SINGAPORE (Dec 20): Cromwell European REIT (CEREIT) is acquiring a portfolio of three light industrial and logistics assets in Germany for a purchase consideration of €38.0 million ($57.0 million), the group reported in a bourse filing on Friday. 

CEREIT has entered into an agreement with subsidiaries of machine construction company Felss Group GmbH on Dec 19 to acquire the assets under a sale and leaseback arrangement.

Felss Group specialises in cold forming for the automotive industry as well as the manufacturing of machines and components. 

According to the REIT’s manager, the consideration price is some 4% below the independent valuation and below estimated replacement costs.

The total cost of the acquisition is estimated to come in at €40.9 million, comprising the purchase price, an acquisition fee payable to the manager in cash, as well as professional and other fees and expenses related to the acquisition.

CEREIT says that the acquisition will be funded by drawing on its revolving credit facility. 

The portfolio spans cities of Pforzheim, Bretten and Königsbach-Stein, with the properties in close proximity to the state’s capital, Stuttgart. 

The three properties have a combined gross lettable area (GLA) of 29,734 sqm, including consisting of 19,016 sqm of warehouse space, 6,225 sqm of office space and 4,493 sqm of other spaces.

According to CEREIT, the properties will be fully let out to subsidiaries of Felss Group GmbH, for a term of 15 years. The lease agreements will be concluded on a triple-net basis with no break clause.

According to the REIT, the acquisition will increase its weighted average lease expiry (WALE) period to 4.7 years from the previous 4.6 years. The portfolio is also being acquired at a net operating income (NOI) yield of 6.2%, compared to the REIT’s current portfolio yield of just above 6.0%.

Following the acquisition, Germany will account for 7.4% of CEREIT’s portfolio, up from 5.7% as at end-September. 

CEO of CEREIT’s manager Simon Garing says, “The acquisition will increase CEREIT’s exposure to the attractive German property market and further demonstrates our on-the-ground teams’ ability to source assets with long leases and at attractive yields, funded by CEREIT’s current low all-in cost of debt of less than 1.5%.”

“Our focus is to continue exploring opportunities in Europe to create further value for and enhance distributions to unitholders by optimising CEREIT’s portfolio and responsibly managing its capital,” adds Garing. 

As at 12.11pm, units in Cromwell European REIT are trading 0.5 euro cent higher, or 1% up, at 53 euro cents.