UPDATED: Cromwell European REIT reports results beating IPO forecasts

Euro coinsPhoto by Leslie Shaffer

This article was originally published on Wednesday, 27 February 2019 at 8:28 A.M. SGT; it has since been updated. 

Cromwell European REIT reported on Wednesday that its net property income for 30 November 2017 to end-December 2018 was 90.18 million euros (S$138.43 million or US$102.72 million), 3.7 percent above the forecast from its IPO prospectus.

The REIT listed on the Singapore exchange on 30 November 2017.

Simon Garing, CEO of the REIT’s manager, was positive on the results, saying it reflected the strength of the Cromwell Property Group, the REIT’s sponsor, in Europe.

“This is an encouraging start for our first year of operations and we will continue working to provide unitholders with stable distributions over the long term,” Garing said in the statement. “Our ‘barbell approach’ to portfolio management and diversification across geographies, sectors, and myriad tenants hedge the risks from the uncertain global macro environment.”

He added the REIT was looking for acquisition opportunities, and was driving organic growth through asset enhancement initiatives to boost valuations.

Gross revenue for the period came in at 135.29 million euros, 1.3 percent above its IPO forecast, the REIT said in a filing to SGX before the market open on Wednesday. That was mainly on strong performance at its light industrial/logistics portfolio, the REIT said.

“The light industrial/logistics properties in the Netherlands, Germany, and France did particularly well, achieving better-than-projected leasing outcomes,” it said in the statement, noting its occupancy rate rose to 86.6 percent, from 85.2 percent as of 30 September 2018.

The 13-month distribution per unit (DPU) was 4.70 European cents, excluding the impact of a rights issue in late 2018, 1.4 percent above the 4.64 European cents projected in the prospectus, it said. Including the rights issue impact, DPU was 4.10 Singapore cents.

During the year, the REIT manager announced acquisitions of 24 properties, 16 of which were completed over the financial period; those were mainly office properties, with two in the Netherlands, 11 in Finland and three in Italy. That brought the portfolio to 90 properties, up from 74 at the time of its IPO, it said.

It completed the acquisition of seven of the remaining eight properties in early 2019, comprising four mainly logistics properties in France and three mainly office properties in Poland, it said. The last property will no longer be acquired as the manager wasn’t satisfied by the due diligence process, it noted.

“The acquisitions are expected to be accretive to unitholder value and will also provide CEREIT with lower concentration risk as well as higher income resilience,” Garing said. “The new office properties also give us access to two new markets – Finland and Poland, which have economic growth rates that are expected to outpace the Eurozone average, while increasing the tenant and trade sector diversity of the
portfolio.”

 

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