Cromwell to manage Finnish logistics portfolio

Home Europe News

06/02/2024

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell or Group) has been appointed manager of a portfolio of five logistics assets in Finland acquired by Goldman Sachs from Inmark Asset Management.

Leased to Posti Group Corporation, the state-owned delivery and fulfilment company with operations in Finland, Sweden and the broader Baltic region, the assets comprise at total of 134,000 sqm of space located in the dominant cities of Tuusula (part of the Helsinki metropolitan area), Tampere, Pirkkala, Oulu and Kuopio.

Commenting on the acquisitions, Pontus Flemme Gärdsell, Head of Northern Europe at Cromwell Property Group, said: “Leased to a strong covenant, these assets provide an excellent investment opportunity in the Nordic logistics market. We anticipate more transactional activity this year in Finland as inflation continues to come down and we have a better understanding of the impact of the ongoing war in Ukraine.”

Over the past 12 months, we have seen a heightened interest from overseas investors in well located assets in this sector across Finland.”

The Nordics represents one of Europe’s most established markets for logistics assets and is supported by strong operating fundamentals, including resilient demand, limited supply, and low vacancy rates. Cromwell manages more than €350 million of assets across Finland, Sweden and Denmark.

Nervesa21 office redevelopment in Milan 70% pre-let

Home Europe News

22/01/2024

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell or Group) has, on behalf of CEREIT, pre-let 70% of available space at the Nervesa21 office development in Milan, leaving only 3,000 sq m of space remaining.

Anchor tenant Universal Music Group, a world leader in music-based entertainment, pre-leased eight floors a year before completion. Scalapay, the first Italian “unicorn” and one of the biggest European BNPL (“buy now, pay later”) providers, signed a pre-lease for two floors and Edelman, an award-winning global communications consultancy firm, pre-leased one floor.

The redevelopment works are largely finished, with the premises successfully delivered to tenants pending some final minor works to be completed in January 2024.

Nervesa21 was re-configured to offer 14 modern floors, a modular flexible layout, premium amenities, two rooftop terraces and four panoramic elevators.

Developed with a strong focus on ESG, the redevelopment includes 5,300 sqm of external green garden leisure space, end-of-trip bicycle facilities and 230 parking spaces – some of which will have electric vehicle charging stations and will be powered by a combination of on-site renewable energy from solar panels and energy sourced from 100% renewable energy suppliers. Up to 50% of the façade is composed of low-carbon glass that, thanks to its integrated value chain, is expected to achieve up to 40% reduction of the embodied carbon footprint of the glass. Upon completion, the redevelopment is expected to attain LEED Platinum and WELL Gold certifications, making it one of the most advanced Grade-A offices in terms of ESG and energy efficiency, with reduced energy consumption of up to 40% compared to similar buildings.

Nervesa21 is strategically located in the Porta Romana district of Milan, south-east of Milan’s city centre. The asset is near Corso Lodi and has direct access to the A1 highway, the Linate Airport and the Central Station.

Commenting on the lettings, Michael Bohde, Head of Southern Europe at Cromwell Property Group, said: “To have pre-let 70% of the space at Nervesa21 is a fantastic endorsement of the office development’s credentials. As our new occupiers commence fit-out work, we are experiencing a strong level of interest in the remaining space from businesses attracted by the building’s ‘oasis-like’ location close to Milan’s bustling city centre.

“The successful execution of this project provides further evidence that occupiers are increasingly focused on ESG criteria when selecting an office location, seeking the best quality space with modern staff facilities, good access to public transport, parking and high energy efficiency. Office buildings with these features are in undersupply across Europe’s major cities.”

Cromwell was advised by CBRE and DILS on the lettings, the general contractors Nessi & Majocchi and the architects at DEGW / Lombardini 22.

Cromwell releases full scope 3 inventory, sets short and long-term emission reduction targets

Home Europe News

22/01/2024

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) has today released for the first time its full scope 3 emissions inventory, becoming one of the few Australian commercial property organisations to publish its emissions footprint across 100% of its global network and supply chain.

