Cromwell European REIT’s Inaugural Results Exceed IPO Forecast


  • All key performance metrics exceed IPO Forecast1 for the reporting period
  • Net property income and income available for distribution to unitholders surpass IPO Forecast by
    2.8% and 3.5%, respectively
  • Valuation of property portfolio now €1,361 million, 3.9% higher than the purchase price
  • Proposed acquisition of office property in Ivrea, Italy, demonstrates strong pipeline sourcing

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.

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 period 30 November 2017 (being the date of CEREIT’s listing) to 31 March 2018 (the “Reporting Period”).

The Manager’s Chief Executive Officer, Mr. Philip Levinson, commented, “Our primary focus since listing has been to keep our commitment to investors. Today, I am delighted to announce that we have delivered on the goal of meeting and exceeding our IPO Forecast for the Reporting Period. We are announcing CEREIT's inaugural financial results with all key performance metrics exceeding expectations. This bears testament to CEREIT’s ability to provide investors with diversified, stable and sustainable income streams through our large, geographically diverse portfolio with a balanced asset class exposure.”

“The REIT turned in a particularly commendable performance in its light industrial portfolio, delivering visible, organic net property income growth through asset management initiatives. We firmly believe in the growth and upside potential of CEREIT’s portfolio and are committed to achieving long-term growth in DPU2 for all unitholders.”

CEREIT recorded gross revenue amounting to €41.0 million during the Reporting Period, up from the IPO Forecast of €40.7 million. Net property income (“NPI”) came in at €27.0 million, surpassing the IPO Forecast of €26.3 million by 2.8% due to the better-than-expected performance by CEREIT’s Pan-European light industrial portfolio, which exceeded the IPO Forecast NPI by €819,000. CEREIT’s office portfolio and other assets performed largely in line with expectations.

Total property operating expense amounted to €14.0 million, down 2.8% from the IPO Forecast, consequence of the Manager’s strategy to rationalise operating costs while maintaining the quality of services.

As a result, DPU2 for the Reporting Period came in at 1.45 Euro cents, exceeding the IPO Forecast by 3.5%. Based on the IPO issue price of 0.55 Euro cents per unit, this translates to a 7.86% annualised distribution yield, which is 3 percentage points higher than the IPO Forecast. Net asset value (“NAV”) of CEREIT group stood at €879.4 million as at 31 March 2018, up 6.4% compared to the NAV of the CEREIT group as at 31 December 2017. Based on the number of units in issue at the end of the Reporting Period3, this translates to a NAV per Unit of 55.9 Euro cents.

The aggregate leverage stood at 35.1% as at 31 March 2018, lower than the 36.8% stated in the proforma balance sheet as at 30 November 2017 in the Prospectus. With the headroom afforded by the lower aggregate leverage, CEREIT possesses significant borrowing capacity to fund future acquisitions.

Portfolio Highlights

Following an external valuation of the entire CEREIT property portfolio, the property portfolio is valued at €1,3614 million as at 31 March 2018. This is 3.9% higher than the agreed purchase price of the properties at IPO.

As at 31 March 2018, CEREIT’s portfolio has an 89.6% occupancy rate, up 1.9 percentage points compared to the portfolio occupancy rate as at 30 April 2017; and CEREIT’s weighted average lease expiry (“WALE”)5 profile remained stable at 5.1 years. This was due to the Manager’s proactive tenant management strategy. CEREIT has a diversified tenant base comprising over 700 tenants, with the top
10 tenants accounting for approximately 41% of the portfolio’s total headline rent, down from approximately 44.2% as at 30 April 2017, as a result of the Manager’s continued initiatives to maintain a low tenant concentration risk.

Acquisition Growth

On 23 April 2018, CEREIT entered into a conditional sale and purchase agreement for the acquisition of a freehold office property located at 13 Via Jervis, Ivrea, Italy (the “Ivrea Asset”). The acquisition is expected to be completed by 30 June 2018. In line with the Manager’s proactive tenant management strategy, which focuses on the sourcing and retaining of high quality tenants, the Ivrea Asset is 100% let to two tenants, one of which is Vodafone Italia, the second largest mobile network operator in Italy by market share6.

Commenting on this, Mr. Levinson added, “The proposed acquisition of the Ivrea Asset demonstrates the strength of our pipeline sourcing capabilities and sets the momentum for an acquisition growth strategy focused on fundamental real estate qualities. The Manager will continue to seek opportunities to acquire quality income-producing properties across the right cities and sectors in Europe.”

Dual Currency Trading

Delivering on its commitment to provide enhanced opportunities for investors to trade in CEREIT units, CEREIT recently completed the process for dual currency trading on the Singapore Exchange. From 16 April 2018, investors in CEREIT have the flexibility to invest in CEREIT units in Singapore dollars as well as in Euros, with units fully fungible between the two counters.

Looking Ahead

Meeting and exceeding IPO Forecast through proactive asset management strategies and asset enhancement initiatives remains a top priority for the Manager for the rest of 2018. Business plans include unlocking asset value through a proactive approach to acquisitions and disposals, as well as capitalising on the deep pool of acquisition opportunities, including those accessed through the sponsor, Cromwell Property Group’s (the “Sponsor”) extensive pan-European platform.

Plans are also underway to prepare the annual sustainability report for CEREIT, in line with the requirements of the Singapore Exchange, which is consistent with the values of the Sponsor to employ a best practice approach to sustainability, corporate governance and corporate social responsibility to achieve high sustainability standards in the operation and management of CEREIT.

Mr. Levinson concluded, “While we continuously work on achieving our business targets, we remain equally focused on employing a best practice approach to sustainability, corporate governance and corporate social responsibility to further enhance returns to our unitholders.”


1. The prospectus of Cromwell European REIT dated 22 November 2017 (“Prospectus”) disclosed a 1-month profit forecast for the period from 1 December 2017 to 31 December 2017 (“December 2017 Forecast”), and a full-year profit projection from 1 January 2018 to 31 December 2018 (the “FY2018 Projection”). The FY2018 Projection disclosed in the Prospectus was derived from four separate quarterly projections which in aggregate formed the FY2018 Projection. The “IPO Forecast” figures referred to in this media release were, where not expressly disclosed in the Prospectus, derived from the December 2017 Forecast and the first quarterly projection for the period from 1 January 2018 to 31 March 2018 which had been used by the Manager to form the FY2018 Projection.
2. Distribution per unit
3. The number of units in issue at the end of the Reporting Period is 1,573,990,000.
4. Based on the valuations as at 31 March 2018 which also excludes a potential deferred consideration relating to Parc des Docks of €12 million.
5. “WALE” is defined as weighted average lease expiry by headline rent based on the final termination date of the agreement (assuming the tenant does not terminate the lease on any of the permissible break date(s), if applicable).
6. Source: Vodafone Group plc Annual Report 2017.