Stoneweg Europe Stapled Trust (formerly known as Cromwell European Reit)

[Shrivathsa]

Interestingly, another European REIT is shooting up. My guess is it is due to a combination of interest rate cuts by ECB and the impending conversion to a Business Trust being the catalyst.

https://links.sgx.com/FileOpen/Stoneweg%...eID=847967

Am curious on whether if one has this under CPF Investment Scheme, what happens to those units? From memory, CPF IS does not allow Business Trusts, or would this be exempt since it is a conversion from REIT to Business Trust?

[ghchua]

Am curious on whether if one has this under CPF Investment Scheme, what happens to those units? From memory, CPF IS does not allow Business Trusts, or would this be exempt since it is a conversion from REIT to Business Trust?

Hi Shrivathsa,

No. It will not be exempted. Business Trust as an asset class is not included under the CPF Investment Scheme even when it was converted from a REIT. This had been seen in a previous case study from Capitaland Ascott Trust, when it was excluded from CPF Investment once it was converted from a REIT to a stapled security (which includes a BT component).

Your existing units will not be affected. They will remain in your CPF Investment Account. You can choose to hold or sell them in future.

However, you will not be able to add onto your existing holdings using CPF funds. Which means, if there is a rights issue, you will still be entitled to it but you will need to use cash to apply and the new rights units have to be transferred out to your CDP account after successful application.

PS: Moderator, could you please help to change the name of this topic to reflect the new name of the REIT? Thanks.

[weijian]

This is one of the 1st related party transaction after the new manager took over. In recent years, rather than acquiring mature assets, many REITs/Trusts have gone up the value chain by providing capital for development. Whether development or holding a mature asset, both are generally capital intensive. If it make sense to participate in the development, then the manager adds value (to OPMIs) by making the right decision to have the REIT participate in development.

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

[SINGAPORE] Stoneweg European Business Trust : SET 0% announced on Tuesday (Jun 24) that it has made a 50 million euros (S$74.4 million) investment in the Stoneweg Icona data-centre fund.

The stake of the trust in the fund is expected to range from four to eight per cent depending on the final quantum of investment made by the other investors.

https://www.businesstimes.com.sg/compani...ntre-sites

[Shrivathsa]

Activum sold a 17.65 sqm land for 11 million Euros in July 2024 in Spain. https://www.datacenterdynamics.com/en/ne...velopment/

Icona acquired 250K+ sqm land in May 2024 in Spain, the value was not disclosed.  Icona Capital Acquires Land for Data Centre Expansion in Europe - Icona Capital

Assuming that a 250K+ sqm land is pro-rata costed, it would come to a cost of 155.8 million Euros.

Even with say 20% appreciation in a year the value of land is say 187 Million Euro. For 55 Million Euro, one should ideally get 29% stake.

To get 4%-8% stake, at a cursory glance, the investment cost looks to be too high or maybe I am calculating costs too simplistically.

[weijian]

This is one of the 1st related party transaction after the new manager took over. In recent years, rather than acquiring mature assets, many REITs/Trusts have gone up the value chain by providing capital for development. Whether development or holding a mature asset, both are generally capital intensive. If it make sense to participate in the development, then the manager adds value (to OPMIs) by making the right decision to have the REIT participate in development.

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

[SINGAPORE] Stoneweg European Business Trust : SET 0% announced on Tuesday (Jun 24) that it has made a 50 million euros (S$74.4 million) investment in the Stoneweg Icona data-centre fund.

The stake of the trust in the fund is expected to range from four to eight per cent depending on the final quantum of investment made by the other investors.

https://www.businesstimes.com.sg/compani...ntre-sites

It is refreshing to know that Stoneweg REIT's DI are not supported by mgt fees paid in units. This can't be said for the majority of S-REITs, whether the "blue chip" ones or not.

On another note, SIAS have questioned about the related party transaction (RPT) of mid 2025. The RPT is of one where the REIT invests as a LP into the Sponsor's private fund. The GP is from the Sponsor. Such RPTs are quite common among S-REITs but if I remember correctly, the local sponsors like Keppel Ltd/Capitaland Investment generally avoid the fee layering by either rebating the AUM fee paid in the private fund, or the stake of the private fund is deducted from the total deposited property value when calculating the REIT's mgt fee. In addition, Capitaland Investment also reduces the typical 1% acquisition fee to 0.5% if it is a RPT.

ANNUAL GENERAL MEETING ON 28 APRIL 2026 RESPONSES TO STAPLED SECURITYHOLDERS’ QUESTIONS

Were FY 2025 distributions supported by realised capital gains or other “top‑up” mechanisms?
SERT’s FY 2025 distributions were not supported by realised capital gains, nor by management fees being paid in units. Distributions were funded entirely from recurring operating income, in line with the REIT’s distribution policy to pay out at least 90% of distributable income.

