proposed acquisition of a portfolio of 27 retail properties, Study notes of French

Download proposed acquisition of a portfolio of 27 retail properties and more Study notes French in PDF only on Docsity! 1 (a real estate investment trust constituted on 1 November 2013 under the laws of the Republic of Singapore) PROPOSED ACQUISITION OF A PORTFOLIO OF 27 RETAIL PROPERTIES LOCATED IN FRANCE Unless otherwise indicated, certain Euro amounts in this Announcement have been translated into Singapore dollars based on the exchange rate of €1.00 = S$1.60 for illustrative purpose only. 1. INTRODUCTION IREIT Global Group Pte. Ltd., in its capacity as the manager of IREIT Global (“IREIT”, and as manager of IREIT, the “Manager”) is pleased to announce that FIT 2, a French SAS company which is a direct wholly-owned subsidiary of IREIT (the “Purchaser”), has entered into a conditional sale agreement (the “Sale Agreement”) with Decathlon SE and other companies under the same control of Decathlon SE (directly or indirectly), namely, Weddis, Exerceo 1, Exerceo 2, Deaucimmo 1, Deaucimmo 3 and Le Blanc Coulon (together, the “Vendor”) to acquire a portfolio of 27 retail properties located in France (the “Properties” and the acquisition of the Properties, the “Acquisition”). 2. INFORMATION ON THE PROPOSED ACQUISITION 2.1 Description of the Properties The Properties comprise 27 retail properties located in France with a total gross lettable area (“GLA”) of 95,477 square metres (“sqm”), an overall occupancy rate of 100.0%1 and a weighted average lease expiry (“WALE”) by gross rental income (“GRI”) of 10 years1 with a weighted average lease to break (“WALB”) of 6 years2. The Properties were developed by Decathlon France SAS (“Decathlon”), the largest sporting goods retailer in the world with approximately 1,650 stores in nearly 1,000 cities in 57 countries and regions, and have been owner-occupied for approximately 15 years on average. The Properties are all freehold. Upon completion of the Acquisition (“Completion”), each of the 27 Properties will be leased-back to Decathlon as sole tenant pursuant to a commercial lease with a 10-year initial duration and an option to break after 6 years3, except for one Property (Cholet) which is also tenanted to another retailer, B&M. In accordance with French law, the lease with B&M will be automatically transferred to the Purchaser. A rental guarantee of 6 years is granted by Decathlon with respect to the B&M lease. 1 The lease with Decathlon will be entered into and commence on the date of Completion. 2 WALB is not adjusted for the 18-month penalty payment which is payable by Decathlon in relation to 9 Properties (Vichy, Lannion, Concarneau, Châteauroux, Sarrebourg, Cergy, Evreux, Foix and Laval) upon termination of the lease after the permissible break date being 6 years after the date of commencement of the lease. 3 Pursuant to the French commercial lease regime, a tenant has an option to break at the end of each triennial period of the lease. Decathlon has waived its right to terminate the lease at the end of the first triennial period (i.e. 3 years after the date of commencement of the lease). 2 The table below sets out a summary of selected portfolio information on the Properties as at 26 April 2021, unless otherwise indicated. Land Area 631,464 sqm GLA 95,477 sqm Committed Occupancy 100.0%(1) Number of Tenants 1 for each of the Properties, except for Cholet which has 2 WALE 10 years (by GRI)(1) WALB 6 years(2) Land Tenure Freehold Valuation as at 26 April 2021 €113.9 million Agreed Value €110.5 million GRI €7.887 million Net Property Income (“NPI”) €7.867 million(3) NPI Yield on Agreed Value 7.1%(4) Notes: (1) The lease with Decathlon will be entered into and commence on the date of Completion. (2) WALB is not adjusted for the 18-month penalty payment which is payable by Decathlon in relation to 9 Properties (Vichy, Lannion, Concarneau, Châteauroux, Sarrebourg, Cergy, Evreux, Foix and Laval) upon termination of the lease after the permissible break date being 6 years after the date of commencement of the lease. (3) Based on the estimated NPI of the Properties for the period from 1 January 2020 to 31 December 2020 assuming the Properties had a portfolio occupancy of 100.0% as of 31 December 2020 and all leases, whether existing or committed, were in place since 1 January 2020. (4) Based on NPI and Agreed Value. The table below sets out a summary of certain information on the Properties as at 26 April 2021, unless otherwise indicated. Property Opening Year Land Area (sqm) GLA (sqm) Valuation (€ m) Agreed Value (€ m) Land Tenure GRI (€’000) Vichy 2002 79,797 3,293 3.7 3.6 Freehold 274 Aurillac 2003 21,704 3,240 4.2 4.1 Freehold 299 Mâcon 1994 30,513 5,990 8.0 7.7 Freehold 568 Belfort Bessoncourt 2013 20,772 3,365 4.1 4.1 Freehold 278 Lannion 2012 27,976 3,569 4.0 3.9 Freehold 282 Dinan 2011 18,084 2,402 2.3 2.3 Freehold 159 Concarneau 2013 10,431 2,385 2.4 2.3 Freehold 163 5 However, in relation to Cholet only, under the terms of the Sale Agreement, even if the pre- emption right is exercised before the deadline for the conditions precedent to be satisfied, in the event the pre-empted sale to the third party is not completed before the end of October 2021 (in such case the third party being considered in default and his pre-emption right waived), the Purchaser shall acquire Cholet at the same Purchase Consideration based on the Agreed Value for Cholet by no later than 31 December 2021. 