ALP REIT INVESTMENT CLUB
IREIT GLOBAL (UD1U)
20 February close price: S$0.69
12-M target price: S$ 0.9
1) Type of Reit: Office rental Reit
2) Number of property in the portfolio: There are currently four properties in Germany.
3) Top 5 properties that generates the heights revenue (Decreasing order): bon campus(30.9%), darmstadt campus(30.0%), münster campus(19.8%) and concor park(19.3%)
4) Challenges: It is facing more competitors from Europe as well as Asia entering the market. There is also an increase in acquisition transactions.
5) Strengths: Germany is experiencing lower unemployment rate, business growth and lower interest rates. These has lent support to the property market as businesses are looking to expand, in turn raising the demand for office spaces.
6) Signification events: successfully listed on the Singapore exchange securities on the 13th august 2014. According to the latest news, it has acquired a new tenant, berlin campus, on august 6, 2015.
7) Table ( Since this reit just listed on 2014, no trailing 5 years performance)
8.) Recommendation: Hold. Ireit global’s properties are located in strategic locations in Germany. With an overall occupancy rate of 99.7% and with the Germany’s stable economy, Ireit global is looking to have a bright year ahead. Moreover, the office space demand is projected to rise while the European economy gently recovers. Rents are expected to increase in all key German cities on an average rate of 1.5%.
Even though the lower EURO is helping to fuel the Real Estate Market, IREIT receives its distributable income in Euros but pays out distributions to Unitholders in Singapore dollars on a semi-annual basis. In view of the weakening of the Euro, they made the decision to fully hedge the distributable income for 2014 and 2015 at the average hedge rate of approximately S$1.68 per Euro and S$1.55 per Euro, respectively. Keep in mind that Hedging comes with the cost of opportunity. We would recommend to hold as the global economy is still very uncertain and this reit has just listed on 2014, hence, past performance is limited to fully gauge the reit’s strength.
Compiled by: Lu Jian
DISCLAMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.