Updated: Jan 11, 2020
After the recent disposal of 12 properties, Cromwell European REIT is acquiring three light industrial assets in Germany from Felss Group. The acquisition comes under a sale and leaseback agreement for $38m Euro, which is 4% discount to the market valuation.
Background of the properties
The three assets have a gross lettable area of 29,734 sqm (19,016 sqm warehouse space, 6,225 sqm office space, 4,493 sqm other space). The assets are located in Germany's third-largest state, Baden-Wurttemberg, which is the hub to global companies such as Bosch, Porsche and SAP.
Structure of the leases
The assets come with a 15-year triple-net, which means that the tenant is responsible for all required capital expenditure works, including structural ones, throughout the tenancy. Besides, the tenant is also providing a 12-month rental security deposit.
With the long leases, Cromwell European REIT's overall weighted average lease-to-expiry (WALE) will marginally rise to from 4.6 years to 4.7 years. It also increases the REITs' AUM in Germany to 7.4% AUM.
The assets are expected to deliver net operating income yield of 6.2%, .relative to its current portfolio yield of 6%.
The REIT has been actively rebalancing its portfolio through offloading ageing asset and acquiring the yield-accretive one. The REIT is currently trading at 7.7% yield.