This article is from the Australian Property Journal archive
CONTINUING on the path to becoming a capital-light fund manager, Cromwell Property Group is selling a 50% stake of its Italian logistics fund assets, leased to logistics giant DHL, to Hong Kong-based asset manager Value Partners Group.
The sale of the share in the seven Cromwell Italy Urban Logistics Fund assets is based on a portfolio asset value of €55.8 million (about $91.4 million, at 100%), a 9.4% increase on Cromwell’s initial purchase price.
The properties are located in northern Italy, near key transport hubs of Milan, Turin, Bologna and Verona, and have a combined gross lettable area of 46 sq km and are fully let to DHL on long-term leases with an overall portfolio WALT of 7.8 years.
“The part-sale of the Cromwell Italy Urban Logistics Fund is another step in the organisation’s strategic journey to repositioning itself as a capital-light fund manager,” Cromwell CEO Jonathan Callaghan said.
“The Italian assets were identified as non-core to Cromwell’s business in 2022 and, as a result, Cromwell actively marketed the assets for sale or co-investment.”
The sale proceeds will return circa €12.5 million (A$20.5 million) of equity to Australia for gearing reduction initially and in time, future redeployment on strategic initiatives.
“We will continue to focus on simplification of the business through our non-core asset sale process, including those assets in the Cromwell Polish Retail Fund, as well as some additional non-core assets in Australia, applying proceeds to debt reduction in the first instance to ensure security through an ongoing difficult operating environment.
Callaghan any redeployment would not “unduly” increase gearing risks.
Settlement is expected late this month. Cromwell’s European operations team will continue to manage the portfolio.
The deal marks Value Partners Group’s first European investment.
Rachel Tong, managing director and head of real estate private equity for Value Partners Group, said, “This expansion and geographical diversification of our logistics portfolio will deliver exciting opportunities for growth and profitability for our investors”.
“Italy is an important logistics hub in Europe. We are confident of stable returns.”
Lorenzo Caroleo, head of Italy at Cromwell said, “Having owned and managed this portfolio since 2020, we have an excellent understanding of the assets, the occupier, and the demand for these types of assets across the north of Italy. The joint venture with Value Partners would allow us to grow this portfolio with selective acquisitions of urban/last mile logistics assets, leased to occupiers with strong covenants, that are located near the major urban hubs in Italy and other cities in Europe.”
Cromwell sold down $381 million worth of non-core Australian assets during the 2022 calendar year, including its Brisbane office tower headquarters for $108.5 million, plus a Village Cinemas in Geelong and a Canberra building leased to the Therapeutic Goods Administration.
Cromwell Property Group also sold its half-stake in LDK Healthcare for a 67% premium to the book value of its equity interest during the period.
