DBS Group Research has kept “buy” on Cromwell European REIT with an unchanged target price of EUR3.00 ($4.77) as it sees a 3.6% y-o-y growth in distributable income of EUR46.2 million for the 1HFY2021 ended June.
The target price implies a target yield of 5.8% and a price-to-net asset value (P/NAV) of 1.2 times,” say analysts Dale Lai and Derek Tan in an Aug 13 report.
Net property income (NPI) increased 11.4% y-o-y due mainly to the acquisitions made by the REIT in Italy, the Czech Republic and Slovakia.
See also: Cromwell European REIT posts 3.6% increase in 1H21 distributable income to EUR46.2 mil
The REIT, say Lai and Tan, is a fast-growing Pan-European S-REIT with a diversified portfolio of office, industrial and logistic assets valued at over EUR2.3 billion.
“The REIT has been an active asset recycler, driving portfolio yields and optimising returns to unitholders. With attractive yields north of 7.0%, coupled with potential inclusion to the EPRA NAREIT, we see multiple re-rating catalysts for the stock,” they explain.
Cromwell European REIT reported resilient financial results during Covid-19. The REIT has a weighted average lease expiry (WALE) of 4.7 years, “offering strong visibility to distributions”.
“We anticipate operational metrics improvement as the economy rebounds beyond the Covid-19 pandemic,” they add.
The REIT’s pivot into the industrial/logistics sector, which accounted for some 39% of its assets as at June 2021 is something Lai and Tan remain “excited” on.
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The REIT, which continues to increase its exposure in the fast-growing subsector, will “drive a further compression in yields for the stock,” they write.
Cromwell European REIT closed 2 Euro cents or 0.79% down at EUR2.50 on Aug 20, with an FY21 P/NAV of 1.0 times and a dividend yield of 7.0 times.
Photo: Cromwell European REIT
