IREIT Global – Poised For Recovery?

IREIT Global

IREIT Global is the first Singapore-listed real estate investment trust (REIT) established with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe that is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets.

I have done a stock analysis of IREIT Global in July last year. Since then, there has been some changes to the portfolio under IREIT Global which I think is worthy of an update to investors out there.

First, let us look at the FY19 full year financial results. As you can see from the table below, gross revenue increased by 1.3%. Net property income also improved by 0.1%. Distribution Per Unit in € cents declined by 0.6%. The weak EUR/SGD exchange rates caused the Distribution Per Unit in Singapore dollar cents to decline by 2.8%.

FY2019 Full Year Financial Results

Change (%)
Gross Revenue35,26534,8081.3
Net Property Income30,66230,6300.1
Distributable Income22,73822,6310.5
Distribution Per Unit (“DPU”) (€ cents)3.573.59(0.6)
Distribution Per Unit (“DPU”) (S$ cents)5.645.80(2.8)

Now, let us look at the updates for IREIT Global since my last review.

In December 2019, IREIT Global completed the acquisition of four freehold office buildings located in Spain. This is done via a joint venture whereby IREIT held 40% and 60.0% is held by Tikehau Capital SCA. Prior to the acquisition, IREIT Global own 5 properties. They are Berlin Campus, Bonn Campus, Darmstadt, Münster Campus and Concor Park. The newly acquired four Spain assets are Delta Nova IV, Delta Nova VI, II.Ilumina and Sant Cugat Green.


The acquisition was funded via a term loan facility of €32m maturing in May 2021. It was mentioned that the manager is looking at further debt to acquire the remaining 60% stake. As of 31st March 2020, the gearing ratio for IREIT Global stood at 38.0% which I am not comfortable with. Further debt could bring the gearing ratio higher.

However, I can see the effort that the manager is trying to bring the debt ratio down from a gearing ratio of 39.3% in December 2019 to the current lower gearing ratio of 38.0%.


As of 31st December 2019, the overall portfolio occupancy stood at 94.6%. The occupancy of the German portfolio stood at 99.7%. You may have guessed it right. The overall portfolio occupancy was dragged down by the Spain’s portfolio occupancy rate. On a positive note, the manager shared that the lower occupancy provides opportunity for rental upside from new leases and positive rental reversions.

As of 31st March 2020, the portfolio occupancy has increased slightly to 94.7%. The occupancy remained bogged down by its Spanish portfolio.

German Portfolio


 Spanish Portfolio


Portfolio WALE (“Weighted Average Lease Expiry”) remained healthy at 4.2 years with 97.7% of the portfolio leases due for renewal only from FY2022 and beyond.


The effective date of Mr Aymeric Thibord’s cessation as Chief Executive Officer is on 23rd April 2020. Mr Louis d’Estienne d’Orves has taken over the position as Chief Executive Officer of the Manager. Mr d’Estienne d’Orves joined Tikehau Capital’s Real Estate team in November 2018. Before joining Tikehau Capital, Mr d’Estienne d’Orves spent 11 years at AXA IM Real Assets, most recently as the Co-Head of European Transactions – Special Situations.

Current Dividend Yield

Based on the FY19 distribution pay out of 5.64 cents and current share price of S$0.68, this translate to a current dividend yield of 8.29%. The dividend yield is definitely attractive but of course you need to consider the risks involved such as further weakening of the EUR dollar.

IREIT Global - Poised For Recovery?


As mentioned in my last review, IREIT Global has been suffering from lack lustre financial results and year on year distribution per unit has been rather inconsistent.

However, I do notice some positive points worth mentioning on IREIT Global.

  • Newly acquired Spanish assets added to the portfolio which is a form of diversification.
  • Debt has been reduced to current ratio of 38.0%.
  • 96.5% of portfolio leases will be due for renewal only in FY2022 and beyond.
  • Tikehau Capital and City Developments Limited (CDL) have substantially increased
    their respective unitholdings in IREIT as a vote of confidence, bringing their combined stake to over 50%. Tikehau Capital now owns 29.20% while CDL owns 20.87% of the units in IREIT.
  • A new unitholder, AT Investments has also acquired a substantial 5.50% stake in IREIT, alongside Tikehau Capital and CDL. AT Investments is owned by Mr Arvind Tiku,
    whose family office has an asset portfolio worth approximately US$2bn.

