Cromwell Group Announces Merger for Platform Growth

Cromwell Property Group (ASX: CMW) has revealed its plans for growth through a merger between Cromwell Direct Property Fund (CDPF) and Australian Unity Diversified Property Fund (AUDPF). The merged fund is expected to have a diversified portfolio of high-quality assets valued at approximately AU$1.1 billion. Cromwell will also acquire Australian Unity Property Limited (AUPL), the responsible entity of AUDPF, in a separate transaction.

Improved Diversification and Stability

The merger aims to offer unit holders in CDPF and AUDPF increased ownership interests in a fund that is characterized by improved diversification and stability. This includes enhancing geographic and sector diversification, while simultaneously maintaining robust lease expiry and occupancy metrics. The combined fund aims to offer increased scale, diversification, and stability of income and distributions.

Strategic Focus on Funds Management

Cromwell's Chief Investment Officer, Rob Percy, emphasized that the merger aligns with the company's strategic focus on growing its funds under management. The transaction will contribute approximately AU$425 million in third-party gross assets to Cromwell's Australian platform. This move towards a capital-light funds management business model aims to provide long-term stable and risk-adjusted returns for Cromwell investors.

Positive Outlook and Collaboration

Dr. Joe Fernandes, Chief Investment Officer and Executive General Manager at Australian Unity, expressed excitement about the merger and highlighted Cromwell's reputation as a leading real estate funds manager. The collaboration is expected to preserve and enhance value for investors in the combined fund.

Details of the Merger

The completion of the merger is contingent upon the approval of AUDPF unitholders and the fulfillment of other necessary conditions. As part of the process, the Cromwell Diversified Property Trust will acquire units in CDPF to support a one-time withdrawal facility for AUDPF unitholders. It is expected that the transaction will be finalized by late 2023, incorporating the framework of the Cromwell Direct Property Fund and issuing units to AUDPF unitholders within CDPF.

Conclusion

Cromwell Property Group's merger with Australian Unity Diversified Property Fund aims to drive platform growth and enhance the stability and diversification of the combined fund. With a focus on funds management and a strategic approach to capital allocation, Cromwell aims to deliver sustainable returns to its investors. The completion of the merger is anticipated later this year, marking another milestone in Cromwell's expansion and commitment to value creation for its stakeholders.

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