Ukraine war has 'no direct impact' on Cromwell E-Reit's portfolio

WITH more than 85 per cent of its 2.5 billion euro (S$3.7 billion) European portfolio in Western Europe, Cromwell European Real Estate Investment Trust (Cromwell E-Reit) said in a filing on the Singapore Exchange on Monday (Mar 14) that the ongoing war between Ukraine and Russia has "no direct impact" on its portfolio.

About 10 per cent of its portfolio are in Poland and 2 per cent in Slovakia, and only 2 per cent of leases in both countries are expiring in the near term, said the company. These 2 European countries share a border with Ukraine.

The manager of Cromwell E-Reit CWBU also said that it has not identified any material issues arising from recent sanctions lists screenings, which were conducted in compliance with its regulatory obligations, and as part of its ordinary course of business.

No counterparties of the Reit have been identified to be on any sanctions list.

However, the filing noted that there is "limited immediate impact" on Cromwell E-Reit's business operations.

Out of more than 800 tenants and customers across its portfolio, about 50 are in Poland and 10 in Slovakia. Among those in Poland, the management has identified 8 that have some business exposure to Russia, while 1 imports coal mined by a Russian company.

Cromwell E-Reit noted that this tenant is based in Switzerland and only occupies 400 square metres (sq m) of space out of 1.8 million sq m in its portfolio.

"Accordingly, Cromwell E-Reit has limited exposure to tenant-customers with business exposure to Russia," said the company.

The current rise in energy prices would have no impact on the company as 95 per cent of its tenants bear their own utility costs. The ongoing refugee crisis is also not expected to disrupt rent collection.

Cromwell E-Reit expects energy prices and agricultural commodity prices to remain elevated in the near term, which would mean consumer prices would also be higher.

Business activities such as real estate transactions, travel and tourism are likely to slow down in the short term, and there will likely be a shortage of manpower, as Ukraine supplies a large part of the migrant workforce in Europe.

Units of Cromwell E-Reit closed at 2.20 euros on Monday, down 1.8 per cent or 0.04 euro.

READ MORE:

• Cromwell E-Reit H2 DPU drops 2.8% to 0.08459 euro
• Cromwell E-Reit to acquire 3 logistic properties in UK and Netherlands for 57.8m euros
• Cromwell E-Reit launches S$750 million multicurrency perpetual securities programme
• Cromwell E-Reit acquires third logistics asset in Italy for 19.6m euros