The following are downsides

  • IREIT Global is also impacted by the COVID-19 pandemic. As a result of the pandemic, the eurozone economy is expected to contract. This results in the slow down of the take-up of office space and real estate investment in Europe.
  • Recent change in CEO means a change of leadership which may take IREIT Global into a different direction. Time will tell.
  • Foreign exchange risks (EUR to SGD). Thus, the Distribution Per Unit in SGD may decline further.

There are certainly more positives in IREIT Global than negatives right now. However, as a cautious investor, we should monitor the REIT for a longer period of time. Consistency is the key to success and time will tell whether the manager can turn the assets around.

For those who can’t resist buying into IREIT Global because the share price has been beaten down due to the pandemic, you may wish to split up your purchases over the next few quarters.

My Personal Analysis of Accordia Golf Trust

My Personal Analysis of Accordia Golf Trust

I have recently stumbled upon a Business Trust with an interesting business model which is Accordia Golf Trust. This is the first Business Trust comprising of investments in golf course assets in Japan. Accordia Golf Trust is 49% held by Accordia Golf Co., Ltd. (the “Sponsor”) and 51% held by Daiwa Real Estate Asset Management Co., Ltd, a wholly-owned subsidiary of Daiwa Securities Group Inc.

I am not a golf player and know nothing about golf. If you are a novice to golf like me, you probably will wonder where do Accordia Golf Trust derive its revenue from?

Based on what I found from the prospectus, the operating revenue for Accordia Golf Trust comes from three areas which are golf courses, restaurants and memberships. The sponsor, Accordia Golf Co. Ltd. supports the operation of the golf courses. The business model is very unlike other Business Trusts and REITs whereby they derive their revenue based on rental income.

In Accordia Golf Trust, income comes from fees paid by visitors who play golf on its golf courses and thus the number of golf players is a determining factor of its golf revenue. This explains why you can find the Accordia Golf Trust publishing monthly reports of its total number of players for each month.

The other income will be the golf membership. Because the golf courses are based in Japan, unless you are a local, it is unlikely that you will sign up for a membership.

Accordia Golf Trust also derive its income from restaurants that are operated within the golf courses. Based on what I found, an average game of golf takes at least four hours. The players are likely to dine in restaurants located within the golf courses.


Based on the fact sheet as of 31st December 2019, Accordia Golf operates 88 golf courses, all in Japan with 70% in key areas such as Tokyo, Osaka and Nagoya.

My Personal Analysis of Accordia Golf Trust

Number of Players

Instead of occupancy, we should be looking at the number of players at Accordia Golf courses because the number of players determine its revenue. The number of players in FY19/20 seem to increase as compared to FY18/19 and FY17/18.

My Personal Analysis of Accordia Golf Trust

If you think the number of players will be impacted by COVID-19, think twice. In February 2020, the number of players was 413,800 and utilisation rate was 74.5%. In March 2020, the number of players was 469,950 and utilisation rate was 76.2%.

Financial Summary

Below is Accordia Golf Trust’s 9 month’s financial results. Operating profit for 9M FY19/20 was JPY 9,045 million, which was higher than 9M FY18/19, mainly due to better performance and increase in number of visitors to the golf courses.

1st Apr 2019
31 Dec 2019

(JPY million)
1st Apr 2018
31 Dec 2018

(JPY million)
Operating Income41,49941,0771.0%
Operating Expenses32,45433,243(2.4)%
Operating Profit9,0457,83415.5%
Profit After Tax6,3455,9876.0%
Distributable Income4,2423,19432.8%
Distribution Per Unit (“DPU”) (JPY)3.862.9132.6%
Distribution Per Unit (“DPU”) (S$ cents)4.783.5634.3%

Distribution History

The distribution per unit has fallen over the years especially between FY16/17 to FY17/18. In the annual report, it was mentioned that adverse weather conditions across Japan such as rain and snow have affected its revenue.

Dividends Paid (SGD cents)3.773.856.046.63


As of 31st December 2019, the loan-to-value ratio (LTV) stood at 30.5%. A higher ratio means that the manager (borrower) owes a higher percentage in comparison to the asset’s value. In this case, I think 30.5% is within comfortable limits.


