IREIT Global owns 5 freehold office properties in Germany, 4 freehold office properties in Spain and a portfolio of 44 retail properties in France – valued at €857.3 million.
In its latest business update for the first quarter of 2025, IREIT Global had a portfolio occupancy rate of 88.7%. The REIT also mentioned that while European real estate market has improved, “recent global financial volatility, geopolitical developments and tampered investor interest may slow down the recovery in 2025”.
According to the Manager of IREIT Global, “real estate values in Europe seem to have reached a trough and may start to recover again in the future”.
For those interested in REITs investments, and potentially gaining real estate exposure in western Europe, here are 5 things to know about IREIT Global.
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#1 In FY2024, IREIT’s Revenue Rose 16.3% And Net Property Income Climbed 7.2% Year-On-Year To €75.6 Million And €53.5 Million Respectively. What Were Key Drivers Of This Performance?
IREIT’s resilient performance in FY2024 was mainly driven by:
– Full-year contribution from B&M Portfolio in France: Acquired in September 2023, the portfolio is fully leased to leading European discount retailer, B&M Group, which continues to generate stable and resilient income.
– Higher rental income: Healthy CPI indexation at Decathlon Portfolio in France and rent revision and dilapidation cost at Berlin Campus in Germany supported the income growth.
– Notably, IREIT has successfully secured well-established tenants for approximately 49,450 sqm of new leases in 2024, surpassing the new lease take-up of approximately 13,900 sqm in 2023.
IREIT remains committed to building a diversified portfolio across different asset classes and Western European countries to deliver sustainable returns for Unitholders.
#2 In 2H2024 And FY2024, Property Operating Expenses Surged Over 40% Year-On-Year, Outpacing Revenue Growth. Could You Share Why Expenses Have Escalated, And The Steps Being Taken To Manage Expenses?
The rise in property operating expenses was mainly due to incremental costs from the addition of B&M portfolio and a one-off feasibility study cost of €4.1 million for the repositioning of Berlin Campus.
Without the feasibility study costs, the increase in expenses would be more in line with the revenue growth.
The feasibility study has played a significant role in the proposed repositioning of Berlin Campus from a single-use, single-tenant asset into a multi-let, mixed-use asset with strong upside potential.
Looking ahead, the Manager will continue to employ a disciplined approach towards asset management and portfolio optimisation to manage expenses effectively and drive long-term value creation for Unitholders.
This includes driving steady income growth through operational efficiency, rental escalation and reversion, and asset enhancement initiatives, while strategically divesting low yielding, non-strategic properties to recycle capital and rejuvenate IREIT’s portfolio.
#3 How Does IREIT Approach Capital Management In The Current High Interest-Rate Environment?
IREIT adopts a proactive strategy to manage the Group’s capital structure, ensuring financial resilience through:
– Prudent Capital Management: Maintain a healthy aggregate leverage and debt maturity profile, while ensuring access to capital resources at competitive costs.
– Diversified Funding Sources: Explore different funding options to enhance flexibility in financing sources and maintain a healthy credit profile.
– Effective Interest Rate Hedging: Implement strategic hedging measures to mitigate impacts from market volatility and optimise the risk-adjusted returns to Unitholders.
As at 31 December 2024, IREIT’s aggregate leverage of 37.6% remained significantly lower than the S-REITs office sub-segment’s average of 44.4%, with 97.2% of its bank borrowings hedged with interest rate swaps and caps. This also puts it in a good position to capitalise on attractive investment opportunities that may arise.
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#4 IREIT Currently Plans To Reposition Berlin Campus Asset Into A Multi-Let, Mixed-Use Asset. Please Elaborate On The Impact On Distributions In The Near Term, As Well As The Opportunities For The Asset In The Longer Term.
While the absence of income from Berlin Campus is expected to have a significant impact of IREIT’s distributions during the repositioning period, the transformation of Berlin Campus into a multi-let and mixed-use property will unlock its long-term value by enhancing leasing flexibility and market appeal.
Strategic Integration: The mix of hospitality, retail, and office space is poised to attract a broader tenant base, increase foot traffic, and create a landmark location in the district.
Strategic Location: Situated next to the Ostkreuz main railway station, the second biggest hub in Berlin, Berlin Campus is also well-positioned to capitalise on the strong growth from its surrounding locality.
While the divestment of Berlin Campus was considered, repositioning was deemed to be more value-accretive, leveraging the asset’s potential of transforming into a landmark property. Divestment may be revisited when its office spaces have been committed by tenants.
Already, two hospitality leases for approximately 20,948 sqm of gross floor area or 24% of the net lettable space at Berlin Campus has been secured, well ahead of its repositioning.
#5 Are There Any ESG Initiatives Being Taken In IREIT’s Properties?
Sustainability is integral to IREIT’s core business and strategies. As at 31 December 2024, IREIT had a total of 35 green certifications, including:
– 3 Platinum and 1 Gold Leadership in Energy and Environmental Design (“LEED”) certifications for its Spanish Portfolio.
– 27 Building Research Establishment Environmental Assessment Method (“BREEAM”) certifications for its Decathlon Portfolio in France.
Additionally, IREIT has established a Green Financing Framework in December 2024 to integrate its sustainability commitments and priorities into IREIT’s core business and strategies.
As a responsible real estate owner and investor, IREIT aims to fund projects and investments under the Green Financing Framework to achieve 100% green certifications across our portfolio assets.
The repositioning of Berlin Campus is designed with full consideration of the sustainability aspects, ensuring strong ESG credentials.
Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 25 March 2025 and republished with permission. You can read more about IREIT Global (SGX: UD1U) on the SGX website.
You can also read other featured companies from SGX’s 10 in 10 series on the DollarsAndSense website.
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