Cromwell European REIT Review @ 12 June 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): 115

Performance Highlight

Gross revenue, NPI and distributable income increased yoy mainly due to contribution from properties acquired in 2021 and higher rental income.

Rental Reversion

Rental reversion is at 4.2% for the overall portfolio.

Acquisition

In 1Q 2022, CEREIT acquired 2 properties in Italy and 1 in Germany.

Development

Development for building extension of Lovosice ONE Industrial Park I has commenced and is expected to be completed by 4Q 2023. For the Via Nervesa 21, strip-out works are almost completed.

Sensitivity to Interest Rate

CEREIT debt is 100% hedged until Oct 2022 and would become 77% hedged after that. Should the 3-month Euribor increase to 1% (1.45% increase from the current negative 0.45%), then the impact would be 2 million, around 2.1% of FY21 distributable income.

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 %: 100% 
• Unsecured debt %: Above median for more than 20%
• WADM: Above median for more than 10%
• 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%; €16.67 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.

• 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 +2SD 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
Long Weighted Average Land Lease Expiry	Concentrated Lease Expiry
Low Cost of Debt	Concentrated Debt Maturity
100% Fixed Rate Debt	DPU Downtrend
High Unsecured Debt	NAV per Unit Downtrend
Long WADM	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

The performance has improved slightly as compared to the previous quarter. From the presentation, the properties in Poland & Slovakia which share border with Ukraine represent 12% of CEREIT portfolio in terms of valuation, where the lease expiry of these properties for this year accounts for 1% of NLA. Another thing to note that is the EUR has depreciated against SGD by around 5% this year.

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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Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

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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 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.