# Yew Grove REIT: Strong strategy, tenants and total returns

- Link: https://www.directorstalkinterviews.com/yew-grove-reit-strong-strategy-tenants-and-total-returns-2/412938192
- Published: 2020-11-17T12:41:41+00:00
- Author: Amilia Stone

**Yew Grove REIT plc** (LON:YEW) invests in RoI office and industrial real estate,
let to a carefully selected type of tenant. Through 2020, 97%-plus of rent has been
paid on time, rising to over 99% now. Tenants are creditworthy: 96% large corporate
or the government. The strategy creating such a secure income stream also brings
high and rising rents. The gross yield on the portfolio is 7.9%. Yew Grove has found
asset classes where buyer-competition is modest. The assets are appropriate for 
the world of COVID-19 and post COVID-19, with generous, uncrowded floorplates. During
2020 the modest voids reduced further. We note the mere 0.01% asset value fall in
June.

 * **Strategically placed for secure, sustainable, rising income:** The target markets
   are 50/50 into RoI regional growth zones and the ring outside Dublin CBD. Office
   assets are low rise – typically three storeys – and well connected for car-based
   occupiers, and many are also connected to public transport.
 * **Growth:** Yew Grove raised €35.8m equity and purchased €50.3m investment assets
   through 2019 to February 2020. The shorter-term deliverable acquisition pipeline
   is more than €300m. Shareholders renewed authority for a further equity raise
   of up to €100m in May of this year.
 * **Investment returns:** Strong accounting returns amount to 3.1% p.a. since the
   2018 IPO, post all investment costs. Since the 2018 flotation, asset values have
   grown, with like-for-like up 5.8% in 2019. Acquisition costs affect NAV. 2019
   featured a special dividend but even the ongoing dividends yield over 6%.
 * **Risk mitigation:** WAULT (weighted average unexpired lease term) in recent 
   months lengthened to 4.6 years to first break due to new longer leases. WAULT
   stands at 7.7 years. Yew Grove REIT invested where rent rises and capital values
   lagged Dublin CBD over the cycle, yet its rents are starting to outperform.
 * **Investment case and valuation:** Office assets in locations attractive to FDI/
   government employers and employees deliver secure income. Industrial assets are
   located where the IDA is promoting growth, which underpins broadly positive market
   forces. Other secure income REITs offer average historical dividend yields of
   4.7% and share prices trading, on average, at 103% NAV.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2020/11/201117-Hardman-Yew-Grove-Strong-strategy-tenants-and-total-returns.pdf)

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