Cromwell E-Reit’s Lovosice asset secures 40% of pre-leases for new warehousing unit

THE upcoming 14,679 square metre (sq m) warehousing development for Cromwell European Real Estate Investment Trust’s (Cromwell E-Reit) Czech Republic asset, Lovosice One Industrial Park I, now has 4 secured leases with both new and existing tenant-customers.

In a business update on Tuesday (May 10), the manager of Cromwell E-Reit said the new pre-leases amount to around 40 per cent of the new logistics warehouses.

These includes 2 pre-leases for 2 of five new units at the logistics warehouses, which the manager says are on track to commence construction in mid-2022.

Current tenant-customer AutoMax is set to become the property’s primary tenant-customer as it has signed a long lease of over 6 years directly with Cromwell E-Reit from June 2023. The motor oil, lubricants and auto parts importer and distributor will lease 13,266 sqm of the existing warehouse space - inclusive of an additional mezzanine 800 sq m floor to be constructed.

Another existing tenant-customer, a subsidiary of German-headquartered transport service provider Fiege Group, will occupy 2 of the 5 new units to be constructed on the north-eastern part of the site of Lovosice One Industrial Park I. Fiege has committed to a 5-year lease commencing on Oct 1, 2023.

Czech Republic-based international transportation company Lorenc Logistics will take up 2,611 sq m of space on a more-than 5-year lease term starting from November 2022.

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Cromwell E-Reit’s manager said it will convert the smaller existing unit on site, which currently houses a production and office area, into a crossdocking warehouse facility to accommodate the operational needs of this new tenant-customer.

For the fourth of the leases, existing tenant-customer CTE Cargo has extended its lease for 4,417 sq m of space. The Reit manager said this comes as part of its asset management team’s proactive efforts to work with key tenant-customers on long-term extension strategies.

Occupancy for Cromwell E-Reit’s Czech Republic portfolio currently stands at 99.6 per cent.

Lovosice One Industrial Park I represents Cromwell E-Reit’s first greenfield logistics development, which the manager expects to provide accretive returns in line with normal market logistics development margins.

According to the manager, the development has received strong leasing interest with 2 more companies expected to take over 5,500 sq m in total for the remaining available space of about 9,000 sq m.

The 14,679 sq m of Lovosice One Industrial Park I’s logistics warehouses represent the first phase of Cromwell E-Reit’s 15 million euro (S$22.1 million) logistics development of 25,600 sq m at Lovosice One Industrial Park I and II.

Upon completion, Cromwell E-Reit’s manager expects the development to provide a total of 30,000 sq m of modern logstics facilities.

“Through this 2-phase development project, we aim to maximise the asset’s long-term rental income and enhance its value in an area with high demand for modern logistics facilities. The 3.5 hectare development site is near the D5 highway, connecting Prague with major German cities such as Dresden and Berlin,” said Simon Garing, chief executive of the manager.

Noting “good business activity” taking place across Western and Central Europe despite the ongoing Russian invasion in Ukraine, Garing attributed this to the opening of European economies post Covid-19 restrictions.

“While there has been limited immediate impact on Cromwell E-Reit’s business operations so far, we expect that rising energy, agricultural commodity and consumer prices will affect the financial markets and investor sentiment globally,” he added.

Units of Cromwell E-Reit were trading flat at 2.16 euros as at 9.46 am on Tuesday, after the announcement.