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Cromwell Property Group has announced a merger of its Cromwell Direct Property Fund (CDPF) with the Australian Unity Diversified Property Fund (AUDPF).
CDPF’s responsible entity, Cromwell Funds Management Limited, has signed off on a Merger Implementation Deed with Australian Unity Property Limited.
The merger will create one fund with a diversified portfolio of 15 assets valued at $1.1 billion.
Unitholders in CDPF and AUDPF would have interests in the new fund with improved diversification, stability and strong weighted average lease expiry and occupancy metrics, Cromwell said.
In addition, Cromwell has announced a Share Sale and Purchase Agreement with Australian Unity Limited to buy AUPL as AUDPF’s responsible entity for $17 million.
This will only go through if AUDPF’s unitholders agree to the merger and it is completed.
Cromwell was keen to reuse its capital to increase the funds it had under management, Cromwell chief investment officer Rob Percy said.
“The proposed transaction aligns with Cromwell’s strategic exit from non-core assets and recycling of capital to grow Cromwell’s funds under management, adding approximately $425 million in third-party gross assets to our Australian platform,” Percy said.
“This transaction continues our journey to a capital-light funds management business model and enables us to continue to provide Cromwell investors with long-term stable and risk-adjusted returns.”
Part of the merger involves the Cromwell Diversified Property Trust subscribing for up to $12 million worth of units in CDPF to create a one-off withdrawal facility for AUDPF unitholders.
If AUDPF unitholders agree to merge, the new fund will use the CDPF’s framework with CDPF units issued to AUDPF unitholders.
Completion of the merger is expected to occur in late 2023.
Cromwell is an internationally operating real estate investor and fund manager and as of December 2022, it had an Australian investment portfolio of $2.8 billion and $12 billion worth of total assets under management across Australia, New Zealand and Europe.
