A LONG-TERM main tenant of IReit Global : UD1U 0%’s Berlin Campus, whose lease was due to expire on Jun 30 next year, has extended its lease by six months until Dec 31, 2024.

The real estate investment trust (Reit) manager on Friday (Jul 14) said its tenant, German pension insurance company Deutsche Rentenversicherung Bund (DRV), will pay a revised rent that is about 45 per cent higher than its current office rent effective Jul 1, 2024.

On top of this rent revision, DRV will pay an additional amount of about 18.5 months of its total current rent. IReit Global’s manager said this will allow for the initiation of its repositioning strategy of Berlin Campus into a multi-let asset.

DRV will also pay a lump sum of about 15.5 million euros (S$23 million) – or 16 months of its total current rent – as compensation for dilapidation costs to reinstate its current space back to its original state in the event DRV vacates Berlin Campus at the end of its extended lease term. 

Noting that Berlin Campus remains “under-rented”, the manager said there could be strong growth potential for the property should it become vacant.

“A refurbishment to upgrade Berlin Campus would allow us to attain green certifications for the property and attract a more diversified tenant base,” said Louis d’Estienne d’Orves, chief executive of the manager.

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DRV’s lease extension not only enhances rental income at Berlin Campus as a result of the higher rent, but also provides greater income certainty at the property, he added.

The transaction is estimated to improve Berlin Campus’ pro-forma weighted average lease expiry (Wale) to 1.8 years, from 1.3 years as at Mar 31, 2023.

This would in turn boost the Reit portfolio’s Wale to 4.9 years from 4.8 years previously, said the manager. 

DRV has been occupying Berlin Campus since 1995. As at end-March 2023, its lease with IReit Global contributed to about 24 per cent of total gross rental income.

The main tenant currently takes up about 98.8 per cent of the property’s lettable area of 79,097 square metres, with the remaining 1.2 per cent leased to six other small retail or office tenants on the ground floor.

Units of IReit Global were trading S$0.005 or 1.2 per cent higher at S$0.43 as at 1.24 pm on Friday, after the announcement.