Cromwell Selling European Fund Management Platform to Stoneweg for $457M

Cromwell Property Group has agreed to sell its European fund management platform and interests, including Cromwell European REIT, to Swiss investment firm Stoneweg for €280 million ($457 million), as the ASX-listed company carries out a plan to simplify its business and transition to a capital-light model.

The deal marks the end of a $1 billion sale programme to cut gearing to 25 percent as Cromwell’s focus shifts to its Australia and New Zealand business, which manages A$4.8 billion ($3.2 billion) in assets, the Brisbane-based group said Thursday in a release.

Cromwell, whose two largest shareholders are Hong Kong-listed property giant ESR and the family of Singapore-based mainland tycoon Gordon Tang, reported a loss of A$271.4 million for the six months to the end of December, citing a A$240.2 million decline in property valuations.

“In the current operating environment, numerous options were considered to simplify and de-risk the business, and we believe that this transaction will provide the debt reduction and working capital needed to move forward in a focused and value-accretive way,” said Cromwell chairman Gary Weiss.

CEREIT Team Stays Put

Stoneweg, led by founder and CEO Jaume Sabater, said it was attracted to the quality of Singapore-listed Cromwell European REIT’s portfolio and the high risk-adjusted returns that it believes may be generated under new sponsorship.

For its consideration, Stoneweg will receive Cromwell’s entire 27.79 percent stake in CEREIT, as well as the Australian group’s 100 percent interest in the trust’s Singapore-based manager and European property manager, along with other associated co-investments. CEREIT’s €2.2 billion portfolio comprises more than 100 properties in key European metro areas.

There are no anticipated changes to CEREIT’s independent directors and management team, the trust’s manager said Thursday in a separate statement.

“We are pleased that Jaume and his team are aligned with our belief in the quality and value of CEREIT’s portfolio, as well as its growth outlook and potential,” said Simon Garing, CEO of the manager.

The €280 million transaction covers all components of Cromwell’s European business except for the six-asset Cromwell Polish Retail Fund, which was subject to a separate €285 million ($465 million) sale to Star Capital Finance completed on 15 May.

Doubling in Scale

Founded in 2015, Stoneweg is a real estate asset manager and investment advisory group based in Geneva. The Cromwell deal will double the firm’s assets under management to €8 billion, it said Thursday in a release.

“This milestone transaction immediately creates a pan-European real estate asset management platform of scale and continues our strong track record of successful transactions to deliver value for our investors,” Sabater said.

Upon completion of the acquisition, the Swiss fund manager will be the largest unitholder in CEREIT, followed by Gordon Tang’s family with a more than 9 percent stake.

The deal remains subject to regulatory approval in Singapore and in Luxembourg, where the acquiring Stoneweg fund is domiciled. News of the sale sent Cromwell’s stock 8 percent higher, closing at A$0.47 a share on Thursday, while CEREIT units edged down 0.7 percent to €1.47.