Mr Yoshihiko Machida is the current Chief Executive Officer and an Executive Director of the Trustee-Manager. He has extensive experience in general management and is very familiar with the golf course management business, having worked within the Accordia group for nearly 10 years.

The Sponsor Accordia Golf Co. Ltd is the leading golf course operator in Japan. Recently, there are news that the sponsor is offering 63.17 billion yen (S$783 million) to buy up the assets, including the holding company’s debts. I am not sure what it mean for investors.

My Personal Analysis of Accordia Golf Trust

Current Valuation

Based on the current closing price of S$0.56 and historical dividend payout of 3.77 Singapore cents, this translates to a current dividend yield of 6.73%.

My Personal Analysis of Accordia Golf Trust


Accordia Golf Trust is not my kind of dividend yielding stock that I will hold for the long term even though the dividend yield can be attractive. It amazes me on how the number of golf players are not affected by the current COVID-19 situation but I expect the golf revenue to be lumpy as unexpected bad weather such as Typhoon Hagibis can cause the golf courses to be closed.

If good weather is on Accordia Golf Trust’s side, the Tokyo Olympics will be a good catalyst for Accordia Golf Trust to further increase its revenue and distribution per unit. Nihon Golf-jo Keieisha Kyokai (Japan Golf Course Management Association) indicated that the number of senior golfers, above 70 years old, has increased from 16,800 in 2017 to 18,000 in 2018. The aging population in Japan is also another thing investors can bet on.

My Personal Analysis of First REIT

My Personal Analysis of First REIT

I believe many of you have heard of First REIT. Recently, one of my readers asked me about First REIT. I have not looked into the details of First REIT but I do know that it is a healthcare REIT. Investing into the healthcare industry is considered low risk by many because healthcare services are something that everyone needs no matter the economy is good or bad. Now, let us look into First REIT and whether it is worth investing.

First REIT is Singapore’s first healthcare real estate investment trust that was listed on Singapore Exchange Securities Trading Limited (“SGX”) on 11th December 2006.


First REIT has a total of 20 assets in three countries which are Indonesia, Singapore and South Korea. They have 16 assets in Indonesia alone. I was quite amazed by the number of assets they have in Indonesia. First REIT have 3 assets in Singapore and 1 asset in South Korea.

Indonesia (16 assets)

  • Siloam Hospitals Buton & Lippo Plaza Buton
  • Siloam Hospitals Kupang & Lippo Plaza Kupang
  • Siloam Hospitals Manado & Hotel Aryaduta Manado
  • Siloam Hospitals Yogyakarta
  • Siloam Hospitals Labuan Bajo
  • Siloam Sriwijaya
  • Siloam Hospitals Purwakarta
  • Siloam Hospitals Bali
  • Siloam Hospitals TB Simatupang
  • Siloam Hospitals Makassar
  • Mochtar Riady Comprehensive Cancer Centre
  • Siloam Hospitals Lippo Cikarang
  • Siloam Hospitals Lippo Village
  • Siloam Hospitals Kebon Jeruk
  • Siloam Hospitals Surabaya
  • Imperial Aryaduta Hotel & Country Club

Singapore (3 assets)

  • Pacific Healthcare Nursing Home @ Bukit Merah
  • Pacific Healthcare Nursing Home II @ Bukit Panjang
  • The Lentor Residence

South Korea (1 asset)

  • Sarang Hospital


Occupancy stood at 100% with no leases expiring in 2020. There are only 5 assets expiring in 2021. As we can see below, most of the leases are long leases which is a good thing if you enjoy stability but of course, long leases means less growth since you cannot step up the rent until the lease expires.

My Personal Analysis of First REIT

Financial Summary

First REIT had released their 4Q2019 financial results on 29th January 2020. Gross revenue declined by 1.6% and Net Property Income (“NPI”) declined by 0.8%. However, First REIT has maintained their Distribution Per Unit (“DPU”) payout of 2.15 cents.

Gross Revenue28,86029,321(1.6)%
Net Property Income28,30428,530(0.8)%
Distributable Income17,16917,0140.9%
Distribution Per Unit (“DPU”) (S$ cents)2.152.15

Let us look at the full year 2019 versus 2018 financial results. Gross revenue and Net Property Income (“NPI”) declined by 0.8% and 1.3% respectively. There is no growth in the Annualized Distribution Per Unit which remains flat at 8.60 cents.

