Is Stoneweg European Trust A Good Buy In 2026? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of Stoneweg European Trust and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Business Description

Stoneweg European REIT is an Office and commercial REIT that was listed in 2018 and owns properties across Europe. They are listed in Singapore with two separate denominations in EURO (CWBU) and SGD (CWCU).

What I Like About Stoneweg:

• Distribution has been relatively stable (Figure 8)
  

• Weighted Average Lease Expiry is well managed (Figure 11)
  

• Management has a clear strategy, is pre-emptive and takes action to adjust the property portfolio to adapt to current trends. The management aims to achieve around 70% in logistics, light industrial and data centres by 2027.
  

• Management has a good record of managing the portfolio to adapt to the changing trends as we’ve seen in the recent portfolio rejuvenation.

What I Do Not Like About Stoneweg:

• The counter is very illiquid (Especially for the SGD counter).

  
  

Updates From Recent Performance (FY 2025)

General Comments:

• Guidance for FY2026 distribution will be largely in line with FY2025
  

• Gross revenue was up 0.8% and NPI was up 2.5% supported by strong rental reversion of 9.8% and lower doubtful debt expenses.
  

• DPU from operations decreased by 4.66% due to higher finance costs which saw an increase of 28.66% due to their debt refinancing.
  

• Gearing improved by 3.10% to 38.0% with no debt maturing till 2030.
  

• The management expanded into Data Center developers via AiOnX with a 100million exposure (50% equity & 50% convertible bond). The management has communicated that they intend to expand their Data Center exposure to around 15-25% by 2027.

Positive Headwinds:

• The recent credit rating improvements from BBB- to BBB should help improve REIT’s ability to ask for a lower spread on their cost of borrowing. Though, this will only be seen beyond 2030.
  

• Exposure to the developmental Data Centre may bring about decent returns in the form of valuation uplift and rental income upon the completion of the developments. (2028 and beyond).

Negative Headwinds:

• Ongoing escalation in the Middle East may result in negative implications for the REIT in the form of higher property operating expenses and potentially lower tenant retention as their tenant’s business suffers from this episode as well.
  

• Potential Implosion in the global data centre industry might result in significant negative implications due to the higher risk associated with the ongoing developments.

  
  

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Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore