“This is on top of Europe’s EUR43 billion Chips Act designed to ramp up Europe’s manufacturing and supply chain capabilities to become 20% of the world’s semiconductor production capacity by 2030, up from 9% in 2023,” he adds.
All of this should bode well for the REIT, which holds assets across 10 European countries. As of Dec 31, 2024, the portfolio consists of 55% logistics and light industrial properties, 43% offices and the remainder classified as “others”.
For Garing, the shifts will reflect “much-needed capital projects investment” as well as benefit the logistics and light industrial sector in Europe with “more onshoring and drive demand for new economy innovation hubs and data centres”.
New sponsor, same mandate
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SERT, which was formerly known as Cromwell European REIT (CEREIT), was renamed after Stoneweg Icona Capital Platform — now known as SWI Group — became its sponsor and substantial shareholder in December 2024.
The REIT manager announced in May 2024 that Stoneweg and its associates would be acquiring a 27.79% stake in CEREIT, a 100% stake in the REIT’s Singapore manager and a 100% interest in Cromwell’s European platform for a total of EUR280 million.
In its December announcement, the REIT announced that there would be no change to its mandate, asset and investment strategy, as well as capital management priorities and key management personnel.
Who is SERT’s new sponsor?
“We operate as a group, being positioned as an alternative investment platform with two business units,” says Jaume Sabater, founder and CEO of Stoneweg. One of the business units is Stoneweg Real Assets, which manages living, hospitality, logistics properties, offices, real estate, infrastructure, data centres and experiential ventures. The other business unit is Icona Capital Alternatives, which handles private equity, venture capital, special situations, liquid strategy, private credit, and sports and entertainment. Both are professionally run businesses, says Max-Herve George, founder, chairman and CEO of Icona Capital. Stoneweg was founded in 2015, while Icona was founded in 2019. The group has a third shareholder, the Benhamou family-owned CBH or Compagnie Bancaire Helvétique.
“It is also an investment business, as we do have [a] balance sheet, and we do have co-investments in the mandates in the companies that we are managing. [This includes] the 28% stake we acquired as sponsor of the REIT,” says Sabater. The management of SERT falls under Stoneweg Real Assets.
Stoneweg’s CEO described the acquisition of the REIT as “not a coincidence”, noting that CEREIT was on the market while the group was actively seeking acquisition opportunities aligned with its strategy, says Sabater.
As the group looked into the REIT, they determined that it fit into the group’s strategy in terms of the assets, which “clearly was aligned to the markets and strategies that we wanted to invest more [in]”.
“[It was] more of a northern and central European view… and industrial and logistics as the main strategy with the focus to move alongside our portfolio, which will be more concentrated in the industrial and logistics sector,” says Sabater. “It fits because our business has evolved, and we developed our business with a focus on Switzerland, Southern Europe and the US.”
“We were looking to diversify our European presence geographically, and we decided, in 2022, that there would be opportunities and that we wanted to start analysing potential acquisition targets,” he adds.
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The REIT’s operational strengths, coupled with shared business principles like maintaining a local presence and staying close to the assets it owns and manages for clients, were key factors for the SWI Group. Its investment in Asia, including a presence in Singapore, marked the group’s entry into the Asian market. SERT is the SWI Group’s second listed entity, following its first, which is listed in Switzerland and holds assets in the US.
“For us, these listed businesses are extremely relevant, first of all, because they channel a very relevant piece of our balance sheet, investors, and we are invested in both companies as the sponsor,” says Sabater.
“Cromwell has been for sale for two years, effectively. There needs to be some new direction from a European-based and European-focused new owner and integration. And that’s where I see the excitement,” says Garing.
“[Our European teams] are looking forward to being part of a much larger, dynamic platform, and that’s going to attract new investors. And if you’re going to attract new investors, that’s new acquisitions, it’s new assets to manage… if you’re in the marketing team, it’s more properties to help market. That then becomes a really important cycle for that platform,” he adds.
The REIT was also attractive to SWI Group as it was “cheap” and of “good value”. Its platform and the ability for both the REIT and the group to access capital by cross-selling to investors were also attractive, Garing continues.
Getting support through capital and pipeline
As SERT’s new sponsor, Sabater says the group is prepared to support the REIT through a mix of capital and pipeline. “We want to make [the most] of this role to contribute to the growth of the REIT to develop as a company. We have a strong management team and solid governance.”
With combined assets under management (AUM) of over EUR10 billion, the group can introduce development and redevelopment capabilities as the REIT’s sponsor, which is a “relevant part” of the group’s business.
