Profit or Loss
The office market in Germany and Spain has generally improved in the recent months, with investors showing particular interest in German office real estate. Nonetheless, the Manager is closely monitoring the possible impact of the future demand for office space, in view of the potential adoption of hybrid working model and flexible working arrangement by companies as a result of the COVID-19 pandemic. With its strategy of focusing on blue-chip tenant mix and good quality assets in established office areas, IREIT's portfolio has remained resilient. For 1H2021, all tenants in IREIT's portfolio have continued to pay their rents and none of them have requested for rental rebates or deferrals. In June 2021, Deutsche Rentenversicherung Bund (“DRV”), the major tenant at Berlin Campus, did not exercise its break option to return part of its leased space to IREIT in 2022. As a result, the entire lease with DRV will now only expire in June 2024, thereby raising the income visibility at Berlin Campus substantially.
The Manager is already in advanced discussions with a few tenants who have break options and lease expiries in 2022 and is exploring the multi-let approach to protect IREIT's future occupancy rate and rental income. In July 2021, the Manager has successfully secured 3 lease extensions and 2 new leases at the Spanish properties. The completion of the acquisition of a portfolio of 27 retail properties in France in July 2021 will strengthen IREIT's lease profile and add further scale and diversification to IREIT's portfolio. Moving forward, the Manager intends to continue to pursue acquisitions to optimise the long-term returns of IREIT.
The Manager has also announced today the proposed divestment of the multi-storey car park located adjacent to Darmstadt Campus as part of its capital recycling strategy. The sale consideration of the car park was €9.5 million, approximately 10.5% higher than its independent valuation of €8.6 million as at 30 June 2021. The completion of the divestment is expected to take place in the fourth quarter of 2021.
Furthermore, the Manager will be implementing the dual currency trading for IREIT with effect from 17 August 2021. With this implementation, units in IREIT can be traded in Euros and Singapore dollars, as opposed to Singapore dollars currently. In addition, the Manager will be changing the distribution currency of IREIT from Singapore dollars to Euros starting with the distribution for the period from 30 June 2021 to 31 December 2021 onwards. Unitholders are advised to refer to IREIT's announcement on the dual currency trading of units and change in distribution currency issued on SGXNet today for more details.