IREIT, on Nov 28, announced that it has signed a 20-year lease contract with Premier Inn. Premier Inn, which is the largest hotel chain in the UK, will operate 270 rooms in Berlin Campus, taking up 10,348 sqm (111,384.95 sq ft) of gross floor area, or some 12% of the campus’ total net lettable space.
The news comes after Peter Viens, the new CEO of the manager, said that the REIT was in "exclusive discussions" with a leading hotel brand and long-stay operator to lease about a quarter of the lettable space at IREIT's 3QFY2024 ended Sept 30 briefing in early November.
The lease agreement will have no break option and will yield an annual rent of around EUR2.2 million ($3.1 million) once the hotel segment is completed by the first half of 2027. It will yield an annual rent of EUR2.6 million after a four-year step-up period. In addition, the lease will benefit from an annual indexation after the step-up period.
The manager says it has submitted a building application to the relevant German authorities to refurbish the campus. Refurbishment works are expected to begin in the second quarter of 2025. It adds that it expects to spend around EUR42 million, of which EUR22 million relates directly to the hotel. The remaining EUR20 million will be used to create a new entrance area and upgrade the façade. The capital expenditure (capex) will be borne by IREIT.
As the campus will not produce any income when its present tenant vacates the premises, IREIT’s manager has obtained a waiver from the Monetary Authority of Singapore (MAS) on complying with the income-producing rule till Dec 31, 2028. Under paragraph 7.1(a) of Appendix 6 to the Code on Collective Investment Schemes, IREIT is required to have 75% of its deposited property be invested in income-producing real estate.
“We are excited to welcome Premier Inn as our tenant in Berlin Campus. The achievement of this significant milestone shows the validity of our repositioning project and demonstrates IREIT’s capabilities to manage a significant asset management project,” says Peter Viens, CEO of the manager. “We are also working hard on another hospitality lease concept in Berlin Campus that we hope to be able to announce in the near future.”
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He adds that the REIT’s joint sponsors, Tikehau Capital and City Developments Limited C09 , are supportive of the initiative to reposition the campus as well as the signing of the hospitality lease.
“They are confident on the upside potential and long-term attractiveness of Berlin Campus post repositioning, and will assist in all ways to facilitate the successful execution of Project RE:O within schedule and deliver an iconic building that will anchor the future resilience of IREIT’s portfolio,” says Viens. Project RE:O refers to the strategy to reposition Berlin Campus into a multi-let and mixed-use asset with office, retail and hotel components.
As at 9.35am, units in IREIT Global UD1U are trading flat at 28 cents or 21 Euro cents for its Euro counter.
