EUROPE-FOCUSED real estate investment trust (Reit) IReit Global reported on Thursday (Feb 22) a 26.6 per cent decline in distribution per unit (DPU) for the second half, on the back of lower income to be distributed and a larger unit base.
DPU for the six months ended Dec 31, 2023 fell to 0.0094 euro, from 0.0128 euro in the prior year period. Meanwhile, income to be distributed fell 13.5 per cent on year in the second half to 12.8 million euros (S$18.6 million).
The manager said the performance was mainly due to retention of the dilapidation cost payable to finance the repositioning of Berlin Campus, rent-free granted to tenants at Bonn Campus and Darmstadt Campus, and an enlarged unit base.
Gross revenue for the second half rose 15.7 per cent on year to 36.5 million euros, while net property income increased 14.6 per cent to 27.9 million euros.
The increase was mainly due to contribution from the acquisition of 17 B&M retail properties in France starting from September, as well as other income from dilapidation cost payable by the main tenant of Berlin Campus.
For the full year, the Reit reported gross revenue of 65 million euros, up 5.4 per cent on year, while net property income rose 2.3 per cent to 49.9 million euros.
Income to be distributed was down 19.2 per cent to 25.2 million euros, while DPU fell 30.5 per cent on year to 0.0187 euro.
As at Dec 2023, portfolio occupancy stood at 90.4 per cent, higher than the 88.3 per cent a year earlier. This was driven by the addition of the B&M Portfolio which was fully occupied, as well as the signing of 15-year new lease with for 25 per cent of Darmstadt Campus in April 2023.
Louis d’Estienne d’Orves, chief executive of the manager, said the key focus looking ahead is to increase the occupancy rate of IReit’s portfolio assets, particularly Darmstadt Campus, and to refurbish and reposition Berlin Campus into a multi-let asset if the main tenant leaves in December 2024.
“In 2024, performance is likely to benefit from positive rental escalations, end of rent-free periods granted to tenants within IReit’s portfolio and full-year contribution from B&M Portfolio,” he said.
The manager expects the European real estate market to improve in 2024, but noted that challenges remain, amid the uncertain geopolitical environment and economic outlook.
As at Dec 31, 2023, the Reit’s aggregate leverage ratio stood at 37.9 per cent, up from 32 per cent a year earlier. Its interest coverage ratio stood at seven times, while weighted average interest rate was 1.9 per cent.
Net asset value per unit fell to 0.41 euro as at Dec 2023, down from 0.54 euro in Dec 2022.
Units of IReit Global closed unchanged at S$0.385 on Thursday, before the announcement.
