SINGAPORE – IReit Global is planning to acquire a portfolio of 17 retail properties in France for about €76.8 million (S$112.2 million) through its wholly owned subsidiary.
To partially fund the deal, the Europe-focused real estate investment trust (Reit) plans to launch a preferential offering, to be announced at a later date, said its manager on Thursday.
The total acquisition cost, including fees and expenses, is about €90.9 million.
The transaction will also be financed through external bank borrowings and borrowings from Tikehau Capital, which owns IReit Global Group.
The Reit secured a 15-year lease with a German federal government body for approximately 25 per cent of Darmstadt Campus in Frankfurt in April 2023.
Assuming that the campus is fully vacant, IReit’s manager estimates distribution per unit (DPU) accretion to unit holders to come in at around 2 per cent based on audited fiscal year 2022 financials, before the preferential offering.
However, DPU accretion is estimated to be flat after the preferential offering of new units and the acquisition.
Assuming that the acquisition and the issuance of preferential offering units had been completed on Dec 31, 2022, the Reit’s aggregate leverage would increase to 33.3 per cent from 32 per cent.
The new portfolio is also expected to generate a net property income yield of 7.9 per cent.
The properties have a total gross lettable area of 61,756 sq m, an overall occupancy rate of 100 per cent, and a weighted average lease expiry by gross rental income of about 6.8 years as at March 31.
Among the new properties, 13 have a freehold land tenure, while the remaining four are leasehold.
The new properties are fully leased to a wholly owned subsidiary of multinational variety store chain, B&M European Value Retail.
Upon completion of the acquisition, the properties will become part of IReit’s retail parks (out-of-town) asset class of shops or facilities that are situated away from the centre of a town or city.
Mr Louis d’Estienne d’Orves, chief executive officer of the Reit’s manager, said: “In this macroeconomic environment marked by high inflation, the proposed acquisition is in line with our strategy of strengthening our exposure to index-linked assets in established European markets, supported by a strong blue-chip tenant.”
He also expects the continued success of the Reit’s retail park properties due to their “attractive yields for investors” and lower rental costs for tenants, compared with other asset classes.
Units of IReit Global were trading down 0.5 cent, or 1 per cent, at 48 cents as at 9.52am on Thursday. THE BUSINESS TIMES
