Cromwell sells stake in Investa Office Fund

Cromwell Property Group (ASX:CMW) has entered into an agreement to sell its entire stake in Investa Office Fund (ASX:IOF) for $4.65 per unit, effectively abandoning its $3 billion plan to buy the fund.

The agreed sale price was a premium to the IOF closing price of $4.50 on October 3, Cromwell said in an ASX announcement.

Cromwell Property Securities Limited as responsible entity for the Cromwell Diversified Property Trust purchased its 9.83% stake in IOF for $4.24 per unit on 12 April 2016. The stake sale also represents an annualised equity internal rate of return of 18%, it said.

Investa Property Group (Investa) approached Weightman late Tuesday offering to buy the stake for $4.65 a share. The offer gave Cromwell, which had reached a stalemate with IOF after failing to secure additional funding to raise its bid, a way out, The Australian Financial Review added.

Since the Australian sharemarket closed on Tuesday, Cromwell sold 60.37 million shares at $4.65 to ICPF, which already holds about 10 per cent, The Australian reported.

The $276 million trade equates to about 10 per cent of the stock and was handled by UBS and Rothschild. 

Last year, Cromwell had snapped up the IOF stake, knocking off Dexus Property Group’s $2.5 billion takeover bid for Investa ­Office Fund.

“The investment in IOF has been a profitable one for Cromwell,” said Cromwell chief executive Paul Weightman.

“We would have liked to have been able to complete a deal, but as I have said previously, it became obvious to us that a friendly transaction was unlikely to proceed, regardless of the price that we offered.”

“Upon careful consideration of all of our options, we have therefore decided that the best way forward for Cromwell securityholders is to realise the value in our investment.”

“We will continue to focus on delivering value to our securityholders through the different strategic initiatives that we are currently undertaking,” added Weightman.

The proceeds of the sale will be used to reduce gearing and for other general corporate purposes, Cromwell said.