Cromwell European REIT to buy six offices for $378.18m

The properties in France and Poland have a combined LGA spanning 110,348 sqm.

Cromwell European real estate investment trust (CEREIT) has entered into agreements to acquire three freehold properties in France and three other freehold properties in Poland for $378.18m (EUR246.9m), an announcement revealed.

The properties in France comprise three offices located in or near major business districts, such as Ivry-sur-Seine, La Défense, and Charles de Gaulle Étoile. In aggregate, they have a net lettable floor area (LFA) of 33,786 sqm and a 95.9% occupancy rate as at 31 May, as well as a 5.2-year weighted average lease expiry profile (WALE). Its key tenants include Accenture, Interforum, and Regus.

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Meanwhile, the Poland properties comprise two offices in Kraków, the second-largest city in Poland and an office property in Poznań. The Kraków sites have an aggregate LFA spanning 34,295 sqm and a 100% occupancy rate as at 1 March, as well as a 6.1-year WALE.

Their key tenants include BGŻ BNP Paribas, Motorola Solutions Systems, and UBS Kraków. The Poznań property has an aggregate LFA spanning 42,267 sqm and a 100% occupancy rate, with key tenants including CapGemini, GSK, MAN Group, and Santander Group.

Collectively, the new properties, which have a combined LGA spanning 110,348 sqm, are valued at $380.02m (EUR248.1m) in aggregate, and the agreed price tag of $378.18m (EUR246.9m) translates to $3,427.97 (EUR2,238) per sqm, well below their estimated replacement cost.

Also read: Cromwell E-REIT acquires 23 properties in Europe for $603.62m

According to Cromwell EREIT Management’s CEO Simon Garing, the acquisitions are expected to be DPU-accretive and to strengthen CEREIT’s portfolio. The acquisitions are expected to be DPU-accretive on a pro forma basis, increasing CEREIT’s 12-month DPU for FY 2018 by 6.5% from $0.057 (EUR0.0375) to $0.061 (EUR0.0399).

“The acquisitions mark our entry into the office property market in Greater Paris, a tier-1 European capital city. They also increase our exposure to Poland, which has an economy that has outperformed the Eurozone average as well as an office property market with robust fundamentals and a favourable outlook. In addition, they will enhance the portfolio’s geographical, tenant, and tenant trade sector diversity, providing CEREIT with greater resilience,” he said.

In a separate filing, Cromwell EREIT Management announced the proposed private placement of 217.39 million new units in CEREIT at an issue price of between $0.70 and $0.72 (EUR0.460-0.470) apiece to raise gross proceeds of no less than $153.17m (EUR100m). Of these proceeds, approximately $140.46m (EUR91.7m) will be used to partially fund the six property acquisitions, and $12.71m (EUR8.3m) will be used to pay estimated fees and expenses incurred by CEREIT in connection with the acquisition.

The acquisitions will result in the size and value of properties in the portfolio increasing from 97 properties with an appraised value of approximately $2.76b (EUR1.8b) to 103 properties with an appraised value of approximately $3.06b (EUR2b), with office properties accounting for 62.1% of the portfolio’s value.