Cromwell European REIT's Runcorn asset in the UK. (Cromwell European REIT)Cromwell European REIT's Runcorn asset in the UK. (Cromwell European REIT)

Cromwell European REIT (CEREIT) announced on 7 July that it has acquired a UK logistics asset for EUR22.1 million (SGD31.8 million).

The acquisition consideration for the asset, which is known as The Cube at Whitehouse Industrial Estate, Preston Brook, UK, is 14.7% below independent valuation.

The asset is 100% let on a 10-year triple net lease to a UK national 3PL Kammac Ltd.

“Our experienced, on-the-ground team sourced and secured the investment at a very competitive yield for this type of property in the UK market, approximately 14.74% below independent valuation and more than 30% below replacement cost”, said Simon Garing, CEO of CEREIT’s manager.

“The asset is located in a well-established logistics hub where demand is outstripping supply with vacancy a low 3.1%, complements CEREIT’s portfolio well on a risk-adjusted basis and further builds up scale in the UK”, he added.

The asset has a gross lettable area of 14,120 square metres, only 9% of which are office spaces.

It has a purpose-built distribution facility for modern logistics, 13 loading doors and a significant canopy area.

The acquisition was funded by a combination of CEREIT’s existing cash balances and drawing down from CEREIT’s revolving credit facility.

Additionally, CEREIT announced on the same day that it has divested the Opus 1 office asset in Finland for EUR16.2 million.

With these transactions, CEREIT’s exposure to light industrial and logistics properties has increased to about 44%, while its portfolio allocation to the Finnish office market is effectively reduced to 3.6% from 4.4%.

CEREIT was last done on the Singapore Exchange at EUR1.97, which presently implies a distribution yield of 8.61% according to data on the Singapore REITs table.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.