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Cromwell E-Reit issues new units to raise 150m euros; distributes income to existing unitholders

NEW units in Cromwell European Real Estate Investment Trust (Cromwell E-Reit) started trading on the mainboard of the Singapore Exchange at 9am on Tuesday, via a private placement that raised gross proceeds of some 150 million euros (S$229.6 million). 

In a regulatory filing before the market opened, Cromwell E-Reit noted that it will place out about 326.1 million new units at 46 euro cents each, and distribute its income prior to the issue of these new units to "ensure fairness" to existing unitholders.

The Reit's manager previously announced that it will buy six European freehold office properties – three in France and three in Poland – for 246.9 million euros (S$378.2 million), to be financed with a mix of debt and equity via a private placement.

With the issue of the new units, Cromwell E-Reit will have about 2.53 billion units as at July 2. These new units will rank pari passu in all respects with the existing units in issue on July 1, other than those from a cumulative distribution.

Cromwell E-Reit's policy is to distribute its distributable income on a semi-annual basis to unitholders.

However, in connection with the private placement, the manager has declared a distribution of its distributable income from Jan 1, 2019 to July 1, 2019, being the day immediately preceding the date on which the new units are issued.

The next distribution will comprise Cromwell E-Reit's distributable income from July 2 to Dec 31 this year, and semi-annual distributions will resume thereafter. 

The manager added that the cumulative distribution is intended to ensure that the distributable income accrued by Cromwell E-Reit up to the day before the issue of the new units is only distributed in respect of the existing units, and is being proposed as a means to ensure fairness to existing unitholders.