CEREIT divests Italian office for $138.51m
The divestment of Piazza Affari 2, Milano, Italy office is at €93.6m.
Cromwell EREIT (CEREIT) completed the divestment of an Italian office through a sale and purchase agreement.
Its CEO Simon Garing said they conducted the simultaneous signing and completion of the sale of this Grade A Milan office asset for €93.6m at a €11.9m or 14.6% premium to the 2017 purchase price and €200,000 above the recent June 2023 valuation.
“The Divestment marks the first major step in our previously stated strategy of divesting noncore and non-strategic assets over the next two to three years to recycle into our redevelopment and AEI programmes,” said Garing in a bourse filing.
The office represents 3.7% of CEREIT’s property portfolio and is considered the company’s third largest office asset.
Advantages of the divestment include:
(1) CEREIT’s portfolio is now effectively 50% weighted to light industrial / logistics sector (after taking into account the recently announced proposed divestment in Italy)
(2) The Divestment would increase CEREIT’s FY2022 DPU on a pro forma basis by 2.1%, mainly due to the relatively low NOI yield of the asset and assuming the proceeds are used to repay debt at the current cost of funding; and
(3) The Divestment proceeds reduce the aggregate leverage 2.1% to 37.2% on a proforma basis as at 31 December 2022, with no material impact to the proforma net tangible assets