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

Singapore

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.

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

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.

The move increases the Reit's Germany exposure and raises the size of its Germany portfolio to 157 million euros, from 119 million euros as at Sept 30.

The assets, which sit on freehold land, are located in the cities of Pforzheim, Bretten and Königsbach-Stein, all within Germany's third-largest state Baden-Württemberg.

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.

Under the lease agreements, the Felss subsidiaries will be responsible for any capital expenditure works including structural ones, throughout the duration of the lease. They will also provide a 12-month rental security - in the form of a deposit or first demand bank guarantee.

The leases will increase the weighted average lease expiry (WALE) profile of the Reit's overall portfolio to 4.7 years from 4.6 years. It will also raise the WALE profile of Cromwell E-Reit's light industrial/logistics portfolio to 4.8 years from 4.3 years.

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 closed at 0.53 euro, up by half a euro cent, or 0.95 per cent, after the news.