Europe-focused IREIT Global UD1U has reported distribution per unit (DPU) 0.93 euro cents for the 1HFY2023 ended June, down 23.8% y-o-y. This takes into account the enlarged unit base following a July 19 preferential offering.
Based on the total issued units at June 30, however, the 1HFY2023 DPU would have been higher at 1.07 euro cents, down 24.1% y-o-y.
Based on the closing unit price of 44 Singapore cents as at June 30, 2022, 1HFY2023 DPU translates to an annualised distribution yield of 6.2%.
Net asset value per unit as at June 30 was 75 cents, down from 77 cents at Dec 31, 2022.
Gross revenue for 1HFY2023 decreased 5.5% year-on-year to EUR28.4 million, mainly due to the decrease in rental income and car park income from the vacancy in Darmstadt Campus, and one-off rent-free period in Bonn Campus, Münster Campus and Sant Cugat Green, partially offset by the increase in CPI indexation, announced the REIT’s manager on Aug 3.
Net property income (NPI) fell 10.1% y-o-y to EUR22.0 million due to higher property operating expenses, while distributable income fell 24.3% y-o-y to EUR12.4 million owing to higher finance costs and tax expenses.
See also: IREIT Global raises $75.9 mil as preferential offering 134.7% subscribed
With high inflation rates, tighter lending conditions and uncertain macroeconomic conditions continuing to impact the European real estate market and capitalisation rates, IREIT’s properties saw a broad-based decline in their independent valuations, resulting in a 2.9% decline in the portfolio valuation to EUR922.7 million as at June 30.
IREIT’s overall occupancy rate improved to 88.7% as at June 30, up from 87.0% in the prior quarter, but was still down from 95.0% a year ago as Darmstadt Campus became vacant in December 2022. As at June 30, its weighted average lease expiry stood at 5.0 years.
IREIT announced in June the proposed acquisition of a portfolio of 17 retail properties located across France that is fully leased to B&M Group, a leading discount retailer in Europe.
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In July, IREIT launched an equity fundraising via preferential offering to raise gross proceeds of approximately $75.9 million, which will be mainly used to fund the acquisition.
The preferential offering was 134.7% subscribed, including participation from joint sponsors Tikehau Capital and City Developments Limited C09 .
The transaction is expected to be completed by 3Q2023.
Following the acquisition, IREIT will see higher aggregate leverage of 34.2%, compared to 33.1% as at June 30, according to the manager.
Louis d’Estienne d’Orves, chief executive officer of the manager, says the European real estate market is still expected to remain challenging due to the weak economic environment. “The departure of the large single tenant at Darmstadt Campus at end-November 2022 has highlighted the importance of active asset management and diversification in IREIT’s portfolio.”
That said, the manager has secured a six-month lease extension in July with the main tenant, Deutsche Rentenversicherung Bund (DRV), at Berlin Campus, bringing its lease expiry to Dec 31, 2024. According to d’Estienne d’Orves, DRV will pay a revised rent that is approximately 45% higher than its current office rent, starting July 1, 2024.
Units in IREIT Global closed 0.5 cents higher, or 1.18% up, at 43 cents on Aug 3.
