Brisbane-based ASX-listed Cromwell Property Group completed an $A228 million ($NZ242.5 million) capital-raising at the start of this month intended largely to contribute to its share in a 23-property investment by the European trust it launched in 2017.
For decades, Australia & New Zealand have been targets for limited investment by European & North American investors & funds, and Cromwell is an investor in New Zealand through its 50% ownership of New Zealand property funds manager Oyster Property Group Ltd.
Northbound investment by Australian interests is a burgeoning trade, done through a variety of Australian & offshore vehicles and aimed at various sectors, including student accommodation, industrial, retail & office stock.
Cromwell’s European investment is more complicated than its New Zealand investment – Cromwell of Australia listed the Cromwell European Real Estate Investment Trust on the Singapore securities exchange in November 2017, holds a 35.3% interest in the trust and manages the European portfolio on behalf of the trust.
Cromwell sought $A210 million ($NZ223 million) through an entitlement offer at the end of November, closing at the start of January, aiming to raise a total $A300 million ($NZ319 million), including commitments received from major securityholders, and pulled in $A228 million ($NZ242.5 million) from other investors. Of that, $NZ133 million (€79 million) has gone to pay the Australian group’s share of a simultaneous capital-raising by the Singapore-listed reit, and some to reduce the Australian company’s gearing from 37% to between 30%-33%.
The Singapore-listed reit’s 23-property acquisition is costing it €384 million ($NZ647 million), to be partially equity funded through a €224 million ($NZ377 million) equity-raising.
The new European assets are in 3 portfolios – 11 properties in Finland, 5 properties in Poland & the Netherlands, 5 in France & 2 in Italy.
10 of the Finnish properties, acquisition now settled, are in Helsinki, one in the rapidly growing regional hub of Kuopio, a university city in the east of Finland, with a total valuation of €116.8 million ($NZ197 million), and 61972m² lettable floor area.
Cromwell chief executive & managing director Paul Weightman said: “The success of CEREIT has facilitated the ongoing transition of our European assets under management to more permanent sources of capital. About 45% of European assets under management will be long-term in nature following the completion of CEREIT’s recently announced acquisitions.”
Cromwell’s head of Nordics, Tomas Beck, added: “We are currently operating in a buoyant office market in Finland, supported by strong domestic demand, job growth & rising consumer confidence. These conditions have put upward pressure on rents in high quality, well located buildings that offer efficiency & connectivity.”
As of June 2018, Cromwell had a market capitalisation of $A2.2 billion, a direct property investment portfolio in Australia valued at $A2.5 billion ($NZ2.7 billion) and total assets under management of $A11.5 billion ($NZ12.2 billion) across Australia, New Zealand & Europe.
Attribution: Company releases.