The group can also introduce SERT to markets that the REIT had no access to previously under Cromwell. One of these markets is Spain, which has seen a “strong growth” in the appetites of institutional investors, says Sabater. “Our group has been very actively investing in this market. So these are elements which will allow the REIT to benefit from the sponsor’s network, capabilities, as well as the sponsor pipeline.”
Garing says SWI Group’s European base and connectivity to global investors are beneficial to the REIT. He adds: “In real estate, it’s about location; it’s also about people finding opportunities,” he says, adding that the REIT’s new sponsor has a larger team. “So [of the] 57 properties that we’ve acquired since listing, 56 were off-market. When [the real estate firms] come around with a glossy brochure, it’s too late. You want to be buying buildings off-market.”
“There could be a fund that is expiring. If you’ve got connectivity with the fund manager, and they say, ‘Look, I’ve got these three buildings that are in the Netherlands; they’re not part of our core strategy. We have to sell them. Can you help us out?’ So having a greater deal team, transaction team, and Jaume mentioned Spain and Switzerland, there are two territories, for example, that we haven’t been able to operate in before,” continues Garing.
SWI Group’s markets are complementary as well. For instance, the new sponsor’s presence in Spain and Switzerland — two territories where the REIT hasn’t been able to get opportunities — is a plus as well. “Switzerland is a fantastic market. [It’s] very strong, [and] hard to get in as a foreigner. So we immediately have a seat at the table.”
“In Spain, again, the fourth largest economy in Europe. We’ve not been able to access, [as] we didn’t have boots on the ground,” says Garing, adding that parts of many European countries have nuances within their respective countries, which is why relationships on the ground as well as connectivity within these places are key.
At the same time, the group’s capital partners have broadened the REIT’s investor base beyond what it could reach from Singapore alone. Around 60% of the REIT’s investors are based in Singapore, but there are many more offshore investors the REIT is not directly connected with. Garing notes that the networks of Sabater and George will be key to engaging these investors.
“This acquisition [by Stoneweg] coincides with the stabilisation of the European market. We’re just starting to see the benefit of the European Central Bank (ECB) rate cuts from last year starting to come through,” adds Garing. “This is a time when global investors are looking into Europe, underweight Europe, and now looking to address that. It’s been a very strong-performing stock market, and so want to be on more radar screens.”
As Sabater notes, European investors remain interested in logistics properties, driven by the continued rise of e-commerce, as well as industrial assets. In the current market, where funding and financing costs may increase, investors should look beyond properties that make sense purely on a spread or cap rate yield basis, he says.
Instead, investors should also consider assets that can preserve their value. For example, properties need to be in the right location, serve a relevant purpose and offer potential for repositioning, he adds.
“It’s not a question of buying relatively cheap assets which are yielding anymore. It’s making sure how sustainable your rents are, what’s the demand for the type of assets that you want,” says Sabater.
On SERT’s portfolio, Sabater remains convicted. “The way we’ve seen the portfolio evolving, it’s very positive… because in a difficult market environment with limited liquidity, there were sales that were done at good prices, which allowed to continue [the REIT] to progress in [its] strategy, to focus more in industrial logistics, to pivot. So this is a strategy that we fully support and that we are committed to continue executing.”
Hopes for higher share price
When asked about their goals for this year, Garing expressed his wish for SERT’s unit price to return to trading at its net asset value (NAV). As of Dec 31, 2024, SERT’s NAV attributable to unitholders was at EUR2.03 per unit.
“In March 2022 or February 2022, we were trading at a premium to NAV. And then Putin invaded, and inflation commenced. A good checkpoint for us would be back to NAV,” says Garing. “Interest rates being cut, property cycles turning… [and] we wish for peace.”
“[The] point is, we were pivoting to logistics. So globally, logistic REITs trade at around or above NAV, and that’s where we’d like to get to,” he adds. “We think that’s a fair milestone.”
Asset sales and higher interest costs caused distributions per unit to fall by 10.2% y-o-y to 14.106 Euro cents in FY2024, translating into a yield of 9.86% as of April 11.
On the capital management front, the REIT has no major debt maturity till late 2026. In December 2024, SERT refinanced a PGIM loan for a new 5.1-year term with the same assets. In January, the REIT issued a EUR500 million 4.25% six-year green bond, pushing out weighted average debt maturity to 4.3 years. Its aggregate leverage, as of Dec 31, 2024, was 41.2%, and the net leverage ratio was 40.3%.
