MARKETS SPECTATOR: Cromwell's conquest

Cromwell Property Group has sold $250 million of shares overnight to fund the purchase of seven office buildings from the NSW government, three in central Sydney and four outside the state capital, a person familiar with the matter said.

The share sale was fully underwritten by Cromwell’s investment banks, Bank of America and RBS Morgans, said the person who spoke on condition of anonymity as the success of the share sale had not been disclosed to the ASX.

The stock was sold at $1 a share, a 3.8 per cent discount to May 16 to May 22 total five-day volume divided by the total five-day value of securities sold on the ASX.

About two thirds of the stock was purchased by fund managers, said the source. Cromwell is expected to utilise $200 million of a $260 million three-year debt facility to help fund the purchase of the new property, according to an ASX document.

Cromwell says the value of its property investment portfolio will now be $2.3 billion. The new property the company is purchasing has an average yield of 9 per cent. The average value of the portfolio is $4690 per square metre. The Sydney buildings Cromwell has agreed to buy include Symantec House on Darling Harbour, the McKell Building on Rawson Place and Blight House on the street of the same name.

The company also owns the Qantas headquarters building, HQ North Tower in Brisbane and 321 Exhibition Street in Melbourne.