The portfolio valuation for Cromwell European REIT (CEREIT) has dropped to EUR2.49 billion ($3.55 billion) for the FY2022 ended Dec 31, 2022, 1.6% lower compared to its valuation in June 2022.
The figure is based off the respective independent valuations carried out by CBRE and Savills Advisory Services Limited for the 112 properties in the REIT’s portfolio. It takes into account the benefit of valuation increases on properties under development in Italy and Czech Republic and excludes Sognevej 25 in Denmark, which was acquired in October 2022. Including Sognevej 25, the REIT’s total valuation would have stood at EUR2.50 billion over 113 properties.
During the period of review, the REIT’s properties in Denmark and France saw slight valuation increases of EUR12.2 million and EUR2.4 million respectively due to asset management enhancement initiatives and market rent growth. The Czech Republic portfolio valuation was higher due to the increase in value of properties under development.
That said, the REIT saw valuation declines in the Netherlands, which fell by EUR25.4 million and the UK, which fell by EUR16.6 million. Valuations in Germany, Italy and Poland were also lower by approximately EUR6 million - EUR7 million each, reflecting the higher capitalisation rates caused by the recent increase in interest rates.
According to the REIT manager, the impact on the REIT’s portfolio has been “relatively minor” despite the significant increase in global interest rates.
With the latest valuation, the REIT manager expects the REIT’s aggregate leverage as at Dec 31, 2022, to come in below 40%, remaining within the board’s loan-to-value (LTV) policy range of 35% to 40%. Its net asset value (NAV) will come in at around EUR2.42 per unit.
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These metrics will be confirmed at CEREIT’s results, which are expected to be released on Feb 24.
“It is pleasing to note that CEREIT continues to demonstrate both the resilience of the portfolio and quality of the asset management team, with only a slight reduction reflected in the December 2022 valuations,” says Simon Garing, CEO of the manager.
Units in CEREIT closed at EUR1.65 on Jan 30.