- Main Sector(s): Office
- Country(s) with Assets: England, Scotland & Wales
- No. of Properties (exclude development/associate/fund): 155
Key Indicators
9M2022 revenue has increased yoy due to full-period contributions from the properties acquired in March 2021. However, both distributable income and DPU have declined mainly due to 100% of manager fees being paid in cash starting in 2022 as well as an increase in interest expenses.
There would be a rent review in Apr 2023, which is based on the UK CPI, ranging from min. 1% to max 5% on an annual compounding basis. Judging from the graph above, if we take a rough guide from 2018 to 2022, the potential uplift could be around 13.5%.
Asset Enhancement Initiative
For Bradmarsh Business Park, upgrading of HVAC system and installation of new LED lighting is completed. Various works have been planned for DWP-occupied properties to optimize energy usage.
- REIT sponsor's shareholding: Below median for more than 20%
- REIT manager's shareholding: Below median for more than 20%
- Directors of REIT manager's shareholding: Above median for more than 20%
Lease Profile
- Occupancy: ± 5% from median
- WALE: Above median for more than 20%
- Highest lease expiry within 5 years: Below median for more than 20%; Falls in 2023
- Weighted average land lease expiry: Majorities are freehold properties with some longer than 99 years remaining land tenure
Debt Profile
- Gearing ratio: Above median for more than 10%
- Cost of debt: ± 10% from median (Post loan extension is at 4.2%, which is above median for more than 20%)
- Fixed rate debt %: Below median for more than 10% (Post loan extension is at 68%, which is ± 10% from median)
- Unsecured debt %: 0% unsecured debt
- WADM: Below median for more than 20% (Post loan extension is at 2.2 years, which is still below median for more than 20%)
- Highest debt maturity within 5 years: Above median for more than 20%; Falls in 2024
- Interest coverage ratio: Above median for more than 20%
Diversification Profile
- Top geographical contribution: Below median for more than 20%
- Top property contribution: Below median for more than 20%
- Top 5 properties' contribution: Below median for more than 20%
- Top tenant contribution: Above median for more than 20%
- Top 10 tenants' contribution: Above median for more than 20%
Key Financial Metrics
- Property yield: Above median for more than 20%
- Management fees over distribution: Below median for more than 20%; $9.90 distribution for every dollar paid
- Distribution on capital: Above median for more than 20%
- Distribution margin: Above median for more than 20%
Trends
- Slight Uptrend: DPU
- Flat: NAV per Unit, Occupancy
- Slight Downtrend: Property Yield, Distribution Margin
- Downtrend: Interest Coverage Ratio, Distribution on Capital
Relative Valuation
- Current 52 Weeks Range: 18.2%
- P/NAV: Below -2SD for 1y & 3y
- Dividend Yield: Above +2SD for 1y & 3y
Author's Opinion
| Favorable | Less Favorable |
|---|---|
| High Directors of REIT Manager's Shareholding | Low REIT Sponsor's Shareholding |
| High Occupancy | Low REIT Manager's Shareholding |
| Long WALE | High Gearing Ratio |
| No Major Lease Expiry within 5 Years | High Cost of Debt (Post Loan Extension) |
| Almost 100% Freehold Properties | 0% Unsecured Debt |
| High Interest Coverage Ratio | Short WADM |
| Low Top Geographical Contribution | Concentrated Debt Maturity |
| Low Top Property & Top 5 Properties Contributions | High Top Tenant & Top 10 Tenants Contributions |
| High Property Yield | Interest Coverage Ratio Downtrend |
| Competitive Management Fees | Distribution on Capital Downtrend |
| High Distribution on Capital | |
| High Distribution Margin |
Both revenue and distributable income have declined by around 3% as compared to the previous quarter. After the loan extension on 31 October, the interest rate has increased from 2.6% to 4.2%, coupled with manager fees being paid in cash starting this year, the upcoming DPU would be impacted. The situation should be improved after Apr 2023 when the rent review takes place.
You could also refer below for more information:
SREITs Dashboard - Detailed information on individual Singapore REIT
SREITs Data - Overview and Detail of Singapore REIT
REIT Analysis - List of previous REIT analysis posts
Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs
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REIT Investing Community - Facebook Group where members share and discuss REIT topic
*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage due to the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.
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