From Strategy to Action: Embedding ESG Across the Investment Lifecycle
Protecting and enhancing long-term asset value requires more than strong property fundamentals. It also depends on how effectively environmental, social and governance risks and opportunities are managed across a portfolio. During FY26, Cromwell continued to strengthen this capability through a refreshed ESG Strategy and a series of initiatives designed to support resilience, operational performance and long-term value creation.
FY26 ESG Highlights
Enhancing portfolio resilience
Reduced Scope 1 and 2 (market-based) emissions by 96% from the FY22 baseline.
Increased solar PV capacity by 115% to 2,450kW. (FY25: 1,140kW)
Maintained a 4-Star Green Star Performance Rating.
Supporting asset competitiveness and stakeholder outcomes
Maintained Investment Portfolio rank in NABERS Office Energy SPI
2026 = 3rd 5.4 NABERS energy rating (FY25: 3rd, 5.5)
Improved portfolio energy intensity to 104.0 kWh/m².
(FY25: 122.7 kWh/m2)
Improved water intensity to 0.38 kL/m². (FY25: 0.41 kL/m2)
Tenant satisfaction remained strong at 87%.
Strengthening governance and responsible investment
Improved S&P Global Corporate Sustainability Assessment score to 65/100 (FY25: 64/100).
Maintained a GRESB Public Disclosure Rating of A and achieved a 5/5 rating for Cromwell’s investment portfolio.
Achieved 5-star PRI ratings in all applicable categories.
Investing in people and communities
Employee engagement increased to 71% (FY25: 70%).
Maintained Gender pay gap of 24%1(FY25: 24%)
Released Cromwell’s Reflect Reconciliation Action Plan.
1This data has been subject to independent limited assurance by a third party. Refer to the Independent Limited Assurance Report available on the Cromwell website.
Our strategy in action: Improved Projects ESG Framework
Effective project governance and the integration of ESG considerations help protect asset value, support tenant outcomes and contribute to long-term investment performance.
During FY26, Cromwell enhanced its Projects ESG Framework to align with the new 2030 ESG Strategy and further embed ESG considerations into project planning, procurement, delivery and review.
The revised framework introduces ESG assessment requirements at key project stages, helping teams identify ESG-related risks and opportunities earlier in decision-making. It also establishes clearer standards, stronger governance and increased accountability across the supply chain.
Strengthening governance and responsible investment
During FY26, Cromwell launched its refreshed 2030 ESG Strategy, providing a clearer framework for managing the environmental, social and governance factors most relevant to the business and its stakeholders.
The strategy is designed to strengthen accountability, support informed decision-making and focus investment and management efforts on the ESG factors most likely to influence long-term portfolio performance.
Cromwell’s 2030 ESG Strategy, including strategic priorities and targets, is available in the FY26 Annual Report.
Integrating ESG considerations into project planning, procurement and delivery helps Cromwell make more informed capital allocation decisions, strengthen project oversight and support long-term asset performance.
Cromwell is working with contractors to implement the framework across applicable projects, with compliance and performance monitored throughout delivery. During FY27, the Group will continue to support implementation through practical assessment tools, contractor capability-building initiatives and commercial incentives that encourage continuous improvement.
Looking ahead
As the real estate sector continues to evolve, Cromwell believes that integrating ESG considerations into investment, asset management and project decision-making will remain an important contributor to portfolio resilience and long-term value creation.
Through its refreshed 2030 ESG Strategy, enhanced governance frameworks and ongoing focus on people, communities and environmental performance, Cromwell is working to position its portfolio and business for sustainable success over the long term.
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Tenant survey highlights strength of tenant relationships across the portfolio
Cromwell’s latest tenant survey, conducted independently by workplace experience specialist Future Forma, highlights the importance of strong tenant relationships in supporting portfolio performance and long-term value creation.
The 2026 annual tenant insight program surveyed tenants across the Cromwell Direct Property Fund and Cromwell’s Investment Portfolio. The assets achieved an overall performance score of 87, outperforming the industry Tenant Sentiment Index for the fifth consecutive year, and recorded an outstanding property management team score of 91.8%.
Combined with data from the CromwellConnect tenant engagement platform, the survey results provide actionable insights that guide asset strategies, capital investment and service improvements. These findings help Cromwell direct time, focus and resources where they can have the greatest impact on tenant retention and support long-term asset performance.
