Property and funds manager Cromwell Group (CMW) is pleased to advise it has entered into due diligence, on an exclusive basis, for the acquisition of the majority of the Orchard funds management business. The transaction would involve Cromwell acquiring the management rights for the majority of Orchard’s funds, including the $690 million Orchard Diversified Property Fund.
The Orchard funds’ assets are mostly located in Australian capital cities, with a small percentage in New Zealand. In all, the Orchard funds hold, by value, over $1.5 billion of predominantly office assets. The Orchard Primary Infrastructure Fund and Essential Health Care Fund are currently excluded from discussions.
If the due diligence is successful, Cromwell would expect to make an initial payment to Orchard of $15 million for the management rights plus an additional amount to be determined. A number of the Orchard funds have relatively high gearing and/or near term leasing requirements and Cromwell is in discussion with key stakeholders to finalise a strategy for each fund which will result in the best medium term outcome for Orchard fund investors.
Cromwell CEO Paul Weightman said “The transaction, if it proceeds, will substantially expand Cromwell Group’s existing property funds management business, with the Group expected to benefit from a significant increase in scale. The transaction also has the potential to enhance the Group’s earnings from both recurring and transactional funds management activities over the medium term.”
