IREIT Global and T-bill ladder strategy.


IREIT Global reported lower net property income for 1H2023.

I remind myself that if the current weakness is temporary in nature, then, staying invested is what I want to do.

Portfolio occupancy has improved from 87% to 88.7% as 25% of the vacated Darmstadt asset was taken up by the German government.

However, together with the rent free periods for newly signed leases in Bonn Campus, Munster Campus and Sant Cugat Green, contribution to property income will only be visible in 2H2023.

There is also the fact that the REIT has more units in issue after the recent rights issue while the funds raised have yet to be utilized.

The acquisition of out of town retail parks leased to B&M will make a meaningful contribution to property income when it is completed.

All these point to a higher level of distributable income in 2H2023.




Staying invested in IREIT Global for income also gives me peace of mind unlike being invested in some other REITs like Elite Commercial Trust, Manulife US REIT and Prime REIT because of its very strong balance sheet.

Gearing level will be at around 34% post acquisition of the B&M portfolio.

Even if the value of properties in their portfolio should see a decline of 10%, gearing level would not exceed 40% unlike some of the other REITs mentioned above.

IREIT Global also has almost 100% of its debt on fixed interest rate which is at around 1.9% p.a. and they do not need refinancing until 2026.

I particularly like their Berlin asset which recently saw an extension of its master lease till end of 2024 at a significantly higher asking rent.

This confirms reports that that the said asset is under rented.




Although there could be a vacancy period if the master lease is not extended beyond 2024, I expect that it would be more quickly backfilled than the Darmstadt asset.

IREIT Global seems to be suffering collateral damage as well due to Mr. Market’s pessimism about some overseas REITs.

However, when I look at the details, IREIT Global is in a stronger position.

I keep saying to myself that during tough times, having a strong balance sheet will ensure survival.

This could be lost on Mr. Market. 

So, opportunities to buy IREIT Global even cheaper could present themselves.

This brings me to the next point of this blog post, T-bills.

Regular readers know that I have a T-bill ladder which was completed in April this year.

I have not only been maintaining the ladder but I have also been strengthening it whenever I could.

I would add a thousand dollars or two to my application in every T-bill auction.

Only an extra thousand dollars or two?

Yes, AK is a retiree without a lot of spare cash. Sadness.





I also talked about when I might dismantle my T-bill ladder.

Well, if Mr. Market should become even more irrational than usual, I might just have to dismantle my T-bill ladder to buy more of IREIT Global.

The next T-bill auction is happening on 17 August which is just next week.

I will be putting in a non-competitive bid using money from a T-bill which matured plus some spare cash on hand, as usual.

No need to think hard about how much to bid competitively unless I am using CPF-OA money.

Of course, this is just me talking to myself.

If AK can do it, so can you!

Reference:
T-bill ladder is attractive.



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