Was at $Stoneweg EUTrust EUR(SET.SI)'s (SERT) Investor Day at The St. Regis Singapore today.
SERT is proposing to buy over its management platform from its sponsor, SWI Group. In simple terms, instead of paying an external manager, SERT will own the management business and potentially earn fees from managing properties for others too.
So, what did I find interesting as an investor?
First, the yield. At around €1.50, SERT offers close to 9% distribution yield. Attractive, but of course, sustainability matters.
Second, the sponsor's commitment. SWI Group is taking up new securities at €2, around 33% above the reference market price. Not quite the same as buying from the open market, since it's part of the internalisation deal. Still, an encouraging signal.
Third, the growth angle. Beyond its European industrial and logistics properties, there's the data centre story. Could we be looking at a combination of income today and growth tomorrow?
Fourth, the debt profile. No major term debt refinancing until 2030, apart from its revolving credit facility. That's some useful breathing room, especially with borrowing costs still elevated.
And finally, the alignment of interests. What's also interesting is that SWI will still be the largest shareholder, with its stake going up to around 33%. So SERT gets more control over its own business, without losing the sponsor's expertise.
On paper, I think the arrangement makes sense. Management is projecting a 5.9% DPU improvement too.
But let's not forget, gearing remains relatively high, distributions have declined over the years, and the data centre story will take time to play out.
So far, quite a few boxes seem to be ticked. But ticking boxes and delivering results are two different things. Now it's down to execution.
A big thank you to Noelle Ang and Sylvia Lee ( SEC Newgate Singapore) for the invitation. Special appreciation to Simon Garing, Jaume Sabater, Elena Arabadjieva and the rest of the SERT management team for an insightful Investor Day. Always good to hear directly from management.
A good investment story may attract attention. But only results can turn that attention into conviction. And SERT has certainly given investors something worth keeping an eye on.
#SERT #InvestorDay #GoodInvestmentStory #TradeSGX #POEMS #danccs
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