Cromwell European REIT Delivers 39.2% Increase in YYD 2019 Distributable Income; Transformational Debt Refinancing Executed


  • YTD1 DPU2 up 2.3% year-on-year and 2.3% above the IPO Forecast3
  • c.€248 million in accretive acquisitions during the quarter expanded income base and further diversified the portfolio; as a result, the Manager now expects to exceed the FY 2019 IPO Forecast3 DPU of 4.02 Euro cents
  • 55 leases spanning 40,400 square metres of space signed over the quarter, achieving positive rent reversion rate of 2.4%
  • Total asset size of €2.2 billion (S$3.3 billion4) and NAV5 at 50.3 Euro cents per unit
  • €625.0 million (S$937.5 million4) unsecured debt refinancing was executed today, extending CEREIT’s weighted average term of debt to 3.6 years while maintaining its attractive cost of funding at approximately 1.50%
  Actual YTD 2019 Actual YTD 2018Variance Actual YTD 2019 Forecast YTD 20193Variance
Gross Revenue (€’000) 126,151 93,600 34.8% 126,151 94,831 33.0%
Net Property Income (€’000) 82,583 61,998 33.2% 82,583 62,914 31.3%
Income Available for Distribution to Unitholders (€’000) 70,612 50,718 39.2% 70,612 52,243 35.2%
Distribution per Unit (Euro cents per unit) 3.05 2.983 2.3% 3.05 2.98 2.3%

SINGAPORE – Cromwell EREIT Management Pte. Ltd., the manager (the “Manager”) of Cromwell European Real Estate Investment Trust (“Cromwell European REIT” or “CEREIT”), today announced CEREIT’s financial results for the third quarter and the nine months ended 30 September 2019 (“3Q 2019” and “YTD 20191, respectively).

YTD 2019 gross revenue and net property income (“NPI”) soared 34.8% and 33.2% year-on-year (“y-o-y”) to €126.2 million and €82.6 million, respectively. These also represented a 33.0% and 31.3% outperformance compared to the respective IPO Forecasts3. The increases were mainly attributable to CEREIT’s office portfolio, which generated 63.5% more NPI than forecast3, due to contributions from the new office properties acquired between December 2018 and September 2019. In addition, CEREIT’s light industrial and logistics portfolio exceeded the IPO Forecast3 by 10.7%, performing particularly well in Germany and the Netherlands. CEREIT’s other assets performed largely in line with the IPO Forecast3.

YTD 2019 income available for distribution to unitholders was €70.6 million, 39.2% more than the €50.7 million recorded in the prior corresponding period (“YTD 2018”) and 35.2% above the €52.2 million forecasted at IPO3. The DPU2 for YTD 2019 was 3.05 Euro cents, representing a 2.3% y-o-y increase6 and a 2.3% outperformance against the IPO Forecast3. CEREIT offers an 8.0% annualised distribution yield based on CEREIT’s 50 Euro cents per unit closing price on 7 November 2019. In the fourth quarter of 2019, CEREIT’s DPU2 is expected to further benefit from a full period of contributions from the recently acquired properties.

The Manager’s Chief Executive Officer, Mr. Simon Garing, commented, “We are pleased to have delivered yet another quarter of operational outperformance, our sixth consecutive reporting period of exceeding IPO Forecasts3. Since December 2018, we have augmented CEREIT’s portfolio with 28 high-quality assets, representing an approximately 50% increase in CEREIT’s portfolio value, and welcomed new tenant-customers such as Motorola Solutions Systems, UBS, BNP Paribas and Santander Group, amongst others. The accomplishments of our transactions team were complemented by our asset management team’s relentless efforts to lease up vacancies and achieve positive rent reversions.”

CEREIT’s NAV5 increased 14.4% from €1,119 million as at 31 December 2018 to €1,280 million as at 30 September 2019, largely due to the acquisitions this year and fair value gains. As a result of the payment of the 1H 20197 distribution in addition to the enlarged unit base in July 2019 following a private placement to partially fund some of the acquisitions, NAV5 per unit decreased by 1.9% to 50.3 Euro cents.

Active Asset and Portfolio Management

During 3Q 2019, the Manager signed 55 leases spanning 40,400 square metres (“sq m”), of which 28 were new leases in 9,559 sq m of space in the light industrial / logistics portfolio and 388 sq m of space in the office portfolio. These provided a 2.4% positive rent reversion rate.

