Singapore-listed IREIT Global plans to double its portfolio of European office assets to more than €500 mln in the next 12 months.
Singapore-listed IREIT Global plans to double its portfolio of European office assets to more than €500 mln in the next 12 months.
It has already built up assets worth around €285 mln in four German cities, with Europe’s largest economy the main focus in the months ahead.
‘Right now are focussing on Germany, but we’re not only going to be there,’ CIO Adina Cooper told PropertyEU. ‘We like the UK as a market, it’s just that right now, many of the assets are too expensive for what you’re getting and we’re getting better value in Germany. The next acquisitions are mostly going to be in Germany,’ she said. ‘Once the market can provide us with the kind of assets that we're looking for in the UK, then we may invest there.’
IREIT intends to follow what it calls an ‘ABBA’ strategy: core assets in second-tier cities and core-plus assets in first-tier cities (or A properties in B cities and B properties in A cities).
The REIT’s four investments to date have focussed on German B cities. It has €225 mln of assets in prime sites in Bonn, Darmstadt and Münster, with another €60 mln of assets in Concor Park, 10 km outside the centre of Munich.
‘Most of our portfolio is B cities and A properties, but we do believe that where we’ll be more creative is B properties in A cities. Now we’re more established, we can put more of our portfolio in that direction. To tell you whether it will be exactly 50/50 or not in the end is hard to say,’ said Cooper. ‘But we will be in other cities in Germany. We’re looking at a few, in particular some B properties in Hamburg.’
Major investors include self-made Singaporean developer Lim Chap Huat, owner of Soilbuild Group, and Shanghai-based Summit, which is backed by Chinese billionaire Tong Jin Quan.
While larger investors to date come from southeast Asia, Cooper and CEO Itzhak Sella are primarily based in Europe. Cooper sees the Asian interest in Europe as partly a diversification play that offers 'stable income' and 'very good quality' assets. 'The market in Singapore is very small and most of the southeast Asian markets are developing markets. Here you’re getting yields from a stable, large economy,' she said.
IREIT also has a €96.6 mln loan facility from Germany’s DekaBank, but is looking for further investment.
‘It would be very interesting for us to speak to investors that have portfolios that they are interested in exiting, but that would also be part of the REIT in some way. So we’re talking to some companies that are interested in putting their portfolios into our REIT and that would be their exit, but they would also in the interim maybe get some shares and be part of the process with the REIT,’ Cooper said.