A Path to Forever Financial Freedom
Ireit Global - FY16 Results & Thoughts
Ireit Global announced their full year results expectedly much better with a 20.8% yoy increase in the DPU to 6.33 cents for FY16. At the current share price of 75 cents, this represents a dividend yield of 8.5%. Do also note that from FY17 onwards the management can exercise their discretion to distribute up to 90%, so they might just reduce the level of distribution.
Gross Revenue and Net Property Income both grew double digit as the contribution from the Berlin campus kicked in this year. Gross revenue of EUR 34.4m was 28% higher than previous year of EUR 26.9m. Net Property Income of EUR 30.8m was also 28.4% higher than previous year of EUR 24m.
Against Forecast, DPU actually performed better operationally from EUR point of view but was lower when converted to SGD due to forex reason. They hedged 100% of the income at $1.53 for 2016 but at a higher $1.55 for 2017. So we can almost expect a higher DPU for 2017 just based on the exchange rate alone.
Nothing that was surprising from their balance sheet. They still geared heavily at 41.6% at a low effective interest rates of 2% with a interest coverage ratio of 8.4x. I suspect with the elections looming next year in the Europe with countries such as Germany and France, the rates might remain low for quite a while more. In this regard, it's good that they geared optimally at an attractive rates for now.
WALE is at 5.9 years as at 31 Dec 2016.
Operationally, there was an update on the Munster building as Deutsche Telekom will be vacating one of the six floors from 1 April 2017 and the management will seek to find new multiple tenants to occupy the vacated space. We'll probably have to go to the agm to find out more on these updates.
There was also a 10% increase in the rental income for the Bonn campus, which is CPI linked activated. The building is currently occupied by GMG on a 6.3 years lease left so this is a good news.
The management started to introduce Tikehau capital network and will likely be injecting new assets in the retail or industrial sectors into the portfolio shortly. Given the high gearing they are in at the moment, a placement or rights issue is imminent and only a matter of time and not if.
It's a hold for me for now and I'll be seeking to understand the prospective better once I have attended their agm.
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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....
