Is IREIT Global (SGX:UD1U) A Real Estate Leader?
IREIT Global (SGX:UD1U) is a S$482.5m real estate investment trust (REIT), which is a collective vehicle for investing in real estate that began in the US and has since been adopted worldwide as an investment asset. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the Singapore stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether IREIT Global is lagging or leading in the industry.
Check out our latest analysis for IREIT Global
What’s the catalyst for IREIT Global’s sector growth?
Concerns surrounding rate increases and treasury yield movements have made investors dubious around investing in REIT stocks. Over the past year, the industry saw growth in the twenties, beating the Singapore market growth of 11.3%. IREIT Global leads the pack with its impressive earnings growth of 69.1% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be -41.3% compared to the wider REIT sector growth hovering next year. As a future industry laggard in growth, IREIT Global may be a cheaper stock relative to its peers.
Is IREIT Global and the sector relatively cheap?
The REIT industry is trading at a PE ratio of 14.77x, in-line with the Singapore stock market PE of 12.54x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 6.6% on equities compared to the market’s 7.6%. On the stock-level, IREIT Global is trading at a lower PE ratio of 7.33x, making it cheaper than the average REIT stock. In terms of returns, IREIT Global generated 14.5% in the past year, which is 8.0% over the REIT sector.
Next Steps:
IREIT Global is a REIT industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, IREIT Global is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at IREIT Global’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has UD1U’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of IREIT Global? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
