France's Tikehau buys 80% of German-focused IREIT in Singapore

Diversified Paris-based investment group Tikehau Capital earlier this month completed the acquisition of 80% of the shares of Singapore-based IREIT Global Group, the real estate investment trust listed in Singapore set up to invest exclusively in German commercial real estate. The ownership transfer came with the full support of existing key shareholders the Shanghai Summit (Group) Co. Ltd from China and Singapore's Lim Chap Huat of the Soilbuild Group.

IREIT launched last year to provide a gateway for wealthy Asian investors to access European property markets. The company's largest shareholders to date have bee Chinese billionaire Tong Jinquan, who bought 60% in a private placement, and Singaporean developer and business parks entrepreneur Lim Chap Huat, with 19%. Both last year took up their full allotment in a S$88.2m rights issue designed to finance a €144m purchase of the company's fifth asset, in Berlin. Shanghai Summit and Dolphin Two, affiliated with Lim Chap Huat, hold the remaining 20% after the Tikehau majority investment.

IREIT's current portfolio now comprises five freehold properties in Germany valued at about €450 million, located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich, IREIT’s portfolio has an aggregate net lettable area of over 200,000 sqm with about 3,440 car park lots.

Tenants include blue chip clients such as Allianz, Deutsche Telekom and ST Microelectronics, with the top two tenants collectively accounting for 86.3% of rental income. The occupancy rate is 99.7%, with the average lease term to expiry being 6.8 years.

According to Bruno de Pampelonne, the president of Tikehau Capital, who will now join the IREIT Global board, the move has a two-fold purpose. "This transaction will enable Tikehau Capital to significantly expand its pan-European real-estate footprint and extend our reach toward Asian investors. Also, we are bringing IREIT our extensive Pan-European network combined with strong local operational expertise and existing pipeline of real estate transactions in Europe to accelerate the REIT’s growth. This acquisition further consolidates our position in Asia from Singapore, a hub where we have been operating from, for two years now."

IREIT's yield is currently over 8%, the highest among REITs in Singapore. However, quite where Tikehau plans to take the REIT is not fully clear, and might certainly involve a much broader European footprint across many different property asset classes.