85% of Cromwell EREIT portfolio sanction-safe
Only 10% was in Poland and 2% in Slovakia.
Cromwell European REIT reported its $3.752b (€2.5b) portfolio has no material issues arising from recent sanctions listings due to the Russia-Ukraine conflict. Over 85% of Cromwell EREIT's portfolio is in Western Europe, with only about 10% in Poland and 2% in Slovakia, two countries that share borders with Ukraine.
Most of Cromwell EREIT's tenant-customers in Poland and Slovakia are multinational companies such as European banks, global pharmaceutical companies, and technology companies. Amongst the tenant-customers in Poland, eight have some business exposure in Russia, with most still assessing the impact, if any, on their business. Cromwell EREIT confirmed one tenant-customer in Poland is an importer of coal mined by a Russian company, with the tenant-customer domiciled in Switzerland. Accordingly, Cromwell EREIT has limited exposure to tenant-customers with business exposure in Russia.
Cromwell EREIT's manager said it expects energy prices, agricultural commodity prices, and by extension, consumer prices to stay elevated in the near term. Business activities such as real estate transactions, travel, and tourism are likely to slow down in the short term. Manpower shortage is also expected to come into focus, as Ukraine supplies a large part of the migrant workforce in Europe. In the Czech Republic and Slovakia, many businesses that employ Ukrainian citizens have begun to report associated resourcing issues as Ukrainian men mobilised for military service.
Meanwhile, Cromwell Property Group, the EREIT sponsor, has established a crisis management team that is monitoring developments with the rapidly unfolding humanitarian crisis.
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