IREIT Global

[momoeagle]

Should be looking debts too I guess. If the reit is able to get debts with interest less than 4.5%, technically their resulting yield from their property investments will be higher. It's the idea behind property leverage.

[madagnet]

Too much concentration on just one anchor tenant across its 4 properties, like >90%.

[greengiraffe]

http://infopub.sgx.com/Apps?A=COW_CorpAn...g%2014.pdf

Tong really powderful... got Alan Wang and Soildbuild boss Lim Chap Huat into the IPO...

Another OUE Reit and Viva in the making...

[greengiraffe]

Euro commercial property market gets fundraising boost
ALESSIA PIROLO AND ROBBIE WHELAN THE WALL STREET JOURNAL SEPTEMBER 11, 2014 12:00AM

European REIT sector
European REIT sector Source: TheAustralian
EUROPE was slow to embrace real-estate investment trusts, but a record surge in fundraising is providing a boost to the Continent’s recovering commercial-property market.

This year, 10 new REITs in Ireland, Spain, the UK and other countries have raised $US4.2 billion through August, a record for the first eight months of a year, according to data provider ­Dealogic.

That is up from 10 offerings with proceeds of $US1.9bn in all of last year.

Also, this year is on track to beat the previous record year in 2006, when 26 REIT initial public offerings raised $US5.1bn, ­according to Dealogic.

The new offerings come as the eurozone is recovering from a downturn that was triggered in part by real-estate bubbles in ­several European countries.

Many European banks are still struggling with large portfolios of distressed loans, and the landscapes in some countries are dotted with unfinished developments.

The European market capitalisation of real-estate listed companies was €144.8bn as of August, up from €105.1bn last year, but still well below the €282.8bn in Asia and €497.3bn in North America, according to data from the European Public Real Estate Association, which represents Europe’s publicly listed property companies.

Analysts compare the boom in European REIT IPOs to the surge in new listings in the US that followed the commercial real-estate collapse of the early 1990s. “If I were the Spanish ­government or the Greek or ­Italian government, and I had a problem where I had a lot of property that was in the wrong hands and needed to be liquidated, I would want to have a healthy functioning REIT regime to help me with that,” said John Lutzius, who heads the London office of Green Street Advisors, a real-­estate research firm.

But there are a few differences between the US in the early 1990s and Europe today.

In the US, most of the IPOs were done by existing real-estate companies whose portfolios were over-leveraged, and they used the new equity to shore up their balance sheets.

In Europe, most of the ­companies that have gone public in the past year didn’t own large portfolios of property.

Instead, investors are using the IPOs to raise money to buy property at attractive prices ­following real-estate slumps in several countries, such as Spain, Italy and Ireland.

The largest IPO this year was by Merlin Properties of Spain, a company formed by two former executives of Deutsche Bank AG’s real-estate unit in Spain and the former head of European real estate for Brookfield Asset Management.

Merlin raised €1.25bn and expects to have invested 92 per cent of it by the end of this year, company executives said.

Its purchases include Marineda City shopping centre in La Coruña, the largest retail complex in the country, for €260 million.

REIT IPOs first started showing up in Ireland last year, after the Irish government introduced new REIT legislation. The new players include Green REIT, which mostly owns Dublin office buildings, and Hibernia REIT, which has acquired loan portfolios as well as office properties.

Spain has seen the most IPOs in Europe in the recent REIT boom, with four listings this year and more to come.

Quabit Inmobiliaria SA is seeking to raise about €500mn this year, which it plans to use to buy residential and commercial property, according to people familiar with the company.

[greengiraffe]

• I REIT is the main direct proxy here with assets in Europe... DPU yield more than 10%... any smokes and mirrors here?Buddies input appreciated... not vested GG
  
• Nov 10 2015 at 4:03 PM 
  

European property a missed opportunity: JP Morgan

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NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/o/u/u/m/image.related.afrArticleLead.620x350.gkv7fo.png/1447159143504.jpg[/img]Cities like Birmingham offer opportunities for Australian institutional investors. Visit Britain
[Image: 1426319989079.png]

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by Larry Schlesinger
Europe's recovering commercial property market presents better investment opportunities for Australian superannuation funds, than competing with cashed-up offshore buyers for a limited pool of domestic assets, according to the head of JP Morgan's European Property Fund.
"The case needs to be made that staying home and investing only domestically is probably not the best thing in this point in the cycle," UK-based Chester Barnes told the Atchison Consultants Global Real Estate Forum in Melbourne.
Mr Barnes presented a slide showing that over the past two years, Australian institutions have invested just $1.4 billion in direct European property, ranking the country a lowly eighth in the Asia Pacific, tied with Thailand, despite having the fourth biggest pool of superannuation money in the world.
"We argue that now is a good time to be buying real estate in Europe," he said.

