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The highly-publicised tussle between Cromwell Property Group and its largest shareholder ARA Asset Management reached a crescendo at Cromwell’s annual general meeting on Thursday, with securityholders voting down ARA’s nomination by a “wafer thin” margin.
Cromwell shareholders voted against Gary Weiss’ elevation to the board by a margin of 51.3 per cent with 47.7 per cent of securityholders voting in support.
In a statement released on Thursday, ARA said that the result marks a “profound vote of no confidence” in the leadership and governance of Cromwell.
“The bottom line is there is a significant weight of securityholder opposition,” ARA said.
The nixing of Weiss’ candidacy comes after months of mud-slinging, with ARA campaigning for Weiss’ election and Cromwell accusing its largest investor of attempting to exert undue control.
Shareholders appear to have been swayed by the arguments leveraged against Weiss’ appointment by Cromwell, which ranged from a conflict of interest to an over-commitment to other directorships.
For its part, ARA chief executive John Lim has publicly questioned the corporate governance and c-suite salaries of the Brisbane-based property syndicator and criticised the group’s “appalling track record of investment in overseas markets”.
Cromwell’s significant offshore interests—the group has more than $6 billion in funds under management in Europe—makes it one of Australia’s largest funds with direct international property market exposure.
The spat dates back to June after Cromwell blocked ARA’s bid for stock in its $375 million equity raising as it ramped up a multi-billion-dollar acquisition and international development pipeline.
ARA’s stake in Cromwell was diluted to under 20 per cent, precluding it from re-listing on the Singapore Stock Exchange—a strategy its chief executive John Lim had flagged publicly if the fund manager reached S$100 billion in funds under management.
A stake of 20 per cent would allow ARA to claim Cromwell’s assets under management as its own and provide it with a $S83 billion asset book.
ARA’s Australian head David Blight stood down from the board in July 2019. In October, the legally-trained Gary Weiss, an activist investor known for his philanthropic endeavours, was put forward by ARA.
ARA first entered the Cromwell register in May 2018, picking up an initial 19.5 per cent stake in Cromwell from South Africa’s Redefine Properties.
The group, which is one of Asia’s largest real estate investors, pursued a larger stake in the Brisbane-based property syndicator—increasing its interest to just under 24 per cent.
Prior to Thursday’s annual general meeting, ARA held a 23.7 per cent stake and was banking on a vote of about 40 per cent to drag Weiss over the line.
The Singapore-based ARA Asset Management is one of Asia’s largest investors. ARA delisted after being acquired by a private consortium that included current chief executive John Lim in 2017.
The group has since grown its presence in Australian property markets, and was revealed as the underbidder for 400 George Street, which Cromwell picked up for $524.75 million.
Cromwell has accused ARA of directly competing with the group in European and Australia property markets and agitating for control without paying a control premium.
Acknowledging the barrage of “phone calls, proxy forms and media noise”, Cromwell chief executive Paul Weightman said the group remains focused on its core Australian portfolio, capital recycling and $1 billion development pipeline.
