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 

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