IReit Global explores ways to raise Spanish portfolio's occupancy rate

Singapore

IREIT Global will be leveraging the network and local presence of asset management group and joint venture partner Tikehau Capital to boost the occupancy rate of its recently-acquired Spanish portfolio.

This is with hopes of bringing the "under-rented" properties nearer to market levels through active asset management, said Aymeric Thibord, chief executive of IReit Global's manager in the real estate investment trust's (Reit) announcement on its fourth-quarter results for fiscal 2019 on Wednesday.

"Our real estate team has assessed that there is upside potential on the Spanish portfolio, given that the leasing market around the Spanish properties has been positive and some of the existing leases are below market rates," Mr Thibord said in a statement to The Business Times.

In December 2019, IReit Global acquired a stake in a portfolio of four freehold office buildings in Spain through a joint venture with Tikehau Capital.

Since the completion of the deal, IReit Global's manager said it has been busy engaging local brokers, property managers, potential new and existing tenants to explore ways to increase occupancy rate and improve rental income of the portfolio.

For the fourth quarter ended Dec 31, the Reit posted a distribution per unit (DPU) of 0.86 euro cent (1.36 Singapore cents) after retention, down 3.4 per cent from 0.89 euro cent a year ago.

Units of the mainboard-listed real estate investment trust (Reit) dipped slightly to S$0.855 at 9.10am after the market opened on Thursday, before regaining momentum during the day and closing slightly higher at S$0.865, up 0.5 Singapore cent or 0.6 per cent.

Gross revenue was down 0.7 per cent to 8.9 million euros for the quarter, from nine million euros a year ago. Net property income (NPI) grew 0.1 per cent on the year to 7.49 million euros for the quarter, from 7.48 million euros, on marginal decreases in gross revenue and property operating expenses.

Income to be distributed to unitholders fell 1.8 per cent year on year to 5.5 million euros, from 5.6 million euros. The distribution for the six months ended Dec 31 amounts to 2.71 Singapore cents per unit, and will be paid on Feb 27 after the books' closure on Feb 20.

Meanwhile, for the full year ended Dec 31, DPU was 0.6 per cent lower at 3.57 euro cents after retention, versus 3.59 euro cents a year ago, and income to be distributed grew 0.5 per cent to 22.7 million euros.

Gross revenue was 1.3 per cent higher at 35.3 million euros, while NPI rose 0.1 per cent to 30.7 million euros for the full year.

"We will also be exploring possible debt and equity financing options to repay our term loan facility and to exercise the call option granted by Tikehau Capital to acquire its 60 per cent stake, while maintaining an appropriate capital structure for IReit," Mr Thibord said in the announcement.

The manager of IReit Global is jointly owned by Tikehau Capital and Singapore developer City Developments Limited. Tikehau Capital is an asset management and investment group listed in France.