Cromwell European Reit

Cromwell European Reit | Buy

Target price: 0.63 euro

April 10 close: 0.595 euro

DBS Group Research, April 10

CROMWELL European Real Estate Investment Trust (CERT) is the first Singapore-listed Pan-European real estate investment trust (Reit) with a diversified portfolio of office, light industrial/logistics and retail properties.

With an improving European economy, it is well-positioned to benefit from an uplift in rents. In addition, with European property yield spreads being above the historical 10-year average, it is poised to gain from increases in property values.

With a weighted average lease expiry (WALE) of 4.9 years, CERT offers strong income visibility. With the majority of leases also linked to inflation or similar indices, the CERT has an inbuilt organic growth profile.

Backed by Cromwell Property Group (CPG), CERT has the requisite support to identify DPU (distribution per income) accretive acquisitions.

We initiate coverage with a DCF (discounted cash flow)-based target price of 0.63 euro. The key risk to our view is lower-than-expected rental income, arising from loss of tenants or slower upturn in rents/inflation.

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