Cromwell European REIT (CEREIT) has divested its Grade A office asset in Italy known as Affari for EUR93.6 million.

The sale consideration represents a gain of 14.6% when compared to the 2017 purchase price, and about EUR200,000 above the asset’s June 2023 valuation.

“The divestment marks the first major step in our previously stated strategy of divesting non-core and non-strategic assets over the next 2-3 years to recycle into our redevelopment and AEI programmes”, said Simon Garing, CEO of the REIT’s manager.

Related: Cromwell European REIT to embark on divestment spree for growth

Affari represents 3.7% of CEREIT’s property portfolio and it is the REIT's third largest office asset.

With the completion of the divestment, CEREIT’s portfolio is now effectively 50% weighted to the light industrial and logistics sector.

The divestment proceeds will also reduce the REIT’s aggregate leverage by 2.1% to 37.2% on a proforma basis as at 31 December 2022.

Furthermore, the REIT’s overall portfolio WALE would increase slightly from 4.47 years to 4.49 years, due to the asset’s relatively shorter WALE of 3.6 years, while CEREIT’s overall portfolio occupancy is expected to remain unchanged at around 96%.

CEREIT was last done on the Singapore Exchange at EUR1.56, which presently implies a distribution yield of 11.02% according to data on the Singapore REITs table.