2.4 Principal Terms of the Sale Agreement The Acquisition shall be governed by the terms and conditions of the Sale Agreement entered into between the Purchaser and the Vendor on 27 April 2021, including the terms, representations and warranties in the framework deed of sale appended thereto (the “Deed of Sale”) which shall be executed on the date of Completion. The principal terms of the Sale Agreement include, among others, the following: (i) a fixed compensation amount of approximately €11.0 million, representing 10.0% of the Purchase Consideration (the “Fixed Compensation”) was agreed between the Purchaser and the Vendor, whereby a portion of the Fixed Compensation amounting to approximately €5.5 million, representing 5.0% of the Purchase Consideration shall be paid by the Purchaser as a deposit to the Vendor (held by a third party escrow agent) within ten business days from the date of entry of the Sale Agreement; (ii) the 5.0% deposit shall be returned to the Purchaser in the event of any of the following: (a) if the Purchaser fails to exercise the Call Option by 29 June 2021; or (b) after the Purchaser exercises the Call Option: (1) if on the date of Completion, the Purchaser assigns its rights under the Sale Agreement to an affiliate after the Deed of Sale is signed; or (2) if the Completion does not occur as a result of: (A) any of the conditions precedent below not being satisfied; (B) the termination of the Sale Agreement due to the Vendor’s default; or (C) the Properties suffering material or total loss such that the Sale Agreement is nulled and void, provided that in relation to (A) and (C) above, only the portion of the 5.0% deposit in respect of the affected Property(ies) will be returned, unless more than six Properties are affected in which case the full sum shall be returned; (iii) the 5.0% deposit shall not be returned, and the Purchaser shall pay to the Vendor the unpaid balance of the Fixed Compensation, in the event of a termination of the Sale Agreement due to the Purchaser’s default; (iv) the Completion is subject to and conditional upon the following conditions precedent: 6 (a) there being no exercise and/or a waiver of a pre-emption right or preferential right over the Properties.1 For the avoidance of doubt, where the pre-emption right or preferential right is exercised and/or not waived over one or more of the Properties, this condition precedent will be considered not to have been fulfilled in respect of this or these Property(ies) in question only; (b) the signing by the Vendor of the deeds of sale to exercise an option in order for the Vendor to sell to the Purchaser the Properties which are owned by the Vendor through a financed lease with Crédit Bail, namely Bergerac, Bessoncourt, Calais, Chatellerault, Cholet, Concarneau, Taden, Istres, Lannion, Olonne sur Mer, Cergy, Pontivy, Sarrebourg and Sens; (c) the production of mortgage information or an extract from the Land Register, drawn up in relation to each of the Properties, showing no mortgage registrations, or other securities or registrations jeopardising the free disposal of the right of ownership of the Properties; (d) the production by the Vendor of previous title deeds and mortgage reports confirming proper legal and good marketable title of the Properties over the last 30 years2; and (e) there being no breach of any warranties which would result in a material adverse effect on the Properties; (v) in accordance with the Sale Agreement, if any of the conditions precedent above is not satisfied on or before 15 July 2021, the Sale Agreement shall be null and void (but only in connection to the Property(ies) for which the condition precedent is not satisfied, unless more than six Properties are affected) and neither the Purchaser nor the Vendor shall have any claim against the other under it, save for any claim arising from antecedent breaches of the Sale Agreement; and (vi) within 10 business days from the fulfilment of the last conditions precedent, but no earlier than 15 July 2021, the Purchaser (or its assignee) and the Vendor shall execute the Deed of Sale and thereby complete the Acquisition, unless otherwise 1 In this regard, Cholet is subject to a pre-emption right in favour of an unrelated third party, and Verdun is also subject to a pre-emption right in favour of another unrelated third party. Further, under applicable French laws, the proposed asset sale of each of the Properties is subject to a pre-emption right in favour of the French local authority. (See paragraph 2.3 above for further details on the pre-emption rights.) 