iREITs (IREIT Global)
IREIT Global, a real estate investment trust (REIT), recently reported strong financial performance, driven by its diversified portfolio and strategic asset management.
- Financial Performance (1H2024):
- Gross revenue for the first half of 2024 increased by 28.8% year-on-year to €36.6 million.
- Net property income rose by 22.8% to €27.0 million.
- The revenue increase was primarily driven by contributions from the B&M Portfolio in France, which was acquired in September 2023.
- Other income sources included €5.2 million from dilapidation costs at the Berlin Campus and rental income from the Darmstadt Campus.
- Distribution:
- The total income to be distributed to unitholders for 1H2024 was €12.9 million, representing a 3.9% increase year-on-year.
- The distribution per unit (DPU) stood at €0.96 cents, an increase of 3.2% year-on-year.
- Leasing and Occupancy:
- IREIT Global secured new leases totaling 3,100 sqm at Darmstadt Campus with an average unexpired lease term of around 10 years. This improved the occupancy rate to over 36% for the property.
- Refurbishment works were completed on two office properties in Barcelona, Spain, positioning the buildings to attract more tenants.
- Berlin Campus Developments:
- The main tenant at Berlin Campus, Deutsche Rentenversicherung Bund, has decided not to extend its lease, which expires on December 31, 2024. As compensation, the tenant paid a lump sum of €15.5 million, equivalent to 16 months of rent.
- IREIT Global plans to reposition the Berlin Campus into a multi-let, mixed-use asset. Advanced lease agreements are already in place for approximately 9,500 sqm each with a leading hotel brand and long-stay hospitality operators.
- Strategic Focus:
- The REIT is focused on repositioning Berlin Campus and securing new leases to enhance the overall portfolio’s value proposition.
- The strategic shift is expected to benefit from lower inflation, rising real wages, and interest rate cuts that are expected to revitalize the European real estate market.
- Valuation and Outlook:
- IREIT Global currently trades at 0.6x price-to-book (PB) with a dividend yield of 9%.
- The consensus target price is S$0.37, representing a potential upside of 19.4% from the current share price.
