IReit Global reports 95.9% portfolio occupancy for Q1

IREIT Global on Wednesday announced a portfolio occupancy of 95.9 per cent for the first quarter ended March 31, noting that it is expecting a significant reduction in commercial real-estate letting and investment activity due to the Covid-19 pandemic.

The weighted average lease expiry of the real estate investment trust (Reit) for the latest quarter stands at 3.4 years. Its weighted average debt maturity was 5.1 years, against 5.3 years in the previous quarter.

The full economic impact may be apparent only later, as business operations adjust their workforce arrangements, said the Reit in its Q1 business update. IReit's current portfolio comprises office properties in Germany and Spain.

The take-up in key German office markets dipped 5.9 per cent from over the same period last year. Despite healthy investor demand, German office market investment volume declined 62.2 per cent year on year to 3.2 billion euros (S$5.15 billion) due to supply shortage and pandemic restrictions.

In Spain, office-letting volume in Madrid and Barcelona fell 21.4 per cent and 24 per cent respectively. Office investment volume in Spain dropped 10 per cent quarter on quarter to 362 million euros in the first quarter.

Still, IReit said that its portfolio performance remains stable due to leases with a blue-chip tenant base and good-quality assets located in established office areas. These tenants include Europe's largest statutory pension insurance company, Deutsche Rentenversicherung Bund, and semiconductor company ST Microelectronics, among others.

While there are a few major leases in German properties due next year, the manager is now actively engaging tenants to protect IReit's future occupancy and rental income. Meanwhile, the Spanish properties keep IReit's portfolio diversified.

In the near-term, IReit is expected to complete the acquisition of the Decathlon portfolio in the third quarter this year. It had, through its wholly-owned subsidiary Fit 2, entered into a conditional sale agreement to acquire Decathlon's properties in France for 110.5 million euros. The portfolio comprises 27 retail properties with a gross lettable area of 95,477 square metres.

Post-acquisition, its enlarged property portfolio will have an occupancy rate of 96.9 per cent, and a total valuation of 833.5 million euros - an increase of 15.8 per cent since Dec 31, 2020.

The manager is also exploring the possibility of implementing dual currency (euro and Sing dollar) trading for the Reit and changing its s distribution currency from Singapore dollars to euros.

Units of IReit Global closed at 64.5 Singapore cents on Wednesday, up half a cent or 0.8 per cent.