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Cromwell Property Group [ASX: CMW], the ASX-listed property and funds manager, will spend up to $7.5 million for a 50 percent stake in New Zealand property manger, Oyster Group.
The Brisbane-based company paid $5 million up front for half of Oyster, with earn-outs of up to $2.5 million over the next two years, dependent on the New Zealand firm's financial performance, Cromwell said in a statement. Auckland-based Oyster has more than $650 million worth of properties under its management, including 18 retail buildings, 16 office buildings and eight industrial and carparking buildings. The remaining 50 percent stake will be retained by Oyster's directors, and as part of the transaction Cromwell's New Zealand-based director Michelle McKellar will become chair of the New Zealand manager.
"Despite our history, it has been a long time since we had any significant presence in New Zealand," Cromwell chief executive Paul Weightman said. "Recent economic data suggest New Zealand is entering a new period of strong, sustainable growth."
Cromwell's property portfolio is valued at A$2.3 billion and manages A$1.2 billion worth of assets, according to its website. The company has previously been owned by NZX-listed Corporate Investments in the late 1980s before changing its name to Westholme. It recapitalised and returned to the Cromwell name in 1998, but retained a number of New Zealand-based security holders from its Westholme business and corporate predecessors, the company said.
Cromwell's shares were unchanged at 99 Australian cents, and have risen 1.5 percent this year. The stock is rated an average 'buy' according to six analysts compiled by Reuters, and has a median price target of A$1.05.