IREIT Global’s Ambitious Transformation: From Office REIT to Mixed-Use Powerhouse in Western Europe

IREIT Global: Resilient Performance Amidst Market Fluctuations

IREIT Global has released its 3Q2024 business update, highlighting a stable performance despite some challenges in the Spanish portfolio. The company continues to focus on maintaining a resilient portfolio and a healthy balance sheet.

Key Highlights

Aggregate leverage stands at 37.7%, lower than the S-REITs office subsector average of 43.6% and the overall S-REITs sector average of 39.4%.
Weighted average interest rate remains at 1.9%, with no debt maturity until January 2026.
97.1% of all bank borrowings are hedged.
Weighted average lease expiry is at 4.6 years, remaining relatively stable due to new leases signed within IREIT’s portfolio.
The portfolio occupancy rate is at 89.6%.

Portfolio and Asset Management

IREIT Global’s portfolio spans across key European markets, with properties in Germany, France, and Spain. The total portfolio valuation stands at €855.6 million, with an occupancy rate of 89.6% and a weighted average lease expiry of 4.6 years.

German Portfolio Developments

Darmstadt Campus: Secured 3 new leases totaling 3,100 sqm. Occupancy rate expected to reach 45% this year with additional leases in the pipeline.
Berlin Campus: Targeting to sign 20-year lease agreements with 2 hospitality operators for 17,000 sqm by 1Q2025. Building permit application submitted, with approval expected by 2Q2025.
Münster Campus: Advanced negotiations with 2 potential tenants to lease 3,500 sqm by 1Q2025 after 5,000 sqm were vacated by one tenant.

Spanish Portfolio Updates

Secured 3 new tenants for 2,200 sqm in Madrid with a weighted average unexpired lease term of 7 years and renewed one tenant for 2,500 sqm with a 5-year term, increasing the occupancy rate to 73%.
Ongoing negotiations to lease up currently vacant space in Sant Cugat Green and Madrid properties could further increase occupancy to over 77%.

French Portfolio Progress

Two development projects are ongoing within the B&M portfolio, expected to create value for unitholders.

Capital and Currency Management

IREIT Global’s aggregate leverage improved to 37.7% due to the repayment of existing borrowings related to the divestment of Il∙lumina. The company’s debt maturity profile remains healthy, with ongoing negotiations for refinancing the German portfolio as part of the repositioning of Berlin Campus.

Looking Ahead

The European real estate investment market shows signs of growth, with office letting volumes increasing year-on-year for the second straight quarter in 3Q2024. However, there is a notable shift towards newer and prime assets that are ESG compliant and located in central business districts. The retail market is also experiencing an uptick in demand for space as retailers view physical retail as crucial for consumer engagement.

Portfolio Strategy

New lease for 2,300 sqm at Darmstadt Campus expected to be signed soon, increasing occupancy from 36% to 45%.
Repositioning of Berlin Campus into a multi-let, mixed-use asset to commence in 2025, with targeted lease agreements and building permit expected by 2Q2025.

Financial Outlook

The distribution in 2025 is expected to be impacted due to the absence of income from Berlin Campus. The management aims to secure new leases and renewals to improve the portfolio occupancy rate and continue building a diversified portfolio across asset classes and Western European countries to deliver sustainable returns for unitholders. Additionally, IREIT Global plans to maintain a healthy financial position and debt profile while broadening its funding sources and flexibility.

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

Follow IREIT Global on LinkedIn: https://www.linkedin.com/company/ireitglobal

Disclaimer

This article may contain forward-looking statements that involve assumptions, risks, and uncertainties. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties, and assumptions. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management on future events.