IREIT Global property in Barcelona, Il∙luminia. (Photo: Il∙luminia)IREIT Global property in Barcelona, Il∙luminia. (Photo: Il∙luminia)

IREIT Global is divesting its asset in Barcelona known as Il∙lumina for EUR24.5 million.

The property is a freehold office building located in Esplugues de Llobregat, which is 5 kilometres away from the financial district of Barcelona.

It has a total lettable area of 20,922 square metres, with 310 parking spaces.

The gross rental income of the property is EUR2.4 million for FY2022.

Its sale consideration is 5.2% above the independent valuation of the property as at 30 June 2023, which is EUR23.3 million.

“While the property has provided recurring income since its acquisition, its income yield is lower compared with that of the rest of the portfolio”, said IREIT Global in a statement issued on the divestment.

In addition, the short weighted average lease expiry of 2.8 years, which is lower than the REIT’s portfolio average of 4.9 years, may result in higher vacancy when the leases expire as the secondary office location of the property may pose challenges in leasing, the REIT added in the statement on 22 December.

“The proposed divestment aligns with the manager’s proactive asset management strategy to improve the quality of IREIT’s portfolio by recycling of assets when pricing is right and to optimise returns for unitholders of IREIT”, the REIT added.

IREIT Global intends to use the net proceeds to reduce debt and to assess opportunities for capital expenditures, acquisitions and asset enhancement.

The divestment is expected to be completed by the end of January 2024.

IREIT Global was last done on the Singapore Exchange at SGD0.39, which presently implies a distribution yield of 7.03% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.