The manager of IREIT Global has announced that it has acquired an office building in Barcelona, Spain for a total consideration of EUR27.2 million ($43.1 million) on Sept 23.
The freehold Grade A office building, named Parc Cugat, has a gross lettable area of approximately 15,510 sqm and is located within a business park in Sant Cugat del Vallès. It currently has a committed occupancy of 64%, including 76.5% occupancy for office space only. It has a weighted average lease expiry by gross rental income (GRI) of approximately 6.8 years.
According to the manager, the building generates an annual GRI of approximately EUR1.5 million as at Sept 23. Tenants comprise blue-chip companies including IBM spin-off Kyndryl, KLB Group and Grupo Escada.
The ground floor space of the building is currently vacant, which the manager says has been the case since May 2020. Under the agreed terms of the transaction, the seller, Inmobiliaria Colonial, SOCIMI, will provide rental guarantee for the vacant space on the ground floor for a period of approximately 15 months.
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The consideration of EUR27.2 million represents a discount of approximately 4.5% to the independent valuation of the property with rental guarantee.
Based on the pro forma financial effects on IREIT’s adjusted distribution per unit (DPU) for the financial year ended Dec 31, 2020, the acquisition is expected to lead to a DPU accretion of 3.4%.
The manager intends to finance the acquisition through a combination of external bank borrowings and internal cash resources. In a separate announcement on Sept 24, the manager disclosed that balance proceeds from its $142.8 million rights issue in 2020 amounting to $12.6 million as well as balance proceeds from its $126.7 million equity fundraising in 2021 amounting to $11.9 million have been used to partially fund the Parc Cugat acquisition.
Louis d’Estienne d’Orves, CEO of the manager, attributes the acquisition to the extensive network of the REIT’s joint sponsor Tikehau Capital. “We are pleased to be able to secure this property at an attractive purchase price, owing to the strong local expertise of Tikehau Capital,” he says.
“This enables us to offer modern Grade A space at competitive rents to any occupiers. Its quality asset features and long leases with blue-chip tenants will complement well with IREIT’s portfolio, as we continue to execute our strategy to grow and diversify IREIT’s tenant and geographical exposure,” he adds.
With the completion of the acquisition, IREIT’s portfolio now comprises five freehold office properties in Germany, five freehold office properties in Spain and 27 freehold retail properties in France, with a portfolio valuation of EUR889.7 million.
Units in IREIT Global closed flat at 64.5 cents on Sept 24.
Photo: IREIT Global