"As the European economy continues to recover, we expect better jobs growth to come through and rental value to [eventually] start rising.
"Europe is also less competitive, whereas in Australia there is a $1.20 of funds chasing every dollar of real estate investment."
Mr Barnes said JP Morgan favoured the core asset classes of office, retail and industrial with a focus on outer central London, the top two or three cities in the United Kingdom, Paris and Lyon in France and about six key cities in Germany.
"We like good quality assets in good locations – not the trophy assets – that appeal to occupiers and can deliver decent high single digit returns."

[GreedandFear]

• I REIT is the main direct proxy here with assets in Europe... DPU yield more than 10%... any smokes and mirrors here?Buddies input appreciated... not vested GG
• Nov 10 2015 at 4:03 PM 
  

European property a missed opportunity: JP Morgan

• Share via Email

NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/o/u/u/m/image.related.afrArticleLead.620x350.gkv7fo.png/1447159143504.jpg[/img]Cities like Birmingham offer opportunities for Australian institutional investors. Visit Britain
[Image: 1426319989079.png]

• Share on twitter

by Larry Schlesinger
Europe's recovering commercial property market presents better investment opportunities for Australian superannuation funds, than competing with cashed-up offshore buyers for a limited pool of domestic assets, according to the head of JP Morgan's European Property Fund.
"The case needs to be made that staying home and investing only domestically is probably not the best thing in this point in the cycle," UK-based Chester Barnes told the Atchison Consultants Global Real Estate Forum in Melbourne.
Mr Barnes presented a slide showing that over the past two years, Australian institutions have invested just $1.4 billion in direct European property, ranking the country a lowly eighth in the Asia Pacific, tied with Thailand, despite having the fourth biggest pool of superannuation money in the world.
"We argue that now is a good time to be buying real estate in Europe," he said.

"As the European economy continues to recover, we expect better jobs growth to come through and rental value to [eventually] start rising.
"Europe is also less competitive, whereas in Australia there is a $1.20 of funds chasing every dollar of real estate investment."
Mr Barnes said JP Morgan favoured the core asset classes of office, retail and industrial with a focus on outer central London, the top two or three cities in the United Kingdom, Paris and Lyon in France and about six key cities in Germany.
"We like good quality assets in good locations – not the trophy assets – that appeal to occupiers and can deliver decent high single digit returns."

I think the assets are fine with long tenancies. Agree with the JPM view that European real estate is likely to continue to appreciate as the economy recovers. Also, European interest rates are likely to stay low for quite a while as the European economic recovery is far behind the US (whereas the Fed looks likely to hike soon). Do bear in mind that there was a share issuance (June if I remember correctly ?) to fund the latest property purchase. By my calculations, taking into account the dilution and the expected yield of the new property and cost of the new loan, dividend yield is more likely to be around 9.3% at the current share price of 68 cents. The NAV is EUR 48 cents which is SGD 73 cents at the current exchange rate (1.53), so there is a small discount. In my mind, the biggest risk is further EUR depreciation but you have some cushion from the slight discount to NAV (7%) and the reasonable dividend (9.3%ish). I bought in the low 60s and would purchase more at that level.

[Nick]

The 2 biggest risk are declining Euros and default by its 2 counterparties. However, when I look at the positives - freehold assets leased to blue chip counterparties for multi year leases, low cost of debt at 1-2%, yields of 9 - 10%, potential for expansion due to the large spread between asset yield and debt cost - it does seem to be attractive. I acquired IREIT shares at low 60s. Not really accumulating much since then.

