The manager of Cromwell European REIT (CEREIT) has announced the acquisition of a freehold logistics asset in the UK for GBP10 million ($18.8 million) on August 4.
This marks the REIT’s first UK acquisition.
“We’ve been studying the UK market for some time and actively looking for accretive opportunities for CEREIT to make our entry, so I am pleased that we, as the manager of CEREIT, are able to deliver on our stated strategy in 2021,” says Simon Garing, the manager’s CEO.
The asset is a single-story logistics building located in Kingsland Grange Industrial Estate in Warrington, North West England. It has 9,764 square metres (sqm) of net lettable area and spans a site area of 20,438 sqm.
Originally constructed in 1980, it was recently refurbished this year ahead of the new lease. It has 86 parking spaces, dual-access loading with three dock-level and 14 floor-level loading doors and a manoeuvring area with 60 metres (m) yard depth.
The building is 100% occupied by home delivery specialist Panther Warehousing, with a weighted average lease expiry of 10 years till May 2031.
The purchase consideration of GBP10 million reflects a 3% discount to its independent valuation of GBP 10.3 million and a 32% discount to replacement cost.
Inclusive of fees payable to the manager, as well as professional and other fees and expenses in connection with the acquisition, the total cost amounts to approximately GBP10.8 million.
The acquisition is not expected to have any material effect on CEREIT’s net tangible assets
The acquisition will be fully funded by cash, with the asset being acquired at a net operating income (NOI) yield of 5.6%.
See also: Cromwell European REIT reports 9% dip in DPU for 1Q21
Following this acquisition, the weighting of the light industrial / logistics segment in CEREIT’s portfolio has increased to 39%, up from 38%. This is consistent with the manager’s stated investment strategy to rebalance CEREIT’s portfolio towards a 50% exposure to quality light industrial / logistics assets.
The acquisition also marks CEREIT’s entry into the post-Brexit UK market, and further diversifies CEREIT’s portfolio geographical exposure.
From a sustainability perspective, the asset has a ‘C’ Energy Performance Certificate rating and is expected to achieve a “Good” BREEAM rating in the near term, with further upgrades envisaged in the long term.
“We look forward to expanding our footprint in the UK, in line with the stated strategy. Cromwell Property Group’s experienced local, on-the-ground team has once again proven their local asset management capabilities and was instrumental in securing this deal amidst the highly-competitive property market in the UK,” Garing adds.
Units in CEREIT closed flat at EUR2.50 on August 3.
Photo: CEREIT
