Stoneweg Europe Stapled Trust Finalizes €85 Million Unsecured Refinancing, Marking Completion of Balance Sheet Optimisation Programme

Key Highlights for Investors

• €85 million unsecured facility secured with a five-year tenor and the option to extend by 12 months. €70.63 million will be immediately drawn to refinance existing debt.
• An accordion feature allows the facility to be increased up to €185 million, granting significant financial flexibility for future needs.
• Margin improvements and sustainability-linked features: The facility is priced at a lower margin compared to the previous facility, with further reductions possible upon meeting specific sustainability targets.
• Debt maturity profile strengthened: Weighted average debt expiry (WADE) is now extended to almost 6 years, with no debt maturities until 2030.
• Credit rating upgrade: Fitch has upgraded the trust’s credit rating to ‘BBB’ with a stable outlook, reflecting improved financial strength and potentially reducing funding costs further.
• Completion of this refinancing marks the final leg of a substantial balance sheet optimisation programme, with nearly €900 million in debt refinanced year-to-date at lower margins and longer tenures.
• Sustainability-linked pricing: Margin reductions are tied to hitting targets for GRESB ratings, green building certifications, and green lease agreements.

Detailed Information for Shareholders

Loan Facility Terms and Strategic Rationale

The new €85 million facility, arranged by Banque Internationale à Luxembourg (BIL) and Qatar National Bank (QNB), replaces an existing €70.63 million loan and provides additional liquidity for general corporate purposes. The initial drawdown is €70.63 million, with the option to increase the facility up to €185 million through an accordion clause, subject to certain conditions.

The margin on the new facility is lower than the previous one, reflecting Stoneweg Europe Stapled Trust’s (SERT’s) improved investment-grade credit profile. Margin reductions are further possible if SERT achieves specified sustainability performance targets, such as improved GRESB ratings, an increased number of green-certified buildings, and a higher proportion of green leases. This aligns with SERT’s ongoing focus on ESG and sustainability across its portfolio.

The refinancing extends the trust’s debt maturity profile, with no significant debt maturities until 2030. The weighted average debt expiry (WADE) now stands at almost six years, and the average cost of debt is approximately 3.9% per annum.

Implications for Shareholders and Share Price

• Reduced refinancing risk: The facility and the broader refinancing programme significantly lower the risk of near-term refinancing and support overall funding cost stability.
• Enhanced financial flexibility: The accordion feature provides capacity to quickly scale up debt if required for strategic acquisitions or operational needs.
• Support for portfolio repositioning: The strengthened balance sheet and improved credit rating underpin SERT’s ability to execute the next phase of its portfolio repositioning, which is likely to include a greater focus on logistics, light industrial, and data centre assets.
• Potential for cost savings: The lower margin and sustainability-linked incentives could further reduce borrowing costs, benefiting future distributions to unitholders.
• Change of control clauses: The facility contains standard prepayment clauses if there is a change of control or management, or if the trustee is replaced without necessary measures. None of these events have occurred as of the announcement date, but shareholders should be aware as such occurrences could accelerate loan repayments and impact financial flexibility.

Stoneweg Europe Stapled Trust Overview

SERT, formerly Cromwell European REIT, is a stapled group comprising Stoneweg European Real Estate Investment Trust and Stoneweg European Business Trust. The trust focuses on income-producing commercial real estate in Europe, with at least 75% weighting to Western Europe and the logistics/light industrial and office sectors.

As of the latest update, SERT’s portfolio is valued at €2.2 billion, covering 97 predominantly freehold properties close to major gateway cities in the Netherlands, Italy, France, Poland, Germany, Finland, Denmark, the Czech Republic, and the UK. The portfolio spans approximately 1.6 million sqm and serves over 760 tenant-customers. SERT is listed on the Singapore Exchange (SGX), with the sponsor (SWI Group) holding a significant 28% stake.

About the Sponsor

SWI Group, the sponsor of SERT, manages over €10 billion in assets across real estate, data centres, credit, and financial sectors, and operates in 15 European countries, the US, and Singapore. Stoneweg, its tangible assets arm, has a track record across logistics, industrial, data centres, living, hospitality, and experience assets. Its listed mandates represent about 40% of group AUM.

Potential Share Price Impact

This refinancing and balance sheet optimization is likely to be positively received by the market, given:

• The elimination of near-term refinancing risk and strengthened debt maturity profile.
• Improvement in credit rating and borrowing costs, which may enhance distributions.
• Enhanced financial flexibility and alignment with sustainability trends, potentially attracting ESG-focused investors.

However, investors should monitor for any potential change-of-control events or management changes, as these could trigger prepayment clauses and affect the trust’s financial position.

Disclaimer

This article is for informational purposes only and does not constitute or form part of an offer, invitation, or solicitation of any securities of Stoneweg Europe Stapled Trust (SERT) in Singapore or any other jurisdiction. The value of SERT units and the income derived from them may fall as well as rise. Investments in SERT are subject to risks, including the possible loss of the principal amount invested. Past performance is not indicative of future results. Please consult your financial adviser before making any investment decisions.

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