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3 REITs That Offer Exposure to European Assets

Royston Yang
European building artefact

REITs offer investors exposure to different types of properties in different locations around the world. The beauty of having a wide variety of REITs listed on our local stock exchange is that investors can select REITs that are appropriate for their own portfolio preferences and risk tolerances.

Investors who are keen on gaining exposure to European real estate can consider these three REITs.

1. iREIT Global

iREIT Global (SGX: UD1U) is a Singapore REIT that invests in a portfolio of income-producing real estate in Europe used primarily for office, retail, and industrial purposes. Its portfolio currently consists of five freehold properties located in Germany with a total net lettable area of around 200,600 square metres, along with 3,400 car park spaces.

For its Q2 2019 earnings, the REIT reported a 1.8% year-on-year increase in gross revenue to EUR 8.8 million, while distribution per unit (DPU) increased by 1.3% year on year to 1.51 Singapore cents. Using H1 2019’s DPU of 2.93 Singapore cents, iREIT Global’s shares trade at a forward dividend yield of around 7.7% at the last traded price of S$0.76.

2. Cromwell European REIT

Cromwell European REIT (SGX: CNNU) invests in real estate assets in Europe used primarily for office, light industrial, logistics, or retail purposes. Its portfolio consists of 102 properties (as of 8 August 2019) in countries such as Denmark, Finland, France, Germany, Italy, the Netherlands, and Poland. Investors can gain access to a wide variety of European nations by investing in this REIT.

Cromwell reported a strong set of results in its Q2 2019 earnings report. Gross revenue and net property income surged 32.5% and 33.7%, respectively, year on year, mainly due to the acquisition of 22 new properties in late 2018 and early 2019. As a result, DPU increased by 3% year on year to 0.0204 euros. For H1 2019, DPU increased by 4.6% from the IPO forecast to 0.0204 euros. The REIT’s forward dividend yield is around 8.2% at the last traded share price of EUR 0.50.

3. Frasers Logistics & Industrial Trust

Frasers Logistics & Industrial Trust (SGX: BUOU) owns 81 logistics and industrial properties located in Australia, Germany, and the Netherlands. These properties are worth around 2.9 billion Australian dollars as of 30 June 2019. Note that of the 81 properties, 22 are from Europe with a portfolio value of approximately AU$1.0 billion. These European properties have a 100% occupancy rate with an average property age of 8.6 years.

FLT recently reported its Q3 2019 earnings (it has a 30 September fiscal year-end), and 9-month 2019 DPU declined by 2.6% year on year to 5.27 Singapore cents, mainly due to the weakening of the AUD and EUR against the SGD. The REIT offers a forward dividend yield of close to 6% at the last traded price of S$1.20. The REIT is also in the process of finalising an acquisition of nine properties in Germany and three in Australia for a total consideration of AU$507.2 million, and this acquisition is expected to boost future DPU.

Key risks for European REITs

Investors should note that the key risk for European real estate is the strength of the euro, as the European Union has engaged in quantitative easing (i.e., the printing of more money) in order to stimulate the economies. Another risk is the demand-supply dynamics for properties within each country, as this may affect both the occupancy and rental reversion rates for the REIT.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore contributor Royston Yang owns shares in Frasers Logistics & Industrial Trust.

Motley Fool Singapore 2019