Singapore-based real estate investment trust (Reit) manager, IReit Global, has received news that its long-term main tenant of the Berlin Campus will not be extending its lease, set to expire on December 31, 2024. This comes as a significant blow to the Reit, as the tenant’s lease currently contributes about 20 percent of the Reit’s total gross income.
German pension insurance company Deutsche Rentenversicherung Bund (DRV), which has occupied the Berlin Campus since 1995, was the Reit’s top tenant by rental income. In July 2023, DRV extended its lease, agreeing to pay a revised rent that would be approximately 45 percent higher than its current office rent, starting July 1, 2024.
Additionally, as part of the lease extension agreement, DRV agreed to compensate IReit with a lump sum of about €15.5 million (S$22.4 million), equivalent to 16 months of its current rent. This compensation was intended to cover dilapidation costs and reinstate the leased space to its original state if DRV were to vacate the Berlin Campus at the end of the extended lease term. The payment of these dilapidation costs must be made to IReit by June 30.
With the announcement that DRV will not be extending its lease, IReit Global now faces the challenge of finding a new tenant to fill the void. Despite this setback, the Reit manager remains committed to moving forward with its proposal to mitigate the potential impact of losing the main tenant. It aims to explore various strategies to ensure the long-term viability and success of the Berlin Campus.