This article is from the Australian Property Journal archive
ASX-listed Cromwell is exiting its troubled European operations, selling its fund management platform and interests in the continent, including the Cromwell Italy Urban Logistics Fund and €2.2 billion Cromwell European REIT, to Stoneweg for $457 million.
The deal comes just a week after Cromwell sealed the $465 million of its portfolio of Polish shopping centres to Prague-based SCF.
“The transaction continues the group’s strategy to simplify the business and transition to a capital-light fund management model, through the sale of non-core assets and realigning to Cromwell’s core competencies in Australia and New Zealand,” Cromwell said yesterday when announcing the deal with Geneva-headquartered Stoneweg.
Citi and UBS brokered the deal.
Stoneweg co-founders, Jaume Sabater (CEO) and Joaquin Castellvi, said in a statement the acquisition will double the group’s assets under management to a circa €8 billion, comprising equity and debt investments in the European residential, light industrial, logistics, hospitality, office, and cultural and leisure sectors, employing over 300 professionals in 25 offices. Cromwell’s European platform comprises over 160 assets and 1,600 tenants, with 14 local offices in 12 European countries.
“The transformational transaction will build on the strengths and strong track records of both Stoneweg and Cromwell Europe to create a leading European real estate business, with diverse and substantial capital relationships and product offerings,” Stoneweg’s cofounders said.
Cromwell said the sale proceeds will initially be used to repay debt. Following completion of the transaction, Cromwell’s pro-forma gearing and look-through gearing will both reduce to around 25%.
The sale represents the conclusion of a $1.6 billion sale program undertaken since December 2021 to reduce its gearing, while consecutive financial losses have been in part driven by significant writedowns to the value of its European assets. Among the more recent divestments have been a 50% share of its joint venture retail asset in Ursynów, Poland to its joint venture partner for $69 million, and a 50% stake of its Italian logistics fund assets for $91.4 million to Hong Kong-based asset manager Value Partners Group.
At home, it sold 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 will continue to manage $4.8 billion of assets in Australia and New Zealand, and said it would “focus future efforts on growing its Australian and New Zealand funds management platform”.
“This is a turning point for Cromwell to focus on leveraging the exceptional team we have in Australia, to drive value from our local asset and funds management business,” said Cromwell chair Gary Weiss.
“In the current operating environment, numerous options were considered to simplify and de-risk the business, and we believe that this transaction will provide the debt reduction and working capital needed to move forward in a focused and value-accretive way.”
“Following the financial completion of the transaction, Cromwell will review its capital position and funding requirements and options for possible capital management initiatives.
“We extend our thanks to our investors and other stakeholders for remaining engaged and supportive as we have executed on Cromwell’s refreshed strategy over the last few years,” Weiss said.
Weiss was a central figure in the protracted and bruising battle for control Cromwell, representing Asia-Pacific real estate manager ARA. ARA was then acquired by pan-Asian logistics giant ESR.
Cromwell and Australian Unity last year terminated a proposed merger that sought to establish a $1.1 billion unlisted investment property fund, due to increasing uncertainty in the market.
