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Cromwell E-Reit to buy industrial property in Germany for 16.6m euros

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The property is fully let to Euro Pool System International, a reusable packaging firm in the European fresh supply chain.

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) will acquire a freehold light industrial/logistics asset in Germany for 16.6 million euros (S$25 million). 

The deal is expected to be completed in April after conditions have been satisfied, Cromwell E-Reit's manager said on Friday.

The property is fully let to Euro Pool System International, a reusable packaging firm in the European fresh supply chain.

The lease, which extends until May 2024, is on a double-net basis, whereby the landlord is only responsible for repairs throughout the duration of the lease.

Cromwell E-Reit has entered into a purchase agreement with Nathusius Vermögensverwaltungs-GmbH & Co KG for the deal.

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The purchase price of 16.6 million euros is about 0.5 per cent below the independent valuation of 16.7 million euros by Cushman & Wakefield Debenham Tie Leung as at Jan 15, 2020. It is also about 50 per cent below the estimated replacement cost. 

The total cost of the acquisition is estimated at 18.2 million euros, comprising the purchase price, an acquisition fee payable to the manager in cash, as well as other fees related to the deal.

These will be funded from cash reserves and/or available undrawn debt facilities, Cromwell E-Reit's manager said.

Located in Sangerhausen, a town in central Germany, the property was built in 2017 and can easily be repositioned for a multi-tenanted strategy if required, the manager said.

The asset has 30,557 square metres (sq m) of net lettable area, which includes 28,060sq m of warehouse space and 2,315 sq m of office space. It sits on a site spanning about 79,000 sq m.

It is being acquired at a net operating income (NOI) yield of 6.3 per cent, which is above Cromwell E-Reit's existing portfolio's NOI yield of just above 6 per cent, the manager said.

In addition, the acquisition will increase Cromwell E-Reit's exposure to Germany, with the size of its portfolio in the country rising to 136.6 million euros, up from 120 million euros as at Dec 31, 2019. 

After the acquisition, Germany will account for 6.5 per cent of Cromwell E-Reit's portfolio, up from 5.7 per cent as at December last year. The weighting of the portfolio towards light industrial/logistics space will also increase to 31.2 per cent from 30.6 per cent.

The property will provide stable cash flow and a weighted average lease expiry of over four years, the manager said.

Last December, Cromwell E-Reit also announced that it is buying a portfolio of three freehold light industrial/logistics assets in Germany for 38 million euros. 

As at 10.55am on Friday, units in Cromwell E-Reit were trading at 54 euro cents, down two euro cents or 3.6 per cent, after the announcement.

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