Singapore-listed Cromwell European Real Estate Investment Trust (CEREIT) has sold its Piazza Affari 2 office asset in Milan to Italian fund manager Kryalos SGR for €93.6m.

The sale marked the first major step in CEREIT’s previously-stated strategy of divesting non-core and non-strategic assets over the next 2-3 years to recycle into its redevelopment and asset enhancement programmes.

The proceeds from the Piazza Affari sale will be used to pay down debt and would reduce CEREIT’s gearing ratio by 2.1% to 37.2%. 

Post-transaction, CEREIT’s portfolio would be 50% weighted to the light industrial/logistics sector, and its portfolio weighting to Italy would drop from 23.4% to 20.3%.

The transaction was done at a 14.6% premium to the 2017 purchase price and €200,000 above the recent June 2023 valuation, said Simon Garing, CEREIT’s CEO and executive director.

“We remain committed to our well-publicised strategy to recycle capital through rejuvenating some of CEREIT’s other strategically-located older office assets in the Netherlands and Italy, where we also expect good tenant interest and superior risk-adjusted returns,” Garing said.

CEREIT aims to raise up to €400m from asset disposals.

Garing said CEREIT would proceed with redevelopment of Nervesa 21, a project offering 10,000sqm of office space, which is on track for completion by the end of this year.

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