Cromwell Cuts Credit Margin to 1.31% While Launching Major Canberra Development
Cromwell Property Group has launched a major office development in Canberra’s Barton precinct with a long-term lease to a key Commonwealth Government department, alongside a strategic debt refinancing.
- 19,800 sqm office building development in Barton, ACT
- 15-year lease with Commonwealth Government, plus 5-year extension option
- Project targets 6-star NABERS Energy and Green Star ratings
- Debt refinancing reduces credit margin from 1.77% to 1.31%
- Shift towards capital-light investment management model
A Strategic Milestone in Canberra
Cromwell Property Group has announced a significant new development in Barton, ACT, marking a pivotal moment in its strategic growth trajectory. The project involves constructing a 19,800 square metre, six-level office building designed to meet high environmental standards, including 6.0-star NABERS Energy and Green Star ratings. This facility will consolidate multiple Commonwealth Government tenancies into a single, modern building located within the Parliamentary Precinct, close to Capital Hill.
Long-Term Income Stability with Government Lease
The building will be fully leased to a key Commonwealth Government department under a 15-year agreement, with an option for an additional five years. This lease arrangement provides Cromwell with a rare opportunity for long-term income stability backed by a AAA-rated tenant. CEO Jonathan Callaghan highlighted the project's strategic importance, especially in a challenging development market, emphasizing the Group’s confidence in delivering a top-tier facility through its in-house development team.
Financial Strength and Debt Refinancing
Alongside the development announcement, Cromwell revealed a successful renegotiation of its bilateral debt facilities. The new terms offer more favourable conditions, including flexible covenants and extended durations, reducing the weighted average drawn credit margin from 1.77% to 1.31%. This improvement reflects the Group’s strengthened balance sheet following the sale of its European platform and a significant reduction in net debt and gearing.
Towards a Capital-Light Model
While Cromwell will initially fund the Barton project internally, the Group plans to attract capital partners in due course. This approach aligns with its transition to a capital-light investment management model, allowing Cromwell to leverage its development expertise while optimising capital deployment. Chairman Gary Weiss noted that the business simplification journey has positioned Cromwell well for this next phase of growth, focusing on careful and considered initiatives.
Implications for the Market
This development not only strengthens Cromwell’s portfolio with a high-quality government-backed asset but also signals confidence in Canberra’s commercial property market. The consolidation of government tenancies into a single, sustainable building reflects broader trends in public sector property management. For investors, the combination of a secure long-term lease and improved financing terms enhances Cromwell’s risk-adjusted return profile.
Bottom Line?
Cromwell’s Barton project and debt refinancing set the stage for a disciplined growth phase anchored by government tenancy and financial resilience.
Questions in the middle?
- What is the total capital expenditure expected for the Barton development?
- When does Cromwell anticipate bringing in capital partners to reduce its funding exposure?
- How will this project influence Cromwell’s overall portfolio composition and income profile?
