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9 Key Takeaways From IREIT Global’s Latest Earnings

Two weeks back, IREIT Global (SGX: UD1U) announced its second quarter of 2018 earnings update. As a quick introduction, IREIT Global has five freehold properties in Germany. These properties are located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich.

Here, let’s look at nine things that investors should know about its latest results:

1. Gross revenue for the reporting quarter declined 1.8% year-on-year to €8.7 million, but net property income improved by 0.6% to €7.9 million.

2. The REIT’s distribution per unit (DPU) for the quarter grew by 2.8% year-on-year (in Singapore dollar terms) to 1.49 Singapore cents.

3. Based on IREIT Global’s annualised DPU of 5.9 Singapore cents, and its closing unit price of S$0.76 as of 20 August 2018, the REIT has a trailing distribution yield of 7.8%

4. As of 30 June 2018, the REIT’s gearing stood at 38.6%, which is a safe distance from the regulatory gearing ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 98.5% at the end of the quarter.

6. The weighted average lease to expiry profile (by gross rental income) was 4.6 years, as of 30 June 2018. There are no leases expiring in 2018.

7. The REIT’s top five tenants accounted for 97.2% of its gross rental income, as of 30 June 2018, with the largest tenant, namely Deutsche Telekom, taking up a 51.9% share.

8. Tikehau Capital, through its investment arm in Asia, has acquired an additional 4.52% of the shares of the REIT’s manager, bringing its total shareholdings to 84.52%. In addition, Tikehau Capital has agreed to increase its interests in IREIT from approximately 3.61% to 8.00%.

9. Here are the comments shared by IREIT Global regarding its outlook:

“A combination of healthy business confidence, falling unemployment rate, rising wage growth and accommodative financing conditions has continued to support the European real estate investment market and the take-up of office space. IREIT’s properties should continue to deliver stable performance for the rest of 2018, as there are no lease expiries during the period.

The discussions with several existing tenants for a possible lease extension ahead of their lease expiries in 2019 are ongoing. In respect of Berlin Campus, the Manager is pleased to report that the key tenant, Deutsche Rentenversicherung Bund (DRV), did not exercise its lease break option to return part of its leased space in 2019. On the capital management front, the Manager has also initiated discussions with banks for the refinancing of IREIT’s term loans.”

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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.