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Australian Unity, Cromwell agree on unlisted property funds merger

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By Jessica Penny
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3 minute read

Cromwell is set to take over management of the combined portfolio valued at $1.1 billion.

CDPF’s responsible entity, Cromwell Funds Management Limited, has signed off on a merger implementation deed with Australian Unity Property to combine its Cromwell Direct Property Fund (CDFP) with the Australian Unity Diversity Property Fund (AUDPF).

Upon completion, which is expected in late 2023, the merged fund will comprise a diversified portfolio of 15 assets valued at $1.1 billion.

Separately, Cromwell has also entered into a share sale and purchase agreement with Australian Unity to acquire AUPL, the responsible entity of AUDPF, for total consideration of $17 million.

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According to the property group, a condition to the acquisition of AUPL is AUDPF unitholder approval and implementation of the merger.

Moreover, the merger will result in unitholders in CDPF and AUDPF both owning interests in a “more diversified and stable” fund with strong weighted average lease expiry and occupancy metrics, Cromwell said in a statement to the ASX on Friday.

Part of the merger also involves the Cromwell Diversified Property Trust subscribing units in CDPF — up to $12 million — to assist in funding a one-off withdrawal facility for AUDPF unitholders.

Commenting on the merger, Cromwell chief investment officer Rob Percy said the transaction signifies the company’s journey to a “capital-light funds management business model”.

“The proposed transaction aligns with Cromwell’s strategic exit from non-core assets and recycling of capital to grow Cromwell’s funds under management, adding approximately $425 million in third-party gross assets to our Australian platform,” Mr Percy continued.

“We are excited by this opportunity to merge the Australian Unity Diversified Property Fund with the Cromwell Direct Property Fund to create a combined fund that benefits investors through increased scale, diversification, and income and distribution stability,” added Dr Joe Fernandes, chief executive officer and executive general manager, funds management at Australian Unity.

“Cromwell’s reputation as a leading real estate funds manager and a custodian of investors’ capital places the combined funds in good stead for future success. We look forward to working with Cromwell to preserve and enhance value for investors.”

Australian Unity, Cromwell agree on unlisted property funds merger

Cromwell is set to take over management of the combined portfolio valued at $1.1 billion.

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