Published 28 September 2009
A Brisbane-based property trust with both old & new New Zealand connections is seeking to reignite investment interest from this side of the Tasman.
The Cromwell Riverpark Trust’s parent company, Cromwell Corp Ltd, evolved from the reverse takeover of Corporate Equities Ltd, a New Zealand-listed offshoot of Corporate Investments Ltd, both headed by Peter Masfen.
Both of the NZ-listed companies succumbed in the 1987 sharemarket crash, although Corporate Equities lingered as a shell with about 600 New Zealanders still on its share register.
“They’ve seen their shares go from a dollar to a cent and back again,” chief executive Paul Weightman said.
One new connection is Michelle McKellar, former head of real estate consultancy CB Richard Ellis in New Zealand, who’s been a non-executive director of the Cromwell Group for 2 years. Finance director Daryl Wilson is also a New Zealander.
The trust has an $A95.15 million bank loan and is seeking a total $A91 million from investors to buy an old gasworks site on Breakfast Creek Rd at Newstead Riverpark, 2km from the Brisbane cbd, and fund construction of the 7-storey Riverpark office building which will be the headquarters of the Queensland Government-owned Energex Ltd.
The Green Building Council of Australia awarded the building a 6-star rating last year under version 2 of its office design rating tool.
Energex has taken a 15-year lease over 93% of the building from completion, expected to be in July 2010. The 7% balance of the property will be subject to a 5-year lease arrangement with a subsidiary of ASX-listed FKP Property Group, which is also selling the land.
The land price is $A15 million and the building value $A158 million for an $A173 million completed value.
Investors will be paid monthly at an initial 8.25%, and the trust has a life of 7 years, although Mr Weightman said in recent times Cromwell investors had voted to roll over their investment trusts or seek liquidity, in which case Cromwell would make them an offer.
Regulation & tax treatment differ, and the offer document notes there is a currency exchange risk.
Mr Weightman said Cromwell had timed the sale of about one-third of its portfolio perfectly, selling off at the top of the market in 2007, which left it about 35% geared. In the downturn, as others have been relinquishing assets, Cromwell has been acquiring.
He said Cromwell had attracted New Zealand investors to its syndicates without trying to, but this week would begin the task of rebuilding its New Zealand investor network.
“Our business has always been focused on long-term government leases – we’re regarded as a passive investment,” Mr Weightman said.
$A65 million of the Riverpark trust’s equity has been sold in Australia and Mr Weightman said Cromwell would be “pretty happy” if it could sell $A10 million in New Zealand. It expects to close the syndicate by the end of the year.
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Attribution: Phone interview, product disclosure statement, story written by Bob Dey for the Bob Dey Property Report.