SINGAPORE (June 21): The manager of Cromwell European REIT (CEREIT) is acquiring six freehold properties -- three in France and Poland each -- for a total of €246.9 million ($378 million) or €2,238 per sqm.
The French properties comprise three mainly office properties located in or near the major business districts of Ivry-sur-Seine, La Défense and Charles de Gaulle Étoile.
Meanwhile, the Polish properties comprise two predominantly office properties in Kraków and an office property in Poznań.
Valued at €248.1 million in total, all six properties have an aggregate LFA (lettable floor area) spanning 110,348 sqm, an occupancy rate of 98.7% and 4.8-year WALE as at March 31.
The properties are being acquired at a net initial yield of 7.4%, compared to the net initial yield of 5.8% for CEREIT’s existing assets.
Following completion of the acquisitions, CEREIT’s portfolio will have 103 properties valued at about €2 billion, with office properties accounting for 62.1% of the portfolio’s value.
Cromwell EREIT Management says it intends to fund the acquisitions via the issuance of new CEREIT units under a private placement as well as through loans drawn from new debt facilities.
The private placement will sell about 217.4 million new units in CEREIT to institutional and other investors at between €0.46 and €0.47 each to raise gross proceeds of no less than €100 million.
However, the size of the placement may be raised to secure additional gross proceeds of up to €50 million.
The issue price range of €0.46 and €0.47 per new unit represents a discount of between 3.8% and 5.9% to the adjusted volume weighted average price (VWAP) of €0.4886 (for CEREIT listed in €) as at Thursday's close; and 7.7% and 9.6% to the VWAP of €0.5091 (for CEREIT listed in $) as at Thursday's close.
Of the €100 million raised from the placement, about €91.7 million will be used to partially fund the acquisitions while the rest of the €8.3 million will be used to pay fees and expenses related to the acquisitions and private placement.
Any balance of gross proceeds from the placement will be used for general corporate and/or working capital purposes.
Simon Garing, CEO of Cromwell EREIT Management, says, “Capitalising on the low interest rate environment in Europe as well as the sponsor’s pipeline sourcing and execution capabilities, we have successfully negotiated deals to buy the new properties below replacement costs and at attractive yields. The acquisitions mark our entry into the office property market in Greater Paris, a Tier-1 European capital city. They also increase our exposure to Poland, which has an economy that has outperformed the Eurozone average as well as an office property market with robust fundamentals and a favourable outlook. In addition, they will enhance the portfolio’s geographical, tenant, and tenant trade sector diversity, providing CEREIT with greater resilience.”
As at 11.21am, units in CEREIT are trading at 50.5 EU cents.
