SINGAPORE (June 30): The manager of IREIT Global, which invests in a portfolio of office real properties in Europe, has agreed to acquire a property in Berlin for 144.2 million euros ($217.7 million).

This is its first acquisition since its IPO.

The Berlin property is located in the district of Lichtenberg, Berlin, where commercial office development and occupancy demand have been growing.

It comprises two fully connected building sections of 8 storeys and 13 storeys and has an NPI yield of 7.1%.

About 98.8% of the property is tenanted out.

IREIT said it was attracted to the Berlin property due to the strong principal tenant, Deutsche Rentenversicherung Bund (DRB), the largest of 16 federal pension institutions in Germany, and the opportunity for rental and value growth in this increasingly popular location.

IREIT intends to fund the total acquisition cost of about $236.9 million through a mix of equity and debt.

It is planning to raise gross proceeds of $88.7 million through a renounceable rights issue of 189.6 million new units at 46.8 cents.

The REIT closed 0.5 cent higher at 80.5 cents yesterday.

Shareholders will be entitled to subscribe to 45 rights shares for each 100 shares held.

Tong Jinquan, Lim Chap Huat and IREIT Global Management who own a total of about 76.5% of the existing units have undertaken to subscribe to their allotment of rights units.

About $84.2 million from the proceeds of the rights issue will be used to fund the acquisition.

The balance of the funding of $152.7 million will be funded through a bank loan facility.

Post-acquisition, the gearing ratio of IREIT is expected to increase to 43.7% on a pro forma basis.

With this acquisition, IREIT’s total portfolio value will increase to $661.4 million.