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Results are out.
As expected, the rights issue was oversubscribed.
At 40.8c per rights unit, it was just too cheap to ignore.
With DPU expected to be at 2.31 Euro cents, we are looking at 3.42 Singapore cents using the prevailing exchange rate.
At the moment, 1 Euro = S$1.48.
This gives a distribution yield of almost 8.4%.
This is very attractive to me, especially when I remind myself that IREIT Global retains 10% of its distributable income.
There is also the fact that IREIT Global's gearing ratio is only 33% and that almost 100% of its debt is fixed until 2026.
This gives me peace of mind.
Although its Berlin asset will see its Master Lease expiring middle of next year, I am not too worried.
This is because the office market in Berlin is relatively resilient with vacancy rate at only around 5%.
There is also the fact that IREIT Global's Berlin asset is significantly under rented and I believe it should not have great difficulty getting the lease renewed or, failing that, getting new tenants.
IREIT Global's unit price closed at 42.5c today.
At this price, the distribution yield is 8.05% which is still very attractive.
Looking at the chart, I see the declining 200 days moving average at 50 cents.
This should be the resistance to watch.
Having said that, as an investor for income, I am more interested in receiving passive income.
Although with the rights issue oversubscribed, I do not expect my application for excess rights to be fully filled, I still expect IREIT Global to continue generating meaningful income for me.
As IREIT Global was already one of my largest investments, this rights issue has served to further enlarge my investment.
This should have an outsized impact on my passive income in future, all else being equal.
If AK can do it, so can you!
Related post:
T-bills, DBS, OCBC and IREIT.
Bloggy Award
17 comments:
Hi AK,
what do you think about the viewpoint of this on Ireit?
https://www.liveyoungandwell.com/wealth/ireit-global-share-price/
will the capital depreciation outweight the dividend?
hi ak, i very suaku. first timer getting rights.. when will we know the results?
ps. hope you're coping well. emotionally ofc. not financially. lol.
Hi AK,
U are absolute right! 👍🏼😊
IReit Global’s Berlin Campus main tenant extends lease at 45% higher rent
https://www.businesstimes.com.sg/companies-markets/ireit-globals-berlin-campus-main-tenant-extends-lease-45-higher-rent
Regards,
Eddy
hi ak
the long term chart doesn't look very good leh. is it worth to keep on holding to it? y not cash out and switch to other investments?
cw
IREIT has just announced an early lease extension by their main tenant at their Berlin Campus till Dec 24, with a 45% rent increase.
https://links.sgx.com/1.0.0/corporate-announcements/4Y28T1ZPSBPNJW5P/c96611aab94e32ea4d04614f3d1d283c0d1bf828f50c2f18d4312e267f260e2b
Hi E,
The blogger's focus seems to be on price while I like to focus on value.
I responded to another reader who had the same question in an earlier blog.
You will find it in the blog's comments section:
Ignoring one rights issue and buying the other.
AK is lazy lah. ;p
Hi yuhui,
I am emotionally stable.
Thank you for asking.
I am more worried for my sister but time will heal. :)
As for IREIT's rights issue results, I would wait to see if I get any money refunded.
From there, I would be able to tell how many units I was successful in getting.
Alternatively, I could check my CDP account online a few days later.
The units will be issued before 19 July, if I remember correctly.
Hi Eddy,
I was out the whole day and just got home.
Thanks for the good news! :D
Hi cw,
I see no reason to sell a fundamentally sound investment that is generating meaningful income for me, especially not when it is so undervalued.
Having said this, if we are trading for income, then, our focus would be on price action and not valuation. ;)
Hi MK,
That is good news! :D
This gives greater clarity as to the true value of the Berlin asset and what is the rent it could command in the current market.
Whether the master tenant stays or leaves in 2025, we know that the asset is able to generate higher income and should have a higher valuation.
"The main tenant of the Property, Deutsche Rentenversicherung Bund (“DRV”), has been occupying the Property for 28 years since 1995. As at 31 March 2023, the lease with DRV at the Property constitutes approximately 24.0% of IREIT’s total gross rental income.
"Ahead of DRV’s lease expiry on 30 June 2024, the Manager has successfully negotiated and signed a lease addendum with DRV to extend its lease further by another six months until 31 December 2024. In addition, DRV will pay a revised rent that is approximately 45% higher than its current office rent from 1 July 2024 onwards.
"DRV would also need to pay a lump-sum amount of €15.5 million, equivalent to over 16 months of its total current rent, as compensation for the dilapidation costs to reinstate Berlin Campus back to its original state should DRV vacate the Property at the end of the extended lease term. Including the higher revised rent, DRV will pay a total additional amount equivalent to approximately 18.5 months of its total current rent, allowing the Manager to initiate its repositioning strategy of Berlin Campus into a multi-let asset."
I like. :D
Hi AK
Hope you got all the excesses you applied for!! :-)
Cheers
EK
HUAT!! =P
Hi AK,
I subscript to my entitled rights units in full, however, i got my full refund back to my account today. What a disappointment. Is this normal? I am quite puzzled here.
The same thing happen to my AIMS reits as well.
Kind regards,
GP
Hi Elaine,
I checked my CDP account just a few minutes ago.
My application was fully filled!
Happiness! :D
Hi Kenji,
Kamsiah you plenty plenty! Huat ah! :D
Hi GP,
That is very odd.
I can understand not getting any excess rights but you should get your entitlement filled.
You might want to check with your broker.
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