Cromwell E-Reit proposes rent deferrals, monthly payments for tenants

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) is proposing to offer tenants a switch from quarterly to monthly rent payments, and allow these to be deferred by one to three months in special cases, it said in a bourse filing on Wednesday.

This comes comes after 139 smaller tenants, comprising 9.7 per cent of the Reit's annual rent roll, requested for rental payments to be deferred for one or two months.

They include the Reit's four-star hotel in Saronno near Milan (which is temporarily closed) and small and medium-sized enterprises such as cafes, childcare centres, gyms and public car park operators.

The Reit's manager is also mulling rent-free leases for tenants in exceptional cases as an incentive for an early lease extension or removal of break options.

All these options are subject to a thorough assessment of tenants' business and creditworthiness.

Simon Garing, chief executive of the Reit's manager, said it had not yet agreed to rental rebates for any tenant, except its sole cinema operator in Lissone, which has been closed by government decree for the past seven weeks, resulting in a rent loss of 162,000 euros (S$251,428.55).

"At this stage, we have not had to make blanket provisions for 'rent relief', nor are we offering across-the-board rent waivers," Mr Garing said.

Andreas Hoffmann, the Reit manager's head of property, said that so far, none of the companies in the Reit's portfolio have gone bankrupt as a result of Covid-19.

Earlier last month, the Reit's manager said the novel coronavirus outbreak had "minimal impact" so far on its income from properties in Italy and the wider European region.

Mr Hoffmann said that the Reit's manager expects an improvement in tenant retention rates this year as a result of a large-scale retention programme launched prior to the outbreak.

Tenants are also likely to be more risk-averse, and stay in their current premises as moving budgets are cancelled or frozen, he added .

According to Mr Garing, the Reit is currently operating at "close to full potential within the constraints of the various 'lockdown' and 'circuit-breaker' measures". Its occupancy rate was 93.2 per cent as at Dec 31, 2019.

Given the stricter social distancing measures in Singapore, the Reit expects to hold its annual general meeting towards the end of June, where it will put forward a buyback resolution.

Units of Cromwell E-Reit were trading at 35 euro cents as at 1.24pm on Wednesday, down 1 cent or 2.8 per cent.