ESR Sells Remaining Stake in Australia’s Cromwell Property to Brookfield

Just over two weeks after completing a privatisation that saw it leave the Hong Kong stock exchange, Asia Pacific’s largest real estate fund manager has agreed to sell its remaining stake in an Australian property firm to Brookfield Asset Management.

ESR is selling its 19.9 percent holding in Brisbane-based Cromwell Property Group as part of an effort to refine its focus, company representatives said, with local media reports indicating the trade carried a price tag of A$200 million ($131 million).

“As part of our ongoing strategy to streamline operations and focus on core assets, ESR has agreed to sell its remaining 19.9 percent stake in Cromwell Property Group,” a company spokesperson said, adding that the transaction is subject to regulatory approvals.

 

Brookfield representatives declined to comment when contacted by Mingtiandi, however, the deal, which would provide the top tier fund manager with a stake in a portfolio of eight office properties across top Australian markets, could be seen aligning with the proclivities of one of the world’s largest office landlords.

Planned Disposal

Mingtiandi had reported in 2023 that ESR was exploring a sale of its interest in Cromwell as part of a campaign to divest at least $1 billion in assets that year. 

In a video conference with investors and analysts in March 2023, then ESR chairman Jeffrey Perlman was considering a sale of its then 31 percent stake in Cromwell. The then-Hong Kong-lised firm had gained its interest in Cromwell through its acquisition of Singapore’s ARA Asset Management in a deal which closed in early 2022. 

ESR had sold a 10.8 percent stake in Cromwell via a block trade in May which was handled by Goldman Sachs and local Brisbane player Morgans Financial, according to a report in the Australian Financial Review.

In an interview with Mingtiandi earlier this month, ESR president Phil Pearce emphasised that the company is committed to a more focused approach to its business following the $7 billion buyout of the company’s shares by a consortium including Starwood Capital Group, SSW Partners, Sixth Street and Warburg Pincus, along with the Qatar Investment Authority, Canada’s Ontario Municipal Employees Retirement System, Sumitomo Mitsui Banking Corporation, and ESR’s founders.

“The key strategic objectives are to simplify the business, bolstering our balance sheet and recycling capital,” Pearce said at the time. “We aim to grow the core of our business, which includes our fund management platform, focusing on logistics and data centres, as well as infrastructure.”

Brookfield on the Move

For Brookfield, the deal for Cromwell comes less than a month after the firm agreed to sell Australian senior living operator Aveo for A$3.85 billion in the country’s biggest direct real estate transaction ever.

The stake in the Brisbane fund manager gives Brookfield nearly one fifth ownership in Cromwell’s portfolio of eight Australian office assets, which account for 68 percent of its gross income, according to the company’s website. 

The properties are spread across Melbourne, Sydney, Brisbane and the Canberra area, with Cromwell also having a wholly owned private fund management unit in Australia, as well as a 50 percent stake in New Zealand’s Oyster Property Group.

Brookfield, which manages more than $1 trillion in assets globally, has approximately 65 million square feet (6 million square metres) in office properties in Asia Pacific, according to earlier statements by the company.