The inventory release covers all Cromwell scope 3 emissions across upstream and downstream activities, covering its entire supply chain of tenant activities; funds under management; joint ventures; and embodied carbon sources. It goes further than general sector reporting practices, where disclosure is often limited to scope 3 emissions where a company possesses operational control.

Alongside the disclosure of its scope 3 emissions inventory, Cromwell has today also released new short and long-term emission reduction targets which will help underpin future decarbonisation efforts.

This includes a net zero target across Cromwell’s entire portfolio for scope 1, 2, and 3 emissions by 2045, which includes tenant emissions and embodied carbon. In addition, Cromwell has also set a short-term target of a 42% reduction in scope 1, 2 and 3 emissions by 2030, along with a net zero target for new developments by 2030 and 2035 for all assets under Cromwell’s operational control.

Group Head of ESG, Lara Young, said: “Developing a full scope 3 inventory provides us with an accurate and meaningful picture of all emissions across our supply chain for the first time. It enables us to make more informed investment decisions on decarbonisation activities, working with our partners.

“Specifically, we have now shifted our focus to asset-level decarbonisation. In the last year, we have started to undertake assessments at specific sites to identify emissions sources and create bespoke plans to reduce these emissions, which we will do working in partnership with our service providers. We’ll continue this process going forward.”

Case studies

Cromwell has recorded positive progress across its current decarbonisation and emissions reduction activities, with scope 1 and 2 emissions reducing by 44% since FY22 and a 19% reduction across scope 1, 2, and 3 emissions since FY22. Examples of initiatives include:

  • The large-scale electrification upgrade of the 24-storey McKell Building, converting the existing commercial gas-fired heating system to an electric heat recovery reverse cycle heating, ventilation, and air conditioning (HVAC) system. This was a first of its size for the Sydney CBD and will achieve a 5% reduction in total building electricity consumption.
  • Cromwell’s solar programme which now includes 502kw of solar installation in Australia, which has reduced annual emissions by 538tCO2e, or up to 52% at each site. Cromwell is planning an additional five solar projects in Australia and three in Europe in FY24 to further reduce emissions.
  • Investing in sustainable technology and materials, including the refurbishment of CEREIT Nervesa 21 in Italy, where innovative and low-carbon glass was used instead of standard glass, which helped to record a significant reduction in the building’s embodied emissions.

ESG Report

The information above has been released today as part of Cromwell’s FY23 ESG Report. The full report can be found here.
In summary, the ESG Report highlights Cromwell’s long-term targets which include:

  • Achieve net zero operational emissions (scope 1 & 2) by 2035.
  • Achieve net zero operational emissions for the entire portfolio (scopes 1, 2, & 3) including tenant and embodied carbon by 2045.
  • Significantly reduce our gender pay gap year on year.
  • Achieve 40:40:20 workplace gender diversity at all levels.
  • Integrate ESG into risk registers and business strategy, including objectives and key results.

“Cromwell recognises the challenges that the property industry faces; however, we also recognise the opportunity to deliver tangible positive impacts. The Group has a global in-house ESG team and dedicated Australian and European teams that support all Cromwell activities,” said Ms. Young.

Cromwell reorganises European operations

Home Europe News

07/12/2023

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell or Group) today announced the reorganisation of its European operations to be more aligned with its investors’ strategies, and to improve efficiency in the current challenging market environment.

The reorganisation involves the creation of a regional structure comprising two European regions, which will be headed by Pontus Flemme Gärdsell for Northern Europe, and by Michael Bohde for Southern Europe, both reporting directly to Andy Creighton, Head of Investment Management, Europe. These two regions will replace the former structure, where each country had its own country head.

Pontus will be responsible for managing Cromwell’s investment and asset management activities in the Nordics, the Netherlands, the UK and CEE while Michael will be responsible for managing Germany, France and Italy.

