Cromwell launches European fund for logistics as takeover simmers

Property group Cromwell has bought properties in Italy for a new fund even as it fends off a takeover from major shareholder ARA.

Paul Weightman, CEO of Cromwell Property Group.

The embattled Cromwell Property Group will launch a new $800m European property fund specialising in logistics real estate as it seeks to shrug off attacks by its dissident major shareholder.

Under attack by Singapore’s ARA Asset Management, which has made a takeover offer, Cromwell says it has teamed up with Korean real estate investment manager, IGIS Asset Management to buy seven DHL logistics assets in Italy for $85.7m.

The assets will form the seed portfolio for a new Cromwell European Logistics Fund that is to buy property in Belgium, France, Germany and Italy, with a target total gross asset value of $650m to $800m.

“Logistics is a high conviction sector that we believe will prove resilient in these difficult times and provide our capital partners with strong potential for outperformance over the medium term,” said Cromwell’s chief investment officer, Rob Percy.

He predicted the demand for logistics assets was likely to continue to increase, supported by long term structural and demographic trends, especially in urban locations where supply is constrained.

Cromwell already runs a listed European REIT in Singapore and is looking to relaunch the Cromwell Polish Retail Fund, which it took on to its balance sheet last year.

The company this month announced a data centres fund that it hopes to grow to $1.4bn with partner Stratus Data Centres.

Meanwhile the fight over Cromwell‘s future is heating up, with ARA earlier in the month lodging a $518m proportional takeover offer for the company and saying it will call a meeting to appoint corporate raider Dr Gary Weiss and Melbourne funds manager Joe Gersh to the target’s board.

The battle for control of the $2.8bn company, which has property across Australia and Europe, has rolled on for more than a year since relations soured between Cromwell and ARA, its major shareholder.

ARA has already attacked Cromwell’s planned foray into the new field of data centres, saying it lacks expertise in the field.

ARA said last month it would make a proportional off-market takeover bid that could see it end up with a stake of about 49 per cent in Cromwell. But the offer price is just 88.125c, below analyst estimates, and has been rejected by Cromwell, which has told investors to take no action.

Cromwell says the draft bidders statement contains misleading statements and material omissions, particularly in relation to ARA’s intentions for the future of the business.

Cromwell shares dipped by 0.8c to 88.2c in midday trading.