2 The Manager has through due diligence of the Properties ascertained that the Vendor has proper legal and good marketable title over each Property (save that the Vendor must beforehand exercise its call option and sign the deed of sale for the Properties owned through a financed lease as a condition precedent (see paragraph 2.4(iv)(b) above)). Nonetheless, a general market practice to further evidence proper legal and good marketable freehold title of a French property is to establish the chain of ownership for at least 30 years prior to the sale of such property. For majority of the Properties, the title deeds to establish the chain of ownership over the last 30-year period has been made available, correlated and completed by the stipulations of the land registry certificate. However, certain old previous title deeds / land registry excerpts in relation to a few of the Properties have been requested but have not yet been provided by the Vendor. For the avoidance of doubt, it should be noted that such request is a market practice and not a regulatory requirement under French law, and is not material in determining the proper legal and good marketable title of the Vendor over each Property. It should also be noted that certain additional information in order to justify the delisting from public property of former plots in relation to two Properties (Mâcon and Osny) have been requested but are expected to be obtained from the Vendor prior to Completion. 7 agreed in accordance with the terms of the Sale Agreement. 2.5 Estimated Total Acquisition Cost The total cost of the Acquisition (the “Total Acquisition Cost”) is estimated to be approximately €122.3 million (approximately S$195.7 million) comprising: (i) the Purchase Consideration of approximately €110.5 million (approximately S$176.8 million); (ii) the acquisition fee of approximately €1.1 million (approximately S$1.8 million) (the “Acquisition Fee”) payable in cash to the Manager (being 1.0% of the Agreed Value pursuant to the Trust Deed (as defined herein)); and (iii) the estimated professional and other fees and expenses1 of approximately €10.7 million (approximately S$17.1 million) incurred or to be incurred by IREIT in connection with the Acquisition. 3. METHOD OF FINANCING The Manager intends to finance the Total Acquisition Cost though a combination of (i) the net proceeds raised from the issue of new units in IREIT (“Units”, and the new Units to be issued, “New Units”) pursuant to an equity fund raising (“Equity Fund Raising”), (ii) external bank borrowing(s), and/or (iii) a drawdown of debt facilities. The structure and timing of the proposed Equity Fund Raising have not been determined by the Manager. If and when the Manager decides to undertake the proposed Equity Fund Raising, the proposed Equity Fund Raising may, at the Manager’s absolute discretion and subject to the then prevailing market conditions, comprise: (i) a private placement of New Units to investors (the “Private Placement”); and/or (ii) a non-renounceable preferential offering of New Units to the existing unitholders of IREIT (“Unitholders”) on a pro rata basis (the “Preferential Offering”, and the New Units to be issued pursuant to the Preferential Offering, the “Preferential Offering Units”). It should be noted that, while the Manager’s primary objective is to pursue an Equity Fund Raising, should the market conditions be non-conducive to raise capital by equity and/or the proposed Whitewash Resolution (as defined herein) is not approved by the Unitholders, the Manager may decide in the best interest of Unitholders to fund the Total Acquisition Cost with less or no equity capital raised by way of the Equity Fund Raising and the balance to be funded through a combination of external bank borrowing(s) and/or a drawdown of debt facilities. In this regard, the Manager may drawdown on a bridge loan facility of up to €79.0 million (the “Bridge Loan”) from Tikehau Capital SCA (“Tikehau Capital”), one of the strategic investors of IREIT, to partially fund the Total Acquisition Cost. For the avoidance of doubt, while the entry into the facility agreement in connection with the Bridge Loan (“Bridge Loan Agreement”) would constitute an “interested person transaction” under 1 Such fees and expenses include real estate transfer tax of approximately €7.5 million (approximately S$12.0 million), acquisition costs and debt financing costs of approximately €3.2 million (approximately S$5.1 million). 