Australia’s Charter Hall and Singapore-based Ascendas-Singbridge are believed to have shown interest in buying a stake in Cromwell Property Group from its largest shareholder, Redefine Properties.
South Africa’s Redefine, which owned more than 25% of Brisbane-based Cromwell at the end of June, is understood to have hired an investment bank to sound out potential buyers.
Based on Cromwell’s current share price, the stake is worth AUD424m (€284m). Cromwell has a market value of almost AUD1.7bn
Sources close to Charter Hall confirmed that it had been approached and had expressed an interest. A spokesman for Charter Hall said: “We do not comment on market speculation.”
A source close to Ascendas-Singbridge said representatives of Cromwell and Redefine had approached the company over different matters in recent months.
When contacted by IPE Real Estate, Marc Wainer, executive chairman of Redefine, reiterated his previous public statement that “our stake is absolutely not for sale”, but added that, if he was offered AUD1.20, he might think about it.
Cromwell shares closed on Monday at AUD0.955 per unit – down two cents after it withdrew a planned initial public offering to list its European portfolio in Singapore on Friday.
Cromwell had hoped to raise up to €1.25bn from the float, at the same time freeing itself of a portfolio that includes three assets it jointly purchased with PFA Pension of Denmark for €205m to seed a pan-European real estate fund. Cromwell has since bought the assets back.
A source familiar with the Cromwell-Redefine relationship claimed Redefine’s patience with Cromwell management had been tested over three key decisions: the acquisition of the Valad Europe platform in 2015; the failed attempt to take over the Investa Office Fund (IOF) last year; and last week’s aborted IPO.
A source familiar with Ascendas-Singbridge told IPE Real Estate that there is an awareness in the industry that Ascendas-Singbridge is looking to acquire a platform in Australia, but he said he did not expect it to be comfortable with what he calls “the dynamics” surrounding Cromwell.
The source said he understands AscendasSingbridge had been approached over the IOF takeover and the Singapore IPO but opted out.
“Some investors thought it weird that Cromwell, an Australian company, should try to list a vehicle owning assets in Europe in Singapore,” he said. Redefine’s stake in Cromwell is not on the Ascendas-Singbridge radar “at this moment”, he added.
Cromwell’s gearing ratio was 45.2% on 30 June, among the highest of Australia’s listed real estate investment trusts (REITs). This and its reliance on short-term debt last week prompted the international credit agency Moody’s to put Cromwell on its watchlist for a rating downgrade.
Observers believe that any buyer of the Redefine stake would probably seek to privatise the listed company, which could prove challenging because Cromwell’s register is dominated by small retail investors.
A source in touch with Redefine told IPE Real Estate that the South African company is likely to hang on to its stake at least until next year because Cromwell pays high distributions to unitholders.