IREIT Global (SGX:UD1U)’s 2H/FY23 DPU slightly missed estimates. While FY23 was a transitional year, with occupancy movements and slow backfilling progress, a better FY24 is expected on the back of full income contribution from newly signed leases and acquisition contributions.
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While uncertainties remain on the Berlin campus lease extension beyond FY24, the severe under-rented nature of the asset offers good repositioning potential.
More clarity on Berlin campus by end 1H24.
Berlin campus is IREIT Global’s largest asset with key tenant Deutsche Rentenversicherung Bund (DRV) accounting for ~21% of FY23 income. As announced earlier, DRV signed a short-term (6- month) lease extension from its initial Jun 2024 expiry until the end of the year, with a 45% increase in rent for the term. DRV also paid a EUR15.5m dilapidation fee, equivalent to 16 months’ rental income.
- Read this at SGinvestors.io -
Due to the asset’s excellent location and severely under-rented nature (30-40% lower post adjusted rent), management sees strong medium-term potential. However, repositioning the asset involves significant capex (EUR50-150m) and a short-term drop in distributable income.
Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
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