Cromwell European REIT Review @ 30 August 2022

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 development/associate/fund): 116

Key Indicators

Performance Highlight

Gross revenue, NPI, income available for distribution and DPU improved yoy mainly due to income from new acquisitions in the Czech Republic, Slovakia, Italy, the United Kingdom, the Netherlands and Germany, partially offset by the loss of income from Via Nervesa 21 located in Italy due to redevelopment.  Income available for distribution to Unitholders and DPU included €1.1 million ( €0.197 cents) from divestment gain.

Rental Reversion

Rental reversion for 1H is at 2.9%.

Acquisition & Divestment

In 1H, CEREIT acquired 4 properties in Italy, Germany and U.K. For the same period, CEREIT divested an office asset in Finland and a warehouse unit contained within the CLOM logistics asset in Italy.

Development

Development for Via Nervesa 21 and Lovosice ONE Industrial Park I extension have commenced. 

Sensitivity to Interest Rate

After 11 August 2022, the DPU would be impacted by 0.7 cents, which is around 4.3%. Should 3-month Euribor increase by 0.7%, the DPU impact would be 0.4 cents, around 2.2%.

Related Parties Shareholding

• REIT sponsor's shareholding: ± 10% from median
• REIT manager's shareholding: Below median for more than 20%
• Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE: Above median for more than 10%
• Highest lease expiry within 5 years: Above median for more than 20%; Falls in 2025
• Weighted average land lease expiry: Above median for more than 20%

Debt Profile

• Gearing ratio: ± 10% from median
• Gearing ratio including perps: ± 10% from median
• Cost of debt: Below median for more than 20%
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: Above median for more than 10%
• WADM: ± 10% from median
• Highest debt maturity within 5 years: Above median for more than 20%; Falls in 2025
• Interest coverage ratio: Above median for more than 20%

Diversification Profile

• Top geographical contribution: Below median for more than 20%
• Top property contribution: Below median for more than 20%
• Top 5 properties' contribution: Below median for more than 20%
• Top tenant contribution: ± 10% from median
• Top 10 tenants' contribution: Below median for more than 10%

Key Financial Metrics

• Property yield: ± 10% from median
• Management fees over distribution: Below median for more than 20%; €16.39 distribution for every dollar paid 
• Distribution on capital: Above median for more than 10%
• Distribution margin: ± 10% from median

Trends

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

• Uptrend: Occupancy
• Downtrend: DPU, NAV per Unit, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

• P/NAV: Below -1SD for 1y, 3y & 5y
• Dividend Yield: Above +1SD for 1y; Above average for 3y & 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	DPU Downtrend
Low Cost of Debt	NAV per Unit Downtrend
High Unsecured Debt %	Interest Coverage Ratio Downtrend
High Interest Coverage Ratio	Property Yield Downtrend
Low Top Geographical Contribution	Distribution on Capital Downtrend
Low Top Property & Top 5 Properties Contributions	Distribution Margin Downtrend
Low Top 10 Tenants Contribution
Competitive Management Fees
High Distribution on Capital
Occupancy Uptrend

Performance is improved as compared to the previous quarter mainly due to acquisition in 1H. One thing to note would be the EUR is weakening against SGD by around 9.5% ytd.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage due to the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.