Cromwell and Australian Unity call off fund merger

The proposed merger of the Cromwell Direct Property Fund (CDPF) and the Australian Unity Diversified Property Fund (AUDPF) to create a $1.1 billion unlisted fund has been called off amid uncertain market conditions. 

The CPDF is comprised of a portfolio of nine commercial property assets with some 54 per cent of income sourced from government and listed tenants. Meanwhile, the AUDPF is an unlisted property fund that owns properties across Australia, diversified across convenience retail, office and industrial sectors.

In an ASX announcement, the firms have now jointly agreed to terminate the merger implementation deed in relation to the proposed merger.

First announced in July, the merged fund aimed to hold a well-diversified portfolio of 15 high-quality assets valued at $1.1 billion.

If the conditions were met, it would have adopted Cromwell Direct Property Fund’s existing framework and was slated for completion in late 2023.

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“Since the announcement of the proposed merger, market conditions impacting commercial property investment have materially changed and, consequently, have increased uncertainty in relation to the proposed merger,” Cromwell’s statement read.

“Given these developments, the parties have determined that proceeding with the proposed merger is no longer in the best interests of the respective funds’ investors.”

Alongside the merger, Cromwell entered into a share sale and purchase agreement with Australian Unity to acquire Australian Unity Property for $17 million, on the condition of unitholder approval and implementation of the merger, which has also been terminated.

Earlier this month, the real estate investor also saw the departure of its long-time chief financial officer Michael Wilde after an 18-year tenure. Wilde would step down in December 2023 to pursue other interests and opportunities, the firm said.