CROMWELL European Real Estate Investment Trust' s (Cromwell E-Reit) distribution per unit (DPU) fell by 14.6 per cent to 1.744 euro cents (2.79 Singapore cents) for the second half ended Dec 31, 2020, from 2.04 euro cents a year ago.

 

On a like-for-like basis, assuming FY2019 management fees were paid in cash, H2 2020 DPU is 1.3 per cent below H2 2019' s DPU of 1.767 euro cents.

 

Gross revenue for the six months ended December 2020 was down 1.4 per cent to 93.3 million euros, from 94.7 million euros a year ago, according to results released on Tuesday.

 

Net property income (NPI) declined by 3.9 per cent on the year to 59.6 million euros, from 62 million euros.

 

Income available for distribution fell by 14.4 per cent to 44.6 million euros, from 52.1 million euros.

 

The H2 2020 DPU will be paid out on March 31, after the record date on March 4.

 

For the full year ended Dec 31, 2020, DPU was 14.6 per cent lower at 3.484 euro cents, versus 4.08 cents a year ago. On a like-for-like basis, DPU dropped by 3 per cent from 3.59 euro cents.

 

Income available for distribution was down 8 per cent on the year to 89.1 million euros, from 96.9 million euros.

 

Gross revenue for the full year advanced by 5.6 per cent to 187 million euros, while NPI rose by 1 per cent to 117.3 million euros. These were largely due to contributions from newly acquired office assets in France, Italy and Poland and light industrial/logistics assets in Germany, the manager said.

 

Despite headwinds from the Covid-19 pandemic, the Reit&rsquo s occupancy rate increased to 95.1 per cent as at end-December. 

 

Leases for about 8.5 per cent of the Reit&rsquo s portfolio in net lettable area were signed in FY 2020, with a total of 178 new and renewed leases for 131,791 square metres of space secured at a positive rental reversion of +2.1 per cent across the Reit&rsquo s portfolio in total.

 

The manager added that it has further de-risked Cromwell E-Reit&rsquo s portfolio coming into 2021, extending or renewing 59 per cent of leases subject to expiries or breaks in the first half of 2021. 

 

The portfolio&rsquo s weight average lease expiry profile stood at 4.9 years as at Dec 31, 2020, maintained at similar levels for the past three years.

 

The board of the Reit manager has also approved the introduction of a distribution reinvestment plan and is proposing to activate it for the H2 2020 distribution. The distribution reinvestment plan gives unitholders an opportunity to acquire new units at a preferential price without incurring transaction costs.

 

On the outlook, Simon Garing, chief executive of the Reit manager said it will look to further rebalance the Reit&rsquo s portfolio, increasing its exposure to the logistics sector closer to 40 per cent weighting and exploring similar opportunities in the post-Brexit UK, while divesting a number of office and other non-strategic assets. 

 

&ldquo We will also continue planning for key redevelopment opportunities in Paris, Amsterdam, and Milan,&rdquo he added. 

 

FOLLOWING the completion of independent valuations by CBRE and Savills, Cromwell European Reit (Cromwell E-Reit) reported that 95 properties in its portfolio have been valued at an aggregate of 2.13 billion euros (S$3.41 billion) as at Dec 31, 2020.

 

This represents an overall 2.2 per cent fair-value increase from the Reit portfolio' s previous valuation as at June 30, 2020, its manager announced on Thursday. The latest aggregate valuation also represents an overall fair-value increment of 45.4 million euros. The total valuation increment for the full year ended Dec 31, 2020 was 20.5 million euros.

 

Based on the latest valuations, the portfolio is valued at an initial yield of 6.2 per cent with a reversionary yield of 6.5 per cent. This has resulted in the manager' s expectation of growth on average when leases are renewed at expiry and the remaining vacancy is leased up in the future.

 

In its bourse filing, Cromwell E-Reit' s manager noted that the portfolio' s revaluation gain was driven by the logistics and light industrial sector, which continued to outperform with a fair-value gain of 57.8 million euros.

 

However, both the office and other sectors slightly underperformed, booking fair-value losses of 8.5 million euros and 3.9 million euros respectively.

