IREIT Global Eyes Expansion Amidst Resilient Performance

IREIT Global has released its 3Q2024 business update, highlighting key performance metrics and future strategic plans that could potentially sway investor sentiment and share values.

Key Highlights

IREIT Global, a pure play Western Europe-focused REIT, reported a stable performance in 3Q2024. Despite a marginal dip in occupancy rates in its Spanish portfolio, the overall portfolio occupancy rate remains robust at 89.6%. The aggregate leverage stands at 37.7%, which is notably lower than the average leverage of 43.6% for S-REITs office subsector and 39.4% for the overall S-REITs sector.

Significantly, the weighted average interest rate is maintained at a low 1.9%, with no major debt maturity until January 2026 and 97.1% of all bank borrowings hedged. The weighted average lease expiry (WALE) is 4.6 years, reflecting a relatively stable lease profile.

Portfolio and Asset Management

IREIT’s portfolio is diversified across key European markets with 53 properties primarily in Germany, France, and Spain, valued at approximately €855.6 million. The portfolio includes 5 office properties in Germany, 44 retail properties in France, and 4 office properties in Spain.

Recent asset management activities include:

• Darmstadt Campus: Three new leases totaling 3,100 sqm secured with well-established tenants. The occupancy rate is expected to reach 45% with an additional lease for 2,300 sqm.
• Berlin Campus: Plans to sign 20-year lease agreements with two hospitality operators for 17,000 sqm by 1Q2025. A building permit application was submitted in September 2024, with anticipated approval by 2Q2025.
• Münster Campus: Advanced negotiations with two potential tenants to lease 3,500 sqm following a recent vacancy of 5,000 sqm.
• Spanish Portfolio: Secured new tenants for 2,200 sqm with a weighted average unexpired lease term of seven years and renewed leases for another 2,500 sqm. Advanced negotiations are ongoing to further increase the occupancy rate to over 77%.

Capital and Currency Management

The company maintains a healthy gearing with limited impact from rate hikes. As of 30 September 2024, gross borrowings stand at €359.2 million with an aggregate leverage of 37.7% and a weighted average interest rate of 1.9%. The interest coverage ratio is a strong 8.1x, highlighting robust financial health.

Looking Ahead

IREIT Global’s strategic focus includes increasing occupancy rates through new leases and lease renewals. The proposed repositioning of the Berlin Campus into a multi-let, mixed-use asset is expected to commence in 2025, with significant lease agreements targeted to be signed by 1Q2025. However, the 2025 distribution might be impacted due to the absence of income from the Berlin Campus during its repositioning phase.

The company aims to build a diversified portfolio across asset classes and Western European countries to deliver sustainable returns for unitholders. Additionally, efforts to maintain a healthy financial position and broaden funding sources are ongoing.

Important Notice for Shareholders

Shareholders should note the potential impact of the Berlin Campus repositioning on the 2025 distribution. The company’s proactive asset management and strategic leasing initiatives are crucial for future growth and could significantly influence share values. The anticipated signing of long-term lease agreements and ongoing portfolio diversification efforts underscore IREIT Global’s commitment to enhancing unitholder value.

Disclaimer: This article contains forward-looking statements based on current management views and assumptions. Actual results may differ materially due to various risks and uncertainties. Investors are advised to exercise caution and not place undue reliance on these statements.

For further details or enquiries, please contact Mr. Kevin Tan, Head of Investor Relations and Capital Markets, at (65) 6718 0593 or kevin.tan@ireitglobal.com.

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