Cromwell European REIT expects its tenant retention rate to improve this year, from around 60% in 2019, even when factoring in the potential impact of coronavirus on business activities.
Cromwell said this is partly down to a large-scale retention programme launched before the coronavirus outbreak.
Occupiers are also predicted to become more risk-averse and likely to stay in current premises, while moving budgets are cancelled or frozen.
Separately, the Singapore-based REIT has also drawn down its €150m (£95m) revolving credit facility and placed the cash in the bank. A portion of this is earmarked to refinance existing debt; the first debt expiry, taking into account a built-in extension period, is in H2 2021. The company currently has cash reserves of more than €200m.
Rent deferrals will also be offered to some of its occupiers. The REIT, which primarily invests in offices, retail and light industrial, has properties in Denmark, Finland, France, Germany, Italy, the Netherlands and Poland.
Cromwell said 139 smaller tenants, representing 9.7% of its annual rent roll, has asked for rents to be deferred for one or two months.
This includes its four-star hotel in Saronno near Milan, which is temporarily closed, as well as small and medium-sized enterprises such as cafes, childcare centres, gyms and public car park operators.
In exceptional cases, the REIT is also considering rent-free leases as an incentive for an early lease extension or removal of break options. It would only agree to this after a “thorough assessment of [occupiers’] business and credit worthiness”.
Simon Garing, chief executive and executive director of the REIT’s manager, said it has not yet agreed to rental rebates for any occupier except for its sole cinema operator in Lissone. This has stayed closed in the government shutdown for the past seven weeks, causing a €162,000 rent loss.
“At this stage we have not had to make blanket provisions for “rent relief”, nor are we offering across-the-board rent waivers,” said Garing.
There have not been any bankruptcies so far in the Singapore-listed company’s portfolio as a result of Covid-19, seven weeks into the crisis.
Elsewhere Andreas Hoffman, head of property, noted that among its light industrial and logistics properties, some of its bigger tenants are looking for more space as demand for e-commerce during the coronavirus crisis grows.
He pointed to an unnamed global parcel delivery occupier in Denmark, which is seeing heightened demand for their cargo flights while commercial flights remain suspended.
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