 

Commenting on the Reit' s latest portfolio valuation figures, the manager' s chief executive Simon Garing said the overall uptick is a testament to the portfolio' s diversification and resilience, as well as the capabilities of Cromwell' s asset management teams.

 

" Cromwell E-Reit' s valuations have now grown by 169.5 million euros or 8.4 per cent over the respective purchase prices, in part also to our ability to negotiate off-market acquisitions," he added.

 

A SUBSIDIARY of Cromwell European Real Estate Investment Trust (Cromwell E-Reit) has priced a new tap issue of 200 million euros (S$321.3 million) of existing senior unsecured notes due 2025.

 

They will bear a coupon rate of 2.125 per cent while the reoffer yield will be 1.6 per cent, payable annually in arrears.

 

The new notes will be issued under Cromwell E-Reit' s recently established 1.5 billion euro medium-term note programme, after which they will be consolidated and form a single series with the existing offering of 300 million euros of five-year senior unsecured notes issued in November 2020.

 

Net proceeds from the issuance will be used to refinance existing debt and for general working capital purposes, said the Reit manager on Thursday morning.

 

The new notes are expected to be issued on Jan 27, 2021, and will be listed on the Singapore Exchange on or about the business day after. Cromwell E-Reit' s manager will also apply for the notes to be admitted for listing on the Luxembourg Stock Exchange, and for trading on the exchange' s Euro MTF Market.

 

ING Bank' s Singapore branch and Morgan Stanley have been appointed as joint global coordinators for the notes, as well as joint lead managers together with Credit Agricole and Standard Chartered. Intesa Sanpaolo was appointed as a passive bookrunner for the notes.

 

Fitch Ratings Singapore has rated the new notes BBB-, having earlier assigned the trust a long-term issuer default rating of BBB- with a stable outlook.

 

" I am very pleased that the strong demand from global credit investors for our inaugural bond allowed us to tap the market with this new issue within a very short time span following our inaugural issuance. The positive investor feedback and widespread support we have received are an endorsement of Cromwell E-Reit&rsquo s track record, recognised corporate governance and risk management processes," said Simon Garing, chief executive of the manager.

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) has proposed to buy 11 logistics and light industrial properties for 113.2 million euros (S$183.6 million).

 

This comprises 50.8 million euros for six light industrial/logistics properties in the Czech Republic and 62.4 million euros for five industrial/logistics properties in Slovakia.

 

The purchase price of 113.2 million euros is below the properties' independent valuation of 115.6 million euros. It also translates to a net operating income yield of 6.7 per cent and a 4.9 per cent accretion to the Reit' s proforma distributions per unit.

 

The Czech Republic assets are located in Uherske Hradiste, Lovosice, Vyskov and Pisek. Meanwhile, the Slovakia properties are in Zilina - the fourth-largest Slovakian city, Nove Mesto nad Vahom and Kosice.

 

The assets are all freehold properties and are fully occupied by 17 tenant-customers mostly in logistics. The assets also have a weighted average lease expiry of 6.2 years and a weighted average lease break of 5.9 years.

 

They total 125,435 square metres (sq m) of gross lettable area of modern construction logistics and light industrial properties, with a weighted average age of eight years. Three assets have about a total of about 140,700 sq m of land permitted for development.

 

The properties sit on valuable freehold land in " well-connected micro-locations" in established business parks with access to public transport and important highways, the manager said.

 

With the proposed transaction, Cromwell E-Reit' s exposure to light industrial/logistics property will increase to 35.8 per cent from 32.3 per cent. These types of assets are in sectors that have performed well since the emergence of the Covid-19 pandemic, the manager noted.

 

The Reit will also be able to further establish its presence in Central Europe, specifically in the Czech Republic and Slovakia - emerging markets expected to benefit from further integration with neighbouring Western Europe economies.

 

Together with the Reit' s existing portfolio, the new properties reduce concentration risks for Cromwell E-Reit through tenant diversification.

 

Unitholder approval for the proposed acquisitions is not required as they are within the investment mandate of Cromwell E-Reit. The manager plans to finance the proposed purchases through internal resources and/or existing debt facilities and will announce more at an appropriate time, it said.