Cromwell reaps $276m as it sells Investa stake

By | octubre 4, 2017
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For the second time in the space of two weeks, Cromwell Property has stepped away from a potential deal, this time exiting its long-held 9.83 per cent stake in the listed Investa Office Fund for $276 million.

Property manager Investa Property Group has bought the 59.3 million securities in the $3 billion Investa Office Fund from Cromwell for $4.65 per security, which is an 18 per cent return on the stake that Cromwell bought in April 2016 at $4.24 per security.

This has bumped IPG’s stake in the listed vehicle to 19.95 per cent and has prompted market suggestions that the property platform may look to privatise the fund.

Cromwell bought its 9.83 per cent stake in April 2016, thwarting rival bidder Dexus, which made a cash offer for IOF in November 2015. Dexus’ offer went nowhere as a result. Since then Cromwell has said it wanted to make a formal offer, but none has eventuated.

It has been one of the longest-running battles for control of a large asset fund in the real estate investment trust sector.

In 2007, Morgan Stanley Real Estate Funds and other global sovereign and pension funds bought the Investa Property Group for about $6.5 billion.

Investa had three parts: direct assets, which were sold to Chinese Investment Corp for $2.4 billion, the funds management platform and a land division, the former Clarendon Homes.

Jonathan Callaghan, chief executive of Investa, said the acquisition of the Cromwell stake “further reinforces the alignment between Investa and IOF security holders”.

“This acquisition is a demonstration of Investa’s commitment to IOF and its ongoing strong performance,” Mr Callaghan said.

“Investa is proud of the performance of IOF under its management, where IOF has consistently outperformed the S&P/ASX200 A-REIT Index and its peers, and we look forward to continuing to deliver strong performance for IOF security holders.

“Investa Office owns a high quality commercial office portfolio with very high exposure to the outperforming Sydney and Melbourne markets, as well as exposure to the improving Brisbane market. We consider IOF an attractive investment opportunity for Investa Property unitholders,” Mr Callaghan said.

Cromwell float

Cromwell surprised the market on September 22 after the Brisbane-based developer and investor pulled its proposed $1.7 billion Singapore float which was to own a number of the group’s European assets.

It has been one of the longest-running battles for control of a large asset fund in the real estate investment trust sector.

Cromwell’s chief executive Paul Weightman said despite significant interest from strategic, institutional and retail investors, market conditions were the key reason for not registering the prospectus in line with the timetable previously provided to the market.

Brokers at Macquarie said while the intentions for the seed assets and existing European fund(s) are unclear, this is another disappointing outcome for CMW and follows the recent attempts to acquire Investa Office.

“The investment in IOF has been a profitable one for Cromwell,” Mr Weightman said.

“We would have liked to have been able to complete a deal, but as I have said previously, it became obvious to us that a friendly transaction was unlikely to proceed, regardless of the price that we offered.

“Upon careful consideration of all of our options, we have therefore decided that the best way forward for Cromwell security holders is to realise the value in our investment.”

Mr Weightman said the group will continue to focus on delivering value to security holders through the different strategic initiatives that Cromwell is currently undertaking.

He said the proceeds of the sale will be used to reduce gearing and for other general corporate purposes. 

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