Cromwell E-Reit says Ukraine war has 'no direct impact' on its property portfolio
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A building owned by Cromwell E-Reit in the Netherlands on Jan 5, 2022.
PHOTO: CROMWELL EUROPEAN REIT
Janice Lim
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SINGAPORE (THE BUSINESS TIMES) - Cromwell European Real Estate Investment Trust (Cromwell E-Reit) said in a filing on the Singapore Exchange on Monday (March 14) that the ongoing war between Ukraine and Russia has "no direct impact" on its portfolio.
The Reit has more than 85 per cent of its €2.5 billion (S$3.7 billion) European portfolio in Western Europe.
About 10 per cent of its portfolio is in Poland and 2 per cent in Slovakia, and only 2 per cent of leases in both countries are expiring in the near term, said the company. These two European countries share a border with Ukraine.
The manager of Cromwell E-Reit also said that it has not identified any material issues arising from recent sanctions list screenings, which were conducted in compliance with its regulatory obligations and as part of its ordinary course of business.
No counterparties of the Reit have been identified to be on any sanctions list.
However, the filing noted that there is "limited immediate impact" on Cromwell E-Reit's business operations.
Out of more than 800 tenants and customers across its portfolio, about 50 are in Poland and 10 in Slovakia. Among those in Poland, the management has identified eight that have some business exposure to Russia, while one imports coal mined by a Russian company.
The Reit noted that this tenant is based in Switzerland and occupies only 400 sq m of space out of 1.8 million sq m in its portfolio.
"Accordingly, Cromwell E-Reit has limited exposure to tenant-customers with business exposure to Russia," said the company.
The current rise in energy prices would have no impact on the company as 95 per cent of its tenants bear their own utility costs. The ongoing refugee crisis is also not expected to disrupt rent collection.
Cromwell E-Reit expects energy prices and agricultural commodity prices to remain elevated in the near term, which would mean consumer prices would also be higher.
Business activities such as real estate transactions, travel and tourism are likely to slow down in the short term, and there will likely be a shortage of manpower as Ukraine supplies a large part of the migrant workforce in Europe.
Units of Cromwell E-Reit closed up five cents, or 2.3 per cent, at $2.24 on Friday.
