Cromwell Funds Management Limited (CFM) has announced the opportunity for Unitholders to vote on the future of the Cromwell Property Trust 12 (Trust), which reached the end of its initial seven-year term in October 2020.
The Trust has performed consistently for Unitholders, returning 14.9% per annum annualised since its October 2013 inception to 31 October 2020. Over the same period, monthly distributions per unit have increased from 7.75 cents per unit p.a. to 9.25 cents per unit p.a.
Launched initially with three assets, the Trust now holds one key asset - the Australian Tax Office Building at 19 George Street in Dandenong, Victoria (the Property) - following the successful sale of the South Melbourne property in 2015 and upcoming settlement of the Rand Distribution Centre in December 2020.
19 George Street is 93% leased to the Australian Taxation Office until September 2030 and has a 5.5-Star NABERS Energy Rating, a 5.5-Star NABERS Water Rating, and a 6-Star Green Star Office As Built v3 rating. As of 31 October 2020, the asset was independently valued at $107 million, a 52% increase in less than seven years.
The settlement of the Rand Distribution Centre in December 2020 will see Unitholders receive a Special Distribution of $0.6184 per unit in addition to the monthly distribution, irrespective of whether a Further Term is approved.
In the coming month, Unitholders will be given the option to vote on extending the Trust for a further five years to October 2025, or to terminate the Trust as detailed in a Notice of Meeting and Explanatory Memorandum (EM) which was sent to Unitholders last week.
The outcome of the vote will be decided on Thursday, 17 December 2020. In order to extend the Trust, 50%of Unitholders eligible to vote need to vote in favour of the Rollover Proposal.
Cromwell’s Head of Retail Funds Management, Hamish Wehl, encouraged Unitholders to vote.
“Every vote counts in reaching a genuine outcome. The Trust has been a stellar investment for Unitholders, generating consistently high yields at a time when low interest rates have reduced the returns offered by cash and term deposits,” Mr Wehl said.
“The blue-chip tenant and lengthy lease term insulates the Trust’s income from COVID-19 induced market volatility, with the ATO not exposed to the same market conditions as a private enterprise.”
Cromwell Funds Management Limited, as responsible entity of the Trust, will implement a Matching Facility to provide Unitholders who wish to exit the Trust the opportunity to sell some, or all, of their units to Unitholders who wish to acquire more units in the Trust, at a Matching Price of $0.9349 per unit.
For Unitholders voting to remain in the single asset Trust, distributions are forecast to be 5.75 cents per unit p.a. from 1 July 2021, increasing at a rate of 0.25 cents per unit each July over the Further Term. This reflects a distribution yield of 6.2% on the Matching Price of $0.9349.
‘Back to basics’ approach
The Trust was the fourth of Cromwell’s ‘Back to Basic’ suite of trusts, which feature high quality assets underpinned by long-term quality leases. It was highly sought after by investors looking for reliable monthly income in a low interest rate environment.
“Our approach and expertise in identifying and managing quality assets has proven highly successful for unitholders in Cromwell trusts,” Mr Wehl added.