Commenting on the changes, Pertti Vanhanen, Managing Director, Europe at Cromwell Property Group, said: “By streamlining our European business, we will be able to provide a greater focus on the countries our investors are showing most interest in. It will also enable us to improve operational efficiencies in the current challenging macro-economic environment, providing our clients with more integrated cross-border investment and asset management services”.

In the past 18 months, Cromwell has been active across Europe and the UK servicing longstanding mandates with clients such as CEREIT, the Singapore-listed REIT, as well as several new international mandates and marketing new strategies to investors.

Vanhanen, added: “Since the onset of higher interest rates, the market has changed significantly as investors and managers adjust strategies to cope with the higher cost of finance and structural changes impacting the sector. Foremost among these are how we improve the sustainability and carbon footprint of real estate assets and how we reposition buildings in sectors like offices where behaviours have changed”.

Cromwell has made significant progress in these areas, implementing a sustainable finance framework to support the transition to more sustainable borrowing across its portfolio and is currently premarketing a value-add office repositioning strategy in the UK.

A person typing on a laptop

Cromwell achieves new highs results in Global Real Estate ESG Assessment

Home Europe News
November 28, 2023

Cromwell achieves new highs results in Global Real Estate ESG Assessment

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell) has delivered record high company benchmarks in the annual Global Real Estate Sustainability Benchmark (GRESB) global rankings.

GRESB is an independent organisation that provides validated ESG performance data and peer benchmarks for investors and managers to improve business intelligence, industry engagement, and strategic decision-making.

The 2023 GRESB ESG Benchmark has become increasingly competitive, growing to cover more than USD$ 8.8 trillion of gross asset value across 2,084 real estate entities. GRESB data is utilised as an investment decision-making tool by over 170 institutional investors with more than US$51 trillion AUM.

Group Head of ESG, Lara Young, said Cromwell Property Group our longstanding participation in the assessment is a good opportunity for the organisation to demonstrate its ongoing commitment to enhance its ESG performance and test itself against the worldwide market.

Participation in GRESB is Cromwell’s opportunity to measure our ESG performance against our peers, and this year’s efforts have not disappointed.
Lara Young – Group Head of ESG, Cromwell Property Group

“Participation in GRESB is Cromwell’s opportunity to measure our ESG performance against our peers, and this year’s efforts have not disappointed.” said Ms. Young.

  • The Singapore-based Cromwell European Real Estate Investment Trust (CEREIT) achieved a record-high overall score of 85 points in the 2023 GRESB Real Estate Assessment, with full marks for social and governance aspects. CEREIT was awarded a four-star rating – up from a three-star rating last year – and achieved a public disclosure score of a perfect 100, placing first out of its five peers.
  • The Cromwell Diversified Property Trust (DPT) maintained its score of 87 points, ranking 28th out of 41 participating listed Australian office portfolios and achieving 95 out of 100 (A Grade) for public disclosure. With Australia’s real estate sector leading the world in sustainability, ranking first in GRESB for the last 12 consecutive years, DPT has consistently performed well against the hyper-competitive local market.
  • Cromwell Polish Retail Fund (CPRF) achieved a five-star rating and a record-high overall score of 90 points, ranking 11th out of 32 European retail non-listed peer funds and 17th out of 87 in the European Retail category.

 

“Not only have we exceeded our previous overall scores, but for all three disclosing portfolios -CEREIT, CPRF, and Cromwell’s investment portfolio, DPT – we have increased our scores across all categories, placing them well above global and industry peer averages,” said Ms. Young.

“These results would not be possible without a huge team effort and collaboration from our investors, tenants, supply chain partners, and the broader Cromwell team, and we would once again like to share our thanks to everyone involved.”

Cromwell will publish its FY23 ESG report in early December 2023.

Cromwell secures €66 million green financing for Janki shopping centre in Poland

Home Europe News

14/09/2023

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell or Group) has secured a €66 million green loan for the 61,000 sq m Janki shopping centre in Warsaw, Poland.

Arranged under Cromwell’s new Sustainable Finance Framework, this is the second green loan the company has secured, having transitioned an existing A$130 million bilateral loan on the Cromwell Riverpark Trust in Australia earlier this year.

