The redevelopment is “making good progress”, says Natarajan, and construction works have begun. The manager is currently in “active advanced negotiations” with two prospective AAA-rated tenants looking at taking up a substantial portion of the office space on a long lease of more than 15 years, he adds.
Office space accounts for some 70% of Berlin Campus’ overall redeveloped net lettable area. IREIT plans to secure the tenant by 1Q2026, which will provide strong cash flow visibility and hence, likely to significantly boost valuation, says Natarajan.
IREIT also plans to monetise up to a 50% stake in the asset. Natarajan believes this could potentially raise up to EUR200 million.
This amount will then be used to fund IREIT’s projected capex of $165 million to $180 million for redevelopment, thereby resulting in minimum additional funding requirement via debt or equity fund raising.
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Former tenant Deutsche Rentenversicherung Bund has commenced litigation against the REIT – claiming EUR8.4 million and legal costs in disputing the dilapidation cost settlement.
However, IREIT’s legal counsel believes it stands a high chance of defending against the claim.
Natarajan has tweaked up his FY2025 and FY2026 distribution per unit (DPU) forecasts by 1% and 2% respectively, factoring in slightly higher occupancy.
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IREIT posted DPU of 71 Euro cents for 1HFY2025 ended June 30, down 26% y-o-y.
“The fall in DPU is mainly due to ongoing redevelopment at Berlin campus, which is expected to be completed by early 2027, following which earnings should see a strong recovery,” says Natarajan.
As at 10.50am, units in IREIT are trading 0.5 cents lower, or 1.75% down, at 28 cents.
