IREIT Global, managed by IREIT Global Group Pte. Ltd. (the “Manager”) and jointly owned by Tikehau Capital and City Developments Limited (CDL), has acquired 17 retail properties across France for a total purchase consideration of approximately EUR76.8 million ($112.2 million). The acquisition is estimated to cost the REIT a total of EUR90.9 million including fees and taxes.

“We are delighted to be acquiring an attractive portfolio of Retail Parks (Out-of-Town) properties located in well-established regional retail areas. In this macroeconomic environment marked by high inflation, the proposed acquisition is in line with our strategy of strengthening our exposure to index-linked assets in established European markets, supported by a strong blue-chip tenant,” says Mr Louis d’Estienne d’Orves, CEO of the manager.

“The retail parks (out-of-town) segment has outpaced the broader retail investment market. Their success is expected to continue due to their attractive yields for investors and lower rental costs for tenants, compared to other asset classes. In addition, the popularity of hard-discounters, discounters and outlet stores in France has risen exponentially to reach an estimated total revenue of approximately EUR12.0 billion in 2023, which augurs well for this resilient asset class. Also noteworthy is that the tenant, B&M Group, has been occupying the properties since 2005 on average,” he adds.

The properties have a total gross lettable area (GLA) of 61,756 sqm (664,736.052 sq ft). They are fully leased to B&M France SAS, a wholly-owned subsidiary of B&M European Value Retail. The group is a leading European discount retailer that has been listed on the London Stock Exchange since 2014.

The properties have an overall occupancy rate of 100% and a weighted average lease expiry (WALE) of 6.8 years by gross rental income (GRI) as at March 31. Out of the 17 properties, 13 of them are freehold while the rest of the four are leasehold.

The acquisition is expected to be accretive to the REIT’s distribution per unit (DPU) by 2.0% on a pro forma adjusted FY2022 basis. It is also expected to be accretive to IREIT’s net property income (NPI) yield of 7.9%.

“This yield-accretive portfolio is in line with our strategy of diversifying our portfolio beyond the office sector and expanding our presence within Europe to enhance long term steady returns to unitholders. We will continue to leverage on the expertise of our joint sponsors – Tikehau Capital and CDL to identify potential yield-accretive acquisition opportunities in Europe that will strengthen our portfolio in scale and diversification,” says d’Estienne d’Orves.

IReit Global has launched a preferential offering at a ratio of 161 preferential offering units for every 1,000 existing units at a price of S$0.408 per new unit. The S$75.9 million proceeds will be used mainly to fund the acquisition of the 17 retail properties located across France.

The REIT’s joint sponsors, Tikehau Capital and CDL, have irrevocably undertaken to subscribe each of their pro-rata allotment in full. CDL’s wholly-owned subsidiary, City Strategic Equity Pte. Ltd. (CSEPL), has also further undertaken to subscribe for excess units in the preferential offering such that its total subscriptions will amount to a maximum of $40.0 million.

Overall, the REIT’s joint sponsors and manager have pledged to subscribe up to a maximum of approximately $62.1 million or 81.8% of the preferential offering. CSEPL will rank last in the allocation of excess unit applications in the preferential offering.