The loan was provided by the Polish branch of HSBC Continental Europe. Under the terms of the agreement, Cromwell will need to report on a number of sustainability measures, including renewable energy usage, annual greenhouse gas emissions and ensure that in any given reporting year at least 50% of new leases include green clauses that cover scope 3 emissions.

One of six retail assets in Cromwell’s Polish retail fund, Janki shopping centre is certified BREEAM In-use Excellent. The fund scored 85 in the GRESB index in 2022 and won the BREEAM-GRESB Award for Corporate Investment in Responsible Real Estate in March 2017.

Afraz Ahmed, Cromwell’s Head of Treasury for Europe, commented: “The second green loan that Cromwell has agreed since launching our Sustainable Finance Framework earlier in the year, this transaction demonstrates our continuing commitment to achieving a more sustainable financing structure across the assets we manage in Europe and Australia.

“Throughout this process, we’ve noted a strong alignment of interest with our network of issuers and financial institutions, who are equally committed to achieving more sustainable ways to finance real estate assets.”

Lara Young, Cromwell’s Group Head of ESG, said: “Cromwell’s Sustainable Finance Framework is a critical part of our pathway to achieving net zero by 2045, making it possible to measure and account for scope 1,2 and 3 emissions in our portfolio.

“This is an excellent example of cross-team collaboration at Cromwell, drawing on expertise from our in-house ESG, Treasury and CEE teams. We’ve added a new dimension to our strategy by proving that we can match debt funding needs with sustainability outcomes across Cromwell assets.”

Wioletta Bratoszewska, Director, Real Estate Finance, HSBC Continental Europe Poland, added: “It was a pleasure to support Cromwell with this financing as Sustainability Coordinator and Lender. As the corporate real estate industry drives towards more sustainable ways of financing we are thrilled to have played a part in Cromwell’s sustainability agenda which aligns with our own focus on helping to deliver a net-zero global economy”.

Cromwell European REIT

Cromwell European REIT Secures new 15-year lease with a leading global asset management firm at Haagse Poort in The Netherlands

Home Europe News

27/07/2023

Cromwell EREIT Management Pte. Ltd., the manager (the “Manager”) of Cromwell European Real Estate Investment Trust (“Cromwell European REIT” or “CEREIT”), is pleased to announce that it has secured a major new lease with a leading global asset management firm at Haagse Poort in The Hague, Netherlands.

The Manager’s Chief Executive Officer, Mr. Simon Garing, commented, “We are very pleased to welcome a leading global asset management firm to the roster of our tenant-customers at Haagse Poort in The Hague. This is CEREIT’s largest Grade-A office asset, representing c. 7% of the portfolio and it will remain at 99% occupancy following this new lease.

“This 10,000 sqm is currently let to Nationale Netherlanden (NN), the largest tenant-customer at the asset, The successful re-leasing two years ahead of expiry demonstrates the strength of the asset and the capabilities of our on-the-ground local Dutch team.

With The Hague’s latest office vacancy at only 2.7%[i], high quality BREEAM certified office space is currently in short supply. We have also built in further rent flexibility depending on the level of energy efficiency we may obtain, as we work with all key customer tenants to enhance the landmark nature of this asset.”

Haagse Poort is one of the most iconic high-rise office buildings in The Hague. Spanning 68,500 sqm, the 16-storey building has been in CEREIT’s portfolio since listing. Strategically located in Beatrixkwartier, the central business district of The Hague and one of the best-performing office locations within the Netherlands, the asset was recently refurbished with upgrades to its high-rise entrance lobby, the installation of a new green biophilic area and restaurant, as well as elevator enhancements. In addition, the property also has charging points for electric vehicles and e-bikes, as well as a BREEAM “Very Good” certification. All these enhancements have raised the asset’s attractiveness amid tight supply and strong occupier demand for modern office spaces in strategic office locations.

