Brookfield snaps up 19.9pc interest in Cromwell Property Group
North American investment giant Brookfield acquired ESR’s remaining stake in real estate fund manager Cromwell Property Group over the weekend for $200 million, Street Talk understands.
Sources said it acquired the 19.9 per cent stake at 38¢, a 4.1 per cent premium to Friday’s close. Goldman Sachs’ investment banking team oversaw the process.
The acquisition comes two months after industrial property player ESR Real Estate Investors launched a $93 million block trade for a portion of its 31 per cent stake in Cromwell Property Group via Goldman Sachs and Morgans Financial.
ESR first popped up on Cromwell’s register in 2021 after it acquired ARA Asset Management, becoming a 31 per cent shareholder. The Hong Kong-based company flagged it was considering offloading its stake more than a year ago as part of a broader strategic review. After the block trade via Goldies and Morgans, ESR retained 19.9 per cent of Cromwell’s stock.
The acquisition gives Brookfield a meaningful interest in Cromwell. It is understood it has no further intentions at this time.
Cromwell, which trades with a market capitalisation just under $1 billion, has limited analyst coverage and institutional shareholder support due to its tightly held register and lack of free float. Shares in the company have traded down 3.75 per cent over the past year and 57 per cent over the past five years.
Of note, ESR’s top executive, Phil Pearce, told The Australian Financial Review on July 4 that while the firm was “happy” with its shareholding in Cromwell, “it’s probably not a long term strategic hold.”
Getting busy
On Brookfield’s part, the deal underscores the increasing presence of the Canadian giant’s real estate investing division in active situations across Australia and New Zealand. It owns 14 office properties in Melbourne, Perth and Sydney, and earlier this month, sold retirement-living operator Aveo to Craig Carracher and Stephen Gaitanos’ The Living Group, formerly Scape, for $3.85 billion, marking the country’s largest-ever direct real estate transaction.
Ruban Kaneshamoorthy, head of Brookfield Property Group, oversaw the investment, helping to sweep Aveo off the ASX boards in 2019 for $1.3 billion when the sector was under regulatory pressure. Brookfield invested $200 million between 2020 and 2024.
For ESR, one of the Asia-Pacific region’s largest property investors with a $215 billion portfolio, it has shed its stake in Cromwell less than a week after being taken private by a consortium led by US group Starwood Capital.
ESR has become a major player in Australia’s warehouse and logistics sector, with about $29 billion invested after just eight years here.
