CDL pays S$77.7m for 12.4% of IREIT Global and 50% of trust manager

Singapore

CITY Developments Limited (CDL) has paid S$77.7 million to acquire a 12.4 per cent stake in IREIT Global and half of the European property trust's manager.

CDL, a Singapore-listed property developer, bought the 50 per cent stake in trust manager IREIT Global Group (IGG) for S$18.36 million from Tikehau Capital, a pan-European alternative asset management and investment group. Tikehau, which previously owned 84.5 per cent of IGG, bought out the minority shareholder of IGG just before the deal with CDL and now holds the remaining 50 per cent interest in IGG.

CDL shelled out S$59.36 million for 12.4 per cent of IREIT Global, or 78.6 million IREIT Global units at about S$0.76 per unit, from vendors Shanghai Summit and Lim Chap Huat. The price of the units represents a 1.3 per cent discount over IREIT Global's closing price of S$0.77 on Tuesday.

Shanghai Summit was the minority shareholder of IGG that sold its IGG shares to Tikehau. It sold 75.6 million units to CDL through Goodness Investments, an affiliate. The other three million units were sold by Mr Lim.

Tikehau, which "remains fully committed to IREIT's growth", increased its stake in IREIT to 16.4 per cent, almost double its previous unitholding stake of 8.5 per cent, by buying units held by Goodness Investments.

Listed on the Singapore Exchange since 2014, IREIT Global focuses on investing in income-producing office, retail and industrial properties in Europe. Its current portfolio, which comprises five freehold office properties in the German cities of Berlin, Bonn, Darmstadt, Munich and Münster, is valued at 504.9 million euros (S$767.4 million).

The five properties have a total net lettable area of more than 200,600 square metres and comprise about 3,400 carpark lots. They have an overall occupancy rate of 98.6 per cent, and the combined portfolio has an annual yield of about 8 per cent.

Frank Khoo, CDL's group chief investment officer, has been appointed IGG's non-executive director.

"As part of CDL's transformation, we are developing our fund management business through organic growth coupled with the acquisition of assets and platforms. This investment in a Reit is in line with our aim to achieve assets under management of US$5 billion by 2023," Mr Khoo said.

"Besides being earnings accretive with immediate contribution to our recurring income through management fees and attractive yield, the investment in IREIT Global complements our existing CDL Hospitality Trusts and will strengthen our Reit management expertise."

CDL shares closed S$0.15 or 1.6 per cent lower at S$8.94 on Tuesday.