Straddling the A12 highway in The Hague, Haagse Port is only 150 metres away from The Randstad rail station and is well connected to road transport links, with bus and tram stops outside of the building. The property’s strong public transportation link is an important differentiating feature, with a recent survey[ii] on European office workers indicating public transportation access as the most important factor in corporate office selection decisions.

Demand for Grade-A office in key cities in the Netherlands remains strong, with average vacancy rate of only 4.4%[iii] in the first quarter of 2023, with The Hague the lowest at 2.7%. This is following a multi-year recovery that saw vacancy rates drop substantially in the last five years in most cities and continue to hold up relatively well during and after COVID-19 pandemic. This is partially because, prior to the pandemic, companies in the Netherlands were already operating with a relatively low workplace per employee ratio compared with other markets such as United States and limited new supply[iv].

Cromwell Grade A Office Vacancy

Simon Garing concluded: “The Netherlands is a core market for CEREIT, accounting for 27% of the total portfolio and 49% of CEREIT’s office as at 30 June 2023. Demand for Grade-A office in key cities in the Netherlands remains resilient, with average vacancy rate of only 4.4%[v] in the first quarter of 2023. This is supported by a national unemployment rate of only 3.5%. While GDP growth is expected to be muted in FY23, its AAA-rated[vi] sovereign credit rating represents one of the lowest risks amongst developed countries in the world.

As occupiers seek higher grade, modern spaces in core locations, we will continue to proactively dispose of non-core and non-strategic assets to recycle into select asset enhancement and redevelopment initiatives to optimise our office portfolio’s long-term rental income and value for the benefit of our unitholders, while continuing our pivot to a majority weighting to logistics and light industrial assets.”

Cromwell Property Group and Bain Capital Special Situations to develop two LEED Gold logistics warehouses in Tuscany, in the Florence macro-area

Home Europe News

25/07/2023

Real estate investor and fund manager Cromwell Property Group and Bain Capital Special Situations, a leading global special situations investor with experience supporting differentiated real estate platforms, have acquired a new plot of land for development of two modern grade A logistics warehouses in the greater Florence area, adding to their growing portfolio in Italy.

Part of a series of planned developments by the two firms, this latest acquisition confirms their conviction in the Italian logistics market and their intention to continue taking advantage of the shortage in supply of logistics assets across Italy.

Designed to meet all modern grade A logistics standards, and with the flexibility to accommodate up to four occupiers, the two assets will be developed on a 155,000 square-meter plot of land in Lari, an industrial and logistics cluster strategically located along the motorway connecting Livorno commercial harbour and Florence (just 35 mins from the A1 tollgate). The area is an established logistics hub that is home to many well-known logistics operators, including Amazon, SDA Express Courier, Fercam, Ceva Logistics, STEF, Arco Spedizioni, DB Schenker, as well as international giants DSV, LIDL, DS Smith, Gucci, Fendi and Piaggio.

The site is a three-minute drive from a major junction with the Fi-Pi-Li motorway, a fast route crossing Tuscany that connects Florence, Livorno and Pisa, the main cities in the region. The catchment area is home to one million people within a 20-minute drive, increasing to two million within a 60-minute drive.

Cromwell has already received preliminary interest to lease more than three times the expected gross lettable area and expects to have most of the assets let by the start of construction in September 2023.

All future assets in the strategy will be developed to grade A logistics standards incorporating modern technical specifications and will target the LEED Gold certification. Innovative and alternative construction techniques and materials will be considered in order to lessen the environmental impact of construction and enable ongoing energy efficiency, carbon and cost savings.

Lorenzo Caroleo, Cromwell’s Head of Italy said: “This acquisition not only highlights our commitment to the logistics sector in Italy, but also demonstrates our commitment to ESG and willingness to invest across the country in locations where the assets and local submarkets align with our investment strategy. So far, we’ve acquired assets in northern, southern and now central Italy.

“With construction due to start in September, these warehouses will be ready to accept tenants in 2024 and we are already in discussions with several potential occupiers, keen to take advantage of the modern, efficient and flexible warehouse space we are providing.

