Wolf Money(IREIT Global)situational
The below article is for educational purpose only. Kindly refrain from taking any action. It shouldn’t constitute as an investment advice. Please read the disclaimer.
I am starting the new year with a test case purchase at IREIT GLOBAL. The REIT’s performance has been poor since listing 10 years ago. The major contributor of that weakness was due to Berlin Campus vacancy, a massive office complex vacated by a German insurer. Berlin Campus alone contributed more than 20% of the REITs income previously. The second point was the money required to spruce up the space to attract new tenants to a tune of up to SGD $250m, which put pressure on the already weak gearing numbers. Third, the rising interest rate. The REIT had previously lock in a low interest rate before covid, now faces higher interest rates. The higher interest affects DPU.
The REIT manager has been working behind the scenes to lease the rest of the unoccupied space on Berlin Campus. Two hotels had taken up 25% of the space with the remaining still under negotiation. The two lease agreements will contribute to 50% of the previous total rental income. There are enquiry for the rest of the space. The manager is working hard to close the lease agreement by the end of 1Q26. The management did mention partial divestment of the Berlin Campus as an option which will bring in much needed capital to reduce gearing.
For those looking for longer term. These are the things to watch out
Risks
1.) The potential tenants didn’t agree on a lease agreement with the REIT on the unoccupied space in Berlin Campus.
2.) Weakness in leasing for other properties.
3.) Cost overrun on the reposition of Berlin Campus.
4.) The higher interest will affect DPU.
5.) Potential cash call.
6.) Weak European economy.
Merits
1.) Positive out come from risks point number 1.
2.) The share is trading at 50% discount to NAV, providing a margin of safety.
3.) The current yield is at 6% providing a base rate for return.
4.) Relative long term wale at 5.4 years, providing stability.
5.) Uplift in Berlin Campus rental is positive. They under priced their lease to a former tenant.
The nature of my position is short term. A bet on IREIT finding a tenant to soak up the unoccupied space in the Berlin Campus will have a positive effect financially. It will definitely take away the uncertainty of spending capex without a tenant. More details at the end of month portfolio update. God Bless.
Please consider following us on telegram for the latest update on Lone Wolf investor by clicking on the link below. No form filling, no payment required, no collection of data, no data mining, no hard selling, no obligation.
https://t.me/joinchat/oCgkD3sQFRMzMWM1
Disclaimers
All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for education only. Buyer beware,do you own due diligence.
Comments
Post a Comment