10 An application was made to the SIC for the waiver of the obligation of CSEPL to make a Mandatory Offer under Rule 14 of the Code should the obligation to do so arise as a result of the subscription by CSEPL of the Excess Preferential Offering Units in accordance with the terms of the Undertakings. Further details of the outcome of the application to the SIC and the conditions imposed by the SIC (including the details of the proposed Whitewash Resolution) will be set out in the circular (the “Circular”) to be issued to the Unitholders in due course, together with a notice of EGM, for the purpose of seeking the approval of Unitholders for the proposed Acquisition and the proposed Whitewash Resolution. 4. RATIONALE OF THE ACQUISITION The Manager believes that the Acquisition will bring the following key benefits to Unitholders: 4.1 Strategic Foray into France and a New Asset Class The proposed Acquisition provides IREIT with an attractive entry point into France, the third largest economy in Europe by gross domestic product (“GDP”).1 The French economy is expected to rebound strongly from 2020, with GDP growth forecasted to outpace that of Europe, at 5.5% and 4.0% in 2021 and 2022 respectively.2 This is supported by the French government’s €100 billion “Relaunch France” economic stimulus which includes reduction in taxes, increase in public investments and additional funding in training. The reopening of COVID-19 sectors as well as the rebound in household confidence have resulted in France’s household consumption expenditure of goods returning to pre-COVID- 19 levels in December 2020.3 1 Source: Statista / The National Institute of Statistics and Economic Studies. 2 Source: Independent valuation report by the Independent Valuer. 3 Source: The National Institute of Statistics and Economic Studies. 11 Further, the Properties are part of the Out-of-Town retail asset class, which has remained resilient amidst the challenges within the retail sector. The Out-of-Town retail asset class refers to shops or facilities that are situated away from the centre of a town or city. These retail parks and standalone stores are easily accessible and have large car parking, which allows consumers to access the stores quickly and easily while respecting social distancing measures. Unlike other retail asset classes, the Out-of-Town market remains an attractive asset class with investment volumes up by approximately 9% in 2020, compared to an approximately 38% decline for High Street market and approximately 26% decline for Shopping Centres market. The Out-of-Town market also offers the best spread over all real estate asset classes at approximately 5.58% above France’s risk-free rate.1 1 Independent valuation report by the Independent Valuer. 12 4.2 Blue-chip Tenant, Decathlon, Operates within a Defensive Industry Sporting Goods Industry Emerged as a Defensive Industry Through COVID-191 2020 was a challenging year for the global retail industry as COVID-19 resulted in lock- downs for majority of the world’s population, and in turn, adversely affected numerous retailers. The sporting goods industry has however emerged as a defensive industry as COVID-19 has reshaped consumers’ patterns with two key trends emerging – rise of athleisure and higher physical activities. Due to the increase adoption of work-from-home arrangements, consumers favoured practical and comfortable clothing, such as athleisure (i.e. casual, sports-focused clothes), over more formal work attire. Further, COVID-19 led to a higher number of people exercising and engaging in physical activities. Accordingly, these key trends within the sporting goods industry have resulted in less decline in the turnover of the sporting goods industry as compared to the wider retail sector, despite strong economic headwinds, including the closure of retail outlets over two lockdowns in France, which had led to declines in spending across the board. In 2020, turnover for sporting goods retailers in France declined by approximately 10.5% year-on- year compared to approximately 24% year-on-year for the wider retail sector. Globally, the sportswear market is forecasted to grow at approximately 7.5% year-on-year between 2020 and 2024. In-line with global growth, the sporting goods industry in France is expected to rebound strongly with forecasted turnover growth of approximately 13.0% expected for 2021. 1 McKinsey & Company, “Sporting Goods 2021-The Next Normal for an Industry in Flux” and XERFI market research, “La distribution d’articles de sport”. 15 The majority of the Properties (23 out of 27) have sales floor area of less than 5,000 sqm, with the average sales floor area across the Properties at less than 3,000 sqm. The smaller retail footprint better suits Decathlon’s omnichannel retail concept as this provides an optimal balance of sufficient sales floor area for Decathlon to display the products range while leveraging the stores to support Decathlon’s digital operations. The Properties are each strategically located, with the nearest competing Decathlon store being, on average, over 30 minutes away. Closure of any of the 27 Properties would result in a direct loss of turnover for Decathlon. 