Cromwell E-Reit to acquire logistics park in Italy for $84.2 million

SINGAPORE (THE BUSINESS TIMES) - Cromwell European Real Estate Investment Trust (Cromwell E-Reit) has entered into an agreement via a wholly-owned vehicle to acquire a logistics park in Italy for 52.6 million euros (S$84.2 million).

The freehold intermodal logistics park with 156,888 square metres (sq m) of net lettable area (NLA) will add around 10 per cent to Cromwell E-Reit's overall portfolio NLA, the manager of Cromwell E-Reit said in an exchange filing on Wednesday morning (Nov 25).

"The logistics park is expected to generate stable and recurring cash flows with scope for further rental upside and will increase Cromwell E-Reit's exposure to the resilient logistics sector, which is consistent with our stated purpose of delivering long-term distribution and net asset value per unit growth to unitholders," Simon Garing, chief executive officer of the Reit's manager said. He added that the asset has a net operating income yield of 7.4 per cent.

The acquisition price of 52.6 million euros is around 3.5 per cent below the independent valuation of 54.5 million euros as at Nov 13, 2020, and around 33 per cent below its estimated replacement cost.

The Reit manager said the total cost of the acquisition is estimated to be around 55.1 million euros, comprising the acquisition price as well as other fees and expenses. The total cost of the acquisition is expected to be funded from available cash reserves and/or committed undrawn debt facilities.

The acquisition is expected to be completed in December 2020, once certain customary conditions are satisfied, the manager added.

The logistics park is located in Monteprandone, a municipality in central Italy along the eastern Italian coast. It has nine warehouses, an office building and a canteen. Around 18,000 sq m of its NLA is used for cold storage, which commands significantly higher rental rates than space used for general warehousing purposes, the Reit manager said.

It also includes a railway with four tracks, each about one-kilometre long, with direct loading platforms and a freight terminal connected to national railway services.

The logistics park is over 99 per cent leased to a tenant-customer base comprising 24 different occupiers, with four major ones being Spinservice and its parent brand Eurospin, Tod's, and White Solution.

The acquisition will increase the weighting of the light industrial and logistics segment in Cromwell E-Reit's portfolio to 32.3 per cent, up from 30.6 per cent, based on portfolio value, as at Sept 30, 2020. The Reit manager said this is consistent with its strategy of rebalancing the portfolio more evenly between the office and light industrial and logistics sectors.

Units of Cromwell E-Reit closed at 47.5 euro cents on Tuesday, up 0.5 cent or 1.1 per cent.

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