RHB Group Research analyst Vijay Natarajan has reiterated his “buy” call for IREIT Global with a higher target price of 74 cents in a research note dated August 27.
His target price has increased to 74 cents from 70 cents previously. “Valuation is attractive with the REIT trading at 0.8 times P/BV,” he says.
See also: KGI initiates coverage on iREIT Global with 'outperform', target price of 69 cents
Natarajan is bullish on the counter following the completion of IREIT Global’s acquisition of 27 assets in France in end-July. The way he sees it, the assets, which are fully leased to Decathlon, have further enhanced the company’s income resilience while also boosting the diversification of its tenant and geographical mix.
Despite "slight" market concerns retail assets, Natarajan is positive on the addition as the sporting goods sector has remained resilient. He also points out that the assets have a low occupancy cost of some 4%, along with an attractive yield, in addition to a long weighted average lease expiry of 10 years.
Commenting on its other assets, Natarajan highlights that IREIT Global’s Germany portfolio value rose 4% in 1HFY2021 ended June, while its Spanish portfolio value was up 1% on a h-o-h basis. “Rent collection remains high in the 99% and there were no rent rebate/deferment requests since the start of the year in-line with improving economic outlook in Europe,” he adds.
Natarajan is also positive on the strong support IREIT Global has from its two “good quality” sponsors, while he also notes that the company’s modest gearing positions it for future inorganic growth. “Gearing post-recent transactions remains comfortable at c.36%,” he points out.
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IREIT Global recently comment trading in dual currency on Aug 17, which Natarajan says will benefit unitholders who are keen on underlying Euro exposure instead of Singdollar. The distribution currency will also be changed to Euro starting from the next distribution.
As at 4.22, shares in IREIT Global are trading up 0.5 cents or 0.78% higher at 64.5 cents.
Photo: IREIT Global
