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IReit Global rights issue raises S$142.8m to fund Spain purchase, repay CDL loan

IREIT Global on Monday concluded an oversubscribed rights issue, raising some S$142.8 million to finance the acquisition of properties in Spain and repay a loan from City Developments Limited (CDL).

Valid acceptances and excess applications totalling 484.4 million rights units were received, which meant the rights issue was 166.2 per cent subscribed, said the Europe-focused real estate investment trust's manager in a filing late Monday night.

Announced on Sept 18, the renounceable, non-underwritten rights issue was done on the basis of 454 units for every 1,000 units held, at an issue price of S$0.49 apiece.

AT Investments as well as IReit's joint sponsors Tikehau Capital and CDL have, pursuant to their undertakings, subscribed for their total provisional allotments corresponding to each of their direct interests in the trust.

France-listed asset management group Tikehau and Singapore-listed real estate company CDL jointly own IReit's manager. As at Sept 18, Tikehau had a direct interest of 29.3 per cent in IReit, CDL owned 21 per cent of the units while AT Investments held 5.5 per cent.

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At the close of the rights issue, excluding applications from CDL and AT Investments, valid acceptances and excess applications were received for 403.4 million rights units, or about 138.4 per cent of the rights units available.

Part of the proceeds will be used to acquire the remaining 60 per cent of four freehold multi-tenanted office buildings located in Spain's Madrid and Barcelona, from Tikehau. These properties are already 40 per cent owned by IReit.

The purchase price for the stake acquisition is estimated at 47.8 million euros (S$77 million), the IReit manager said in its Sept 18 filing. This was derived based on the consolidated net asset value of the joint venture that holds the Spain properties and adjusted based on the properties' agreed market value.

IReit will also use the rights issue's proceeds to repay a CDL loan in relation to the Spain assets. CDL's subsidiary had extended a 32 million euro loan to IReit to fund the latter's purchase of its 40 per cent interest back in December 2019.

Last month, IReit's manager had said it planned to use about S$77.8 million of the rights issue's gross proceeds for the share purchase and related expenses, and some S$51.5 million to repay the CDL loan.

The Spain acquisition will add value to the existing portfolio through geographic diversification, and enable IReit to benefit from the "quality tenant base and potential for positive rental reversions" at the four buildings, said Louis d'Estienne d'Orves, chief executive of IReit's manager, on Monday.

He added that the rights issue improves the trust's liquidity, reduces debt and puts it in "a strategic position to secure new opportunities with attractive debt terms".

With the rights issue, IReit's aggregate leverage has fallen to 35 per cent from 39 per cent.

The issue price of S$0.49 represented a discount of 32.9 per cent to the closing price of S$0.73 on the Singapore bourse on Sept 18, and a 25.2 per cent discount to the theoretical ex-rights price of S$0.655, the manager noted last month.

The rights units will rank pari passu with the existing units in all respects, including the right to any distributions which may accrue for the period from July 1, 2020 to Dec 31, 2020, as well as all distributions thereafter.

The IReit manager expects the rights units to be listed and quoted on the mainboard of the Singapore exchange on Oct 23 at 9am.

Aside from the four Spanish office properties, IReit's portfolio also includes five freehold office properties in Germany.

IReit units were trading at 60.5 Singapore cents as at 9.07am on Tuesday, down 0.5 cent or 0.8 per cent. CDL shares fell S$0.09 or 1.2 per cent to S$7.65.

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