Cromwell European REIT Review @ 23 November 2023

Basic Profile & Key Statistics

• Main Sector(s): Office, Industrial & Logistics
• Country(s) with Assets: Netherlands, Italy, France, Poland, Germany, Finland, Denmark, Slovakia, Czechia & England
• No. of Properties (exclude associate/fund): 111

Key Indicators

Performance Highlight

For YTD 9 months, gross revenue and NPI remain similar YoY. However, distributable income and DPU declined YoY mainly due to higher finance costs, offset by lower tax expenses.

Rental Reversion

Rental reversion is at 10.6% for 3Q 2023.

Divestment

On 6 October, CEREIT divested Viale Europa 95 at a 14.6% premium to the purchased price. 

Development

Development of Nervesa 21 is on track to be completed in 1Q 2024 while the Lovosice ONE

Industrial Park I in The Czech Republic and Nove Mesto ONE Industrial Park I / III in Slovakia are

largely completed and close to 50% and 60% pre-let. Maxima is currently under strip out works.

Related Parties Shareholding

• REIT Sponsor's Shareholding: ± 10% from median
• REIT Manager's Shareholding: Below median by 20% or more
• Directors of REIT Manager's Shareholding: Blow median by 20% or more

Lease Profile

• Committed Occupancy: ± 5% from median
• Income in SGD/Major Currencies: Below median by 10% or more
• WALE: Above median by 10% or more
• Highest Lease Expiry within 5 Years: Below median by 20% or more; Falls in 2025
• Weighted Average Land Lease Expiry: Above median by 20% or more

Debt Profile

• Gearing Ratio: ± 10% from median
• Gearing Ratio including Perps: ± 10% from median
• Cost of Debt: Below median by 20% or more
• Fixed Rate Debt %: Above median by 10% or more
• Unsecured Debt %: ± 5% from median
• WADM: ± 10% from median
• Highest Debt Maturity within 5 Years: Above median by 20% or more; Falls in 2025
• Interest Coverage Ratio: Above median by 10% or more

Diversification Profile

• Top Geographical Contribution: Below median by 20% or more
• Top Property Contribution: Below median by 20% or more
• Top 5 Properties' Contribution: Below median by 20% or more
• Top Tenant Contribution: ± 10% from median
• Top 10 Tenants' Contribution: Below median by 20% or more

Key Financial Metrics

• Property Yield: ± 10% from median
• Management Fees over Operating Distributable Income: Below median by 20% or more; €14.71 distribution for every dollar paid 
• Operating Distributable Income on Capital: Above median by 10% or more
• Operating Distributable Income Margin: ± 10% from median
• Operating Distribution Proportion: Above median by 5% or more

DPU Breakdown

• Distributable Income Breakdown:
• 98.9% from Operation
• 1.1% from Proceeds from Divestment

Trends

*DPU and NAV per Unit are adjusted for the 5-to-1 consolidation.

• Uptrend: Committed Occupancy
• Flat: DPU from Operation
• Slight Downtrend: NAV per Unit
• Downtrend: Interest Coverage Ratio, Property Yield, Operating Distributable Income on Capital, Operating Distributable Income Margin

Relative Valuation

• Dividend Yield: Above +1SD for for 1y & 3y; Above +2SD for 5y
• P/NAV: Below -1SD for 1y & 3y; Below -2SD for 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low REIT Manager's Shareholding
Long WALE	Low Directors of REIT Manager's Shareholding
Well Spread Lease Expiry	Concentrated Debt Maturity
Long Weighted Average Land Lease Expiry	Interest Coverage Ratio Downtrend
Low Cost of Debt	Property Yield Downtrend
High Fixed Rate Debt %	Operating Distributable Income on Capital Downtrend
High Interest Coverage Ratio	Operating Distributable Income Margin Downtrend
Low Top Geographical Contribution
Low Top Property & Top 5 Properties' Contributions
Low Top 10 Tenants' Contribution
Competitive Management Fees
High Operating Distributable Income on Capital
High Operating Distribution Proportion
Committed Occupancy Uptrend

As compared to the previous quarter, gross revenue remains similar but NPI declined due to divestment of Piazza Affari 2 and higher property expenses. Nonetheless, distributable income and DPU increased YoY due to the release of a tax accrual. For debts, there is no debt maturity until November 2025. Together with the high fixed-rate debt proportion at 91%, the interest expense is expected to remain stable.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

To support my work, check out:

Patreon - Subscribe and get exclusive content

Investing Note - Support by following my Investing Note profile

X - Support by following my X account

Facebook Page - Support by liking my Facebook Page    

Facebook Group - REIT Investing Community - Join to share and discuss REITs

Telegram Channel - Singapore REITs Post - Join to receive posts for Singapore REITs

Buy Me a Coffee - Treat me a coffee for my efforts

*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.