This comes as it focuses on Western European markets with &lsquo deeper liquidity and stronger tenant demand&rsquo

 

[SINGAPORE] Stoneweg Europe Stapled Trust (Sert) has divested its entire Slovakia investment in logistics and light industrial properties for 70 million euros (S$105.4 million), its manager said in a bourse filing on Tuesday (Nov 11).

 

The stapled group sold 100 per cent of its shares in five Slovakian property companies &ndash and their underlying assets &ndash through its wholly owned indirect subsidiary Stoneweg Europa 3. This comes as it lowers its Central Europe exposure to focus on Western Europe markets.

 

&ldquo The Slovakian divestment marks the near completion of our 400 million euro capital recycling programme, and reflects our continued discipline in optimising the portfolio,&rdquo said Simon Garing, chief executive of the manager.

 

&ldquo By exiting smaller and less liquid Central European assets, we are sharpening Sert&rsquo s focus on core Western European markets with deeper liquidity and stronger tenant demand.&rdquo  

 

Garing added that proceeds from the divestment will &ldquo strengthen Sert&rsquo s balance sheet&rdquo and bring its gearing below 40 per cent, providing &ldquo flexibility to reinvest in higher-value add investments that drive future growth&rdquo . 

 

Net proceeds will be used partly for immediate repayment of Sert&rsquo s revolving debt facility, which stood at 36.9 million euros as at Sep 30. The stapled group&rsquo s manager said the balance will be earmarked for a &ldquo modest acquisition pipeline&rdquo , working capital requirements and &ldquo any future security repurchase programme&rdquo . 

 

The manager noted that the gross property price of 71.4 million euros represents a 1.3 per cent discount to the latest valuation of 72.4 million euros conducted on Jun 30 by Savills. 

 

However, the 70 million euro consideration for the divestment translates to a premium of 3.5 per cent or 2.4 million euros to the five divested companies&rsquo net equity of 67.7 million euros as at Jun 30.

 

The manager attributed this &ldquo slight premium&rdquo to the buyer &ldquo agreeing to pay for half of the deferred tax liabilities held by Sert&rsquo s entities, which (were) not captured in the property valuations&rdquo . 

 

Rationale

The manager noted that the divestments align with Sert&rsquo s investment strategy announced in 2022, to &ldquo divest 400 million euros of assets over the next two to three years&rdquo . 

 

It added that this was to maintain gearing within the board&rsquo s policy range of 35 to 40 per cent over the medium term achieve a 70 per cent weighting to light industrial and logistics by 2027 reduce exposure to &ldquo non-core and non-strategic office and other assets and less liquid assets&rdquo as well as to recycle capital into redevelopments and asset enhancement initiatives. 

 

&ldquo The strategy is consistent with Sert&rsquo s primary purpose of providing superior risk-adjusted returns and driving long-term sustainable distribution per share (DPS), and net asset value and security growth,&rdquo the manager said. 

 

It further noted that the divestments seek to reduce Sert&rsquo s Central Europe exposure, due to asset illiquidity in the region and greater geopolitical risks. 

 

After the latest sale, Sert&rsquo s exposure to the region is expected to decrease by 290 basis points to 10.4 per cent, from 13.3 per cent previously.

 

Sert&rsquo s exit from Slovakia will reduce the number of countries in which it invests and &ldquo continue to drive scale in its core Western Europe markets&rdquo , the manager said. 

 

The divestments will also improve the stapled group&rsquo s portfolio occupancy, which is set to rise to 93.6 per cent from 93.5 per cent after the divestment, due to the Slovakia portfolio&rsquo s slightly lower occupancy of 92.9 per cent. 

 

Assuming the divestments were completed on Jan 1, 2024, and assuming a repayment of Sert&rsquo s debt from the entire proceeds at the cost of funding then, Sert&rsquo s distributable income would have fallen to 79.1 million euros from 79.3 million euros. Its DPS would have fallen to 0.1407 euro from 0.1411 euro.

Net proceeds will be used to refinance existing borrowings due to mature in 2026 and 2027

 

[SINGAPORE] The managers of Stoneweg Europe Stapled Trust (Sert) on Wednesday (Oct 15) announced that it has issued its second green bond in 2025 under its 1.5 billion euro medium-term note programme.

 

The 300 million euro (S$452 million) bond will mature on Feb 22, 2033. It will have a coupon rate of 4.125 per cent, with a re-offer yield of 4.203 per cent, and maturity of 7.3 years.

