Credit Update: IREIT Global: Bridging the Berlin Gap for a 4+% Yield

We previously initiated coverage on IREIT Global’s bonds in late December 2025: Idea of the Week: Attractive high yield opportunity with IREIT bonds

• For the full year ending 31 December 2025 (FY25), gross revenue for IREIT Global (IREIT) declined by 33.3% year on year (YoY) to €50.4 million. This decline was primarily driven by the planned vacancy at the Berlin Campus, which is undergoing renovation works, following the lease expiry of the main tenant on 31 December 2024, alongside the absence of one-off dilapidation income in the previous year. Consequently, net property income (NPI) fell by 38.7% YoY to €32.8 million.

• While the Berlin Campus undergoes its dramatic transformation, the rest of IREIT’s portfolio is acting as a steady, reliable anchor. This “silent engine” proved its resilience in FY25, delivering a solid 4.0% rental escalation and maintaining a stable occupancy of 89.4%. With a 5.6-year weighted average lease to expiry (WALE), IREIT has secured clear rental income visibility that stretches comfortably beyond the maturity of its May 2028 notes. The momentum has already carried into the new year; in 1Q2026, the manager clinched a key 10-year lease with a federal tenant at the Darmstadt Campus. This move is set to propel the property’s occupancy from a lean 41.3% to nearly 60%. For bondholders, this operational stability from the core portfolio, ex-Berlin, provides the necessary anchor for IREIT’s credit profile. 

 

• Since our initial assessment (check the related article above), management has provided further clarity on the path ahead for the Berlin Campus. This project is now entering its most critical execution phase; construction on the hospitality components (phase 1) remains on track for a 2Q2027 completion, anchored by the high-profile Premier Inn and Stayery brands. The financial bridge for this phase 1 stage is firmly in place, fortified by the S$85 million, a €20 million capex facility, and the timely €12.5 million loan from joint sponsor City Development Limited (CDL). However, we note that management has projected a total capital expenditure of €165 million to €180 million for the entirety of phase 1, which would introduce near-term pressure on IREIT in the form of higher interest costs. Furthermore, with the office leasing target shifting slightly to 2Q2026, the credit narrative now centres squarely on management’s ability to convert these discussions into signed leases. We note that no information was provided by management regarding this shift in target, which is a possible indicator of the soft leasing environment in Germany.  While the broader portfolio’s resilience provides a vital cash flow buffer, we stress that the speed at which Berlin returns to being an income-contributing asset remains key for the REIT’s path to normalisation and the seamless servicing of its May 2028 notes. 

 

• Liquidity remains lean but is fortified by strategic facilities and sponsor commitment. As of 31 December 2025, the group held an unrestricted cash position of €39.1 million, representing roughly 9.6% of total borrowings– a level that reflects the REIT’s lean, distribution-focused mandate. While this is lower than historical norms, the liquidity profile is bolstered by the dedicated €20 million capex facility, which reduces the need for IREIT to further draw down on its cash balance. Crucially, the €12.5 million bridge loan from joint sponsor CDL underscores the sponsor’s “skin in the game” and their readiness to provide a liquidity backstop while the REIT navigates its most capital-intensive transition phase, ensuring that IREIT retains the necessary breathing room before Berlin Campus can start contributing income again.    

 

• The REIT’s debt maturity profile remains decent with a weighted average debt maturity of 2.7 years. The next major maturity– a €68.6 million Spanish facility due in late 2026– is expected to be refinanced by the second half of 2026, which would further extend the REIT’s runway for the Berlin Campus transformation. Operating cash generation moderated significantly, with operating cash flow declining 70% YoY to €14.7 million, mainly due to the absence of income contribution from the Berlin Campus. That said, we remain comfortable with IREIT’s ability to service its interest obligations, even after accounting for an increase in finance costs, through its ability to generate cash from its core portfolio. 

 

• IREIT’s aggregate leverage rose, standing at 44.6% as of 31 December 2025 compared to 41.3% as of 30 September 2025. This moderate increase is mainly due to a decrease in portfolio valuation. In particular, Berlin Campus (renovating) and Concor Park (weak leasing market conditions) were the main drivers for this decline in portfolio valuation.    We also highlight that this aggregate leverage ratio is higher than the average S-REITs leverage of 39.9%, and below the MAS regulatory requirement of 50%. Looking forward, we expect a modest pick-up in the leverage ratio as IREIT secures more borrowings to complete the renovation of the Berlin Campus. 

 

• IREIT’s interest coverage ratio also softened to 2.7x as of 31 December 2025, compared to 4.0x as of 30 September 2025. While this decline is due to higher interest costs, we note that it is in line with our forecast (see the related article above). Overall, we still view coverage as adequate; the core portfolio’s robust rent collection (99.9% of rents collected for FY25) and the secured nature of upcoming capex funding mean near-term financing pressure remains low. Having said that, we think interest coverage would moderate slightly moving forward due to the increased borrowings IREIT has to undertake for its Berlin Campus. 

• Overall, we think IREIT’s credit profile has moderately weakened compared to when we initiated coverage in late December 2025. We continue to expect the core portfolio, ex-Berlin campus, to remain the credit anchor for IREIT while it navigates its Berlin Campus transition. The securing of facilities and sponsor support are positive signs for bondholders, while management’s execution remains key in ensuring the Berlin Campus’ return to income contribution for IREIT. Debt maturity remains decent, especially if management completes the refinancing of its upcoming €68.6 million Spanish facility due in late 2026. While interest coverage has softened, it remains in line with our projection, and we think this metric would remain adequate moving forward, anchored by the core portfolio.   

 

• IREIT’s outstanding 2028 notes trade at a yield to worst of 4.15%, with 2.2 years to maturity. When compared to other SGD REITs and issuances of similar tenor (Table 1 below), these 2028 notes offer an attractive yield pickup ranging around 200+bps, which compensates investors for IREIT’s higher leverage, Berlin Campus execution risk and tighter liquidity. 

• Amidst the falling SGD rates backdrop, we believe the 2028 notes still offer a decent high-yield option for investors who have a higher risk tolerance and are comfortable with a moderately leveraged issuer. 

Table 1: Peer Comparison:

Issue	Issuer	Ask Price	Yield to Maturity (%)	Years to Maturity
IREGLB 6.000% 22May2028 Corp (SGD)	IREIT Global	103.83	4.15%	2.19
FLTSP 2.180% 26Jul2028 Corp (SGD)	FLCT Treasury Pte. Ltd.	100.54	1.94%	2.36
CRCTSP 2.400% 29Jun2028 Corp (SGD)	CapitaLand China Trust	100.64	2.11%	2.29
CAPITA 2.100% 08Mar2028 Corp (SGD)	CMT MTN Pte Ltd	100.46	1.86%	1.98
ARTSP 4.200% 06Sep2028 Corp (SGD)	Ascott REIT MTN Pte Ltd	105.56	1.88%	2.48
SGREIT 2.230% 13Sep2028 Corp (SGD)	Starhill Global REIT MTN Pte. Ltd.	100.68	1.95%	2.50
Data as of 16 March 2026 Source: Bondsupermart, iFAST Compilations.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.