Cromwell E-Reit to dispose of 12 Europe properties

Singapore

CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) on Tuesday said it has entered into a master sale and purchase agreement with entities owned by funds advised by Blackstone affiliates on Dec 16, to dispose of 12 properties located in the Netherlands, Denmark and France.

The agreed property sales price of the portfolio is 65.7 million euros (S$99.2 million), representing a 15.2 per cent premium to the original purchase price; and a 4.1 per cent premium over the latest market value of the portfolio, based on independent valuations.

Cromwell E-Reit will sell the portfolio of light industrial/logistics properties via an asset sale for the Dutch and Danish assets, and via a sale of shares of the French companies that own the French assets.

Cromwell E-Reit will receive 36.1 million euros in cash, as the French assets will be sold through the sale of shares of the French companies which own them, instead of asset sales like the Dutch and Danish assets. The French companies also hold some of the Reit's debt and liabilities, the Reit told The Business Times.

Cromwell E-Reit will also record a capital gain in excess of five million euros and have a higher net asset value as the agreed property sale price of 65.7 million euros is still above the value of the 12 assets' original purchase price or independent valuation.

Moreover, the mentioned debt and liabilities will be deducted from the Reit's balance sheet once the French companies are sold.

The sales consideration of about 36.1 million euros takes into account the agreed property sales price for the Dutch and the Danish assets, and the agreed share value based on the net assets of the French companies.

Five of the properties in the Netherlands will be sold for 19.1 million euros. They are Antennestraat 46-76, Bohrweg Spijkenisse, Fahrenheitbaan, Harderwijkerstraat Deventer and Nieuwgraaf.

Two properties in Denmark will be sold for 9.1 million euros. They are Hjulmagervej 3-19 and CF Tietgensvej 10.

The five properties in France will be disposed of by selling the French companies which own the properties. These companies have a provisional sale price of 7.9 million euros.

The properties owned by the French companies are Parc de la Chauvetière, Parc de l'Esplanade, Parc des Aqueducs, Parc des Mardelles and Parc Jules Guesde.

The manager added that the total cost of the disposal is estimated to be 700,000 euros. This comprises the disposal fee payable to the manager as well as professional and other fees and expenses.

The disposal is expected to be completed in the second half of February 2020, subject to conditions precedent.

The manager said the disposal is consistent with its investment strategy of disposing assets which are either not strategic, or whose risk-return profile no longer fits the Reit's key objectives or benchmarks. This will allow capital to be recycled into new investments.

Sale proceeds will provide capital for accretive redeployment into more core assets to enhance the Reit's distribution per unit and net asset value per unit. It will also improve the overall risk-return profile of the Reit's portfolio.

Occupancy rate will also be improved by 0.7 per cent, based on the Reit's occupancy as at Sept 30.

Cromwell E-Reit units ended flat at S$0.795 on Tuesday.