 

The deal comes days after Fitch Ratings upgraded the stapled trust&rsquo s long-term issuer default rating to &ldquo BBB&rdquo , from &ldquo BBB-&rdquo . Sert has also extended its debt maturity to one of the longest among Singapore-Reits, easing near-term refinancing pressure and freeing capacity for future growth.

 

It also entered a five-year fixed-to-floating interest rate swap, bringing its overall interest rate to 3.9 per cent.

 

Demand from international institutional investors and banks for the notes had the order book peak at nearly one billion euros, marking about a 3.3 times oversubscription.

 

The net proceeds will be used to refinance existing borrowings due to mature in 2026 and 2027. This includes a 70.6 million euro unsecured facility already approved by the lead bank for extension beyond 2029.

 

It consists of three interconnected buildings with a total lettable area of 11,503 square metres.

Stoneweg Europe Stapled Trust divests Italy asset for 11.4 million euros, completes sale in Poland

The bond was priced at a margin of 175 basis points over the mid-swap rate, &ldquo materially lower&rdquo than the bank debt being replaced and is distribution-accretive by about one million euros per annum.

 

Simon Garing, chief executive officer of Sert&rsquo s managers, said: &ldquo Looking ahead, we will continue to enhance unitholder returns through disciplined capital management and the ongoing shift towards higher-yielding logistics and light-industrial and highly environment, social and governance-rated office assets in Western Europe.&rdquo

Its managers are bullish on the logistics and light industrial sector as e-commerce, onshoring and fatter defence budgets could swell demand for warehouses

[SINGAPORE] For too long, the property markets in Spain and Switzerland have eluded Stoneweg Europe Stapled Trust (Sert), but this may soon change, with the managers having welcomed a European sponsor late last year.

 

Simon Garing, chief executive officer and executive director of Sert&rsquo s managers, told The Business Times: &ldquo For many years, we wanted to get into Spain, but we had no boots on the ground.&rdquo

 

And Switzerland, although &ldquo a great market&rdquo similar in some respects to Singapore, had also been tough to break into because the assets there are &ldquo very tightly held&rdquo , he said. 

 

&ldquo The advantage we have now is Stoneweg&rsquo s headquarters is in Geneva, and so it has a logistics, light industrial team and business in Switzerland,&rdquo he said.

 

&ldquo So in the next one to three years, you&rsquo ll see us invest in Spain and Switzerland.&rdquo

 

The managers&rsquo refreshed strategy follows a series of changes in Sert, formerly known as Cromwell European Real Estate Investment Trust (Reit). It has been listed in Singapore since 2017.

 

Homing in on Spain and Switzerland would likely expand Sert&rsquo s footprint in Western Europe and the Nordic region, which already accounts for 86 per cent of its portfolio by geography.

 

This would mean selling out the &ldquo very small, less-liquid markets&rdquo , such as its Slovakian, Finnish or Polish offices, which account for 12.7 per cent of its portfolio.

 

But Garing said the plan is not to push the weightage in central Europe down to zero.  

 

Places like the Czech Republic, which accounts for 3.4 per cent of Sert&rsquo s assets, have a positive economic outlook, are cheaper to operate in, and still offer slightly higher yields than markets like Germany, he added.

 

&ldquo We&rsquo re conscious that Asia-based investors perhaps don&rsquo t necessarily understand the nuances of Central Europe versus Western Europe,&rdquo he said. &ldquo We think if we can be more Western Europe, that comes with the perception of less risk.&rdquo

 

As far as risk goes, the question is whether greater geographical diversification would be helpful. After all, three countries &ndash France, Italy and the Netherlands &ndash account for nearly two-thirds of the Reit&rsquo s portfolio.

 

Sert currently has 104 assets in 10 countries in Europe, with a portfolio value of 2.25 billion euros (S$3.39 billion).

 

&ldquo We sleep so well at night because we have 1,000 leases &ndash our largest tenant is only 3.8 per cent, and the top 10 tenants are about 20 per cent of total rent. So we don&rsquo t have to wake up one day and find there&rsquo s an issue with a particular tenant,&rdquo he said.

 

Logistics and light industrial over offices

There is no dominating industry sector in its portfolio now, but Garing plans to tweak Sert&rsquo s asset-class weightage over the next two years, by bringing the logistics and light industrial sectors and data centres up to 70 per cent, from the current 60 per cent.

 

This implies a reduction in office assets to 30 per cent. The managers&rsquo realignment comes despite the cyclical upswing that offices are facing, with office occupancy rates near pre-Covid levels.

