SINGAPORE (May 12): The manager of Cromwell European REIT (CEREIT) is declaring a distribution per unit (DPU) of 0.91 Euro cents (1.39 Singapore cents) for 1Q2020 ended March, with base management and property management fees paid fully in cash.
Income available for distribution amounted to €25.8 million, up 15.3% y-o-y.
CEREIT was not particularly affected by the Covid-19 containment measures in Europe. While the lockdown of northern Italy impacted a number of CEREIT’s tenants, in particular the Starhotels Grand Milan in Saronno and the UCI cinema-anchored property in Lissone (near Milan), CEREIT’s gross revenue and net property income (NPI) rose 21.4% and 17.2% y-o-y to €48.5 million and €31.0 million respectively. The increases are largely contributed by the 14 new properties acquired over the past year, and partially offset by the 13 properties that were divested between October 2019 and March 2020.
During the quarter, the manager signed 24,361 sqm of net lettable area (NLA) in new leases, and achieved a 12.1% increase in average rent reversion rate, led by leases for light industrial and logistics space.
To further boost CEREIT’s cash levels, the manager fully drew down its €150 million revolving credit facility in mid-March. A portion of this has been earmarked for the refinancing of existing debt, if required, as a "safety first" move even though CEREIT does not have any debt maturing until the second half of 2021.
CEREIT currently holds €229 million of cash in total and has a 34.5% net gearing level as at March 31.
“CEREIT remains well within market-standard debt covenants and enjoys good relationships with many key banks across Asia and Europe, underpinned by the successful track record of both the REIT and its sponsor,” says Simon Garing, CEO of the manager.
“In line with the heightened priority on preserving cash during these unprecedented times, we have reduced non-essential capital expenditure and have rolled over some projects to 2021. We continue to explore non-core asset sales in order to recycle capital into strategic growth opportunities while we carry on planning asset enhancement initiatives to further strengthen the portfolio over the medium term,” he adds.
As at March 31, CEREIT’s average occupancy rate stands at 94.7%, with a weighted average lease expiry (WALE) profile of 4.5 years.
“The dramatic impact of COVID-19 on the global economy will linger for a long time. As is the case with all sectors of the economy, this may have an impact on CEREIT’s earnings in 2020,” notes Garing.
“Nonetheless, as evidenced by CEREIT’s operations and outstanding performance in 1Q 2020, its diversified portfolio has been designed for resilience, with the logistics assets providing access to the growing e-commerce economy, while the office assets provide longer leases to largely government and multinational tenant-customers. We remain very optimistic about CEREIT’s long-term value proposition,” he concludes.
As at 9.39am, units at Cromwell European REIT are trading 0.5 cents lower, or 1.3% down, at 39 Euro cents.
