IGB REIT – Annual Report 2015

What is a REIT?

So first and foremost, what is a Real Estate Investment Trust (REIT)? A REIT is a company that owns, and in most cases, operates income-producing real estate. They are listed on the KLSE and its shares are open to the public to purchase.  Learn more about them here in my Complete Guide to REITs in Malaysia.

Now, on to one of my favorite REITs – IGB REIT.

IGB REIT

IGB REIT Annual Report

I was awaiting the arrival of the dividend voucher from IGB REIT when to my surprise, it came together with its annual report in the form of a CD. Personally, I like how companies are mailing their annual reports in a CD instead of the old days when they printed thick copies of the reports and mailed those to every single shareholder.

Before we go into the details, you may download and open IGB REIT’s annual report here: IGBReit AR15

For the benefit of those who don’t know, IGB REIT’s property portfolio consists of Mid Valley Megamall and The Gardens Mall in the Klang Valley. Their main shareholders are IGB Corporation Berhad and Goldis Berhad whose main shareholders are the family of IGB Corp’s co-founder the late Datuk Tan Kim Yeow.

I will attempt to brief everyone on some of the more significant details of IGB REIT.

Balance Sheet

Dear shareholders of IGB REIT, these are yours.

IGB REIT The Gardens Mall

Photo Source: thisismetrixit.blogspot.com

IGB REIT Mid Valley Megamall

Photo Source: mapio.net

There were no significant changes in the REIT’s assets and liabilities, value of the company’s investment properties stood at RM4.9 billion. Mid Valley Megamall is valued at RM3.61 billion and The Gardens Mall at RM1.28 billion by Henry Butcher as at 31 December 2015.

Cashflow

A Real Estate Investment Trust’s (REIT) main source of income comes from rentals and the company’s gross rental income increased by 7% in 2015 to RM380 million a year. I particularly liked that IGB REIT also managed to not only keep expenses low, they were able to reduce it by almost RM3 million a year.

However, a lower net profit was declared for 2015 mainly because there was no changes in the fair value of the REIT’s properties. Generally most properties held by REITs would have an increase in value every year, I am not concerned with this aspect of IGB REIT because fair value of properties are paper gains, the true value of a REIT comes from its rental income.

Apart from rental income, I’d like to bring your attention to their Other Income section mainly car park, advertising an kiosk rental. The REIT is rakin in RM44 million a year in parking fees alone, RM6 million for advertisements and a cool RM23 million from renting out kiosk booths. All of which have increased compared to 2014.

My Holdings

IGB REIT has been in my PORTFOLIO since July 2015 with my gross investment at RM1.3152. I’ve been adding to my position when the price was right. As of today (3/3/16), the market price is RM1.54, giving me an unrealized capital gain of 16.33%. I have also received dividend income from IGB REIT recently amounting to RM766.08. Total gains including dividends received stands at 20.93%.

At the current price, dividend yield for the REIT is still above 5%, I will consider disposing off some of my shares in IGB REIT when the yield dips below the 5% mark and will top up on the REIT depending on their next quarterly results.

Do you own any REITs in your investment portfolio? 

Thanks for reading.

4 thoughts on “IGB REIT – Annual Report 2015

  1. Dear Leigh,

    Hey man. Just reading through some of your old posts and it hit me that you’re big on buying “when the price is right”. Unfortunately not all of us out here are as good as you (at least not yet I hope) at valuing and analysing stocks such that we know when and what is a good price to buy in, so scrubs like me use the good ol’ dollar cost averaging (DCA).

    What’s your stance on that and DCA in general?

    • Hey Eugene,

      Always good to hear from you!

      I really am just an average investor with an interest in investing that’s all. I get some of my picks wrong as well. =(
      But yes, I’m a 100% for DCA. In fact, I’d recommend it over timing the market and buying ‘when the price is right’ for the average investor. Just remember to keep your fees low! Ie. calculate the most efficient amount.

      • Aite thanks for the response!

        Oh c’mon man, with that skillz and that portfolio at that age, “average investor” my ass. 😛

        • Hey EJ,

          You’re too kind but really my friend, my returns are nothing special. In fact, they’re way lower compared to some out there.
          Just trying to show that wealth can be built slowly but surely.

          Hope to hear more from you my man.

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