“This is our second such acquisition in a few months, despite the macro uncertainty and challenging financing conditions, with more to come as we press ahead with our pipeline of opportunities and additional land plots to be developed in the near future.”

Rafael Coste Campos, a Managing Director at Bain Capital Special Situations added: “We like to invest in hard-to-access real estate sectors, underpinned by enduring secular trends that drive long-term demand. By partnering with Cromwell, with its experienced on-the-ground Italian team and in-house development capabilities, we have identified a deep dislocation between the supply of modern logistics facilities and the demand from occupiers across the region. We look forward to working with them on this mandate.”

Cromwell joint ventures with Value Partners Group on DHL portfolio in Italy

Home Europe News

03/07/2023

Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell), has entered into a binding agreement to create a joint venture with Hong Kong-based asset manager Value Partners Group, exchanging on the sale of a 50% stake in the Cromwell Italy Urban Logistics Fund assets. The seven properties that make up the Fund are 100% leased to DHL (Parent Company Deutsche Post DHL Group) and situated in seven prime logistics submarkets in Italy.

Settlement is expected in late July 2023, with Cromwell’s Italian team set to continue to manage the portfolio. Located in northern Italy, near key cities of Milan, Turin, Bologna and Verona, the seven logistics properties have a combined gross lettable area of 46K sqm and are fully let to DHL on long-term leases with an overall portfolio WALT of 7.8 years.

Two of the seven logistics centres are very new, built to modern and technologically advanced specifications, while the other five properties are fully compliant with DHL’s high standards having been occupied by DHL since their development. The assets are used by DHL’s Supply Chain, Express and Global Forwarding divisions, providing the portfolio income diversification and protection across business cycles.

Commenting on the sale, Lorenzo Caroleo, Head of Italy at Cromwell, said: “Having owned and managed this portfolio since 2020, we have an excellent understanding of the assets, the occupier, and the demand for these types of assets across the north of Italy. The joint venture with Value Partners would allow us to grow this portfolio with selective acquisitions of urban / last mile logistics assets, leased to occupiers with strong covenants, that are located near the major urban hubs in Italy and other cities in Europe.”

Rachel Tong, Managing Director and Head of Real Estate Private Equity for Value Partners Group commented: “As a Hong Kong-based investor, it’s great to partner with Cromwell who will remain co-invested in this opportunity. This expansion and geographical diversification of our logistics portfolio will deliver exciting opportunities for growth and profitability for our investors. Italy is an important logistics hub in Europe. We are confident of stable returns.”

Cromwell European REIT sells Piazza Affari 2 office building in Italy

Home Europe News

30/06/2023

Real estate investor and fund manager Cromwell Property Group (Cromwell) has completed the sale of the Piazza Affari 2 office building in Milan on behalf of Cromwell European REIT (CEREIT).

This transaction marks the first major step in CEREIT’s previously stated strategy to divest non-core and non-strategic assets over the next 2-3 years to recycle into CEREIT’s redevelopment and asset enhancement programme. Executing this landmark Milan CBD office divestment at an opportune time is further testament to the execution skills and strength of Cromwell’s team in Europe.

Built in the 1930s and partially refurbished in 2017, Affari is an office building located in the heart of Milan’s CBD with 7,787 sq m of net lettable area, eight floors above ground and two basement levels. It currently holds a BREEAM “Very Good” rating certificate.

Commenting on the sale, Lorenzo Caroleo, Head of Italy at Cromwell Property Group, said: “The strong buyer interest that we received for Affari 2 highlights the level of demand in Italy’s major cities for very well-located Grade A office assets.

“Buildings with good ESG credentials and high BREEAM / LEED certifications are highly sought after by corporate tenants in key cities like Milan, where Grade A vacancies are currently under 3%, representing an all-time low.

“We are confident that we will be able to take advantage of this trend through CEREIT’s first such redevelopment, the 10,000 sq m Nervesa 21 office redevelopment in Milan which is targeting LEED platinum status and is due for completion by the end of 2023.”