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IReit Global enters Spain, acquiring 4 office buildings
IReit Global has partnered with Tikehau Capital to enter the Spanish market with an acquisition of four freehold office buildings in Madrid and Barcelona.
The Europe-focused real estate investment trust and a key unitholder Tikehau Capital will enter into a 40:60 joint venture to buy out the property holding companies of the Spanish portfolio. IReit, through the joint venture, will be "actively involved in all key operational and financial matters", said IReit's manager, IReit Global Group in a statement on Dec 7.
Tikehau Capital will grant the Reit a call option to acquire its 60 per cent stake, while another key unitholder of IReit, City Developments, will extend a 32 million euro (S$48.1 million) bridging loan to finance IReit's Spanish investment. Subsequently, IReit's manager will explore possible debt and equity financing options to repay the bridging loan and exercise the call option, while maintaining an appropriate capital structure for IReit.
The agreed property value of the Spanish portfolio on a 100 per cent basis is at 133.8 million euro, representing a 3.3 per cent discount to the aggregate valuation of 138.3 million euro by independent valuer, Cushman & Wakefield Spain.
The Spanish properties are currently multi-tenanted and are anchored by a number of large reputable companies from diverse industries such as Clece (provider of logistics, facility management and cleaning services), Digitex (integrated management solutions provider), Gesif (unit of Cabot Credit Management Group), Catalan Media Corporation (public radio and television company in Catalonia), Coca-Cola European Partners (bottling company for Coca-Cola products), DXC Technology (spin-off from Hewlett-Packard) and Roche (Swiss healthcare company).
Chief executive of IReit's manager, Aymeric Thibord, said: "The Spanish portfolio is a strategic addition that complements well with IReit’s existing portfolio, as its diversified blue-chip tenant base and well-staggered lease expiry profile will add strength, scale and diversification to the portfolio."
The passing rents of the Spanish properties are generally below the current market rents, while the overall occupancy rate currently stands at 80.9 per cent. This presents an upside potential for IReit by bringing the under-rented properties nearer to market levels and increasing the occupancy rate through active asset management, the statement said.
With the call option granted by Tikehau Capital to IReit to acquire its 60 per cent stake in the joint venture, it also provides a future growth opportunity for IReit.
IReit units ended at S$0.795, unchanged on Dec 6.