.42 Singapore cents.

3. Based on an annualised DPU of 5.75 Singapore cents and closing price of S$0.765 on 30 September 2017, the latest distribution translated to a yield of 7.5%.

4. The REIT’s gearing, as at September 2017, stood at 41.7%, with interest coverage of 8.5 times.

5. Latest occupancy rate stood at 98.30%, as at September 2017.

6. The REIT has a relatively long lease expiry profile of 5.3 years, with no expiry from now until 2018.

7. The top five tenants occupy up to 97.4% of the properties (based on gross rental), with the biggest client, Deutsche Telekom, accounting for 52.3% of IREIT’s income.

8. During the quarter, one of IREIT’s key tenants at Concor Park has exercised its prolongation option to extend its lease for another three years, one year ahead of its lease expiry in September 2018.

9. IREIT has established a formal currency hedging policy for its income to be repatriated from overseas to Singapore starting from FY2019. This policy will be based on the use of currency forwards on a quarterly basis to hedge approximately 80% of the expected Euro-denominated income to be repatriated, one year in advance.

10. The following is the outlook provided by the REIT:

“Sustained economic growth, healthy employment and favourable business prospects have continued to support the office sector in Germany, both in terms of leasing and investment.

Looking ahead, IREIT will continue to seek to enhance its long-term income by investing in income producing quality assets across Europe. It intends to execute a growth strategy based on four pillars, namely seeking diversification, taking a long-term approach, achieving economies of scale, and having a local presence.”

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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.