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Cromwell E-Reit buying 3 German freehold industrial assets for 38m euros

Bretten Asset.jpg
The assets are located in the cities of Bretten (pictured), Pforzheim, and Königsbach-Stein, all within Germany’s third-largest state Baden-Württemberg.

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) is acquiring a portfolio of three freehold light industrial/logistics assets in Germany for a purchase price of 38 million euros (S$57 million), the manager said in a regulatory update on Friday. 

The Reit had entered into a purchase agreement and lease agreements with subsidiaries of Felss Group GmbH on Thursday to acquire the portfolio under a sale and leaseback arrangement.

The total cost of the acquisition is estimated at 40.9 million euros, comprising the 38 million euro purchase price, the acquisition fee payable to the manager in cash, and professional and other fees and expenses. It will be funded by drawing on the Reit's revolving credit facility.

The purchase price is 4 per cent below the independent valuation of the portfolio, and below estimated replacement costs, the manager said. 

Felss Group’s business is in cold forming steel technology and manufacturing machine tools and components.

The portfolio has a total of 29,734 square metres (sq m) of gross lettable area – consisting of 19,016 sq m of warehouse space, 6,225 sq m of office space and 4,493 sq m of other spaces. 

The portfolio will be fully let to Felss Group subsidiaries for a term of 15 years under lease agreements with no break clause. 

The manager added that the proposed acquisition is not expected to have any material effect on Cromwell E-Reit’s net tangible assets. The acquisition is expected to be completed in February 2020.

Cromwell E-Reit units were trading at 0.52 euro on Friday as at 10.05am, down 0.5 euro cent or 1 per cent after the announcement.