Comparing Cromwell European REIT to other S-REITs with European assets

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REITs

By Beansprout • 06 Apr 2023 • 0 min read

We look at how the three Singapore REITs with all their assets located in Europe - Cromwell European REIT, IREIT Global and Elite Commercial REIT fare on our REIT investing checklist.

Cromwell European REIT vs IREIT vs Elite Commercial REIT

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What happened?

Many of you might already be familiar with S-REITs (S-REITs) such as CapitaLand Integrated Commercial Trust and Mapletree Pan Asia Commercial Trust with assets largely in Singapore.

However, there are a number of S-REITs with properties located outside of Singapore too. 

In fact, there are three REITs listed on SGX with all of their assets located in Europe - Cromwell European REIT (CEREIT), IREIT Global and Elite Commercial REIT (ECR). 

Cromwell European REIT is the largest of the three REITs with a market capitalization of more than S$1.2 billion as of 4th April 2023. 

Comparison of Cromwell European REIT with iREIT and Elite Commercial REIT

We shared Beansprout’s Singapore REIT investing checklist earlier, and highlighted that there are three key factors we will look at when evaluating a REIT, including the fundamental strength of the REIT, its financial strength, and valuation. 

Let’s take a closer look at how Cromwell European REIT compare against iREIT and Elite Commercial REIT on these metrics. 

Table

Description automatically generated#1 – Fundamental strength

Cromwell European REIT’s sponsor is Cromwell Property Group, a real estate investor and fund manager listed in Australia. 

Cromwell Property Group had a market capitalization of A$1.8 billion (S$1.61 billion) as at 31 December 2022. Its portfolio comprises more than 210 assets which are let to 2,300 tenants. 

Simon Garing, the CEO of Cromwell European REIT, has more than 25 years of experience in the global real estate industry. Prior to his appointment, he was the Chief Capital Officer of Cromwell Property Group. 

Cromwell Property Group owns approximately 27.9% stake in Cromwell European REIT. The stake owned by its sponsor is below what Tikehau Capital and City Developments own in IREIT Global, but above that owned by the sponsors of Elite Commercial REIT. 

 

Cromwell European REIT (CWBU.SI)

IREIT Global (UD1U.SI)

Elite Commercial REIT (MXNU.SI)

SponsorCromwell Property GroupTikehau Capital and City Developments LimitedElite Partners Holdings Pte. Ltd. and Ho Lee Group Pte. Ltd. and Sunway RE Capital Pte. Ltd.
% of REIT owned by sponsor27.9%49.8%7.7%
Source:  Latest company data

Cromwell European REIT has a portfolio of 113 office and light industrial/logistics assets in Europe. The logistics assets it owns give it exposure to the e-commerce market in Europe. On the other hand, IREIT and Elite Commercial REIT own predominantly office and retail assets. 

Cromwell European REIT has a diversified tenant mix, with its top 10 tenants representing just 30% of its net property income. Elite Commercial REIT’s tenant base comprises largely of the UK government, with leases signed directly with the Secretary of State. 

The occupancy rate of Cromwell European REIT reached a record high of 96.0% in the second half of 2022. This is significantly higher that the occupancy rate of IREIT Global, and slightly below the occupancy rate of Elite Commercial REIT. 

 Cromwell European REIT (CWBU.SI)

IREIT Global (UD1U.SI)

Elite Commercial REIT (MXNU.SI)

Exposure113 office and light industrial/logistics assets in Europe 37 office and retail assets in Europe155 office assets in the UK
Tenant mix – Top 10 tenants by net property income29.8%80%100%
Occupancy rate96.0%88.3%97.9%
Source: Latest company data

#2 – Financial strength

Cromwell European REIT has a gearing of 39.4% as of December 2022, below the regulatory limit of 50% and Elite Commercial REIT’s gearing of 45.8%. However, its gearing is higher than IREIT Global, which has a gearing of 32.0%.

The borrowings of Cromwell European REIT have a weighted average debt expiry of 2.9 years, and it has no material debt expiries until the fourth quarter of 2024. 

Its weighted average debt expiry is higher than Elite Commercial REIT but below that of IREIT Global.

 

Cromwell European REIT (CWBU.SI)

IREIT Global (UD1U.SI)

Elite Commercial REIT (MXNU.SI)

Gearing (Total debt/total assets)39.4%32.0%45.8%
Weighted Average Debt Expiry2.9 years3.5 years2.0 years
Source: Latest company data

#3 - Valuation 

Cromwell Euroepan REIT offers a dividend yield of 9.9%, above that of IREIT Global but below that of Elite Commercial REIT. 

It is trading at a price-to-net asset value of 0.58x as of 4th April 2023, comparable to the valuation of IREIT Global, but below that of Elite Commercial REIT.

As of 4th April 2023

Cromwell European REIT (CWBU.SI)

 

IREIT Global (UD1U.SI)

Elite Commercial REIT (MXNU.SI)

Price Eur 1.56S$0.505GBP 0.43
Market Capitalisation Eur 877 million (S$1.27 billion)SGD 584 millionGBP 200 million (S$332 million)
P/NAV0.580.600.67
Div yield9.9%7.7%11.3%
Source: Yahoo Finance as of 4th April 2023

What would Beansprout do? 

Cromwell European REIT is the largest SGX-listed REIT with 100% European portfolio. The REIT has a reputable sponsor listed in Australia which continues to own a significant stake in the REIT. 

Its portfolio of logistics and office assets in Europe has a good mix of tenants and a high occupancy of 96.0% in the second half of 2022. 

Cromwell European REIT’s debt level of 40% is moderate compared to other REITs. However, the debt expiry profile is staggered over approximately three years. 

Cromwell European REIT trades at a price-to-NAV of 0.6x, lower than its peers IREIT Global and Elite Commercial REIT. It offers a dividend yield of 9.9%. 

To find out more about Cromwell European REIT, read our interview with CEO Simon Garing here.

We hope the above analysis helps you understand how our REIT investing checklist can be used to evaluate REITs. If you are keen to learn more about how to select the best REIT for your portfolio, do check out our comprehensive guide to investing in REITs.  

Find analysing REITs too tedious? You can also consider getting exposure to REITs through a REIT ETF .

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