Cromwell European REIT Divests Three Light Industrial/Logistics Asset In Germany and France at 28% Premium to Latest Valuation

Cromwell EREIT Management Pte. Ltd., the manager (the “Manager”) of Cromwell European Real Estate Investment Trust (“Cromwell European REIT” or “CEREIT”), is pleased to announce that CEREIT has entered into separate sale and purchase agreements to divest two light industrial / logistics assets in Germany (the “German Divestments”) and a light industrial / logistics asset in France (the “French Divestment”), (collectively, the “Divestments”).

The Manager’s Chief Executive Officer Mr. Simon Garing said, “I am pleased to announce the divestment of three non-core assets in France and Germany, for a total price of €22.01 million (S$30.6 million), a blended €4.85m (+28%) premium to the latest June 2022 valuations2 of €17.15m. The 3 assets formed part of CEREIT’s IPO portfolio five years ago. Cromwell’s local teams recently fulfilled the asset management plans and associated leasing programs for the three older style warehouses. Aided by the strength in the European logistics market, the teams’ executed the sales €13.6 million (162%) above the aggregate IPO purchase price of €8.4 million in 2017. This is testament to the local teams’ ability to identify and manage value add opportunities, realising strong gains for investors.

We expect to complete the divestment process in 4Q2022, subject to fulfilment of certain customary conditions in Germany and France and recycle the capital into other opportunities.”

2. The German Divestments

The Manager, (through EHI Fund Germany Limited, an indirect and wholly-owned subsidiary), has entered into a sale and purchase agreement with United Germany 2022 Propco S.à.r.l. to divest two light industrial / logistics assets located at An der Steinlach 8-10, 65474 Bischofsheim, Germany (“Bischofsheim II”), and Kinzigheimer Weg 114, 63450 Hanau, Germany (“Hanau”).

2.1 Bischofsheim II Bischofsheim II

Is a 50-year-old commercial and logistics park with 7,158 square metres (“sqm“) net lettable area, 25 loading docks, service facilities and convenient location.

Bischofsheim II was independently valued by CBRE Ltd (as commissioned by the Manager, and by Perpetual Asia Limited (“Perpetual”), in its capacity as trustee of CEREIT) at €5.15 million as at 30 June 2022, using the income capitalization method.

Bischofsheim II was acquired at IPO on 30 November 2017, for €3.5 million (approximately S$4.7 million1) and is being divested for a consideration of €6.0 million (approximately S$8.3 million1).

2.2 Hanau Hanau

Is a 51-year-old business park that was more recently extended in 1996. It comprises a threestorey office block and a single storey warehouse with attached set of small office suites.

Hanau was independently valued by CBRE Ltd (as commissioned by the Manager, and by Perpetual, in its capacity as trustee of CEREIT) at €5.0 million as at 30 June 2022, using the income capitalization method.

Hanau was acquired at IPO on 30 November 2017 for €2.9 million (approximately S$4.0 million1) and is being divested for a consideration of €5.0 million (approximately S$7.0 million1).

3. The French Divestment

CEREIT has also (through EHI France 15 Gondreville Nancy SCI, an indirect and wholly-owned subsidiary) entered into a promissory deed with a French investor to divest a light industrial / logistics asset located at Parc du Bois du Tambour, Route de Nancy, Gondreville, France (“Bois du Tambour”).

3.1 Bois du Tambour

Bois du Tambour was constructed between 1980 and 1982 and consists of five main separate structures housing a mix of light industrial / warehouse space and associated offices, 10 km from the centre of Nancy city centre.

Bois du Tambour was independently valued by Savills plc (as commissioned by the Manager, and by Perpetual Asia Limited, in its capacity as trustee of CEREIT) at €7.1 million as at 30 June 2022.

Tambour was acquired at IPO on 30 November 2017 for €2.0 million (approximately S$2.8 million1) and is being divested for a consideration of €11.0 million (approximately S$15.3 million1).

4. Other Information

Each of the sale considerations were arrived at on a willing buyer and willing seller basis. The net proceeds from the Divestments will be deployed to repay the revolving credit facility and / or for other working capital purposes.

A divestment fee of €0.1 million (being 0.5% of the Sale Consideration) is payable to the Manager in accordance with the trust deed constituting CEREIT.

While CEREIT remains a long-term investor in real estate, divestments from time to time are consistent with the Manager's proactive asset management strategy to improve the risk return quality of CEREIT's portfolio. This is in line with CEREIT's primary purpose to provide CEREIT's unitholders with stable and growing distributions and net asset value per unit over the long term.

5. Financial Effects of the Transactions

Based on the relative figures as computed on the bases set out in Rule 1006 of the Listing Manual, each divestment is a “Non-Discloseable Transaction” within the meaning of Rule 1008 of the Listing Manual. 

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