 

&ldquo Office transactions are now the second-most sought after in Europe,&rdquo he said, as investors eye the &ldquo out-of-favour asset class&rdquo at relatively discounted prices.

 

Yet, office Reits tend to trade at a discount to their net asset value (NAV), unlike their industrial and logistics peers.

 

For one, it is less capital-intensive to keep a warehouse running than an office building, which has much higher energy consumption.

 

Several other factors inform Garing&rsquo s bullish view on the logistics and light industrial sector&rsquo s long-term potential.

 

Demand for warehouse space is projected to rise on the back of e-commerce growth and the trend of onshoring in Europe. 

 

Expanding defence budgets also provide a further impetus. Allies of the North Atlantic Treaty Organization have committed to raising defence expenditure to 5 per cent of gross domestic product by 2035. This could generate an additional 37 million square metres of demand for warehouse space, Garing noted, citing data from a recent Savills report.

 

Meanwhile, the trustee-manager of Stoneweg European Business Trust in June announced a 50 million euro investment in the Stoneweg Icona data-centre (IDC) fund, or AiOnX. This translates to a 6.72 per cent stake in a 10-year life development fund.

 

The portfolio comprises interests in five early-stage data-centre development sites taking up a total of 310 hectares in Denmark, Ireland, Italy, Spain and the United Kingdom. 

 

It is a project the managers have been waiting a number of years for, following a fruitless attempt in 2020 with the &ldquo wrong joint venture partner&rdquo .

 

In such early-stage projects that involve developing rural farmland, securing power and water supply as well as a pre-lease could potentially push up their value by five to 10 times, said Garing.

 

This could bring an estimated 13 per cent yield on cost, he said, compared with 5 per cent had the project been acquired after it had been developed. 

 

Protecting dividends

This is about as far as the managers would go in riding the artificial intelligence boom.

 

&ldquo We don&rsquo t want to go out, and on our balance sheet take on 100 per cent development risk of another data centre,&rdquo he said.

 

No dividend is expected from the development fund in the next two to three years, until tenants start paying rent. The interest expense from a larger investment would then eat into the Reit&rsquo s dividend.

 

&ldquo We&rsquo re very mindful of protecting the dividend of the Reit, and this is one of the reasons we have the Reit and the business trust,&rdquo said Garing.

 

It is also why, even if interest rates are trending lower, the managers are not about to go on a buying spree.

 

&ldquo We&rsquo re very mindful of our gearing, we&rsquo re very mindful of our investment-grade credit rating (from) both S& P and Fitch, so we&rsquo re not out there looking to gear up to buy assets,&rdquo he said. 

 

&ldquo Our incentive is to grow the share price, not grow AUM (assets under management).&rdquo

 

Better days

He said he has not forgotten the painful days when spiking interest rates forced many Singapore Reits to refinance their debt, and eroded their dividends.

 

In the first half of 2025, Sert&rsquo s managers reported a 1.1 per cent rise in revenue to about 107 million euros, but a 7 per cent drop in distribution per stapled security to 0.06533 euro.

 

&ldquo That is now behind us,&rdquo Garing said, noting that Sert has no debt expiring till 2026. He also expects some savings in the next round of refinancing.

 

At an 8 per cent annualised yield and a 25 per cent discount to NAV, he notes that Sert compares favourably to the average S-Reit distribution yield of 6.7 per cent. Underpinned by the strengthening euro and lower interest rates, the managers don&rsquo t have to be &ldquo overly bullish&rdquo , he said.

 

&ldquo If we can be stable for the next 12 months, investors will enjoy a very good return,&rdquo he said.

 

&ldquo But if we can start showing dividend growth, then we should see some good share price growth, and that&rsquo s ultimately our goal.&rdquo

 

Garing&rsquo s optimism perhaps stems from the fact that he has seen far worse days &ndash including a hostile takeover attempt five years ago &ndash since becoming the manager&rsquo s CEO in 2018.

 

The fog appears to have finally lifted. In December 2024, alternative investment groups Stoneweg and Icona Capital joined hands to acquire the former sponsor&rsquo s entire stake in the Reit.

 

&ldquo I like the fact that a very smart, deep-pocketed investor called Stoneweg identified that we were mispriced and invested 240 million euros of their own capital &hellip into us,&rdquo he said.

