IReit Global acquires Grade A office building in Barcelona for 27.2m euros

IREIT Global's wholly-owned subsidiary has acquired a Grade A freehold office building in Barcelona, Spain, for 27.2 million euros (S$43.1 million).

The move brings the number of Spain properties in the Europe-focused real estate investment trust's (Reit) portfolio to five - three in Barcelona and two in Madrid.

The subsidiary had entered into a public deed of sale on Sept 23 with seller Inmobiliaria Colonial, SOCIMI, S.A, and completed the acquisition on the same day, IReit Global's manager said in a bourse filing on Friday.

Assuming the acquisition was completed on Jan 1 and IReit held and operated the building through to June 30, H1 2021 distribution per unit (DPU) would be 1.49 euro cents, representing a DPU accretion of 3.3 per cent, according to pro forma estimates.

The building, Parc Cugat, is located within a business park in Sant Cugat del Vallès, which is 20 minutes from the financial district of Barcelona. Sant Cugat del Vallès is also considered to be one of the most sought-after areas in the metropolitan area of Barcelona, IReit Global's manager said.

The property has a gross lettable area of 15,510 square metres (sq m), which comprises 12,000 sq m of office space, 293 sq m of canteen space, 2,509 sq m of storage space and a 708 sq m auditorium.

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It has a committed occupancy of 64 per cent and a weighted average lease expiry by gross rental income (GRI) of about 6.8 years. It also has an annual GRI of about 1.5 million euros as at Sept 23.

The office building is leased to five tenants, including blue-chip companies such as Kyndryl (a spin-off from IBM), operational consulting firm KLB Group and fashion marketing company Grupo Escada.

The seller is a Spain-based Reit operator listed on the Madrid Stock Exchange since 1999. As part of the deal, it will provide a rental guarantee of about 400,000 euros, equivalent to around 15 months of market rental income. This is for the vacant ground floor of Parc Cugat, together with common expenses of the rental guarantee area of about 200,000 euros.

With the rental guarantee, the purchase consideration of 27.2 million euros represents a discount of about 4.5 per cent to Parc Cugat's independent valuation.

The total acquisition cost is estimated to be 29.1 million euros, comprising the purchase consideration, acquisition fee, as well as projected debt financing costs and other fees and expenses.

The manager will finance the transaction through a combination of external bank borrowings and internal cash resources.

Units of IReit Global ended flat at 63.5 Singapore cents on Thursday.