ARA steps up attack on Cromwell

ARA steps up attack on Cromwell

8 November 2019

Cromwell’s largest shareholder — Singaporean real estate firm ARA Asset Management — has launched an attack ahead of the annual shareholder meeting, accusing Cromwell poor strategic and operating performance.

In addition, ARA has stepped up its campaign to install legendary corporate raider Gary Weiss on Cromwell Property Group’s board amid a stinging attack on its strategy and governance.

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.

It claimed Cromwell was trying to market $1bn worth of ­Polish assets that had been ­rejected by prospective investors in the company’s Singapore-­listed REIT, warning the move risked driving even further falls in distributions.

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.

Cromwell has defended its ­European property moves and also appointed two new independent non-executive directors, Lisa Scenna and Tanya Cox. But it has rejected Dr Weiss as a potential board member mainly because of conflicts he would create as an ARA-backed candidate.

ARA’s letter signals that they will not drop its quest to get a spot back on Cromwell’s board after its local head, David Blight, left in July after ARA was cut out of a major placement.

ARA has bumped up its Cromwell stake to more than 21 per cent, having received an ASIC waiver that it can move to 23.7 per cent without launching a bid.

Cromwell’s latest board meeting in Japan — in the middle of the Rugby World Cup semi finals and finals — hasn’t helped matters. Cromwell has no assets in Japan, and none of its directors are based there or nearby.

But according to The Australian Financial Review, Cromwell, does have Japanese investors (though certainly not major ones), and the potential to raise additional capital there.