Cromwell European Reit posts indicative Q1 DPU of 3.9 euro cents, down 5.8%
Derryn Wong
CROMWELL European Real Estate Investment Trust (Cromwell E-Reit) on Monday (May 15) posted an indicative distribution per unit (DPU) of 3.90 euro cents for the first quarter ended Mar 31, 2023, down 5.8 per cent from 4.14 euro cents in the year-ago period.
Including divestment gains in lieu of rent for two properties vacated for redevelopment, the Reit’s indicative DPU is 4.12 euro cents, a 2.4 per cent drop compared to 4.22 euro cents in the previous corresponding period, the manager said.
The board will decide whether to top up DPU with realised divestment gains for Cromwell E-Reit’s H1 2023 financial results.
The Reit also reported gains in both gross revenue and net property income (NPI) thanks to higher portfolio occupancy. The drop in indicative DPU was attributed to higher finance costs, which offset NPI growth. Gross revenue was up 4.2 per cent year on year, from 52.6 million euros (S$76.4 million) to 54.8 million euros. NPI was up 3.6 per cent, from 32.5 million euros to 33.6 million euros, over the same time period. (*see amendment note)
The Reit also reported an occupancy rate of 95.8 per cent in first quarter of 2023, a 1 per cent increase over the previous corresponding period, with rental reversion at 6.7 per cent.
Net finance costs increased to 7.2 million euros in Q1, up from five million euros in the year-ago period, a 44.5 per cent increase. Due to the European Central Bank’s rise in interest rates and higher margins on new loans, the Reit’s all-in annual interest rate climbed to 2.7 per cent as at Mar 31, 2023, from 2.38 per cent on Dec 31, 2022. (*see amendment note)
The manager’s chief executive, Simon Garing, said: “The rise in financing costs and the slowing economy have led to heightened uncertainty with valuations under pressure, so we have taken proactive steps to mitigate the risks through asset sales. These should help reduce leverage over the medium term and help fund accretive developments.” It plans to pivot towards a majority of light industry and logistics real estate portfolio by the end of 2023, noting its current portfolio of such real estate to be at “effectively full occupancy” in the first quarter of 2023.
*Amendment note: An earlier version of this story incorrectly reported NPI as 33.7 million euros instead of 33.6 million euros. The all-in interest rate for Dec 31, 2022, was also written as 1.7 per cent when it is, in fact, 2.38 per cent. The article has been amended to reflect these changes.
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