16 4.4 Strengthens IREIT's Portfolio Resilience and Diversification Since 2018, IREIT’s property portfolio value has grown at a compound annual growth rate (“CAGR”) of 19.4%, from €504.9 million to €719.6 million by 2020. The Acquisition builds on IREIT’s growth momentum, increasing the portfolio asset value by approximately 15.8% to €833.5 million. Similarly, the GLA of IREIT which had grown at a CAGR of 16.7% from 200,609 sqm in 2018 to 272,987 sqm by 2020, will increase by a further approximate 35.0% to 368,464 sqm with the Acquisition. Notes: (1) Based on existing property portfolio valuation of €719.6 million as at 31 December 2020. (2) Comprises the existing property portfolio valuation as at 31 December 2020 and the valuation of the Properties as at 26 April 2021. 17 Note: (1) Based on existing property portfolio’s GLA of 272,987 sqm as at 31 December 2020. The Acquisition reduces IREIT’s reliance on any single property, geographical location and trade sector, benefitting Unitholders from increased scale and diversification in its portfolio and income streams. IREIT will also gain exposure to the Sports & Leisure trade sector, a resilient segment that is expected to grow by approximately 13.0% in 2021 driven by strong customer demand in athleisure and higher physical activity.1 Note: (1) Based on the GRI as at 31 December 2020. 1 McKinsey & Company, “Sporting Goods 2021-The Next Normal for an Industry in Flux”. 20 Note: (1) Based on the adjusted FY2020 NPI of €39.3 million, adjusted as though the Spanish Acquisition were completed on 1 January 2020 and IREIT had held and operated the Spain Properties through to 31 December 2020, and the existing property portfolio valuation of €719.6 million as at 31 December 2020. The NPI Yield before adjustment of the existing property portfolio is 4.6%. (2) Based on the pro forma adjusted FY2020 NPI of €47.2 million, adjusted as though the Spanish Acquisition were completed on 1 January 2020 and IREIT had held and operated the Spain Properties through to 31 December 2020, the existing property portfolio valuation of €719.6 million as at 31 December 2020 and the Agreed Value of €110.5 million. The NPI Yield before adjustment of the enlarged property portfolio is 4.9%. 4.6 Increases Market Capitalisation and Liquidity For illustrative purposes, assuming that approximately 212,042,812 new Units are issued at an illustrative average issue price of approximately S$0.596 per new Unit to raise gross proceeds of approximately €79.0 million (approximately S$126.4 million) pursuant to the Equity Fund Raising, market capitalisation of IREIT is expected to increase by 20.7% to S$736.7 million. The increased market capitalisation increases probability of inclusion in key indices, which offers benefits of a wider and more diversified investor base, higher trading liquidity, increased analyst coverage and potential positive re-rating. Notes: (1) Based on an IREIT’s volume weighted average price of S$0.650 on 26 April 2021, being the market day immediately prior to the date of the Sale Agreement and assuming exchange rate of €1.00 = S$1.60. (2) Assuming approximately 212,042,812 new Units are issued at an illustrative average issue price of Market Capitalisation (S$ m) 610.3 736.7 Market Capitalisation Pro-forma Market Capitalisation Post-Equity Fund Raising (1) (2) 21 approximately S$0.596 per new Unit to raise gross proceeds of approximately €79.0 million (approximately S$126.4 million) pursuant to the Equity Fund Raising. 4.7 Leveraging on Strategic Investors’ Knowledge, Expertise, Support and Resources in France The Properties mark IREIT’s second portfolio acquisition since December 2019, and demonstrates the deep knowledge, expertise and support from the strategic investors, Tikehau Capital and CDL. IREIT is able to leverage on Tikehau Capital’s extensive pan- European network and intricate knowledge of the local markets to secure the sale & lease- back transaction with Decathlon. Tikehau Capital is headquartered in Paris, France and IREIT would benefit from its established market presence (over 15 years) and its technical know-how of the French real estate market, especially in retail sector. At the same time, CDL provides strong financial support to IREIT. In the event IREIT issues New Units pursuant to an Equity Fund Raising, and if the Equity Fund Raising includes a Preferential Offering, CDL (through its wholly-owned subsidiary, CSEPL) has provided an Undertaking to subscribe for Preferential Offering Units amounting to approximately S$59 million in aggregate. (See paragraph 3.1 above for further details.) 5. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION The pro forma financial effects of the Acquisition on the DPU and NAV per Unit presented below are strictly for illustrative purposes and were prepared based on the audited financial statements of IREIT for the financial year ended 31 December 2020 (the “2020 Audited Financial Statements”), taking into account the Purchase Consideration of the Properties and assuming that: • the Total Acquisition Cost is partially financed with a bank loan of approximately €51.4 million (approximately S$82.2 million) and the balance of which is financed with part of the net proceeds of the Equity Fund Raising, and no drawdown is made on the Bridge Loan; • approximately 212,042,812 new Units are issued at an illustrative average issue price of approximately S$0.596 per new Unit to raise gross proceeds of approximately €79.0 million (approximately S$126.4 million) pursuant to the Equity Fund Raising, out of which approximately €70.9 million (approximately S$113.4 million) will be used to partially finance the Total Acquisition Cost, with the balance to be used for future capital expenditure, repayment of debt and/or acquisition, and to pay for estimated professional and other fees and expenses incurred or to be incurred by IREIT in connection to the Equity Fund Raising; • approximately 1,182,123 new Units are issued and 394,041 new Units to be issued at an illustrative price of S$0.640 per new Unit for the management fee payable to the Manager in relation to the Properties for the financial year ended 31 December 2020; • 100.0% of the Distributable Income attributable to the Properties arising from the Acquisition is distributed to Unitholders. For the avoidance of doubt, the Manager 22 will continue to distribute approximately 90.0% of the annual distributable income attributable to the existing property portfolio of IREIT; and • Acquisition Fee payable to the Manager will be paid 100% in cash. IREIT had on 22 October 2020 completed the acquisition of the balance 60.0% interest in four freehold office buildings located in Spain (the “Spain Properties” and the acquisition of the Spain Properties, the “Spanish Acquisition”), such that IREIT owns 100.0% of the Spain Properties. The Spanish Acquisition was fully funded through a renounceable rights issue of 291,405,597 new Units to raise gross proceeds of approximately S$142.8 million (the “Rights Issue”), and the gross proceeds of the Rights Issue were also utilised to repay the loan from City Developments Limited in relation to the initial acquisition of the 40.0% interest in the Spain Properties. In order to provide a more meaningful overview of the financial position of IREIT for the full financial year ended 31 December 2020 (“FY2020”), the adjusted pro forma financial effects of the Acquisition on the DPU and NAV per Unit, adjusted as though the Rights Issue and the Spanish Acquisition were completed on 1 January 2020 and IREIT had held and operated the Spain Properties through to 31 December 2020, are also presented below strictly for illustrative purposes only and, in addition to the above, assuming that: • approximately 689,039 new Units to be issued at an illustrative price of S$0.640 per new Unit for the performance fee payable to the Manager in relation to the Properties for the financial year ended 31 December 2020. 5.1 Pro Forma DPU FOR ILLUSTRATIVE PURPOSES ONLY: The pro forma financial effects of the Acquisition on IREIT’s DPU for the financial year ended 31 December 2020, as if the Acquisition was completed on 1 January 2020, and IREIT had held and operated the Properties through to 31 December 2020, are as follows: Before the Acquisition After the Acquisition Net Property Income (€’000) 32,894 40,761(6, 7) Adjusted Net Property Income (€’000)(1) 39,349 47,216(8, 9) Distributable Income (€’000) 27,434 33,739(6, 7) Adjusted Distributable Income (€’000)(1) 29,272 35,576(8, 9) Issued Units (‘000) 937,046(2) 1,150,271(3, 4, 5) DPU (€ cents) 3.21 3.14(6, 7) DPU (S$ cents) 5.14 5.03(6, 7) Adjusted DPU (€ cents)(1) 2.81 2.84(8, 9) Adjusted DPU (S$ cents)(1) 4.50 4.54(8, 9) DPU Accretion (%) - (2.2)%(6, 7) Adjusted DPU Accretion (%)(1) - 1.0%(8, 9) 25 6. INTERESTS OF DIRECTORS AND SUBSTANTIAL UNITHOLDERS As at the date of this Announcement, certain directors of the Manager collectively hold an aggregate direct and indirect interest in 937,930 Units. Based on the Register of Directors’ Unitholdings maintained by the Manager, the Directors and their interests in the Units as at the date of this Announcement are as follows: Name of Director Direct Interest Deemed Interest Total No. of Units Held %(5) No. of Units %(5) No. of Units %(5) Mr Lim Kok Min, John 421,700 0.045 - - 421,700 0.045 Mr Nir Ellenbogen 210,830 0.022 - - 210,830 0.022 Mr Chng Lay Chew - - - - - - Mr Bruno de Pampelonne 290,800 0.031 - - 290,800 0.031 Mr Khoo Shao Hong, Frank - - - - - - Mr Sanjay Bakliwal 14,600 0.002 - - 14,600 0.002 26 Based on the information available to the Manager, the Substantial Unitholders of IREIT and their interests in the Units as at the date of this Announcement (unless otherwise stated) are as follows: Name of Substantial Unitholder Direct Interest Deemed Interest Total No. of Units Held %(5) No. of Units %(5) No. of Units %(5) Skyline Horizon Consortium Ltd 56,359,095 6.002 - - 56,359,095 6.002 Shanghai Summit (Group) Co., Ltd(1) - - 56,359,095 6.002 56,359,095 6.002 Mr Tong Jinquan(1) - - 56,359,095 6.002 56,359,095 6.002 Tikehau Capital SCA(2) 275,401,501 29.330 2,053,542 0.219 277,455,043 29.549 City Strategic Equity Pte. Ltd.