EUROPE-focused real estate investment trust IReit Global has signed a 20-year agreement with hospitality operator Stayery, which will be leasing about 10,600 square metres (sq m) of gross floor area at its office property in Berlin.
Taking up about 12 per cent of the net lettable space, Stayery will be operating about 255 guest rooms at the property, known as Berlin Campus, said the Reit in a bourse filing on Thursday (Dec 19).
The inking of this long-term lease agreement comes less than a month after the Reit announced that it had signed another contract with UK hotel chain Premier Inn for 10,348 sq m or 12 per cent of Berlin Campus’ net lettable space.
Similar to the deal with Premier Inn, the lease agreement with Stayery will last 20 years with no break option. Rents will be stepped up in the first three years, before it gets indexed against the inflation rate from the fourth year.
The tenant is expected to start operating by the first half of 2027 and pay an initial annual rent of around 2.7 million euros (S$3.8 million). This will grow to about three million euros at the end of the three-year step-up period.
With the addition of this second new lease, a total gross floor area of 20,948 sq m, representing 24 per cent of net lettable area, has now been committed at Berlin Campus.
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“This places IReit well on track on its execution plans to reposition Berlin Campus into a multi-let and mixed-use asset with office, retail and hotel components,” read the filing.
New plans
IReit’s repositioning plans follow long-term main tenant, German pension insurance company Deutsche Rentenversicherung Bund (DRV), deciding not to extend its lease, which is due to expire at the end of this year.
DRV has been occupying Berlin Campus since 1995. Following DRV’s decision to not extend its lease, the Reit manager had said that it plans to proceed with its proposal to convert Berlin Campus into a functional mixed-used urban precinct after the tenant vacates the premises.
Peter Viens, chief executive officer of IReit’s manager, noted that the success in securing the new hospitality leases reflects the market appeal of how Berlin Campus has been repositioned.
“These leases will not only provide a perfect complementary fit, diversify our tenant mix, but also create a compelling unique selling point for other prospective tenants, thereby reinforcing the value proposition of our repositioning efforts,” he added.
The estimated capital expenditure for this tranche of refurbishment works is 40 million euros, of which 30 million euros relate directly to Stayery, while the rest is for the refurbishment and demolition works of the property’s roof, facade, lifts, and ground floor office lobby to support further letting activities and project delivery.
This brings the total cumulative capital expenditure for the repositioning of Berlin Campus to 82 million euros.
The lease agreement with Stayery came after IReit also inked other contracts for its other properties, bringing the total lettable area of new leases and lease renewals to 48,000 sq m in the year to date.
Units of IReit fell 1.8 per cent or S$0.005 to close at S$0.28 on Thursday.
