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Cromwell Equity Raising

Cromwell Property Group have kicked off a $300m equity raising campaign offering a 2 for 13 accelerated non-renounceable entitlement offer of stapled securities at $0.98 per Security.

The Equity Raising is partially underwritten and together with commitments received from major security holders the minimum proceeds are $210 million.

The issue price at $0.98 per security represents a:

  • 4.9% discount to the last closing price of $1.030 on 23 November, 2018

  • 4.0% discount to the 5-day VWAP2 of $1.020 ending on 23 November, 2018

  • 4.2% discount to the TERP3 of $1.023 as at 23 November 2018

  • FY19 operating earnings yield of 8.2% per security

  • FY19 distribution yield of 7.4% per security

Cromwell propose to use the proceeds to repay $171m of Australian bank debt prior to redeploy debt into value add development opportunities.

The capital will also provide Cromwell with the capacity to support their c.$124m equity commitment in Cromwell European Real Estate Investment Trust enabling them to maintain to the 35.3% holding in CEREIT in the current capital raising being undertaken by CEREIT which offers an attractive distribution yield of 10.8%.

The balance of $5.5M will be absorbed in transaction costs.

The repayment of debt will allow Cromwell to draw up further debt in 2019 to fund the development pipeline which includes;

  • a new four storey office building, hotel, retail spaces tof further intensify the FSR on its Victoria Ave, Chatswood site (est cost $80)

  • the conversion of Tuggernong Office Park to an aged care facility (est cost >$150M)

  • Preparatory work for additional 14,000 sqm of office, 175 room hotel and residential accommodation at their Collins Street Melbourne asset.

Entities associated with ARA Asset Management and Mr Gordon Tang (the two largest security holders in Cromwell) hold approximately 28.5% of Cromwell Securities on issue and have committed to take up their pro rata entitlement under the Equity Raising, representing total support of $86 million (28.5% of the Equity Raising).

Refer presentation