Cromwell Property Group, which has sought to take over the listed Investa Office Fund (IOF), has voted against proposals to partially internalise the fund’s management platform.

Cromwell, the largest shareholder of IOF, said the proposal to buy 50% of the fund’s management platform was the “worst of all worlds” for IOF investors.

The property fund management company, led by Paul Weightman, has long sought to buy all shares in IOF. Its latest offer came in April.

But a proposal for IOF to buy a 50% stake in its management company could scupper Cromwell’s ambitions.

The management platform is currently owned by another fund, the unlisted Investa Commercial Property Fund (ICPF).

An agreement is in place that once IOF’s assets under management reach AUD3.5bn (€2.34bn), it can buy half of the management company. That milestone was reached last year and IOF has until the end of May to exercise the right.

Cromwell, which owns 9.83% of IOF securities, making it the largest shareholder, said the proposal “materially benefits ICPF while offering limited value and marginal accretion for IOF investors at a cost of at least AUD45m.

As well offering no certainty of a return on investment, the proposal will have a negative impact on the value of IOF securities, Cromwell said.

It also described the proposal as an “unsatisfactory concept”.

Cromwell said: “We remain highly sceptical of the proposed governance arrangements, and in our view the proposal appears to embed, continued adverse governance practices.”

IOF was not available for comment, but the fund’s manager Penny Ransom told IPE Real Estate earlier this year that the proposals could benefit investors.

“If you look at other listed funds which own their management platform, they benefit from the fees from the platform and the growth in capital value as assets under management increase,” she said.

“Potentially, it would also create a better alignment with the other owner of the platform, and we would jointly make decisions involving our assets.”