Cromwell E-Reit sponsor to divest all interest in managers, Reit for 280 million euros
The acquirer is Stoneweg Global Platform, a Luxembourg alternative investment fund
CROMWELL Property Group, the sponsor of Cromwell European Real Estate Investment Trust (Cromwell E-Reit), entered into a binding agreement to divest all its stake in the Reit and its European fund management platform, including the manager and property manager, for a total consideration of about 280 million euros (S$409.3 million).
The acquirer is Stoneweg Global Platform, a Luxembourg alternative investment fund sponsored by Stoneweg Group, said the Reit manager on Thursday (May 23).
The sales and purchase agreement entails the sponsor’s entire 27.79 per cent stake, or 156.2 million units, in the Reit at 1.52 euros per unit, as well as its 100 per cent interests in the Reit’s Singapore manager and property manager, on top of other associated co-investments.
Stoneweg Group will become the Reit’s new sponsor following the transaction.
The transaction is expected to be completed by the end of Q3 2024, subject to Singapore and Luxembourg regulatory approvals and other customary closing conditions.
There are no anticipated changes to the Reit’s management team or listing status upon the transaction, noted the manager.
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DBS Group Research noted a fair valuation of the purchase, which implies a price-to-earning multiple of between 15 and 18 times, assuming profit margins of 10 to 15 per cent for the manager and property manager.
While the stake in Cromwell E-Reit was purchased at a premium to the three-month volume-weighted average price, it represents an about 25 per cent discount to the current net asset value and is projected to generate a forward dividend yield of around 10 per cent, said the research house.
“Although it remains to be seen how the new sponsor will address Cromwell E-Reit’s cost of equity and position the Reit for future growth, we see this change as a positive in terms of alignment of interest and improved depth of capabilities,” the research house added. It maintained a “buy” rating with a target price of two euros for the Reit.
DBS Group Research added that as Stoneweg is based in Europe with core investments primarily in Europe, the new sponsor’s local team will complement the Reit’s existing operations.
Stoneweg is an international real estate asset manager with a presence in Europe, Switzerland and the US. Following the transaction, it is evolving into an enhanced pan-European and US asset management platform with eight billion euros in assets under management and market exposure to over 20 countries.
Units of Cromwell E-Reit closed on Tuesday down 1.3 per cent or 0.02 euro to 1.48 euros.
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