Cromwell Urge Caution with ARA31 October 2019
As Cromwell approach an important AGM, the group has issued a quarterly update to investors, reiterating the focus on Investing to Manage but also encouraging unit holders to be circumspect with regard to any direct approach from ARA, their largest shareholder.
ARA own just under 20% of the stock and have moved to have a representation on the Board with a resolution to be put to unit holders at their AGM.
ARA are not seen by Cromwell to be a direct competitor to Cromwell in Australia, however they have both bid on the same assets including 400 George Street in Brisbane, whilst in Europe, Cromwell and ARA are both active investors.
In an effort to keep ARA out of the Boardroom, Cromwell are seeking to ensure that all non-executive directors are independent and free of any conflict, so they can act in the best interests of all securityholders. On that basis, the Board appointed two new independent non-executive directors on 21 October 2019 and has recommended against the election of ARA’s new nominated Board representative.
The vote at the AGM will set the scene whether corporate activity in Cromwell heats up.
In terms of the operating business, Cromwell continues to recycle capital from the assets sales into new opportunities, selling the 50% interest in Northpoint Tower for $300 million and acquiring 400 George Street in Brisbane for $524.75 million.
Cromwell are also making progress on their $1 billion pipeline of active asset opportunities, including the repositioning of an old office style campus in Greenway, ACT into a seniors’ living village with our joint venture partner LDK Healthcare.
In Europe Cromwell has recently signed agreements to acquire all of the third-party investor interests in the Cromwell Polish Retail Fund which consists of seven retail centres with a gross asset value of approximately $1 billion.
In Singapore, the Cromwell European REIT (CEREIT) continues to grow following the completion of an €88.8 million acquisition of an office asset in Poznan in Poland. This takes the REITs' portfolio to 102 properties in seven European countries. Cromwell’s 32% stake is currently worth approximately €400million.