CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) announced that it has acquired its third logistics asset in Italy for 19.6 million euros (S$30.6 million) in a bourse filing on Monday (Nov 1) before the market opened.

The asset is a freehold, light logistics property occupying 47,787 square metres (sq m), located in Mira, Greater Venice, and was developed as a build-to-suit warehouse for British fast moving consumer goods company, Reckitt Benckiser Group. The asset has been independently valued at 21 million euros by CBRE using the income capitalisation method.

"This is a valuable off-market opportunity for CEReit to acquire a fully-leased freehold logistics asset in the strategic Greater Venice market in Northern Italy, at an accretive 6.5 per cent net operating income yield. Cromwell's on-the-ground transaction team has secured the centre at well below independent valuation, with relatively low risk characteristics," said Simon Garing, chief executive officer of Cromwell E-Reit management.

The Reit notes that the asset has been acquired at 6.7 per cent below the independent valuation, and at a higher net operating income yield than the 4.5 per cent the northern Italian region currently has. The purchase price of 702 euros per sq m is also significantly below the replacement cost of about 1,342 euros per sq m which includes land and current estimated cost of the automation storage system included in the purchase price.

The tenant, Reckitt Benckiser Group, is also a high-quality tenant-customer, with a long lease exceeding 8 years and typical extension options and specific early withdrawal notice periods. The company has invested extensively in Mira, with a proprietary product manufacturing site located adjacent to the asset as well as Reckitt Benckiser's European research and development centre being in the vicinity.

The acquisition will be initially funded by available cash reserves. This acquisition is not expected to have any material effect on Cromwell E-Reit's net tangible assets.

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Units of the counter last traded up 1.5 per cent or 0.04 euro to 2.65 euros at the end of trading on Friday (Oct 29).

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