In April 2019, CDL completed the acquisition of a 50% stake in IREIT Global Group Pte. Ltd., the manager of Singapore-listed IREIT Global, and 78.6 million units (approximately 12.4%) of the total issued units in IREIT Global for about S$77.7 million. In June, CDL increased its stake to 12.5% of the issued units.
Listed on the Singapore Exchange since 2014, IREIT Global focuses on investing, directly or indirectly, in income-producing office, retail and industrial properties in Europe. Its current portfolio, which comprises five freehold office properties in Germany’s cities of Berlin, Bonn, Darmstadt, Munich and Münster, is valued at €526.4 million (about S$816 million).
The five properties have a total Net Lettable Area (NLA) of more than 200,600 square metres (sqm) and comprises about 3,400 carpark lots. With an overall occupancy rate of 98.6%, their diversified blue-chip tenants include Allianz Handwerker Services GmbH, Deutsche Rentenversicherung Bund, GMG (a wholly-owned subsidiary of Deutsche Telekom) and ST Microelectronics.
Why invest in IREIT Global?
As part of its transformation, CDL is developing its fund management business through organic growth coupled with the acquisition of assets and platforms.
Mr Frank Khoo, Group Chief Investment Officer of CDL, said, “This investment in a REIT is in line with our aim to achieve AUM of US$5 billion by 2023. Besides being earnings accretive with immediate contribution to CDL’s recurring income through management fees and attractive yield, the investment in IREIT Global complements the existing CDL Hospitality Trusts and will strengthen CDL’s REIT management expertise.”
This deal will also enhance CDL’s diversification by increasing its presence in established European economies such as Germany, which has continued to develop physical and digital infrastructure to draw in talent and capital. Germany has attracted companies looking to establish or expand their European presence, which has benefitted its economy. This has also translated to tightening cap rates, increasing rents, and decreasing vacancies across the country.
CDL has confidence in the long-term fundamentals of the established European economies and will continue to seek opportunities to acquire assets with deep value, capitalising on attractive pricing and yields in key locations.
Through asset management and enhancement expertise, CDL can add value and potentially recycle capital by injecting properties into IREIT Global.