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Cromwell E-Reit buys office building in Italy for 17.7m euros
CROMWELL European Real Estate Investment Trust (CEREIT) has completed the acquisition of a freehold office property in Italy at a purchase price of 17.7 million euros (S$26.6 million).
Built in 1982, the recently refurbished, self-contained building is located in the Colleoni Business Park in Agrate Brianza, about a 30-minute drive north-east of Milan.
The purchase price of 17.7 million euros was arrived at based on Colliers International’s independent valuation of the property at the same amount, CEREIT said on Friday morning. The price also takes into account the amount required for capital expenditure works on the property and outstanding incentives to be funded by the vendor.
The total cost of the acquisition is about 18.5 million euros, comprising the purchase price, the acquisition fee payable to CEREIT’s manager, and professional and other fees in connection with the transaction.
CEREIT will fund the total cost from available cash, most of which will come from the proceeds of its recent 19 million-euro sale of the Parc d’Osny property in France. CEREIT’s manager said this is part of its strategy of recycling capital by selling non-core assets and reinvesting them in a higher-yielding asset, to provide accretion to unitholders.
The property, located in the Greater Milan metropolitan area, complements the Reit’s Italy office portfolio in terms of lease length term, thus enhancing the stability of the portfolio’s cash flows and further diversifying its tenant-customer base, the manager added.
There are three principal tenants, contributing to just over 50 per cent of the total income of the property. The office building is almost fully let, and the weighted average unexpired lease term to first expiry is about 4.8 years as at Nov 28, 2019.
The building is made up of three adjoining blocks interconnected at various floors. It has eight storeys above ground and one basement level. Its weighted lettable area, excluding carpark spaces, is 11,500 square metres.
In addition to the 182 parking spaces, the property’s tenants also have access to a public shuttle service provided specifically for the business centre. The building is about 1.5 kilometres (km) from the A51 Ring Road of Milan and 3 km from the A4 motorway.
CEREIT units closed flat at 51.5 euro cents on Thursday.