Cromwell Property Group’s (Cromwell) wholly-owned subsidiary, Cromwell EREIT Management Pte. Ltd., the manager (Manager) of Cromwell European Real Estate Investment Trust (CEREIT), celebrated CEREIT’s second anniversary by striking the ceremonial gong and opening the Singapore Stock Exchange Ltd (SGX-ST) market on Friday 6 December 2019.
As the first Euro-denominated REIT on the SGX-ST and the largest REIT IPO in Asia since 2013 by market capitalisation at the time of listing, the successful IPO of CEREIT in late-2017 was an innovative and transformative deal.
Given the unprecedented and complex nature of the listing, Cromwell, CEREIT’s sponsor, persevered with the IPO and CEREIT was successfully launched upon its second attempt. Gross proceeds of €865.7 million were raised and Cromwell’s interest of 35.8% was valued at approximately €310 million at the time.
The initial portfolio of 74 properties in five European countries, with a value of €1.4 billion, has subsequently increased to 103 properties across seven European countries as at present date, and is valued at above €2 billion, representing over a 50% increase in portfolio size since IPO.
More recently, CEREIT’s hugely successful two-year run has been bolstered by strong Q3 2019 results. Gross revenue and net property income soared 34.8% and 33.2% year-on-year to €126.2 million and €82.6 million, respectively. These figures also represent a 33.0% and 31.3% outperformance compared to the respective IPO forecasts.
CEREIT’s Chief Executive Officer, Simon Garing, commented, “Two years ago, almost to the day, we made a commitment to unitholders to deliver regular and stable distributions and achieve long-term distribution per unit and net asset value growth from a pan-European portfolio. We are pleased to have delivered our seventh consecutive reporting period of exceeding IPO forecasts.”
Cromwell’s Chief Investment Officer, Rob Percy, discussed CEREIT, which connects Asian capital to European real estate, celebrating its second birthday.
“CEREIT was the first example of our ‘Invest to Manage’ strategy, which involves investing balance sheet capital to create new funds to attract investment from capital partners, enabling us to release and redeploy capital into other opportunities to build enterprise value.
“This has been a very successful venture for both Cromwell and CEREIT securityholders, and a strategy that other managers - Lendlease being the most recent - are starting to follow,” he concluded.
Cromwell’s current interest of 31% has increased by more than €100 million in value since the IPO and is currently worth €410 million (A$665 million) based on the share price of €0.53 as at 6 December 2019. At its Q3 results announcement on 12 November 2019, CEREIT stated it expected to exceed its IPO prospectus FY19 DPU forecast of 4.02 cents per unit, which at the current price, implies at least a 7.6% annualised distribution yield to securityholders.