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IREIT Global completes divestment of Barcelona property; secures two leases

The Edge Singapore
The Edge Singapore • 2 min read
IREIT Global completes divestment of Barcelona property; secures two leases
The Il∙lumina was sold at €24.5 million or 6.1% above valuation / Photo: IREIT Global website
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IREIT Global has completed the divestment of an office property in Barcelona. The Il∙lumina was sold at €24.5 million, 6.1% above the independent valuation conducted by Savills Advisory Services as at Dec 31. The sale gave IREIT a net property income yield of 5.9%.

The freehold property was acquired in December 2019 and has since generated €4.0 million in cash flow to the REIT.

“We consider this is an attractive opportunity and the right time to dispose of Il∙lumina," says CEO of the REIT manager Louis d’Estienne d’Orves.

With the divestment of Il∙lumina, IREIT’s portfolio occupancy is estimated to increase from 90.4% as at Setp 30 to 91.5% on a pro forma basis, while its weighted average lease expiry will increase from 4.9 to 5.0 years. 

The net proceeds after repaying the bank borrowings secured against the property is intended to be used for financing higher-yielding assets and refurbishment of existing assets.

In conjunction, the REIT says it has secured two key leases at IREIT’s French and German portfolios. 

See also: OUE REIT secures $600 million in unsecured sustainability-linked loan to refinance existing debt

The first is the lease extension to the sole tenant of 17 B&M retail properties in France. 

Following the acquisition of these properties last September, IREIT has gotten the tenant agreeing to extend its leases by 3.8 years on average to 7.7 years, which will add over €22 million of stable cash flows to IREIT’s portfolio.

The other lease is for a lease in the Münster Campus, where a major provider of mobile roof antenna in Germany will take on two office floors at the Münster North building, replacing the existing tenant Deutsche Telekom when it leaves in the first quarter of 2024. 

See also: SGX RegCo makes statement on who can vote at Sabana REIT’s EGM as manager clarifies current external model to unitholder

The lease duration for the two floors is 10 years, with rents maintained at similar rates as the passing rents for Deutsche Telekom’s lease, says the REIT.

Notably, there are limited costs incurred by IREIT and no rent-free period in respect of the new lease at Münster North building.

“These initiatives on capital recycling and asset management will bring additional stability to IREIT’s portfolio and improve returns to our Unitholders,” says d’Orves.

IRET Global units ended Jan 31 at 40 cents, down 1.23%.

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