 

&ldquo That&rsquo s a great recognition and endorsement of the portfolio, of the team and the strategy, and that&rsquo s left a really powerful sentiment and motivation for the team.&rdquo

Distributable income for period down 7.3% on year at 36.7 million euros

 

[SINGAPORE] Stoneweg Europe Stapled Trust : SEB 0% (Sert) on Wednesday (Aug 13) posted a distribution per stapled security (DPS) of 0.06553 euro for its first half ended Jun 30, 2025, 7 per cent down from a DPS of 0.0705 euro in the year-ago period.  

 

The stapled group&rsquo s lower DPS was &ldquo in line with market expectations&rdquo and a reflection of higher interest expenses in the current rate environment, said Simon Garing, the chief executive of its managers. 

 

For the six months, its distributable income fell 7.3 per cent to 36.7 million euros (S$55 million), from 39.6 million euros in H1 2024, mainly driven by a 23.9 per cent hike in net interest costs. This was due to higher all-in interest rates and higher borrowings following the January issuance of a 500 million euro six-year green bond, the managers said. 

 

Its net property income (NPI) inched up 2.2 per cent to 66.9 million euros, from 65.5 million euros previously.  

 

H1 revenue rose marginally by 1.1 per cent on the year to 107.4 million euros from 106.3 million euros. 

 

The improvements to NPI and revenue were driven by strong growth in the logistics/light industrial sector. Higher income from redeveloped properties in Milan &ndash Nervesa21 and Via dell&rsquo Industria 18 &ndash also contributed to the gains. 

 

Notably, Sert in late June made a 50 million euro investment into AiOnX &ndash the sponsor&rsquo s fund, comprising hyperscale data centre development projects in five locations. The managers said that the investment, which was recorded at fair value of 74.8 million euros, resulted in a 49.6 per cent valuation upside. 

 

Sert&rsquo s portfolio occupancy stood at 92.4 per cent, 1.2 per cent lower than H1 2024. 

 

Its weighted average lease expiry stood at 5.1 years, 0.3 year longer than in the year-ago period.  

 

Weighted average debt to maturity was 3.8 years, amid the issuance of the 500 million euro six-year green bond in January, which extended Sert&rsquo s debt expiry profile. 

 

Net gearing rose to 41.8 per cent, 1.6 percentage points higher compared with Dec 31, 2024. 

 

Looking ahead, the managers noted that in the event that increased tariffs slow economic activity in the short to medium term, European central banks could respond with rate cuts. This could potentially accelerate real asset yield compression, the managers said. 

 

Garing said that the stapled group would continue to focus on disciplined capital management and active asset management. 

This is due to positive economic and market factors such as inflation and easing monetary policy

 

[SINGAPORE] Stoneweg Europe Stapled Trust : SET -0.66%&rsquo s (Sert) portfolio valuations increased by 1.1 per cent or 24.9 million euros (S$37.3 million) for the first half of the year compared to December 2024, to about 2.3 billion euros.

 

This was attributed to positive economic and market factors such as inflation, easing monetary policy and strong demand prospects causing an increase in market rents and compression in terminal cap rate across the portfolio. 

 

The independent valuations were carried out by JLL and Savills Advisory Services for 104 properties in Sert&rsquo s portfolio as at Jun 30. 

 

In particular, Sert&rsquo s logistics or light industrial portfolio initial yield remained at 6 per cent, due to support from a long weighted average lease expiry (Wale) of 5.2 years and a higher reversionary yield of 6.8 per cent. The managers said that this reflects the valuers&rsquo expectation for further market rent growth. 

 

Simon Garing, chief executive of the managers, said: &ldquo Our strategy to pivot the portfolio to majority exposure to the European logistics and light industrial sectors continued to benefit Sert. These sectors now represent 56 per cent of the total portfolio. The sector recorded a valuation gain of 18.7 million euros, up 1.5 per cent compared to the Dec 31, 2024, valuations, and 48.3 million euros, up 4 per cent compared to H1 2024 valuations.&rdquo

 

According to JLL, a 45 per cent increase in European real estate transaction volumes was recorded in the first quarter of 2025, as compared to the same period last year. 

 

Moreover, its office portfolio initial yield is now at 6.5 per cent, supported by a long Wale of 5.1 years, with a higher reversionary yield of 7.7 per cent. 

 

This is an improvement from its performance in H2 2024, where the office portfolio saw valuation declines recorded in Italy (-0.6 per cent), Poland (-1.3 per cent) and the Netherlands (-2.5 per cent) due to upcoming potential refurbishment and redevelopment projects at the time. 

 

With regard to the office portfolio, Sert has a 20-year lease agreement with its largest tenant NN Group at Haagse Poort and the cooperation agreement to refurbish over 28,000 square metres at the site. 

