Cromwell Property Group’s largest shareholder, Singapore’s ARA Asset Management, has launched a broadside ahead of the annual shareholder meeting, accusing the Brisbane-based property fund manager of poor strategic and operating performance.
Cromwell, led by Paul Weightman, has clashed with ARA over the Singaporean investment house’s nomination of veteran director Gary Weiss to a seat on the board. ARA’s local head, David Blight, stepped down from the board in July.
In a letter to its fellow shareholders, ARA’s chief executive John Lim called Cromwell to task over a series of issues.
“For example, over financial year 2019, Cromwell reduced its distribution per security by 13.1 per cent while the chief executive officer’s statutory remuneration increased by 34.1 per cent and corporate overheads increased by 48.3 per cent,” he wrote.
“Are securityholders the first priority at Cromwell?”
ARA slammed Cromwell for “an appalling track record of investment in overseas markets”. Cromwell had added to its risk profile “with a large bet on volatile Polish retail property prices” by bringing onto the balance sheet the same Polish assets which had to be removed from the seed portfolio for Cromwell’s Singaporean listed REIT due to investor backlash, the letter said.
“This could place already declining distributions at even greater risk.”
Worse, Cromwell had a history of paying distributions in excess of free cash flow, creating concerns regarding the sustainability of distributions in the future, according to ARA.
ARA, which holds a 21 per cent stake, is urging its shareholders to vote for Dr Weiss, a move that would help Cromwell resume a “sound business strategy”, it said.
It will also support the re-election of Jane Tongs to the board but it opposes the election of two recent board appointments, Lisa Scenna and Tanya Cox.
On its side, Cromwell has opposed the election of Dr Weiss on the grounds that his principal purpose would be representing ARA’s interests, which may not be in the best interests of all shareholders of the company,
“As has become evident, ARA and Cromwell Property Group compete in the same or similar markets in a number of jurisdictions, including Australia, Asia and the United Kingdom,” Cromwell said last month.
ARA and Cromwell have been at loggerheads since Cromwell’s takeover bid for British-listed RDI REIT fell over in April.
In May, ARA requested Cromwell’s shareholder register, a move that can be a preliminary step to calling a shareholder meeting. Cromwell warned its shareholders to treat any unsolicited communication from the Singaporean player “with circumspection”.
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