Daniel Lee
- Jul 16
- 4 min read

[Case Study] Is It Possible For Investors To Avoid a 50% Loss On IREIT Global?

Updated: Jul 17

On 24 June 2024, IREIT Global reported that they had lost their main tenant – Berlin Campus – which will not renew their lease on 31st December 2024. This adds to the ongoing pessimism surrounding the REIT, with the share price experiencing a 50% drawdown over the last two years.

That got me thinking, is it possible for us to avoid investing in such REITs or are there any signs we can look out for to help us reduce our risk of getting caught up in a severe market drawdown?

Before I begin, let it be known that I am not a unitholder of IREIT as it didn’t fulfil my criteria to justify starting a position. The point of this article is to examine the decision-making process of those who did invest in IREIT and determine if any mistakes were made along the way and if so, what are those and how we avoid them as investors.

Is It A Mistake To Be Attracted By the Yield?

As with most retail investors that I’ve seen, the decision to invest in any REIT is often guided by the prevailing dividend yield that the REIT has to offer.

Reflecting on IREIT’s Price-to-Distributable Income Ratio and dividend yield behaviour, it's clear why investors were attracted by the high yields in 2020 and 2022. In particular, the indicators in 2022 suggested that IREIT was an undervalued REIT. However, those who invested in IREIT in 2022 ended up disappointed with its poor fundamental and share price performance in 2023.

From here, we can conclude that starting an investment position solely based on the attractiveness of a dividend yield itself might not be sufficient to catch a falling knife. This is especially so if there is no sustained fundamental recovery to improve investor sentiment as without it, the share price will continue to remain depressed.

Is It A Mistake To Bank On A Single Narrative?

Another common motivation today for investing in REITs is the anticipation of better fundamentals performances driven by macroeconomic tailwinds.

In the case of IREIT’s global, many investors I’ve seen went in with an investment hypothesis that the performance of IREIT will recover at the back of the improving economic conditions in Europe. Investors are banking on the recovery in occupancy rates and lower interest rates which should drive distribution up.

While in theory, the hypothesis may be worth exploring, in reality, such recovery would often take years to materialize as the current investor sentiment is still largely affected by the ongoing economic headwinds and would need both time and hard evidence of a sustained economic recovery for things to turn around.

Furthermore, the hypothesis works best assuming that there is no further action by the management – acquisition or divestment – which may introduce additional layers of uncertainty that may thwart the overall performance of the REIT thereby reducing the likelihood that the hypothesis may materialize.

In the case of IREIT Global, in 2023, they issued preferential offerings to acquire an additional 17 properties of which the full impact of these acquisitions can only be accounted for in 2024. Meanwhile, as a result of the enlarged base, the distributable income behaviour took a hit in 2023 which could have very well been a push factor for uneducated investors to exit their position.

Overall, we are unable to conclude if investing based on a narrative is a mistake as we would need more time to examine the performance of IREIT. However, what is certain is that many things can change during this period which could throw the original investment hypothesis off. Like it or not, that is the main risk that narrative investors have to deal with.

Summary: Could A 50% Loss Be Avoided?

In the case of IREIT, I think it may be extremely difficult for an investor to avoid investing in IREIT if their hypothesis is based on the dividend yield or narrative alone as up till 2022, the fundamentals and health of IREIT are sound and there weren’t any red flags that screamed “uninvestable” to any investor examining IREIT.

The only way that investors could have avoided or at least mitigated the impact of market volatility in the case of IREIT Global is to limit their position size and have a long-term investment horizon to see their hypothesis play out in the future.

On a personal note, the only reason why I did not invest in IREIT Global was because I found a better alternative (Cromwell EU REIT) with similar underlying exposure which made me start a position in the other REIT instead of IREIT Global.

Even so, I made it a point to keep my position in such REITs to be no more than 20% of my investment portfolio as these are to be seen as tactical allocations which are designed to boost your overall portfolio returns and are not to be held on for life.

I’ve written extensively on the topic of REIT investing in my book “Retire With REITs” where you can find my investment methodology in selecting the right REITs to invest in and how I design and implement a profitable REIT portfolio myself:

Outside of my book, I'm also sharing my opinion on the individual Singapore listed REITs on my telegram channel, so do join the channel and stay updated with future analysis.