SINGAPORE (May 13): The manager of Cromwell European REIT (CEREIT) is declaring a 1.02 Euro cents distribution per unit (DPU) for 1Q19, exceeding the IPO forecast by 5.2% and 6.3% higher over the DPU in the previous corresponding period.
Income available for distribution to unitholders amounted to €22.4 million ($34.3 million), 32.3% above the €16.9 million IPO forecast and 36.9% more than the €16.4 million recorded in 1Q18.
Gross revenue and net property income (NPI) surged 31.7% and 33.8% y-o-y to €40.0 million and €26.4 million respectively. These also represented a 28.7% and 29.6% outperformance compared to their respective IPO forecasts.
The increases were mainly attributable to contributions from 23 properties that were acquired after CEREIT’s listing, with the acquisitions of 22 of them only completed between December 2018 and February 2019.
Simon Garing, CEO of Cromwell EREIT Management, says, “The income uplift attests to the accretion from the recent acquisitions and CEREIT’s enhanced ability to deliver stable and sustainable distribution growth. CEREIT has benefitted from access to the growing Finnish and Polish economies, with the new Finnish office properties contributing a maiden full quarter to earnings and the new Polish assets contributing from February 2019. We also achieved better leasing outcomes for the light industrial / logistics assets in France and the Netherlands.”
During the quarter, the manager signed 53 new leases spanning 25,043 sqm.
As at March 31, CEREIT’s portfolio has a 90.2% occupancy rate and a 4.7-year weighted average lease expiry (WALE) profile.
CEREIT’s aggregate leverage rose from 33.0% as at Dec 31 2018 to 37.0% as at end March, largely due to loans drawn to partially finance CEREIT’s recent acquisitions.
Over the same period, CEREIT’s interest coverage ratio5 has risen from 8.9 times to 9.2 times.
Following the manager’s execution of additional hedging instruments in February 2019 to mitigate exposure to market volatility, the REIT’s debt is now 86.0% hedged as at March 31, up from 71.2% as at Dec 31 2018; and its borrowings have a 2.7-year weighted average term to maturity. The manager is in advanced stages of refinancing the November 2020 debt to take advantage of attractive bond yields.
In its outlook statement, Cromwell EREIT Management says the Eurozone is expected to see GDP growth of 1.3% in 2019, as economic activity stabilises. Most European economies look poised to withstand headwinds due to tightening labour markets and with real wage growth boosting consumer spending. Contained inflation and low interest rates should provide some relief as well.
Garing adds, “Looking ahead, I am confident that CEREIT is well-positioned to take advantage of accretive acquisition opportunities in Europe with attractive yield / debt spreads, while divesting non-core assets.”
Units in Cromwell European REIT closed 1 cent higher on Friday at 50 Euro cents.
