Cromwell European REIT (SGX: CNNU) is a real estate investment trust (REIT) focusing on income-producing real estate assets in Europe that are mainly used for office, light industrial / logistics, and retail purposes. It currently has properties across various countries including Denmark, France, Germany and others.
There are two things to know about the REIT right now: its latest financial performance and valuation.
Here is a table showing important items from Cromwell European REIT’s financial performance for the first half of financial year ending 31 December 2019.
Source: Cromwell European REIT Results Presentation
The latest result was better than the REIT’s performance last year, as well as its IPO forecast. The strong result was mainly due to contributions from 22 new properties acquired in late 2018 and early this year.
Simon Garing, Chief Executive Officer of Cromwell European REIT’s manager, commented:
“CEREIT reaped the benefits of having an enlarged income base following the addition of 22 properties to its portfolio between December 2018 and February 2019, as well as from securing new tenant-customers earlier this year. Importantly, the acquisitions increased earnings not only on an aggregate level, but on a DPU level too. We also recorded positive rental reversions on average, fuelled primarily by the light industrial / logistics properties in the portfolio. This validates the efficacy of our barbell approach, whereby the security that CEREIT’s office assets provide is balanced with the growth potential of its light industrial / logistics assets, especially from last-mile e-commerce urban warehouse tenant-customers.”
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio and the distribution yield.
The table below shows Cromwell European REITs’ PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 42 REITs that are in Singapore’s stock market.
Source: Yahoo Finance, OCBC Weekly S-REITs Tracker
We can see that Cromwell European REIT’s valuation is lower than the market average due to its high distribution yield and low PB ratio.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.