Disclaimer: This article is in no way financial advice, nor solicitation to buy or sell shares in this company. It is purely for educational purposes only. You are highly recommended to conduct all necessary due diligence and make your own informed decisions before making any financial decisions. The writer already owns shares in this company and may at any point in time increase or reduce their position without prior notice. Do not try to copy trade!

I was doing some screening for ideas recently in the SG market, looking for:

1. Undervalued REITs priced below book value;

2. High and improving dividend yields; and

3. Improving net income.

Usually, these criteria rarely intersect because REITs that trade below book value or have high dividend yields typically have poor prospects and outlook. The only one that came up in my screener was Stoneweg, and as I read about the company, I found myself liking the CEO and their outlook.

In this post, let’s go through Stoneweg’s business outlook and explore the opportunity we find ourselves with. For an introduction to REITs, you may read my previous article here: https://www.doitduit.com/p/reit-sector-to-benefit-with-interest-rate-dropping-audio

1. Background and History

Stoneweg Europe Stapled Trust was originally known as Cromwell European REIT back in 2017, led by Cromwell Property Group from Australia. The REIT historically invested mainly in European Office properties.

In 2024, Cromwell wanted to exit the European market to focus at home and successfully sold their stake to Stoneweg SA from Geneva in Jan 2025 and the company rebranded into Stoneweg European REIT. In June 2025, Stoneweg merged their REIT and Business Trust Arm into what is known today as Stoneweg Europe Stapled Trust.

This Stapled Trust structure offered more business flexibility compared to typical REITs, in that the Trust can pursue developmental businesses and hold other kinds of assets other than purely property. This enabled them to invest into “upcoming” developments such as Data Centers in Europe and other financial mechanisms like convertible loan stocks rather than having a pure rental model.

Note: A similar business in Malaysia is KLCC, or KLCCP Stapled Group, which is a combination of KLCC Properties and KLCC REIT. 

It’s worth noting that Stoneweg Capital Holding (the major shareholder of SEB) itself is listed in Amsterdam under the ticker SWICH and has performed very well after listing.

Another important point to note is that this is a dual-currency listing in the SGX, with the listing available in both Euro (ticker: SET) and SGD (ticker: SEB) currencies. Functionally, owning either ticker is the same but SEB has fewer currency conversions to deal with.

2. Cleaning the Kitchen And Disappointing the Market

Since 2022, they have been restructuring the business:

1. Refinance maturing debt;

2. Dispose non-performing office properties;

3. Exit Slovakia; and

4. Acquire more logistics and light industrial assets.

Previously, offices made up almost 70% of their portfolio, but today it is about 40%. The company is looking to reduce office exposure to about 30% by next year while owning about 70% in logistics, light industrial, and data center assets focusing on Western Europe which they foresee will have increasing demand.

The disposals of the office assets generally incurred losses due to:

1. Sold below carrying value, plus loss of revenue in the interim between the disposal and new acquisitions;

2. Interest rates were rising rapidly during the 2022-2024 period, property revaluation losses frequently occurred due to the way rental property value is calculated; and

3. Refinancing efforts alongside the high interest rate environment caused a sharp rise in financing costs, thus affecting profits and distributable income as well.

Ultimately, all this restructuring as well as the unfavourable macro environment caused:

1. Net Asset Value per share to decline from about €2.52 in FY2021 to about €2.03 in FY2025; and

2. Distributions per share to drop from 16.96 Euro cents to 13.39 Euro cents in the period.

Understandably, the market views these developments negatively and the shares of the company is trading at around 0.75-0.8x price to book value only with an 8-9% trailing DY showing lack of confidence in the company’s prospects.

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