IREIT Global's Bonn Campus (Photo: IREIT Global)IREIT Global's Bonn Campus (Photo: IREIT Global)

Singapore-listed Europe-focused office real estate investment trust IREIT Global (SGX:UD1U) announced on 27 February that it has missed revenue forecast for the period spanning 13 August - 31 December 2014.

According to the REIT, gross revenue of EUR8.32 million was slightly lower than the EUR8.47 million forecast due to lower service charge which is in tandem with the lower operating expenses incurred.

Net property income of EUR7.5 million for the period was however is in line with the forecast. Property operating expense of EUR0.8 million was lower by 17.3% compared with the forecast of EUR1.0 million.

IREIT’s distribution per unit (DPU) for the period of 2.57 Singapore cents was marginally higher the forecast.

IREIT was listed on the Singapore Exchange on 13 August 2014 with an initial portfolio of four office properties in Germany.

In announcing the period’s results, IREIT has pointed to weakness in the German economy as a factor that may further affect revenue in the coming quarters. “Although Germany’s economy is expected to show positive growth, data released by the Federal Statistical Office of Germany (Destatis) showed that the German consumer price index, which has already remained stagnant over the last quarter of 2014, declined by 1.1% in January 2015 over December 2014”, said the REIT.

“This is likely to have a negative impact on the forecast rental income of the Bonn Campus for 2015, as the time taken to reach the prescribed CPI-linked hurdle rate for its 10% upward rental adjustment is expected to be extended to after 2015”, the REIT added.

The REIT has also warned of an oversupply of office spaces in Germany. “With the QE stimulus introducing massive liquidity into the market and coupled with the weakened Euro and the low interest rates in Europe, competition for commercial properties in Germany will be intense”, it said.

“On the other hand, such market conditions also provide IREIT with opportunities to proactively pursue yield accretive acquisition deals. The manager is currently looking at acquisition opportunities that are in line with IREIT Global’s ‘ABBA’ strategy”, it added.

Units of IREIT are currently listed on the Singapore Exchange at SGD0.865.

IREIT Global's Bonn Campus (Credit: IREIT Global)
IREIT Global's Bonn Campus (Credit: IREIT Global)

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.