Overview

IREIT Global, a pure-play Western Europe-focused real estate investment trust (REIT), released its 3Q2025 business update with significant developments across its portfolio, capital management, and strategic repositioning projects. Its portfolio spans Germany, France, and Spain, comprising 53 properties valued at €859.8 million as of 30 June 2025. The trust continues to be recognised in the industry, having received multiple awards for excellence and investor relations.

Key Financial and Portfolio Metrics

• Portfolio Valuation: €859.8 million, comprising 77% office and 23% retail properties.
• Portfolio Composition:
  • Germany: 5 office properties (61.6% of portfolio valuation, 80.6% occupancy)
  • France: 44 retail properties (23.5% of portfolio valuation, 100% occupancy)
  • Spain: 4 office properties (14.9% of portfolio valuation, 78.5% occupancy)
• Lettable Area: 425,116 sqm
• Committed Occupancy Rate: 89.0% (excluding Berlin Campus)
• Weighted Average Lease Expiry (WALE): 5.6 years (excluding Berlin Campus)
• Aggregate Leverage: 41.3% as at 30 June 2025, below the S-REIT office subsector average of 44.3%
• Weighted Average Interest Rate: 2.6%, with 97.5% of borrowings hedged

Strategic Repositioning: Project RE:O – Berlin Campus

A major undertaking is underway at the Berlin Campus, which is being repositioned into a multi-let, mixed-use asset. Construction began in 2Q2025, backed by unitholder approval and building permits. The project is expected to have a notable impact on distributions during the repositioning period due to the temporary absence of income from Berlin Campus.

• Projected Capital Expenditure: €165–180 million, including €82 million for two hospitality leases
• Funding: S\$85 million green notes issued in May 2025 and a new €20 million capex facility as part of German Portfolio refinancing
• Leasing Progress: Ongoing negotiations with two potential office tenants to secure substantial lease commitments by 1Q2026
• Development Timeline: First phase (2 hotels and entrance hall) targeted for completion in 2Q2027, on schedule and within budget
• Price-Sensitive Impact: The absence of income from Berlin Campus during repositioning is expected to significantly impact distributions to unitholders, which could affect share values.

Portfolio and Asset Management

• Active Lease Management: Major lease renewals and negotiations are ongoing across the portfolio, including:
  • Darmstadt Campus (Germany): Negotiations with federal tenants for 2026 occupancy
  • Münster Campus (Germany): Two major leases renewed (c.9,700 sqm), advanced talks for a further 1,000 sqm lease
  • Parc Cugat Green (Spain): 2-year lease extension and a new 1,200 sqm lease with a WALE exceeding 7.5 years
  • Decathlon Portfolio (France): Ongoing negotiations for lease extensions
• Rent Collection: 99.9% of rents paid; existing portfolio rental escalation year-to-date at 4.0%
• Tenant Base: Blue-chip tenants including ST Microelectronics, Allianz, Decathlon, Deutsche Telekom, B&M, and Handwerker Services GmbH
• Lease Expiry Profile: More than 60% of leases expire in 2030 and beyond, supporting portfolio stability

Capital and Currency Management

• German Portfolio Refinancing:
  • Refinanced in October 2025, extending debt maturity to July 2029 with an additional €20 million undrawn capex facility
  • Aggregate leverage rose to 41.3% due to green notes issuance, partly offset by voluntary loan repayment on Spanish Portfolio
  • 97.5% of bank borrowings hedged through swaps and caps
  • Weighted average interest rate to increase to 4.4% due to new hedging costs and loan margin
• Interest Coverage Ratio: 4.0x post-refinancing
• Targeted Actions: Manager aims to refinance Spanish Portfolio ahead of maturity to manage interest costs and leverage
• Price-Sensitive Impact: Higher interest costs post-refinancing could impact future distributions and share price volatility.

Market Review and Outlook

• European Office Market: Office take-up in 18 key cities rose 2% YoY in 9M2025 to 5.95 million sqm, nearly matching the 5-year average
• Vacancy Rate: Increased by 85bps YoY to 9.3%; average rents up 5.6% YoY
• Commercial Investment Volume: Up 5% YoY to €113.2 billion, with office (+6%) and retail (+13%) sectors leading growth; UK, Germany, and France account for 52% of investment activity

Outlook: While the European real estate market is recovering, growth is moderating amid global macroeconomic and geopolitical uncertainties. Factors such as low unemployment, stabilizing inflation, and increased defence spending are expected to support the region’s economy. The manager remains proactive in leasing, portfolio optimisation, and capital management.

What Investors Need to Know

• The repositioning of Berlin Campus is a major, price-sensitive development. The temporary loss of income from this asset will significantly impact distributions to unitholders until the new mixed-use space is completed and leased.
• Higher interest costs following German Portfolio refinancing may also affect future distributions, introducing potential volatility in share price.
• Proactive asset management and ongoing lease negotiations are critical to maintaining and improving occupancy rates and rental yields.
• The manager is exploring acquisitions and capital recycling activities to improve portfolio yield, which could become future catalysts for share price movement.

Contact Information

For further enquiries, please contact:
Mr Kevin Tan, Chief Financial Officer
Tel: (65) 6718 0593
Email: [email protected]
Follow IREIT Global on LinkedIn

Disclaimer: This article is for informational purposes only and does not constitute investment advice or an offer to acquire, purchase, or subscribe for units in IREIT Global. Past performance is not indicative of future results. Investors should be aware of the risks involved, including the possible loss of principal. Please consult your financial adviser before making investment decisions.

View IREIT Global SGD Historical chart here