SINGAPORE (Nov 29): Cromwell European REIT (CEREIT) has completed the acquisition of a freehold office property in Italy for a total cost of 18.5 million euros ($27.8 million).

The acquisition is part of its strategy of recycling capital by selling non-core assets and reinvesting them in higher-yielding assets to benefit unitholders, says CEREIT's manager.

Built in 1982, the recently renovated building is located in the Colleoni Business Park in Agrate Brianza, about a 30-minute drive north-east of Milan.

The property has three main tenants, contributing to just over 50% of the total income of the property. The office building is almost fully let, and the weighted average unexpired lease term to first expiry is about 4.8 years as at Thursday.

The total cost includes the purchase price of 17.7 million euros as well as 0.8 million euros in acquisition fees payable to CEREIT's manager, and professional and other fees linked to the transaction.

CEREIT's manager says the purchase price was based on independent valuation of the property and also takes into account the amount required for capital expenditure works on the property and outstanding incentives to be funded by the vendor.

The building is made up of three adjoining blocks interconnected at various floors. It has eight storeys above ground and one basement level. Its weighted lettable area -- excluding carpark spaces -- is 11,500 sq m.

Apart from the 182 parking spaces, the property's tenants also have access to a public shuttle service provided specifically for the business centre. The building is about 1.5 kilometres (km) from the A51 Ring Road of Milan and 3 km from the A4 motorway.

CEREIT will fund the total cost from available cash, most of which will come from the net proceeds of 19 million euros from the recent sale of the Parc d'Osny property in France.

As at 4.27pm, units in CEREIT are trading at 52 euro cents.