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Wednesday, May 12, 2021

Cromwell European REIT Review @ 12 May 2021

Basic Profile & Key Statistics

Cromwell European REIT (CEREIT) is a diversified REIT that invests mainly in office, industrial and logistics sectors. CEREIT owns 107 properties across 9 countries.

Performance Highlight

Gross revenue and NPI decreased YoY by 0.1% and 0.4% respectively. Distributable income and DPU decreased YoY by 6.5% and 9.1% respectively mainly due to higher income expenses and higher trust expenses.
Rent reversion is at a negative 1.3% for the overall portfolio. 
CEREIT has completed the acquisition of 11 assets in the Czech Republic and Slovakia on 12 March 2021.

Related Parties Shareholding

  • REIT sponsor's shareholding is moderate at 28.06%
  • REIT manager's shareholding is low at 0.41%
  • Directors of REIT manager's shareholding is low at 0.02%

Lease Profile

  • Occupancy is moderate at 94.6%
  • WALE is long at 4.8 years
  • Highest lease expiry within 5 years is high at 59.6% which falls in 2025 and beyond, without breakdown
  • Weighted average land lease expiry is long at 94.59 years

Debt Profile

  • Gearing ratio is moderate at 38.5%
  • Cost of debt is low at 1.72%
  • All debts are fixed-rate debts
  • Unsecured debt % is high at 91.1%
  • WADM is long at 4 years
  • Highest debt maturity within 5 years is high at 53.9% which falls in 2025
  • Interest coverage ratio is high at 6 times

Diversification Profile

  • Top geographical contribution is low  at 8.4%
  • Top property contribution is low  at 7.8%
  • Top 5 properties contribution is low  at 28.9%
  • Top tenant contribution is high at 12.9% 
  • Top 10 tenants contribution is slightly low at 33.1% 
  • Top 3 countries contribution is from Netherlands, Italy and France which contribute more than 65% of GRI

Key Financial Metrics

  • Property yield is slightly high at 5.4% 
  • Management fees over distribution is low at 6% in which unitholders receive 16.67 for every dollar paid 
  • Distribution on capital is high at 4%
  • Distribution margin is moderate at 45.4%
  • 3.2% of latest 4 quarters DPU is from distribution from asset disposal

Trends

  • Flat - Interest Coverage Ratio
  • Downtrend - DPU, NAV per Unit, Property Yield, Distribution on Capital, Distribution Margin
DPU and NAV per Unit are adjusted for the 5 to 1 consolidation.

Relative Valuation

  • Dividend Yield - Latest 4 quarters DPU @ 17.025 cents / average yield @ 8.07% =  2.11
  • Price/NAV - NAV @  2.44 x average P/NAV @ 0.95=  2.32

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


Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Manager's Shareholding
Long WALEDirectors of REIT Manager's Shareholding
Long Weighted Average Land Lease ExpiryConcentrated Debt Maturity
Low Cost of DebtHigh Top Tenant Contribution
100% Fixed Rate DebtDPU Downtrend
High Unsecured Debt %NAV per Unit Downtrend
Long WADMProperty Yield Downtrend
High Interest Coverage RatioDistribution on Capital Downtrend
Low Top Geographical ContributionDistribution Margin Downtrend
Low Top Property & Top 5 Properties Contributions 
Competitive Management Fees 
High Distribution on Capital

CEREIT fundamentals remain healthy despite the COVID-19 restriction/partial lockdown around Europe. Moving forward, the 11 new properties should improve CEREIT performance in the coming quarters. Do note that the 5 to 1 unit consolidation exercise is completed, the new trading codes are CWBU for EUR and CWCU for SGD.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*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 as a result of 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.

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