The manager of Cromwell European REIT (CEREIT) says the ongoing hostilities in Ukraine have “no direct impact” on its portfolio so far.
In a statement released on March 14, the manager of the REIT said that there were “no material issues arising from recent sanctions lists screenings, which were conducted in compliance with its regulatory obligations”.
“No CEREIT counterparties have been identified to be on any sanctions list,” adds the statement.
As at March 14, over 85% of CEREIT’s EUR2.5 billion ($3.71 billion) European portfolio is in western Europe, with about 10% in Poland and 2% in Slovakia, the two countries that share borders with Ukraine. To date, only 2% of the REIT’s leases in Poland and Slovakia are expiring in the near term.
According to the REIT manager, the majority of its tenants in Poland and Slovakia are multinational companies that include European banks, global pharmaceutical companies, as well as technology companies.
The REIT has around 50 tenants in Poland and 10 in Slovakia out of the over 800 tenants in its portfolio.
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Amongst the tenants in Poland, the manager has identified eight that have some business exposure to Russia. It is still assessing any impact on their business, says the manager.
Of the tenants in Poland, the REIT has one that imports coal mined by a Russian company. The tenant is domiciled in Switzerland and occupies 400 sqm of space within the REIT’s portfolio of 1.8 million sqm.
In addition, about 95% of the REIT’s leases are “net”, whereby tenants on such leases bear their own utility costs.
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Hence, there will be no material impact on the REIT from the current rise in energy prices. The ongoing refugee crisis is also not expected to disrupt rent collection.
Looking ahead, the manager says it expects energy prices and agricultural commodity prices, as well as consumer prices to remain elevated in the near term. Business activities such as real estate transactions, travel and tourism are also likely to slow down for the time being.
“Manpower shortage is expected to come into focus, as Ukraine supplies a large part of the migrant workforce in Europe. In the Czech Republic and Slovakia, many businesses that employ Ukrainian citizens have begun to report associated resourcing issues, as Ukrainian men are mobilised for military service,” says the REIT manager.
Units in CEREIT closed at EUR2.24 on March 11.
Photo: CEREIT