As part of ongoing efforts to proactively work with key tenant-customers on long-term extension strategies, the Manager successfully extended close to 60% of leases subject to expiries or breaks until March 2020. In addition, Motorola Solutions Systems extended its lease at Green Office, in Kraków, Poland till 2026 / 2027. The multinational telecommunications company has since become one of CEREIT’s top 10 tenant-customers by headline rent.

CEREIT’s overall portfolio occupancy rate has increased to 92.0% as at 30 September 2019, up by 40 basis points from 91.6% as at 30 June 2019, with the portfolio’s weighted average lease expiry (“WALE”)8 profile standing at 4.6 years as at 30 September 2019. CEREIT has a high-quality and diversified tenant-customer base, now comprising nearly 1,000 corporations and government agencies. The top 10 tenant-customers now account for only 33.5% of the portfolio’s total headline rent, as compared to 36.8% as at 30 June 2019 and 41.0% as at IPO, further de-risking the portfolio. Approximately 91.7% of the portfolio by value comprises freehold and continuing / perpetual leasehold9 properties.

During 3Q 2019, the Manager completed the acquisitions and onboarding of six mostly freehold assets in France and Poland at a purchase price of ~€248 million at a 7.4% NPI yield, bringing the total number of properties in the portfolio to 103.

Portfolio Breakdown Chart

Post the end of 3Q 2019, in October, the Manager completed its first asset disposal with the sale of the non-core Parc d’Osny light industrial asset in France at a 13.1% premium to its last valuation. Post this divestment, CEREIT’s portfolio as of today comprises 102 properties valued at €2,065 million with a total net lettable area spanning approximately 1.5 million sq m.

Responsible Capital Management and Transformed Debt Structure

As at 30 September 2019, CEREIT had an aggregate leverage10 of 37.0%, up 1.6 pp from 35.4% as at 30 June 2019, largely due to loans drawn to partially finance its recent acquisitions. This is below the regulatory limit of 45% and comfortably within the Board’s preferred gearing range. CEREIT’s debt is 84.7% hedged11. As a result of the continuing wide spread between CEREIT’s portfolio NPI yield and the low cost of debt, the interest coverage ratio12 remained high at 8.9 times.

The Manager today executed a large, transformational debt refinancing, whereby new debt facilities of €625.0 million (S$937.5 million4) have been established, partially to repay existing debt that expires in 2020 / 2021; it also includes a new €150.0 million revolving credit facility (“RCF”), which will initially be undrawn. The debt refinancing extends CEREIT’s weighted average term of debt to more than 3.6 years as at 12 November 2019, from around 2.0 years as at 30 September 2019. As a result, 70% of CEREIT’s assets are now unencumbered, as compared to the previous 10% unencumbrance.

“In line with our responsible capital management strategy, we have successfully refinanced a significant proportion of asset-level secured debt with a high proportion of long-term unsecured debt, substantially improving CEREIT’s financing flexibility while continuing to access the low-cost of debt at c.1.5%”, added Mr. Garing. “We have transformed CEREIT’s debt structure, providing us further opportunities to capitalise on accretive growth opportunities.”

Chart Three - Refinance


The Manager has improved CEREIT’s Global Real Estate Sustainability Benchmark13 (“GRESB”) score by 43%, from 47 points in 2018 to 67 points in 2019. CEREIT outperformed its ‘Diversified – Office / Industrial (Europe)’ peer group average overall, as well as in five of the seven assessment aspects, namely ‘Management’, ‘Policy and Disclosure’, ‘Monitoring and Environmental Management Systems, ‘Performance Indicators’, and ‘Building Certifications’. Notably, the Manager retained its perfect score in the ‘Management’ aspect of the assessment – a testament to its efforts to fully integrate Environmental, Social, and Governance (“ESG”) factors and targets into its strategy and publicly disclose them, among other factors.

The Manager is in the process of attaining BREEAM14 certification of another 10 properties, on top of the existing five properties with green building certifications, which should further improve CEREIT’s score in the ‘Building Certifications’ aspect.

Looking Ahead

The Eurozone’s economy is growing at a slower pace, with the services sector still seeing robust activity but the manufacturing sector weakening amid trade uncertainty. The labour market however remains resilient, and private spending grew slightly as households benefited from stronger incomes. In the European real estate sector, property investment volumes reached €64.9 billion in 3Q 2019, with crossborder capital accounting for almost half of all transactions. The Eurozone’s current low interest rate environment and the ECB’s15 determination to achieve a 2.0% inflation rate is helping to attract foreign capital into real estate, moderately offsetting the weakness caused by external geopolitical headwinds.

