Cromwell E-Reit obtains sustainability-linked credit facility of up to 250 million euros
Mia Pei
CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) has secured a new five-year sustainability-linked revolving credit facility for an aggregate amount of 165 million euros (S$241.6 million).
Proceeds from the facility will be used for general corporate or working capital purposes, the refinancing of the group’s existing debts and expenses, as well as stamp, registration and other taxes payable related to the facility.
The facility includes an accordion feature to increase the size of the facility to up to 250 million euros, said the manager on Tuesday (Aug 1).
The financial covenants of the accordion feature are similar to the Reit’s other existing loan facilities, particularly its aggregate leverage of up to 50 per cent. It is intended to increase the loan size by introducing new lenders and increasing the commitment of any existing lender.
The latest revolving facility obtained by Cromwell E-Reit was supported by Intesa Sanpaolo, Credit Agricole Corporate and Investment Bank, ING Luxembourg, Banque Europeenne du Credit Mutuel and Societe Generale.
A new covenant for this facility comprises a minimum net asset value (NAV) set at 600 million euros, which the manager believes will provide a significant buffer on the current NAV of about 1.3 billion euros.
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The revolving credit facility is based on three sustainability-linked key performance indicators (KPIs) which will be measured on an annual basis. They are designed to improve the Reit’s Scope 3 emissions reporting and performance.
One such KPI is an improvement in the Reit’s real estate score based on assessment by the Global Real Estate Sustainability Benchmark. The remaining KPIs focus on the Reit achieving a higher number of green building certifications, and an increased proportion of tenant agreements with green clauses.
The Reit manager further said it is in advanced stages of finalising a four-year amendment and extension of an unsecured 165 million-euro term loan expiring in November 2024.
This will lead to no further debt maturities until November 2025, said the manager’s chief financial officer Shane Hagan.
Assuming that the revolving credit facility is undrawn, Hagan estimates that 94 per cent of Cromwell E-Reit’s total debt book is now hedged or fixed until November 2025. This ensures the current all-in cost of debt to Cromwell E-Reit is maintained below 3 per cent, he added.
The signing of the new revolving credit facility follows Cromwell E-Reit’s recent full repayment of its existing facility using proceeds from its recent divestment of Piazza Affari 2 in Milan, Italy. The transaction also reduced the Reit’s pro forma leverage to 38.6 per cent as at the end of July.
“We have now completed approximately 415 million euros in sustainability-linked loan facilities over the last two years, in line with our focus on ESG (environmental, social and governance),” said Hagan.
Units of the Reit were trading down 1.2 per cent or 0.02 euro to 1.59 euros as at 2.42 pm on Tuesday, after the announcement was made.
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