Germany’s office real property has been on the roll during the last few years. Judging from its talk about price, IREIT Global (IREIT) was deep in slumber amidst the true estate frenzy. I will look at anywhere near this much unloved and non-covered REIT, as it offers an interesting, albeit long-term value proposition. This is a reversal of my usual investment thesis, where I tend to prioritize macroeconomic factors over company specific ones. What does IREIT do?

IREIT is a pure-play office REIT comprising five office buildings situated in various cities across Germany, with the largest contributor being its Berlin Campus. The REIT was shown in 2014, and the Berlin campus was injected in 2015, without further additions since then. The REIT’s management has changed hands in 2016, when Tikehau Capital obtained 80% of the REIT supervisor from the previous sponsor. The previous Sponsor who carried out the IPO is an Israeli trader into European office possessions. Tikehau is a pan-European Asset supervisor and investor and it is outlined on the Euronext Paris (Bloomberg Code – TKO: FP).

1. 1116 Foreign Tax Credit
2. 5-Year CD – lack of 150 days interest
3. 32$300,000 $0 5%
4. Types of HOME LOANS >
5. NNP= GDP = depreciation
6. Team player with excellent English skills
7. GDP deflator frequently changes weights while CPI is revised very infrequently

Change in mandate. Subsequent to the acquisition, Tikehau announced that IREIT’s mandate will be broadened to add European retail and industrial assets. However, there’s been no addition to IREIT because the Berlin Campus in 2015, leaving it a pure play German office REIT at the moment. Shareholders. IREIT’s largest shareholder is Tong Jinquan, a Chinese tycoon, with a 55% stake at the moment. The stake was acquired as part of the IPO, from the prior sponsor. Tong Jinquan’s stake has continued to be largely unchanged because the IPO.

On the other hands, Tikehau has gradually increased its stake in the REIT since becoming the REIT’s supervisor in 2017. At present, Tikehau is the owner of 8.3% of the REIT. I treat this progressive increase as a motivating sign, as it increases the position of the REIT supervisor with that of unitholders. Germany’s inflation has been stable. IREIT’s leases are usually inflation-indexed, that is regularly modified when cumulative inflation reaches a threshold between 5-7% for the leases.

The Governing Council clarified in 2003 that in the quest for price stability it aims to keep inflation rates below, but close to, 2% within the medium term. Inflation pressure in Germany has averaged 1.5% per annum during the last 20 years, indicating that the ECB has had the opportunity to meet its goal over time, at least for the German, overall economy.

German office rental market has been running red hot during the last few years, with a robust economy producing new unemployment and jobs rate hitting record lows consistently. The steady growth of jobs and employees throughout the market has resulted in office vacancy rates falling rapidly in major cities. Interestingly, though vacancy rates have been declining since 2012 progressively rental rates began to surge from 2015 onwards. This means that that the marketplace tightness only occur extra supply has been consumed once.