IREIT Global reports marginal drop in financial results

IREIT Global’s (IREIT) gross revenue and net property income (NPI) in 2018 slid by 0.4 percent and 2.8 percent to €34.81 million and €30.63 million respectively from a year ago, according to an SGX filing on Wednesday (20 Feb).

The drop in NPI is mainly due to weaker gross revenue and higher property operating expenses due to different initiatives implemented in 2018 to better position IREIT’s properties for the long term.

Consequently, distributable income dipped 3.2 percent to €23.38 million. Nonetheless, distribution per unit (DPU) rose marginally by 0.5 percent from 5.77 to 5.80 Singapore cents due to favourable foreign currency exchange rates.

Moreover, IREIT’s manager IREIT Global Group revealed that it has secured the lease extensions for some important tenants, leaving IREIT’s portfolio with no lease expiry for this year. More than 90 percent of the rental agreements are only due for renewal in 2022 onwards.

“Coupled with a further strengthening of the German real estate market during the period, IREIT’s portfolio properties experienced a €41.8 million year-on-year increase in valuation to €504.9 million. This contributed primarily to an 11.6 percent increase in net asset value (NAV) per unit and a 3.7 percentage point improvement in the aggregate leverage to 36.6 percent,” said IREIT Global Group.

“Looking ahead into 2019, the European economic growth is likely to be moderated compared to 2018, but is still expected to be higher than its 15-year average rate. Coupled with low unemployment rate and muted new development completion, this is expected to herald another year of healthy demand for commercial real estate.”

IREIT owns five freehold commercial properties in the German cities of Bonn, Munich, Münster, Darmstadt and Berlin with a combined net lettable area of around 2.16 million sq ft and 3,400 vehicle parking spaces.

Source: 21 February 2019, CommercialGuru