Cromwell Prop (CMW AU): Brookfield's Stake Foreshadows A Full Takeover

• As discussed in Cromwell Prop (CMW AU): ESR Exit Post-Privatization?, after ESR (1821 HK) acquired ARA Asset Management in 2021, it said Cromwell Property (CMW AU) was a non-core holding.

• After ESR announced a privatisation by Warburg/Starwood on the 4th December 2024, I mused whether this would accelerate the sale as part of a wider strategic review.

• Two months ago, ESR initiated a block trade for part of its 31% stake in Cromwell. Now Brookfield is seeking ESR's remaining 19.9% stake @A$0.38/share. Subject to FIRB approval.

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A Quick Background On ESR and Cromwell

• The strategic review - towards an asset-light model. In an earnings webcast on the 22nd March 2023, ESR's chairman Jeffrey Perlman said ESR was exploring a potential sale of its ~31% in Cromwell Property, in which ESR inherited after it acquired ARA Asset Management on the 20 January 2022.

We’re evaluating our stake in Cromwell, as well as subscale REITs in our portfolio that we don’t feel we can grow to a meaningful size and scale.

We feel this can recycle up to $750 million of capital to the group and we can use that capital to deliver fee-generating AUM and make our business easier to understand in the process.

- chairman Jeffrey Perlman (22nd Mar 2023)