Can the independent directors clarify why acquisition fees are paid by the trust to the manager in relation to the AiOnX investment?
As permitted under the MAS Code on Collective Investment Schemes (Property Funds Appendix) and SERT’s Trust Deed, the Manager is entitled to an acquisition fee of 1% of the investment value in respect of acquisitions, including interested-person transactions. For the initial €50 million AiOnX investment, the acquisition fee of €0.5 million was paid in the form of Stapled Securities, in accordance with the Trust Deed

Can the independent directors confirm whether stapled securityholders are exposed to any form of fee layering, including fees at both the AiOnX fund level and at the trust level? How is the overall fee burden assessed and disclosed to ensure alignment with investors?
At the AiOnX fund level, the General Partner charges fees typical of private equity funds. Certain commercial terms are subject to confidentiality. SERT is not charged property-management fees at the AiOnX asset level that would otherwise duplicate fees payable under SERT’s existing property-management arrangements. The Business Trust Manager receives a management fee based on deposited property, including the AiOnX investment, in accordance with its Trust Deed.

AGM Q&A: https://links.sgx.com/FileOpen/SERT_AGM_...eID=884919

[jaco]

While it is great that SIAS puts a spotlight on the RPT related fee's, we could easily miss the forest for the trees here. The forest is that ultimate sponsor SWI Group will most likely focus this trust more and more on data centres. This is where the ambitions of the SWI Group are. Their latest acquisitions and communications point in that direction. In the same Q&A as mentioned above, the Stapled Trust board mentions:
  

SERT has identified selected logistics and light industrial assets within its portfolio that may be suitable for repositioning to data‑centre use and is progressing early‑stage plans where commercially and technically feasible.

So, we may assume that the take-over of the REIT from Cromwell was already meant to acquire logistics and industrial sites suitable to redevelop as data-centres in the first place. In Europe, finding new locations for data-centres is the main hurdle to develop data-centres. Changing an existing warehouse into a datacentre will not meet with much resistance from nearby residents, if there are any at all, because the buildings are comparable in terms of "aesthetics".

If the Stoneweg pivot into datacentres will be successful, nobody will complain about the RPT related fees considering the huge valuation appreciations it will yield. Conversely, if the pivot should fail, then it won't be the fees that brought it down. The bigger concern here is that sponsor Stoneweg/SWI Group is a very young company. It has not built even one data centre yet. 

This is all not necessarily bad, however -as a unit holder myself- I will be keeping an eye on the development progress of their first data centres, with major milestones early 2027. 

PS: I always considered a Business Trust as a kind of 'sidecar' to the REIT within a Stapled Trust; just a vehicle for things that the REIT can not do, such as large (re)developments like the data centres in this case. However, there seems to be no limit on the size of the BT compared to the REIT within a Stapled Trust. The BT can be expanded as much as the boards wishes and there is not much the unit holders of the Stapled Trust can do about it. Correct me if I am wrong about this.   

PS2: Moderator, could you please help to change the name of this topic to reflect the new name of the REIT/Stapled Trust, which has changed once again: Stoneweg Europe Stapled Trust.

[weijian]

I have taken a closer look at this REIT manager internalization proposal, with the Sponsor SWI Group selling the asset/property mgr to SERT. The motivation seems to be triggered by the SWI Group doing an "all-in" on data center development and decide to sell off its asset mgt arm, ie. a fundamental shift in business model. Some notes on this internalization:

(1) Buying over asset/property mgr (property mgr also manages 3rd party assets) for 103mil (~60% new shares, 40% cash). ~Total 100 personnel across 10 countries.
(2) Total 3.1bil AUM consists of 2.3bil REIT asset + 0.8bil 3rd party property mgt --> There are 2 price tags: REIT asset mgr's purchase price is ~4% of AUM, while 3rd party property mgr is 1% of AUM --> Blended valuation is ~3.2% of AUM
(3) Expect ~10mil annual net gain (with the excess primarily from 3rd party mgt contracts). The current asset/property mgr is leaner and generate 1x more EBIT than when SWI Grp bought it from Cronwell in 2024.
(4) Sponsor and its entities will sign an exclusivity agreement where SERT has rights to manage their related assets, and be presented with acquisition/mgt contract opportunities if they are any. SERT will still pay a finder/introducer fee.

If this sale materializes, it will be the 3rd internally managed S-REIT/Trust (Alpha Integrated REIT and Netlink Trust)

Proposed internalisation

SERT will internalise the REIT Manager, the BT Trustee-Manager and the pan-European logistics and light-industrial operating platform that manages both SERT's assets and selected third-party asset management contracts

Transaction to be funded predominantly through issuance of 40 million stapled securities at €2.00/stapled security

https://links.sgx.com/FileOpen/SERT%20-%...eID=905304