Cromwell E-Reit to buy 11 Czech, Slovakia properties for 113.2m euros

Singapore

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) has proposed to buy 11 logistics and light industrial properties for 113.2 million euros (S$183.6 million).

This comprises 50.8 million euros for six light industrial/logistics properties in the Czech Republic and 62.4 million euros for five industrial/logistics properties in Slovakia.

The purchase price of 113.2 million euros is below the properties' independent valuation of 115.6 million euros. It also translates to a net operating income yield of 6.7 per cent and a 4.9 per cent accretion to the Reit's proforma distributions per unit.

The Czech Republic assets are located in Uherske Hradiste, Lovosice, Vyskov and Pisek. Meanwhile, the Slovakia properties are in Zilina - the fourth-largest Slovakian city, Nove Mesto nad Vahom and Kosice.

The assets are all freehold properties and are fully occupied by 17 tenant-customers mostly in logistics. The assets also have a weighted average lease expiry of 6.2 years and a weighted average lease break of 5.9 years.

They total 125,435 square metres (sq m) of gross lettable area of modern construction logistics and light industrial properties, with a weighted average age of eight years. Three assets have about a total of about 140,700 sq m of land permitted for development.

The properties sit on valuable freehold land in "well-connected micro-locations" in established business parks with access to public transport and important highways, the manager said.

With the proposed transaction, Cromwell E-Reit's exposure to light industrial/logistics property will increase to 35.8 per cent from 32.3 per cent. These types of assets are in sectors that have performed well since the emergence of the Covid-19 pandemic, the manager noted.

The Reit will also be able to further establish its presence in Central Europe, specifically in the Czech Republic and Slovakia - emerging markets expected to benefit from further integration with neighbouring Western Europe economies.

Together with the Reit's existing portfolio, the new properties reduce concentration risks for Cromwell E-Reit through tenant diversification.

Unitholder approval for the proposed acquisitions is not required as they are within the investment mandate of Cromwell E-Reit. The manager plans to finance the proposed purchases through internal resources and/or existing debt facilities and will announce more at an appropriate time, it said.

Units of Cromwell E-Reit closed at 47.5 euro cents on Friday, up one euro cent or 2.2 per cent.