Cromwell E-Reit completes purchase of German properties, sells 12 other assets

Singapore

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) has completed two deals - the acquisition of three light industrial/logistics properties in Germany and the sale of 12 assets in other European countries - its manager said on Wednesday.

The three acquired properties sit on freehold land in the cities of Pforzheim, Bretten and Königsbach-Stein, all within Germany's third-largest state Baden-Württemberg.

The real estate investment trust (Reit) completed the purchase under a sale and leaseback arrangement. The acquisition cost is about 40.9 million euros (S$63.8 million), comprising the purchase price of 38 million euros, the acquisition fee payable to the manager in cash, as well as professional and other fees and expenses.

The manager had said in December that the acquisition will be funded by drawing on Cromwell E-Reit's revolving credit facility (RCF). As at Dec 31, 2019, the unsecured RCF had a limit of 150 million euros, increased from 50 million euros as part of a refinancing in November 2019, according to its financial results for the year ended Dec 31, 2019.

The German portfolio will be fully let to subsidiaries of Felss Group, for a term of 15 years under lease agreements with no break clause. Felss Group's business is in cold forming steel technology and manufacturing machine tools and components.

Meanwhile, the 12 light industrial/logistics properties - in France, Denmark and the Netherlands - were sold to The Blackstone Group through a master sale and purchase agreement for a price of 65.7 million euros.

The total cost of this disposal is about 700,000 euros, comprising the disposal fee payable to the manager as well as professional and other fees and expenses.

The portfolio was disposed of via an asset sale for the five Dutch assets and two Danish properties, and via a sale of shares of the French companies that own the five assets in France.

In December, the manager said Cromwell E-Reit would receive 36.1 million euros in cash from the disposal of the French assets. The French companies also hold some of the Reit's debt and liabilities, which will be deducted from the balance sheet once the companies are sold.

"Sale proceeds will provide capital for accretive redeployment into more core assets to enhance Cromwell E-Reit's distribution per unit and net asset value per unit, and improve the overall risk-return profile of the portfolio," the manager said.

Following the completion of the two transactions, the Reit's portfolio now comprises 94 properties in Denmark, Finland, France, Germany, Italy, the Netherlands and Poland, valued at about 2.08 billion euros.

The Reit's debt position after the two deals remains unchanged from end-2019 according to its latest financial results, Simon Garing, chief executive of the Reit's manager, told The Business Times on Wednesday.

Its gearing ratio remains at around 36 per cent (on the basis of using available cash to repay short-term debt facilities), comfortably below the 45 per cent regulatory limit, Mr Garing said. The Reit also has no debt facilities coming due until the second half of 2021, while its interest coverage ratio stands at 8.6 times.

"Cash, long-weighted debt maturity, low gearing and undrawn lines underpin Cromwell E-Reit's liquidity and security of income," he added.

Units of Cromwell E-Reit fell 1.5 euro cents or 4.6 per cent to finish at 31.5 euro cents on Wednesday.