Cromwell and Australian Unity ink $1.1b merger

The Gary Weiss-led Cromwell Property Group has boosted its suite of funds under management in a deal with Australian Unity that will add another 15 new properties to the portfolio.

The deal will see the merged fund own a portfolio of 15 offices, retail and service station assets, valued at $1.1 billion. Under the plan, unit holders in the unlisted Cromwell and Australian Unity Diversified fund jointly own interests in a larger entity with improved geographic and sector diversification, and strong weighted average lease expiry and occupancy metrics.

Cromwell chairman Gary Weiss.
Cromwell chairman Gary Weiss.Credit: Jessica Hromas

The Brisbane-based Cromwell will pay Australian Unity $17 million through shares and cash, which will require a vote by unitholders.

Cromwell is an ASX-listed diversified trust with a market value of $1.45 billion. Known as a corporate raider, Dr Weiss was appointed chairman in March 2021 after his ARA Property Group made a proportional takeover of Cromwell and forced a board spill.

Weiss is also the chairman of property group Ardent Leisure and Estia Health Limited.

In June 2021, Jonathan Callaghan, who previously led Investa, was appointed chief executive of Cromwell. Last week Cromwell said it was selling a 50 per cent stake of its Italian logistics fund assets to Hong Kong-based asset manager Value Partners Group in a joint venture deal.

Callaghan has said he wants to have a “capital lite” business model and focus on boosting its funds under management through a suite of unlisted trusts.

This will see more sales of what the business considers non-core assets such as its Polish retail fund assets.

“We will continue to focus on simplification of the business through our non-core asset sale process, including those assets in the Cromwell Polish Retail Fund, as well as some additional non-core assets in Australia, applying proceeds to debt reduction in the first instance to ensure security through an ongoing difficult operating environment,” Callaghan said.


“Any redeployment will be measured and disciplined without unduly increasing gearing risks.”

Cromwell’s chief investment officer Rob Percy said the proposed transaction with Australian Unity aligns with Cromwell’s strategic exit from non-core assets and recycling of capital to grow Cromwell’s funds under management.

It will add about $425 million in third-party gross assets to Cromwell’s Australian platform.

“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,” Percy said.

Australian Unity chief investment officer Dr Joe Fernandes, said the merger of the Australian Unity diversified fund with the Cromwell fund will create a combined fund that benefits investors through increased scale, diversification, and income and distribution stability.

“Cromwell’s reputation as a leading real estate funds manager and a custodian of investors’ capital places the combined fund in good stead for future success,” Fernandes said.

In its February results, Cromwell reported a 2023 first-half statutory loss of $129.5 million due to a fall in property valuations, compared to the $132.5 million interim profit it had booked a year earlier.

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