IREIT Global (IREIT), a Europe-focused real estate investment trust managed by Singapore-based IREIT Global Group Pte. Ltd., has agreed to buy a portfolio of 17 retail properties across France.
The aggregate purchase price is around €76.8 million, which is approximately 1.7% discount to the average of the two independent valuations of €78.1 million, says IREIT.
The properties have a total gross lettable area of 61,756 square metres and a 100% occupancy rate. The weighted average lease expiry by gross rental income is approximately 6.8 years as of 31 March 2023. The properties are expected to generate a Net Property Income (NPI) yield of 7.9%.
Freehold and leasehold retail properties
There are 13 freehold properties and also four leasehold properties. They are fully leased to B&M France SAS. B&M Group is a leading European discount retailer.
Louis d’Estienne d’Orves, Chief Executive Officer of the Manager, says, “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.
Outpacing the broader retail investment market
“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 €12.0 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.
“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 City Developments Limited to identify potential yield-accretive acquisition opportunities in Europe that will strengthen our portfolio in scale and diversification.”
The Retail Parks (Out-of-Town) asset class has been resilient through the COVID-19 pandemic due to their accessibility, open-air format, wide range of available spaces, parking facilities, manageable operational cost, value-for-money brands and for some retailers, omnichannel experiences.
In addition, the Retail Parks (Out-of-Town) market in France offers one of the highest prime yields in the broader Retail market at approximately 5.0% in Q4 2022. Retail Parks (Out-ofTown) asset class has also witnessed a record investment value of approximately €2.1 billion in 2022, which is an increase of approximately 75% compared to the five-year average.
The image shows the B&M store at Claye-Souilly, Northern France.
