IReit Global bags new tenant for office space in Germany property

IREIT Global has secured a 5-year lease from a tenant for 5 floors of office space in its Munster Campus building in Germany, the real estate investment trust's (Reit) manager said on Friday (Nov 26).

The tenant is a German federal municipal association operating 35 special schools, 21 clinics and care centres, as well as 18 museums and scientific institutions for the study of cultural heritages and other cultural institutions.

It is one of Germany's largest associations offering aid to people with disabilities, employing a total of 18,000 people, said the Reit manager in a press statement.

The German federal government body will take over the office space after the existing key tenant, GMG Generalmietgesellschaft mbH, vacates the property when its lease expires in March 2022.

The new lease will increase the overall occupancy rate of Munster Campus to 95.7 per cent from 64 per cent, if the existing tenant GMG were to vacate in April 2022 without a new lease.

On a pro forma basis, the weighted average lease expiry (WALE) of Munster Campus as at Sep 30, 2021 will increase from 2.9 years to 4.9 years. IReit's portfolio's WALE would also have improved from 4 to 4.2 years.

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Under the lease agreement, the new tenant will take up 1 upper floor at the Munster North building and 4 upper floors at the Munster South building through a 2-step process.

First, it will move in to occupy 1 upper floor at the Munster South building starting from Apr 1, 2022. It will then take over the remaining 4 floors from Sep 1, 2022.

The 5-year lease, which is secured at rental rates similar to GMG's lease, will expire on Dec 31, 2027 with 2 options to extend the lease by 5 years each.

The tenant has also been granted an option to occupy 2 additional floors at the Munster North building if the space becomes available, said the Reit manager.

Munster Campus is located about 2.5 km north of Munster city centre in the Zentrum Nord office park outside the central business district. It has a total lettable area of 27,501 square metres.

The Reit manager said it will continue to implement a multi-let strategy to diversity IReit's tenant base, enhance its lease profile, as well as pursue acquisitions to build scale and diversification of its portfolio.

Units of IReit Global were trading flat at S$0.635 as at 11.49 am on Monday (Nov 29).