Cromwell European REIT to acquire six properties in France and Poland for 247 million euros

Euro coinsPhoto by Leslie Shaffer

Cromwell European REIT entered deals to acquire three properties in France’s Greater Paris office market and another three properties in Poland for a total 246.9 million euros (S$378.18 million or US$278.89 million), the REIT said in a filing to SGX Friday.

“Capitalizing on the low interest rate environment in Europe as well as the sponsor’s pipeline sourcing and execution capabilities, we have successfully negotiated deals to buy the new properties below replacement costs and at attractive yields,” Simon Garing, the CEO of the REIT’s manager, said in the statement.

“The acquisitions mark our entry into the office property market in Greater Paris, a Tier-1 European capital city. They also increase our
exposure to Poland, which has an economy that has outperformed the Eurozone average as well as an office property market with robust fundamentals and a favourable outlook,” he added.

The properties will also broaden the portfolio’s geographical and tenant diversity, he said.

The deals will be financed with a combination of loans drawn from new debt facilities and the issuance of new units in a private placement to raise at least 100 million euros, the REIT said.

The acquisitions, which are valued at 248.1 million euros in total, are at a net initial yield of 7.4 percent and are expected to increase the REIT’s distribution per unit (DPU), the filing said. That compares with a net initial yield of 5.8 percent for the REIT’s existing office assets, the REIT said.

The properties have an aggregate occupancy of 98.7 percent, the filing said.

On a pro forma basis, the REIT’s 12-month DPU would have been 6.5 percent higher at 3.99 euro cents, compared with the actual DPU of 3.75 euro cents, the REIT estimated.

The French properties are mainly office properties and are located in or near major business districts, including Ivry-sur-Seine, La Défense, and Charles de Gaulle Étoile, with easy access to the Charles de Gaulle Airport, the filing said.

The Greater Paris region is the fifth-largest economic area globally and the largest in Europe, while France has one of the largest and most liquid real estate markets in the world, the REIT said.

The Polish properties are two mainly office properties in Krakow, the country’s second largest city, and an office properties in Poznan, the country’s fifth largest city, the filing said.

The acquisitions will increase the REIT portfolio’s exposure to Poland to 11.8 percent by value, the filing said.

Cromwell European REIT said the deals will boost the portfolio size to 103 properties, from 97 previously, withe the appraised value of 2.0 billion euros.

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