Cromwell European REIT Review @ 21 November 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): 114

Key Indicators

Performance Highlight

For 3Q, gross revenue and  NPI improved yoy mainly due to income from new acquisitions and higher occupancy in certain assets. Despite that, income available for distribution to unitholders remains similar probably due to offset by higher interest expenses.

 

Rental Reversion

Rental reversion for 3Q is at 6.8%.

Acquisition 

On 18 October, CEREIT acquired a property in Denmark.

Divestment

On 18 October as well, CEREIT divested 2 properties in Germany above their purchased price.

Development

Development for Via Nervesa 21 and Lovosice ONE Industrial Park I extension have commenced in 1H 2022. 

Sensitivity to Interest Rate

Should the 3-month Euribor rate maintain at an average of 2.2% for  2023, the DPU impact would be around 2.7%.

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 10%
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: ± 10% from median
• 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 20%

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: ± 10% from median
• 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

• Current 52 Weeks Range: 6.1%
• P/NAV: Below -2SD for 1y, 3y & 5y
• Dividend Yield: Above +2SD for 1y, 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 Interest Coverage Ratio	Interest Coverage Ratio Downtrend
Low Top Geographical Contribution	Property Yield Downtrend
Low Top Property & Top Properties Contributions	Distribution on Capital Downtrend
Low Top 10 Tenants Contribution	Distribution Margin Downtrend
Competitive Management Fees
Occupancy Uptrend

The performance is similar to the previous quarter. The occupancy has improved and rental reversion remains healthy, however, the distributable income could still be offset by higher interest expense, in which the all-in interest rate has increased from 1.72% to 2.28%. Moving forward, management expects to maintain the high occupancy level and would focus on asset recycling. 

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.