IREIT Global has secured a six-month lease extension with a major tenant at its Berlin Campus asset.

The lease was secured with Deutsche Rentenversicherung Bund (DRV) and the tenant will pay a revised rent that is approximately 45% higher than its current office rent from 1 July 2024 onwards.

DRV’s tenancy constitutes approximately 24% of IREIT’s total gross rental income, and 98.8% of Berlin Campus’ lettable area.

The remaining 1.2% of the lettable area is leased to six other small retail and office tenants on the ground floor.

DRV’s lease was set to expire on 30 June 2024, said IREIT in its 14 July statement.

With the lease extension, the rental income from Berlin Campus will not only be enhanced as a result of the higher rent but there will also be greater income certainty at the property, said the REIT.

On a pro forma basis, the weighted average lease expiry (WALE) of Berlin Campus would improve from 1.3 years to 1.8 years as at 31 March 2023, while that of IREIT’s portfolio would improve from 4.8 years to 4.9 years.

DRV would also need to pay a lump-sum of EUR15.5 million as compensation for the dilapidation costs to reinstate Berlin Campus back to its original state should the asset be vacated at the end of its lease term.

“With Berlin Campus still under-rented, there is a strong growth potential at the property should it become vacant”, said IREIT in its statement.

“It is strategically located within 8-minute walk of Berlin's second most frequented station and next to Media Spree, the recently developed CBD sub-district in east Berlin with many high-profile tenants”.

IREIT Global was last done on the Singapore Exchange at SGD0.425, which presently implies a distribution yield of 8.94% according to data on the Singapore REITs table.

Related: IREIT Global assuages concerns over tenant durability in 17-asset acquisition

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.