IReit keeping eye on Europe uncertainties; Q1 portfolio occupancy flat at 95.7%

EUROPE-FOCUSED IReit Global flagged a possible slowdown in the region’s office letting and investment activity, as the outbreak of war between Ukraine and Russia as well as rising interest rates and inflation have led to “significant economic and geopolitical uncertainty”.

In a quarterly business update on Wednesday (May 11), the real estate investment trust’s manager said while IReit’s portfolio has not been adversely affected so far, it is “closely assessing the situation and maintaining its vigilance”.

The manager also noted that consumer sentiment in France may turn cautious due to the uncertainties in Europe.

IReit’s portfolio comprises 5 office properties in Germany, 5 office properties in Spain, and 27 retail properties in France.

For the first quarter ended Mar 31, 2022, portfolio occupancy was unchanged from the prior quarter, at 95.7 per cent. The weighted average lease average stood at 3.7 years, down from 3.8 years as at the end of 2021.

Deutsche Telekom, the sole tenant at Bonn Campus in Germany, did not give notification to terminate its lease that is expiring in April 2023. As a result, the lease has been automatically extended by 12 months, and will now expire in April 2024.

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IReit’s manager is in discussions with Deutsche Telekom to explore options to further extend the lease, while also continuing the active marketing of the property.

It is also in “advanced negotiations” with a few potential and existing tenants for new leases and renewals.

Given the adoption of flexible working arrangements by companies and the evolving demand for office space, the manager will continue to pursue investment and capital recycling opportunities.

Units of IReit Global : UD1U 0% rose S$0.01 or 1.6 per cent to finish at S$0.625 on Wednesday, before the business update was released.