Cromwell boosts profits, completes sell-down of German portfolio

Australian real estate investor and manager Cromwell Property Group posted strong profits for the first half, bolstered by its European strategy. The group transacted more than €1.5 billion in volume in Europe in 2019, made up of about €1 billion in acquisitions and €0.5 billion in disposals, as it continues to implement the parent company’s so-called ‘invest-to-manage’ strategy.

Poland was front of mind for the group, with highlights from the year including the acquisition of all third-party investor interests in the Cromwell Polish Retail Fund (CPRF), with the intention of marketing the €600 million of assets to a range of international investors as a new fund during 2020.

Cromwell also completed the managed sell-down of its German Portfolio within the Cromwell European Diversified Fund (CEDF), having generated an IRR of 19%, the company said. Around 450,000 sqm were leased across all asset classes, with the number of leases totalling 602.

Additionally, the European team helped on a debt refinancing for the manager of Cromwell European REIT (CEREIT), raising €625 million of unsecured debt and extending the weighted average term of debt to 3.6 years, while maintaining the cost of funding at approximately 1.50%. CEREIT also continued to actively invest in income-producing assets across Europe, increasing the number of properties within CEREIT from 90 at the beginning of 2019 to 103 by the end of the year.

Mark McLaughlin, Managing Director Europe at Cromwell Property Group, said: “As well as progressing the ‘Invest to Manage’ strategy, we’ve bolstered the European team with several key hires, both from within the business and from outside.

“In 2020, we’re looking to increase assets under management with a range of new initiatives and expect to see further opportunities to partner with international capital in Europe. We also expect investors to explore the UK market following the perceived clarity around the Brexit process.”

Cromwell has been operating in Germany since 2002, and manages €210m of assets with nearly 100 tenants. It maintains offices in Berlin, Düsseldorf, Frankfurt, Hamburg and Munich, handling asset management, funds management and structuring. Across Europe, the group manages €3.8bn of investment and development asset, across 20 mandates. Its local asset management teams handle 188 assets with over 2,800 tenant customers.

Back in Australia, CEO Paul Weightman commented on the group’s half year results: "Our long-dated balance sheet assets continue to drive operating earnings above our rolling net operating income (NOI) target of 3.0%. Our 'Invest to Manage' strategy, which involves investing to acquire or develop assets, creating new funds, selling down to capital partners and then recycling the proceeds also continues to bear fruit.”

“The Group has a clear proven strategy, a long-WALE portfolio of balance sheet properties, a $1.2 billion plus value-add development pipeline, a host of 'Invest to Manage' opportunities, a successful and growing business in Singapore and a robust platform and presence in Europe.”