Mr. Garing concluded, “Contributions from the accretive acquisitions we’ve made in the past year will continue to underpin CEREIT’s stable earnings and DPU, as we look to extract further value by achieving high reversionary yields and securing high occupancy levels in the 28 new properties. On the back of the recent acquisitions, we now expect CEREIT to exceed the full-year IPO Forecast3 DPU of 4.02 Euro cents. We have demonstrated the resilience of CEREIT’s diversified portfolio, notwithstanding mixed economic conditions, and will continue to explore opportunities to recycle capital in order to boost income and NAV5 growth for unitholders.”

A Selection of CEREIT's Properties

CEREIT Property Sample

Selection of Properties 2a


Cromwell European REIT is a real estate investment trust (“REIT”) with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of income-producing real estate assets in Europe that are used primarily for office, light industrial / logistics, and retail purposes. With a portfolio of 102 properties as at 12 November 2019 in or close to major gateway cities in Denmark, Finland, France, Germany, Italy, the Netherlands as well as Poland, and a balanced focus on the office and light industrial / logistics sectors, it is also the first REIT with a diversified Pan-European portfolio to be listed on Singapore Exchange Securities Trading Limited.

As at 30 September 2019, CEREIT’s portfolio has an aggregate lettable area of approximately 1.5 million sq m with close to 1,000 tenant-customers and a WALE profile of around 4.6 years. Comprising primarily freehold or ongoing leasehold assets, the portfolio has an appraised value of approximately €2,082 million as at 30 September 2019.

CEREIT is managed by Cromwell EREIT Management Pte. Ltd., a wholly-owned subsidiary of CEREIT’s sponsor, Cromwell Property Group16, a real estate investor and manager with operations in 15 countries, listed on the Australian Securities Exchange Ltd.


1. “YTD”, “YTD 2019” or “YTD Sep 2019” refers to the period from 1 January 2019 to 30 September 2019
2. Distribution per Unit.
3. The CEREIT Prospectus dated 22 November 2017 (“Prospectus”) disclosed a profit projection for the period from 1 January 2019 to 31 December 2019. “IPO Forecast” refers to the interpolation of this projection for the relevant period adjusted for the issuance of 600,834,459 new units of CEREIT in December 2018 (the “Rights Issue”) where applicable. The adjusted FY2019 DPU is 4.02 Euro cents per unit (FY2019 IPO Forecast of €4.40 cents per unit adjusted for the Rights Issue).
4. Based on exchange rate of €1.00 = S$1.50 as at 11 November 2019.
5.  Net Asset Value.
6.  YTD 2018 DPU is restated to reflect the bonus element in the new units issued pursuant to the Rights Issue.
7. “1H 2019” refers to the period from 1 January 2019 to 30 June 2019.
8. “WALE” is defined as weighted average lease expiry by headline rent based on the final termination date of the agreement (assuming the tenant-customer does not terminate the lease on any of the permissible break date(s), if applicable).
9. Classified as continuing leasehold or perpetual leasehold / usufruct. A continuing leasehold is agreed in principle for an indefinite period of time but has a fixed ground rent paid to the land owner which must be re-agreed at the end of a certain period, which may result in a termination if the leaseholder and the land owner do not agree on the new ground rent. A perpetual leasehold / usufruct is for an indefinite period of time and the ground rent has been paid off perpetually (which type of leasehold is most similar to a freehold situation).
10. Refers to “aggregate leverage” as defined under the Property Funds Appendix.
11. Proportion of hedged debt is 86.8% as at 30 September 2019, excluding Polish Value-added Tax Loan.
12. Based on YTD 2019 net income before tax and fair value changes and finance costs over the interest expense.
13. GRESB assesses and benchmarks the ESG performance of real assets, providing standardised and validated data to the capital markets.
14. “BREEAM” is the world's leading sustainability assessment method for master-planning projects, infrastructure and buildings.
15. European Central Bank.
16. Comprising Cromwell Corporation Limited and the Cromwell Diversified Property Trust (the responsible entity of which is Cromwell Property Securities Limited).

Goldman Sachs (Singapore) Pte. and UBS AG, Singapore Branch were the joint issue managers for the initial public offering of CEREIT (the “IPO”). DBS Bank Ltd., Goldman Sachs (Singapore) Pte., and UBS AG, Singapore Branch were the joint global coordinators for the IPO. DBS Bank Ltd., Goldman Sachs (Singapore) Pte., UBS AG, Singapore Branch, Daiwa Capital Markets Singapore Limited and CLSA Singapore Pte Ltd were the joint bookrunners and underwriters for the IPO. The joint issue managers, joint global coordinators and joint underwriters of the IPO assume no responsibility for the contents of this announcement.

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