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The German office letting market has generally remained healthy, with positive take-up in office space amid prospects of continued economic growth, demand for office space and low vacancy rates, particularly in key German cities.
IREIT is constantly in discussions with existing tenants for possible lease extensions. During the quarter, the single tenant at Münster South has committed to a lease extension of five years for the six floors that it is currently occupying, one year ahead of its lease expiry in September 2019. The extension, which includes a break option in 2021 for two out of the six floors, will bring the lease expiry from 2019 to 2024. At Concor Park, the Manager is also pleased to report that one of the key tenants has extended its lease by another three years from December 2019 to 2022. With these two lease extensions, there will no longer be any lease expiry in 2019, thereby enhancing the certainty of IREIT’s recurring income stream.
On the capital management front, the Manager has also made headways with respect to the discussions with banks for the refinancing of IREIT’s term loans, and will make the relevant disclosures as and when appropriate.
In the year ahead, the political uncertainty in Europe, especially the recent setback suffered by the government in the German regional election and the ongoing Brexit with the possibility of a no-deal outcome, may cast a pall on the European real estate market. The Manager will stay focused on a growth strategy based on the four pillars of seeking diversification, taking a long-term approach, achieving scale and having a local presence in order to enhance the long-term income for unitholders.