(Vested)

[GreedandFear]

IREIT posted Q3 DPU of 1.41 cents. However, this only included contribution from the newly acquired Berlin property from August 6th. If you adjust for a full quarter's contribution (using the Q3 forecast DPU for the existing portfolio vs the actual Q3 result and then adjusting the difference for a full quarter), I get a "normalised" DPU of 1.61 cents for the quarter or annual 6.46 which gives you around 9.5% yield. NAV is now EUR 0.41 per share or SGD 62.7 cents, so current price of 67.5 cents is about 8% above book. There is a negative valuation adjustment for the newly acquired property of EUR 7.9MM which is not very well explained. Overall, it looks solid enough

[greengiraffe]

DBS maintain BUY:

Last Traded Price: S$0.675 (STI : 2,916.78)
Price Target : S$0.77 (14% upside) (Prev S$0.90)
Potential Catalyst: Acquisitions/increase in German CPI
Where we differ: In line with expectations
Analyst
Mervin Song CFA +65 6682 3715 [email protected]
Derek Tan +65 6682 3716 [email protected]
Price Relative
Forecasts and Valuation
FY Dec (EUR m) 2014A* 2015F 2016F 2017F
Gross Revenue 8 27 33 33
Net Property Inc 8 24 30 31
Total Return (6) 17 23 22
Distribution Inc 6 19 25 26
EPU (S cts) (1.9) 4.4 5.8 5.5
EPU Gth (%) nm nm 30 (5)
DPU (S cts) 2.0 5.1 6.3 6.3
DPU Gth (%) nm 146 25 0
NAV per shr (S cts) 63.1 61.5 61.0 60.3
PE (X) nm 15.2 11.7 12.4
Distribution Yield (%) 3.0 7.5 9.4 9.4
P/NAV (x) 1.1 1.1 1.1 1.1
Aggregate Leverage (%) 31.1 43.4 43.6 43.8
ROAE (%) (6.2) 7.7 9.5 9.0
Distn. Inc Chng (%): 13 45 44
Consensus DPU (S cts): - - -
Other Broker Recs: B: 1 S: 0 H: 1
* for period between 13Aug-31Dec14
Source of all data: Company, DBS Bank, Bloomberg Finance L.P
Too cheap to ignore
Concerns largely priced in. We maintain our BUY call with
revised TP of S$0.77. While the market has rightly placed a
liquidity discount over IREIT due to (1) its small free float (c
29.5%) and market cap, and (2) risk of further devaluation of
the EUR versus SGD on the back of potential QE by the ECB,
we believe these risks have largely been priced in. This is
because even with a further 10% devaluation of the EUR,
IREIT’s FY16F yield is still attractive at 8.5% versus our current
forecast of 9.4%.
Boost from recent Berlin acquisition. IREIT recently completed
the acquisition of a property in Berlin for EUR144.2m, which
implies 7.1% proforma FY14 NPI yield. Beyond the boost in
earnings, the property further diversifies IREIT’s portfolio to five
German cities and increases cash flow visibility with weighted
average lease expiry (WALE) by gross rental income (GRI) now
at c.7 years, up from c.6 years previously.
Exposure to potential cap rate compression in the German real
estate market. With the ECB having embarked on a QE
programme to reflate the European economy, we believe IREIT
provides investors to a potential uplift in property values
through the compression of cap rates.
Valuation:
We lowered our DCF-based TP to S$0.77 from S$0.90 after
incorporating the 45-for-100 rights issue at S$0.468 per unit
and the acquisition of the Berlin property. With an attractive
9.4% FY16 yield and 15% upside to our revised TP of S$0.77
we reiterate our BUY recommendation.
Key Risks to Our View:
The key risk to our view is a significant depreciation of EUR
versus SGD beyond the 1.54 FX rate that our economists have
projected. For every 0.10 change in the EURSGD FX rate, our
DCF valuation changes by 6%. In addition, a weaker than
expected inflation rate would also delay any increase in rents.

[Nick]

IREIT uploaded a set of presentation slides detailing its merits - http://infopub.sgx.com/FileOpen/SIAS_pre...eID=380183

Key Points: > 8% spread from risk free rates, 100% freehold, long WALE of 7 years, 2% debt cost, blue chip tenants, over 9% dividend yield.

Key Risk: Counterparty risk, depreciating Euros.

(Vested)