iREIT Global reports 2.7% lower 1Q DPU of 1.42 cents on higher expenses, forex changes

SINGAPORE (May 16): The manager of iREIT Global has declared a 1Q19 distribution per unit (DPU) 1.42 cents, declining 2.7% from 1.46 cents a year ago due to higher property operating expenses and a weaker SGD/EUR exchange rate.

This represents an annualised distribution yield of 7.6% based on the REIT’s closing price of 74.5 cents on the last trading day of 1Q.

In euro terms, DPU for 1Q fell 1.1% to 0.89 euro cent from 0.90 euro cent a year ago due to higher property operating expenses.

Gross revenue for the quarter grew 1.4% to 8.7 million euros from 8.6 million euros in 1Q18.

Net property income (NPI) however fell 1.8% on-year to 7.6 million euros from 7.7 million euros previously, in the absence of facility management fees recognised in FY18 after finalising services contracts.

iREIT’s management says there was also an increase in repair and maintenance expenses for the upkeep of properties as it continues to take various initiatives at the property level.

Finance costs grew to 3.8 million euros as opposed to 1 million euros in 1Q18, and largely comprised interest expense on loans, interest rate swaps and amortisation of upfront debt transaction costs, as well as one-time costs of unwinding previous borrowings.

Administrative costs and other trust expenses grew 86.5% to 317,000 euros due to higher fees for ad-hoc professional services.

As such, distributable income for the quarter fell 0.5% to 6.3 million euros.

Commenting on its capital management initiatives, iREIT’s manager says it has drawn down new loan facilities in Feb to repay existing bank borrowings while taking advantage of the current low interest rate environment, such that iREIT will benefit from comparatively lower interest rates without having any refinancing requirements until 2026.

“Looking ahead, we intend to continue to undertake various initiatives to upkeep the existing properties and retain its existing tenants. We will also seek further diversification and scale via acquisitions to strengthen IREIT’s portfolio, even if this may have some negative impact on distributions in the short term,” says Aymeric Thibord, CEO of the manager.