DBS Group Research has maintained its “hold” recommendation for IREIT Global, adjusting the 12-month price target to SGD0.30, up from the previous SGD0.25. This adjustment reflects the anticipated benefits from the ongoing repositioning of the Berlin Campus, expected to yield results by FY27. The report highlights that IREIT’s diversified portfolio, which includes 53 assets across Germany, France, and Spain, remains stable despite current challenges.
The Berlin Campus, a significant component of IREIT’s portfolio, is undergoing a major repositioning following the non-renewal of its main tenant’s lease. This has led to a temporary decline in gross revenue and net property income for the first half of 2025. However, DBS analysts Dale Lai and Derek Tan note that the repositioning is expected to enhance earnings once completed.
The report also points out that IREIT’s acquisition of 17 retail assets in France has diversified its portfolio, reducing office exposure and increasing retail assets to approximately 20%. Despite near-term uncertainties, such as potential prolonged vacancies and a slowdown in the office leasing market, the portfolio’s valuation has seen a slight improvement.
DBS Group Research warns of potential risks, including delays in the Berlin Campus project and rising financing costs. However, the successful issuance of SGD85 million in green notes and ongoing discussions with potential tenants are seen as positive steps towards mitigating these risks. The report concludes with a cautious outlook, maintaining the “hold” recommendation due to expected challenges in FY26, including increased borrowing costs and elevated gearing levels.
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