RHB Bank Singapore analyst Vijay Natarajan has kept his “buy” call and target price of EUR2.05 ($3) on Cromwell European REIT. Natarajan’s report dated May 27 comes after the REIT announced that its sponsor, Cromwell Property Group, sold its entire stake to the Stoneweg Group.
The consideration for Cromwell Property Group’s 27.79% stake was EUR280 million, or EUR1.52 per share, which is at a 7% premium to the REIT’s three-month volume-weighted average price (VWAP). Stoneweg is a Swiss headquartered real estate manager and advisory group that was established in 2015.
“The move does not come as a surprise to us and is mainly on the back of Cromwell’s plan to lighten its balance sheet and focus on the core Australian real estate market. The sale was done via a bidding process with Stoneweg emerging as the winner among several bidders. The transaction is subject to regulatory approvals and is expected to be completed by 3Q2024,” writes Natarajan.
To the analyst, the change of sponsor should have “minimal impact” to the REIT’s strategy and operations. In addition, the stake, which was acquired at a premium to the REIT’s current traded price, indicates that Stoneweg sees “good value” in the REIT.
“We expect Cromwell European REIT to continue its deleveraging and asset enhancement strategy, with a pivot towards the logistics and industrial sector, and see tailwinds to its share price from interest rate cuts in 2H,” says Natarajan.
He adds that the REIT is expected to achieve its stated EUR400 million divestment plans by next year. Since 2022, Cromwell European REIT has divested 11 assets for EUR262 million, at a blended 14% premium to valuation. Another EUR60 million of assets are currently in advanced stages, the analyst notes.
As at 3.59pm, units in Cromwell European REIT are trading 2 Euro cents lower or 1.38% down at EUR1.43. In its SGD counter, the REIT is also trading 2 cents lower or 0.94% down at $2.11.
