Andrew Konig. Picture: RUSSELL ROBERTS
Andrew Konig. Picture: RUSSELL ROBERTS

Diversified real estate investment trust Redefine Properties is set to sell a chunk of its stake in Australian group Cromwell for R3.7bn.

The deal, which will bolster Redefine’s liquidity, marks the beginning of a process to rationalise its international holdings.

The 19.5% stake will be sold to ARA Asset Management, which is based in Singapore.

"This deal ticks a number of boxes for Redefine, which supports our mission to create sustained value for stakeholders. We create capital efficiency, refine our international holdings, reduce debt and have a lot of funding capacity should another investment opportunity arise," said CEO Andrew Konig.

Redefine had been operating in a constrained and costly capital environment, and recycling of capital had become a prominent feature of the funding strategy to efficiently source capital and improve credit metrics, Konig said.

The deal was subject to Foreign Investment Review Board approval, and following the sale, Redefine would retain 60-million shares, or 3.09%, of Cromwell securities in issue, offering it an opportunity to benefit from future pipeline deals in Australia.

Cromwell is a Brisbane-based real estate fund manager listed on the Australian Securities Exchange.

Konig said he "only has the highest regard for the management of Cromwell in what has been a fantastic partnership over the past 10 years".

"All our offshore assets are actively managed to create sustained value for stakeholders and are therefore under constant review. When offers come through, we critically evaluate the long-term value-creation and, in this case, we saw an opportunity to optimise capital sourcing and the allocation of capital, while lowering debt."

The deal was not surprising as Cromwell was a noncore asset for Redefine, said Evan Robins of Old Mutual Investment Group.