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Cromwell European Reit buying freehold office building in Italy for 16.9m euros

thCROMWELL European Real Estate Investment Trust (Reit) is acquiring a freehold office building in Italy for 16.9 million euros (S$27.4 million).

On Tuesday, Cromwell EReit Management, the manager of Cromwell European Reit, said that Perpetual (Asia), the Reit's trustee, has entered into a preliminary sale and purchase agreement on Monday with Savills Investment Management SGR PA.

Savills Investment is the management company of C3 Investment Fund, an alternative investment fund established in Italy with 100 per cent of its units held by Cerberus SICAV-SIF.

Cromwell EReit Management intends to finance the acquisition through a combination of a third-party loan to be granted by financial services products company Banca IMI SpA, and a drawdown on the 75 million euros unsecured revolving credit facility granted by ING Bank NV.

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The Reit may pay an additional consideration for the purchase of the property at 13 Via Jervis, Ivrea, upon occurrence of an earn-out event, subject to certain allowable deductions.

There will be an earn-out amount plus applicable taxes payable to Cerberus in cash, depending on certain conditions, that's capped at 652,000 euros.

The net lettable area of the property is 17,990 square metres and its occupancy rate is 100 per cent, Cromwell EReit Management said.

It is leased to two tenants: Vodafone Italia, the second-largest mobile network operator in Italy by market share, and La Direzione del Benessere, a fitness and wellness centre.

The property's weighted-average lease expiry is more than five years as at Apr 23, 2018.

The acquisition is expected to be completed by June 30 this year, subject to the non-exercise of the Italian state pre-emption right within 60 days of the date of the agreement.

It is not expected to have any material effect on the net tangible assets or the distributions per unit of Cromwell European Reit for the current financial year.

Cromwell European Reit was trading at 0.62 euro as at 11.30am.