(3) 198,047,398 21.092 2,053,542 0.219 200,100,940 21.311 CDL Real Estate Investment Managers Pte. Ltd.(3) - - 200,100,940 21.311 200,100,940 21.311 New Empire Investments Pte. Ltd.(3) - - 200,100,940 21.311 200,100,940 21.311 City Developments Limited(3) - - 200,100,940 21.311 200,100,940 21.311 Hong Leong Investment Holdings Pte. Ltd.(3) - - 200,100,940 21.311 200,100,940 21.311 Davos Investment Holdings Private Limited(3) - - 200,100,940 21.311 200,100,940 21.311 Kwek Holdings Pte. Ltd.(3) - - 200,100,940 21.311 200,100,940 21.311 AT Investments Limited 51,069,100 5.439 - - 51,069,100 5.439 Auctus Investments Limited(4) - - 51,069,100 5.439 51,069,100 5.439 Sai Charan Trust(4) - - 51,069,100 5.439 51,069,100 5.439 Mr Arvind Tiku(4) - - 51,069,100 5.439 51,069,100 5.439 Notes: (1) Shanghai Summit Pte. Ltd. and Mr Tong Jinquan and Shanghai Summit are deemed pursuant to the provisions of Section 4 of the Securities and Futures Act, Chapter 289 to have an interest in the 56,359,095 Units held by Skyline Horizon Consortium Ltd. (2) Tikehau Capital SCA is deemed pursuant to the provisions of Section 4 of the Securities and Futures Act, Chapter 289 to have an interest in the 2,053,542 Units held by IREIT Global Group Pte. Ltd. Prior to the Units being traded ex-rights for the Preferential Offering, the Manager expects to be issued new Units as payment for its base management fees for the period from 1 January 2021 to 31 March 2021. (3) CDL Real Estate Investment Managers Pte. Ltd., New Empire Investments Pte. Ltd., City Developments Limited, Hong Leong Investment Holdings Pte. Ltd., Davos Investment Holdings Private Limited and Kwek 27 Holdings Pte Ltd are deemed pursuant to the provisions of Section 4 of the Securities and Futures Act, Chapter 289 to have an interest in the 198,047,398 Units held by City Strategic Equity Pte. Ltd and the 2,053,542 Units held by IREIT Global Group Pte. Ltd. Prior to the Units being traded ex-rights for the Preferential Offering, the Manager expects to be issued new Units as payment for its base management fees for the period from 1 January 2021 to 31 March 2021. (4) Auctus Investments Limited, Sai Charan Trust and Mr Arvind Tiku are deemed pursuant to the provisions of Section 4 of the Securities and Futures Act, Chapter 289 to have an interest in the 51,069,100 Units held by AT Investments Limited. (5) Based on the total number of 938,963,086 Units in issue as at the date of this Announcement. Prior to the Units being traded ex-rights for the Preferential Offering, the Manager expects to be issued new Units as payment for its base management fees for the period from 1 January 2021 to 31 March 2021. Save as disclosed above and based on information available to the Manager as at the date of this Announcement, none of the Directors or the Substantial Unitholders has an interest, direct or indirect, in the Acquisition. 7. OPINION OF THE IFA AND STATEMENT OF THE RELEVANT INDEPENDENT DIRECTORS The Manager has appointed Crowe Horwath Capital Pte. Ltd., as the independent financial adviser (the “IFA”) pursuant to paragraph 2(e) of Appendix 1 of the Code to advise the directors of the Manager who are considered independent for the purpose of the proposed Whitewash Resolution, being Mr Lim Kok Min, John, Mr Nir Ellenbogen, Mr Chng Lay Chew and Mr Sanjay Bakliwal (the “Relevant Independent Directors”) and the Trustee as to whether the proposed Whitewash Resolution is fair and reasonable. The Relevant Independent Directors will form their own views after reviewing the opinion of the IFA, which will be disclosed in the Circular. 8. OTHER INFORMATION 8.1 Directors’ Service Contracts No person is or is proposed to be appointed as a director of the Manager in connection with the Acquisition or any other transactions contemplated in relation to the Acquisition. 