A Path to Forever Financial Freedom
Ireit Global - 1H FY16 Results Review
Ireit Global announced their Q2 results this evening which I will take a few moments to quickly update their results.
This is a company I've taken the decision to average up, with the latest additions coming up only recently this month. It has also taken over to become my largest position currently in the portfolio.
There's no surprise there with the results as it came in within my expectations.
The revenue and NPI increases double digit year on year due to the acquisitions they made towards the Berlin properties which yielded them an NPI of 7.1%.
The DPU actually came in higher at against their forecast by performing better by 1% but the DPU in Singapore dollar has dropped by 9.1%. The recent weaknesses in the EUR has contributed to this. The sensitivity risk of every 1% drop in the EUR is almost 10% impact there to the DPU.
Nevertheless, it's something I am aware and comfortable about.
The management has also taken further steps to hedge 100% of the distributional income for FY16 at EUR1: SGD 1.53.
DPU for the first half came in at 3.18 cents, which represents a 8.5% based on current price, still very decent in my opinion given the long QE program the Europe Central Bank is embarking upon.
I owned 72,000 shares currently, which will entitled me to a dividend of $2,290 for the upcoming payout in September.
In terms of their debt maturity and gearing profile, it's something which as investors I am not too overly concerned about. The company does not have any major refinancing until in 2019 and their coverage ratio stands at a comfortable 8.3 times, higher than most reits you can find out there.
The company does have a heavy gearing at 41.8% on the balance sheet, though this comes at a cheap cost of borrowing at 2%. This means that should they decide to do any acquisitions or AEI, they probably had to reach out to the market for additional funds.
This is not uncommon of reits and it's just something investors have to be informed about.
The company share price has recently trend upwards and I'd actually like to see them did a placement or rights at this point in time, given that the yield has been compressed, which will make them easier to purchase an acquisition with an accretive yield than before. Even if not, this should make a good chance for them to raise funds in order to have the sufficient funds required for any inorganic growth.
One only has to look at how successful reits like Ascendas did their placement and equity funds to understand what it means to have a rising share price. It's one of the fundamental for a successful long term reits.
*Vested with 72,000 shares as of writing.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
