Cromwell Riverpark Trust Term Extension Proposal
Unitholders approve Term Extension Proposal for the Cromwell Riverpark Trust
9 December 2024
Cromwell Riverpark Trust (“Trust”) unitholders have voted to approve the Term Extension Proposal for the Trust, as put forward in the Notice of Meeting and Explanatory Memorandum, dated 30 October 2024.
Of the 69.69% of total unitholders that voted, 88.01% voted in favour and 11.99% voted against.
The detailed results of the vote at the meeting are as follows:
| Number of units | % of votes cast | % of eligible units | |
|---|---|---|---|
| In favour | 42,876,164 | 88.01% | 60.88% |
| Against | 5,842,279 | 11.99% | 8.29% |
| Abstain1 | 368,480 | 0.52% | |
| Total votes cast in the poll | 49,086,923 | 100.00% | 69.69% |
| Eligible units with no proxy | 21,345,434 | 30.31% | |
| Total units eligible to vote2 | 70,432,357 | 100.00% | |
| Resolution Result | Carried |
1. Votes cast by a person who abstains on an item are not counted in calculating the required majority on a poll.
2. In accordance with Section 253E of the Corporations Act, CFM and its associates have not voted on the Resolution
A successful ‘For’ vote extends the Term to 31 December 2026. Cromwell Funds Management will continue to monitor the market with a view to launching a further formal sale campaign during the Further Term, at the earliest time that it considers market conditions are favourable.
If you have any questions in relation to the vote, please contact Cromwell’s Investor Services Team on 1300 268 078 or email invest@cromwell.com.au.
As responsible entity of the Cromwell Riverpark Trust (Trust), Cromwell Funds Management Limited (CFM) is calling a meeting of Unitholders to vote on the Term Extension Proposal for the Trust.
Since November 2021, CFM as responsible entity of the Trust has continued to endeavour to sell the Trust’s property, Energex House, but has not received any offers which it considers to be in the best interests of Unitholders. CFM believes that market conditions continue to be poor and recommends waiting for market conditions to improve. However, CFM acknowledges Unitholders have held this investment for an extended period and accordingly CFM proposes that Unitholders vote on whether to extend the term of the Trust to allow more time to sell the Property.
The Unitholder vote is to consider extending the Term to 31 December 2026. Unitholders are asked to have their say about the future of the Trust.
CFM encourages every investor to read the Explanatory Memorandum and cast their vote at the meeting either in person or by proxy.
The Directors of CFM have carefully considered the advantages and disadvantages of the Term Extension Proposal. Based on the current and projected market conditions, the Directors are recommending Unitholders vote IN FAVOUR of the Resolution.
How to vote
Online votes and Proxy Forms must be received no later than 48 hours before the commencement of the Meeting, therefore by 10.30am (AEST) on Wednesday 4 December 2024.
Frequently asked questions
Due to the prevailing market conditions, CFM has been unable to secure offers it considers to be in the best interest of Unitholders. Having regard to the Property’s significant size and CBD fringe location and given the current and projected market conditions, CFM is proposing Unitholders extend the Term to 31 December 2026.
However, CFM acknowledges the significant amount of time that has lapsed since the Property was first offered for sale and the long duration of this investment for Unitholders may mean individual circumstances have changed. As such, the Directors believe it is important to present Unitholders with the opportunity to vote on the Resolution.
CFM recommends Unitholders vote IN FAVOUR of the Resolution.
Recent market conditions have not been favourable, and while it cannot offer any guarantees in this regard, CFM believes those market conditions are showing signs of improvement and a better outcome may be achieved by postponing a sale. CFM’s views about the market conditions are set out in section 5.1.
No. CFM has an obligation to always act in the best interests of Unitholders. If the Resolution is not passed, then this provides a strong indication that Unitholders have a preference for liquidity in the short-term over postponing a sale in the expectation market conditions improve and a better outcome could be achieved in the future. While the outcome of the meeting will inform CFM’s thinking when considering any offers it might receive, CFM is obliged to only accept an offer it considers to be in the best interests of Unitholders.
Given the upcoming Christmas period and allowing time for a marketing campaign, CFM estimates any sale of the Property is unlikely to be completed before 30 June 2025, following which the Trust can be wound up.
It is not possible to say with certainty. CFM’s intention is to sell the Property when it considers market conditions are more suitable. CFM will monitor the market for favourable conditions in which to launch a further formal sale campaign at the earliest opportunity and may sell the Property at any time during the Further Term if it considers a sale to be in the Unitholders’ best interests.
Yes. It is expected distributions will continue until the Property is sold. Forecast distributions are 12.25 cents per Unit per annum until August 2025 when the distribution rate is forecast to reduce to 9 cents per Unit per annum.
The decrease in valuation of the Property is consistent with value reductions experienced across the broader property market.
The Term expiry coincided with the continuing impacts of COVID 19 pandemic which created a period of uncertainty. The main tenant, Energy Queensland Limited had a lease term remaining of just over 4 years. CFM’s view was that it was in the best interests of Unitholders to negotiate an extension of this lease before offering the Property for sale. This was achieved on 28 October 2021. The sale process for the Property commenced in November 2021, with agents appointed in January 2022 and first round offers received in February 2022. However, unfortunately this coincided with the first of 13 increases in the official cash rate and began the sharpest and second-longest hiking cycle of the Australian cash rate target era. This resulted in a challenging financial environment characterised by a lack of buyers and no offers capable of acceptance have been received at a price that reflects the Property’s book value.
The Trust’s monthly distribution has grown from the inception 8.25 cents per Unit to the current 12.25 cents per Unit, which with the increase in the value of the Property from the original purchase to the current valuation at 30 June 2024 has contributed to a notional equity internal rate of return (IRR) since inception of 11.9% (to 30 June 2024).
Unitholders may transfer units at any time subject to CFM’s approval. Unitholders wishing to sell Units may negotiate the terms of any transfer with a potential purchaser. CFM is assessing the engagement of a group external to Cromwell to provide a platform to facilitate transactions between Unitholders. If the engagement progresses, additional information will be made available separately to this Explanatory Memorandum to explain how this service operates.
Full details of how to vote are set out in Annexure A to the Explanatory Memorandum.
The outcome of the vote is binding on you regardless of whether you cast your vote. The vote requires an Extraordinary Resolution to pass which is 50% of the total votes that may be cast by Unitholders entitled to vote on the resolution (including Unitholders who are not present in person or by proxy). Therefore, if you do not cast your vote (either in person or by submitting a proxy vote) then it is effectively a vote against the Resolution.
Yes. By attending the Meeting, there will be an opportunity to ask questions. Questions may also be asked at any stage prior to the Meeting by contacting Cromwell Investor Services on 1300 268 078 or invest@cromwell.com.au.
Fund documents, financial reports and other information is contained at the Trust’s webpage at www.cromwell.com.au/invest/fully-subscribed-and-closed-funds/cromwell-riverpark-trust/
Cromwell Riverpark Trust Meeting details
The meeting will be held at:
Date: Friday, 6 December 2024
Time: 10.30 am AEST (registration from 10.00 am AEST)
Venue: Level 1, 100 Creek Street, Brisbane, QLD 4000
If you have any questions in relation to the Trust, please contact Cromwell’s Investor Services on 1300 268 078 or via email at invest@cromwell.com.au.