8.2 Disclosure under Rule 1010(13) of the Listing Manual Chapter 10 of the Listing Manual classifies transactions by IREIT into (i) non-discloseable transactions, (ii) discloseable transactions, (iii) major transactions and (iv) very substantial acquisitions or reverse takeovers, depending on the size of the relative figures computed on, inter alia, the following bases or comparison set out in Rules 1006(b) and 1006(c) of the Listing Manual: (i) the net profits attributable to the assets acquired, compared with IREIT’s net profits; (ii) the aggregate value of the consideration given, compared with IREIT’s market capitalisation; Where any of the relative figures computed on the bases set out above exceeds 20.0%, the transaction is classified as a major transaction. The Listing Manual requires that a major 30 APPENDIX A The table below sets out further details on the Properties as at 26 March 2021, unless otherwise indicated. Property Catchment Area (Number of Inhabitants Direct Environment Competition Nearest Decathlon Stores Vichy 45,789 Easy road access and good visibility from roundabout • Sport 2000: 3.7 km • Sport 2000: 5.3 km • Intersport: 2.2 km • Clermont: 67 km (46 min) • Moulins: 62 km (55 min) Aurillac 37,871 In a dynamic retail area, in vicinity of a residential area • Sport 2000: 3.7 km • Sport 2000: 5.5 km • Intersport: 2.2 km • Tulle: 85 km (1 hr 25 min) • Rodez: 89 km (1 hr 21 min) Mâcon 52,990 At the entrance of dynamic retail area • Sport 2000: 2.3 km • Intersport: 3.4 km • Viriat: 36 km (25 min) • Villefranche sur Soane: 39 km (25 min) Belfort Bessoncourt 61,417 Visible and close to anchor tenants (Auchan) • Go Sport: 8.9 km • Intersport: 7.2 km • Montbéliard: 23 km (17 min) • Dornach: 34 km (24 min) Lannion 35,390 Located in an established retail area • Intersport: 500 m • Morlaix: 43 km (46 min) • Saint Brieux: 74 km (53 min) Dinan 43,632 Visible but part of non- established retail area • Intersport: 4.8 km • Saint Malo: 24 km (18 min) • Saint Brieuc: 63 km (42 min) Concarneau 22,180 Visible, but in small / non- established retail area • Intersport: 1.9 km • Quimper: 19 km (15 min) • Lorient: 47 km (32 min) Pontivy 24,160 Low visibility from road but located in established retail area • Go Sport: 1.4 km • Lorient: 58 km (40 min) • Vannes: 52 km (42 min) 31 Property Catchment Area (Number of Inhabitants Direct Environment Competition Nearest Decathlon Stores Châteauroux 42,432 Located towards the rear of the main retail area • Sport 2000: 2.6 km • Intersport: 3.4 km • Romorantin: 85 km (1 hr 3 min) • Bourges: 102 km (1 hr 10 min) Dreux 42,432 Visible and good location within well-established retail area • Intersport: 500 m • Chartres: 38 km (33 min) • Evreux: 45 km (35 min) Verdun 24,706 Visible in the heart of the retail are • Intersport: 750 m • Metz Semecourt: 65 km (45 min) • Metz Augny: 83 km (53 min) Sarrebourg 21,748 Well located in a dynamic retail area • Sport 2000: 3.2 km • Intersport: 4.0 km • Sarreguemines: 68 km (45 min) • Strasbourg Hautepierre: 77 km (51 min) Douai 21,748 Not located in the heart of the retail area but in close vicinity of Action • Intersport: 13 km • Hénin-Baumont: 18 km (20 min) • Cambrai: 30 km (29 min) Calais 94,141 In main retail area, close to anchor tenant (Action) • Intersport: 1.2 km • Dunkerque: 39 km (26 min) • Boulogne: 32 km (22 min) • Saint-Omer: 47 km (29 min) Abbeville 32,726 Visible in the heart of the main retail area • Intersport: 1.0 km • Amiens: 53 km (33 min) • Dieppe: 86 km (1 hr 10 min) Cergy 191,848 Well located in a dynamic and modern retail area • Sport 2000: 6.4 km • Go Sport: 4.8 km • Intersport: 550 m • Herblay: 14 km (22 min) • Montesson: 23 km (40 min) • L’Isle Adam: 26 km (24 min) Pont-Audemer 20,173 Visible from the road and close to anchor tenants • No competitors • Lisieux: 39 km (36 min) • Tourville: 48 km (32 min) Evreux 59,598 Isolated but visible with an easy road access • Go Sport: 2.4 km • Intersport: 2.1 km • Saint Marcel: 35 km (33 min) • Tourville: 45 km (34 min) 32 Property Catchment Area (Number of Inhabitants Direct Environment Competition Nearest Decathlon Stores Châtellerault 38,708 Located in the heart of the retail area • Intersport: 1.5 km • Poitiers: 44 km (32 min) • Jardres: 36 km (34 min) • Chambray: 64 km (43 min) Foix 23,566 Isolated location but good visibility from the national road • No competitors • Escalquens: 72 km (47 min) • Portet-sur-Garonne: 88 km (52 min) Laval 67,521 Isolated but visible with easy road access • Go Sport: 5.3 km • Intersport: 6.3 km • Chantepie: 70 km (47 min) • Betton: 76 km (51 min) Sables d'Olonne 30,799 Located in a very dynamic retail area • Intersport: 1.0 km • Roche sur Yon: 37 km (27 min) • Challans: 41 km (42 min) Cholet 55,083 In the main retail area, close to anchor tenants (Darty, Carrefour) • Intersport: 500 m • Les Herbiers: 29 km (33 min) • Vertou: 56 km (49 min) Gap 44,010 Located in heart of the retail area • Go Sport: 1.1 km • Intersport: 1.0 km • Manosque: 102 km (1 hr 9 min) • Digne les Bains: 83 km (1 hr 10 min) Istres 50,838 Well located at the entrance of the main retail area • Sport 2000: 5.0 km • Intersport: 1.1 km • Martigues: 15 km (17 min) • Arles: 40 km (30 min) Sens 55,500 Located in a dynamic retail area close to food anchor tenant • Intersport: 600 m • Varennes: 39 km (38 min) • Amilly: 57 km (48 min) • Provins: 50 km (50 min) Bergerac 48,522 “Stand alone” location • Sport 2000: 7.5 km • Intersport: 2.4 km • Marmande: 54 km (52 min) • Boulazac: 56 km (53 min)