Gross Revenue115,297116,198(0.8)%
Net Property Income112,894114,391(1.3)%
Distributable Income68,46367,6811.2%
Annualized Distribution Per Unit (“DPU”) (S$ cents)8.608.60

Distribution History

If you are looking at growth in DPU, it is slightly disappointing to see the DPU flat at 2.15 cents since 2018 but on the positive note, First REIT has been consistently paying out and maintaining their DPU. You get 8.60 cents per financial year.

My Personal Analysis of First REIT


The gearing ratio as of 31st December 2019 stood at 34.5%. The weighted average debt maturity is at 2.01 years. As you can see below, they have no refinancing requirements until 2021 which is a good thing.

My Personal Analysis of First REIT


Bowsprit Capital Corporation Limited is the manager of First REIT. Mr Tan Kok Mian Victor is the Chief Executive Officer since 2017. Mr Victor Tan was formerly the chief financial officer of Bowsprit, and joined the company in 2008. As the chief financial officer, he oversees the financial operations and managing the financial risks of the trust. I will say First REIT is in good hands since Mr Tan has been with First REIT since 2008.

The troubling part of First REIT is actually with its sponsor. Originally, First REIT have only a single sponsor, Lippo Karawaci. In 2018, Lippo Karawaci ran into debt problems and thus sold 100% stake in Bowsprit Capital to OUE Limited (“OUE”) and OUE Lippo Healthcare (“OUELH”) and 10.63% of the total unitholdings of First REIT to OUE Lippo Healthcare (“OUELH”). In January 2020, Lippo Karawaci raised $325m from successful bond issuance, which will be used to pay off most of the company’s debts due in 2022.

The above explains why First REIT have two sponsors. I am not sure if it is a blessing in disguise, but First REIT benefited from the two sponsor’s healthy pipelines:

  • Right-of-First-Refusal (ROFR) to Lippo Karawaci’s properties in Indonesia.
  • Right-of-First-Refusal (ROFR) from OUE Lippo Healthcare and opportunities to tap on OUE Lippo Healthcare’s growing healthcare network.

Current Valuation

I am using 6 months chart so that you can see the price crash due to COVID-19.

My Personal Analysis of First REITBased on the current share price of S$0.74 and historical DPU payout of 8.60 cents, this translate to a super attractive dividend yield of 11.62%.

However, the COVID-19 situation has caused the temporary closure of

  • Lippo Plaza Kupang (“LPK”) (which is part of the Kupang property comprising Siloam
    Hospitals Kupang & Lippo Plaza Kupang); and
  • Lippo Plaza Buton (“LPB”) (which is part of the Buton property comprising Siloam
    Hospitals Buton & Lippo Plaza Buton)

From the manager

The temporary closures affect only retail assets which comprise a small proportion of assets within First REIT’s portfolio, which is predominantly healthcare and/or healthcare related. As the situation remains uncertain, it is currently difficult for the Manager to ascertain the full financial impact of the outbreak on the financial performance of First REIT. Nevertheless, First REIT remains in compliance of its debt financial covenants and has adequate financial reserves to fulfil its obligations in the foreseeable future. The Manager will continue to monitor the situation closely across Indonesia, Singapore and South Korea, and will provide updates on any material developments as soon as practicable.


The current COVID-19 situation seems like a good opportunity to buy into First REIT as this gives you an attractive dividend yield of 11.62%. Like what the manager said, the assets are mainly predominantly in healthcare and/or healthcare related but it is difficult to ascertain the full financial impact of the COVID-19 outbreak on the financial performance of First REIT.

Investors should continue to monitor First REIT sponsor Lippo Karawaci’s debt profile even though $325m was raised to pay off due debts. We have seen how the sponsor’s escalating debt caused First REIT’s share price to fall in 2018.

Taking note of the current attractive dividend yield but unknown financial impact to First REIT, it is good to use the strategy of buying into First REIT in tranches until there is more clarity on the COVID-19 impact to healthcare REITs.

Do not forget if the sponsor gets hit by COVID-19, so will the REIT itself!