 

The project will create a prime office asset for energy efficiency in the Netherlands, offering high-quality amenities for NN Group employees while working on sustainable, future-proof real estate.

 

The managers noted that Sert is trading at an approximate 24 per cent discount to the pro forma unaudited June net asset value, of around two euros per stapled security.

The data centre site can be scaled up to a final capacity of 330 megawatts

 

[SINGAPORE] The trustee-manager of Stoneweg European Business Trust announced on Wednesday (Jul 2) that SWI Group, the sponsor of Stoneweg Europe Stapled Trust (Sert), has added a fifth data centre site in the UK, to its fund named AiOnX. 

 

The Cambridgeshire site will be located at Sutton-in-the-Isle, between Cambridge and Peterborough, and be scaled up to a final capacity of 330 megawatts. 

 

It will also target the UK&rsquo s cluster of global technology operators located in the &ldquo Golden Triangle&rdquo &ndash between Cambridge, Oxford and London &ndash to serve artificial intelligence and cloud demand in the area, and become one of the biggest data centres in the UK. 

 

The Stoneweg Icona data centre fund &ndash rebranded as AiOnX &ndash will now encompass five high-specification hyperscale data centre sites across strategic European locations including Spain, Italy, and now the UK.

 

The development plan of the five assets aims at creating 2 gigawatt total capacity for an investment of more than 20 billion euros (S$30 billion), for AiOnX to become one of Europe&rsquo s largest data centre owners.

 

This is one of the first moves by SWI Group &ndash comprising Stoneweg, Icona Capital, its subsidiaries and associates &ndash since it became Sert&rsquo s sponsor in end-2024. 

 

Stoneweg European Business Trust invests 50 million euros in fund with early-stage data centre sites

On Jun 24, Stoneweg European Business Trust said that it invested 50 million euros in AiOnX, where its stake in the fund is expected to range from 4 to 8 per cent, depending on the final quantum of investment made by the other investors.

 

This investment in early-stage data centre sites complements the stapled trust&rsquo s existing data centre holdings in Denmark and Poland, so as to diversify into high-growth infrastructure assets alongside its logistics and light industrial portfolio. 

 

 

Stoneweg Europe Stapled Trust&rsquo s (SERT) maiden foray into the Stoneweg Icona data centre fund offers an &ldquo exciting growth potential&rdquo as it offers the REIT the opportunity to take part in the early development stages of Europe&rsquo s rapidly growing data centre space, says RHB Bank Singapore analyst Vijay Natarajan.

 

The analyst&rsquo s report, dated June 25, comes after SERT announced that it invested EUR50 million ($74.4 million) into the data centre fund. The data centre fund&rsquo s portfolio comprises interests in four early-stage data centre development sites in Ireland, Spain, Italy and Denmark with a secured and/or reserved 1116MW of power and &ldquo very good&rdquo visibility for an additional 563MW, SERT adds.

 

Based on JLL&rsquo s valuations, the estimated gross development value will come up to EUR29.5 billion over 15 years, based on a 100% interest in the fund.

 

These sites are currently progressing through development approvals and are in various stages of securing pre-leases with major tenant customers, SERT added in its June 24 statement.

 

SERT&rsquo s final stake in the data centre fund is expected to range between 4% to 8% depending on the final quantum of investments made by the other investors. SERT&rsquo s managers have indicated that they are open to potentially increasing the trust&rsquo s stake in the fund or selling its stake and crystallising value in future.

 

&ldquo As the transaction is done at a discount, SERT expects a valuation uplift for its stake upon completion. In addition, as the [data centre] fund progresses and various milestones &ndash eg power supply and tenants &ndash are secured, the value of the fund is expected to grow,&rdquo says Natarajan.

 

He adds that the transaction is to be funded by debt using SERT&rsquo s existing revolving credit facilities (RCF), bringing SERT&rsquo s post-transaction gearing to be around 43%. That said, SERT&rsquo s gearing is expected to drop slightly by the year-end from revaluation gains for its European portfolio on the back of rate cuts.

 

&ldquo As the [data centre fund] is currently not income-generating, the debt funding cost will be paid out of the fund&rsquo s valuation gains &ndash hence, no impact is expected on [SERT&rsquo s] DPS (or distribution per stapled security),&rdquo the analyst notes.

 

At this point, Natarajan has kept his estimates unchanged with SERT&rsquo s FY2025 ending Dec 31 DPS to be at EUR0.13. The analyst has also maintained his &ldquo buy&rdquo call and target price of EUR1.90.