Cromwell continues growth path with Bouygues deal

Cromwell continues growth path with Bouygues deal

18 May 2018

Cromwell Property Group has struck a strategic €500 million ($792 million) partnership deal with Linkcity, a subsidiary of global construction company Bouygues Construction, to invest in the rollout of a portfolio of logistics and industrial property in Europe, reports The Australian Financial Review.

Cromwell’s chief capital officer Simon Garing said the group had identified a “significant investment opportunity” in Central and Eastern Europe, where a range of future economic, infrastructure and other growth opportunities lie.

“This partnership is another step forward for our funds management business,” Mr Garing said, “It is also an endorsement of our ability to offer international capital partners with investment opportunities in key sectors across Europe.

Cromwell is seeking to increase its funds under management by 50 per cent in the short to medium term without increasing its cost base.

“We think we are in a similar position to where Goodman Group was seven or eight years ago,” Mr Garing said.

Cromwell, which is now 20 per cent owned by Asia-based fund manager ARA, has made a pivot towards Asia sourced capital in order to grow its funds under management after successful ventures with US groups Blackstone, Oaktree and York.

Regarding the deal, Cromwell’s managing director for Europe Mark McLaughlin said, “We are delighted to partner with an experienced developer of the calibre of Bouygues to create a portfolio of premium logistics and light industrial assets that are already in demand from transport and ecommerce related occupiers,” reports The Australian Financial Review.

The partners have already picked their first asset, an 8,000 square metre logistics building in the Czech Republic that is 88 per cent pre-leased and due for completion in the third quarter of this year, reports The Australian.

The second and third assets selected account for a combined 180,000 square metres and are seeking tenant precommitments.

The portfolio will have a focus on logistics and light industrial assets in central and eastern Europe, which Cromwell managing director for Europe Mark McLaughlin said were in demand from transport and online commerce-related tenants.

The Paul Weightman-led Cromwell (CMW) will source investment funding and manage the assets once complete, while Linkcity and another Bouygues affiliate VCES will focus on the project development, design and construction of the portfolio.

Meanwhile, Macquarie analysts said Cromwell was well placed given the potential for further capital to be available from Asia to be invested in Europe.

Cromwell is motivated to grow its European REIT quickly after recently listing the vehicle in Singapore, targeting a $US2 billion market cap compared to $US1.2bn currently, Macquarie said in a note to clients.