IReit secures 6-year lease extension at Bonn Campus; sets up US$1b debt issuance programme

EUROPE-FOCUSED real estate investment trust IReit Global has secured a lease extension of 6 years from its sole tenant at Bonn Campus in Germany, for 100 per cent of the property starting from May 2023.

In a bourse filing on Tuesday (May 17), the real estate investment trust’s (Reit) manager said its revised lease with Deutsche Telekom’s real estate leasing unit, GMG Generalmietgesellschaft, will now expire in April 2029.

Rental income for the lease will be about 7.3 million euros (S$10.6 million) per annum.

A rent-free period of 4 months and leasing incentives of 400,000 euros were also granted to GMG as part of the revised lease agreement.

With the lease extension, the manager estimates Bonn Campus’ weighted average lease expiry (WALE) to improve from 1 year as at end-March 2022 to 7.1 years – boosting the Reit portfolio’s WALE to 4.6 years from to the current 3.7 years.

The manager said it will continue to focus its efforts on asset management to safeguard IReit’s occupancy rate and future income streams, by securing new leases and lease renewals at the Reit’s portfolio properties.

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This includes Darmstadt Campus where its lease is due to expire in November 2022. Active marketing of the asset’s spaces is ongoing, said the manager. 

“We are very pleased to keep GMG in our building, a key tenant for us. This is a great outcome,” said the manager’s chief executive Louis d’Estienne d’Orves.

He however noted a potential slowdown in letting activity within Europe due to the ongoing Russo-Ukrainian war as well as rising interest and inflation rates, which have led to “significant economic and geopolitical uncertainty”.

“We will continue to assess the situation closely and maintain our vigilance, while remaining steadfast in executing our strategy to provide our unitholders with sustainable returns,” added d’Estienne d’Orves.

Separately on Tuesday, IReit’s manager said it had established a US$1 billion multicurrency debt issuance programme on May 13.

DBS and OCBC have been appointed as the joint arrangers and dealers.

Notes and securities issued under the programme will be offered in Singapore.

Net proceeds raised from future issuances will be used by IReit and its subsidiaries for the refinancing of existing borrowings, as well as the financing or refinancing of potential acquisition and investment opportunities which IReit may pursue in the future.

The proceeds may also be used for the Reit’s capital requirements and general corporate purposes, including capital expenditures.

Units of IReit Global last ended S$0.005 or 0.8 per cent higher at S$0.61 on May 13.