This article is from the Australian Property Journal archive
ONE time flourishing property darling and Orchard Funds Management has found a savior to rescue it.
Orchard which in May last year was forced to sell to offload the highly leveraged listed property vehicle, Orchard Diversified Property Fund to South Africa’s Growthpoint Properties, has shut shop and sold out to Cromwell.
The sale marks an end to Orchard which only three years was considered the “new kid on the block” destined to become a major player in the listed property sector.
Cromwell has entered into a due diligence to buy Orchard for $15 million. Cromwell claims the deal will add $1.5 billion of assets to its assets under management because it will takeover the majority of Orchard’s funds, including the $690 million Orchard Diversified Property Fund; $417.1 million Commercial Office Fund; $236.3 million Childcare Property Fund; and $82.1 million Chevron Renaissance Property Trust.
A number of the Orchard funds have relatively high gearing and/or near term leasing risks.
Cromwell said it is in the process of finalising a strategy for each fund which will result in the best medium term outcome for Orchard fund investors.
Cromwell has fleshed out some ideas and said it could sell off the assets to other parties or into new Cromwell managed funds, similar to a deal proposed by the group in relation to one of its managed funds recently.
Cromwell currently has a gearing of 48% and it recently proposed to buyback assets from the unlisted Cromwell Property Fund, which is highly geared and owns assets like 321 Exhibition Street Melbourne, which is currently vacant.
Australian Property Journal
