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2 Things That Investors Should Know About IREIT Global Now

IREIT Global (SGX: UD1U) has five freehold properties in Germany. These properties are located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich.

There are two things to know about the REIT right now: its latest financial performance and valuation.

Financial performance

Here is a table showing important items from IREIT Global’s financial performance for the second quarter of financial year ending 31 December 2018 (FY18).

Source: IREIT Global Results Presentation

Overall, we can see that IREIT Global delivered a stable quarter. The improvement in net property income was due to lower property expenses while the distribution per unit benefitted from favourable currency exchange rate.

Aymeric Thibord, chief executive of the REIT’s Manager, commented:

“With a portfolio backed by blue-chip tenant base and no lease expiry in 2018, IREIT’s properties should continue to deliver stable performance for the rest of the year.

Looking ahead, we will continue to leverage on Tikehau Capital’s established footprint, proven track record and extensive network in Europe to grow IREIT and deliver long-term sustainable returns to the unitholders.”

As at 30 June 2018, the REIT clocked in a gearing ratio of 38.6% and occupancy rate of 98.5%.

In all, IREIT Global delivered a quarter that was consistent to the prior year period.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows IREIT Global’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.

Source: SGX StockFacts; data as of 23 August 2018

We can see that IREIT Global’s valuation is lower than the market average in terms of distribution yield. Yet, it has a higher PB ratio as compared to the market average.

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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.