In terms of proportion of Top tenant revenue contribution, the REITs are ranked in this following sequence:

Rank 1: Elite Commercial GBP REIT at 99%
Rank 2: First REIT at 81.59%
Rank 3: Parkway Life REIT at 58.5%
Rank 4: iReit Global at 45.80%
Rank 5: Keppel DC at 41%
Rank 6: Lendlease Global at 29%
Rank 7: Starhill Global at 22.9%

Remember the article I wrote previously here - https://www.llamafinance.com/2020/05/are-you-sure-your-reits-dividend-is.html ?

It was on whether dividends is really sustainable for the top 3 REITs ranking in terms of top tenant revenue contribution above.

I have wrote about EC World and interestingly, found that 77% of its tenancy leads to the same entity. Meaning, 77% of its rents comes from a single source. And, this is only discovered after doing some drilling of documents.

Right now, First REIT has taken a hit from potential restructuring of its rental payments between Lippo Karawaci and Siloam hospitals. EC World REIT is under investigation from Commercial Affairs Department.

As for myself, I am sticking to the rule of not investing into REITs with focused tenancies of more than 50%.

Let's take a look at whether rental payments is sustainable for the next 3 REITs in ranking!

Rank 4: iReit Global at 45.80%
IREIT Global Blogger Articles (SGX:UD1U) | SG investors.io

The top tenant in terms of gross rental income is Deutsche Telekom at 45.8% as at 31st Dec 2019. Next in line is  Deutsche Rentenversicherung Bund which makes up 31.6% of gross rental income
of iReit Global.

Data is taken from 2019 Annual report of iReit Global.

So, will Deutsche Telekom be able to afford its rent?

Deutsche Telekom AG is a German telecommunications company headquartered in Bonn and by revenue the largest telecommunications provider in Europe.

The company seems to be doing okay, with a steady stock price for the past 5 years.

It has also been profitable for the past 5 years. It seems to be able to afford the rents to iReit Global.

How about Deutsche Rentenversicherung Bund?
Logo: Deutsche Rentenversicherung  Opens page: Pension
Wait, what is this Renten entity? I translated it and it means German Federal Pension Insurance.

I read up on Germany Pension system, and it seems that this Renten entity is the mandatory kind of pension insurance in Germany. It seems to be government controlled, and works like CPF whether they contribute 'premiums' to Renten, and Renten will then provide retirement payouts once people reaches retirement age.

Given that Germany remains a Triple-A credit rated country, it is suffice to say that they can afford to pay the rents to iReit Global.

Shall continue to write on Keppel DC next:)



~Mr Llama

3 Comments

  1. Thanks for sharing this good article.
    May I know where's Part 1 since this is Part 2?

    ReplyDelete
    Replies
    1. here - https://www.llamafinance.com/2020/05/are-you-sure-your-reits-dividend-is.html

      EC World reit - https://www.llamafinance.com/2020/06/can-forchn-holdings-pay-off-rents-to-ec.html

      Delete
  2. This comment has been removed by the author.

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