Supporting leasing outcomes and long-term value
Understanding tenant needs also enables Cromwell to anticipate changing occupier requirements and identify opportunities to strengthen leasing outcomes. During FY26, this proactive approach supported strong leasing performance across the Investment Portfolio, which maintained occupancy of 95.6% and completed more than 28,000 sqm of new and renegotiated leases.
Tenant engagement remains a key strategic focus, supported by targeted programs, workplace activations, community initiatives and digital engagement through CromwellConnect. Together, these initiatives help create more connected workplace communities, enhance the occupier experience and strengthen tenant relationships.
The survey provides valuable insight into tenant needs, helping us strengthen relationships, support retention and enhance long-term value for investors
Recent initiatives include the lobby transformation at 400 George Street, amenity enhancements and ongoing tenant engagement programs. Informed by tenant feedback, these targeted actions help ensure Cromwell’s assets remain relevant and competitive while supporting leasing demand.
By listening to tenants and acting on their feedback, Cromwell can strengthen tenant relationships, support retention and enhance the long-term performance of its assets, ultimately contributing to sustainable value for investors.
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Head of Industrial, Transactions & Development, Cromwell Property Group
Adelaide-based Mark Brammy has spent more than two decades working across industrial and logistics property, building a career that spans construction, development, investment and funds management. With a background in civil engineering, Mark is known for his practical, asset-level approach to property and his deep understanding of what drives tenant demand in industrial markets.
Mark was CEO of Terre Property Partners before it was acquired by Cromwell in 2025. Earlier in his career, he led Integrated Logistics Partners, growing its portfolio to approximately $500 million. Today, he heads Cromwell’s Industrial, Transactions & Development team, helping drive the Group’s strategy and growth across the industrial and logistics sector.
Industrial property has been one of Australia’s strongest-performing real estate sectors over the past decade. But according to Mark, investors risk oversimplifying the opportunity if they view industrial as a single asset class.
We sat down with Mark to discuss why location still matters, what makes some industrial assets more resilient than others, and why smaller-scale infill assets continue to attract investor attention.
Mark, you originally trained as a civil engineer. How did that background lead you into the world of industrial property?
I’ve always been interested in how things are designed, built and ultimately used. Engineering gave me a strong foundation in problem solving and helped me understand how physical assets function, but over time I became increasingly interested in the commercial side of property.
Industrial real estate was a natural fit because it sits at the intersection of infrastructure, development and business operations. You’re not just looking at a building; you’re looking at how that asset helps a business operate more efficiently and grow. That’s what drew me into the sector and what has kept me interested throughout my career.
What excites you most about starting your Cromwell chapter, and what are you looking to build here?
What excites me most is the opportunity to combine Cromwell’s established platform and investor relationships with the industrial expertise we’ve built over many years.
Industrial remains one of the most dynamic sectors in the property market, and there’s a real opportunity to continue growing Cromwell’s capability in this space. We’re focused on building a high-quality industrial platform centred on assets that are strategically located, difficult to replicate and highly valued by their occupiers.
Ultimately, it’s about creating long-term value for investors while positioning Cromwell to capitalise on the opportunities we see across the industrial and logistics sector.
Mark Brammy – Head of Industrial, Transactions & Development, Cromwell Property Group
Industrial has been one of the market’s standout sectors for years. What do investors still get wrong about industrial property?
One of the biggest misconceptions is that all industrial assets benefit equally from the same market trends.
The industrial story has traditionally been framed around e-commerce growth, logistics demand and supply chain evolution, and those themes remain important. But industrial is an increasingly diverse sector. A large-format distribution centre, an urban infill warehouse, a trade-focused estate and a specialised manufacturing facility can all sit within the same asset class, yet operate under very different demand dynamics.
The reality is that investors need to look beyond the sector headline and ask what makes a particular asset attractive to tenants.
What are the burning questions you get from investors on a daily basis?
If I had to boil it down, investors want to know whether the industrial story still has legs. My answer is usually yes, but not all industrial assets are created equal. The conversation today is much less about whether industrial is attractive and much more about how to separate the good assets from the great ones – that’s where most of the debate is. The drivers of performance vary significantly depending on the asset, its location and the types of tenants it serves.
For example, some assets are heavily linked to national logistics networks, while others support local businesses that need immediate access to customers, suppliers or labour pools. Some facilities can be replicated relatively easily, while others occupy locations where industrial land is increasingly difficult to replace.
That’s why we spend a lot of time understanding the role an asset plays within a tenant’s business. The strongest assets typically have characteristics that are difficult to replicate and highly valuable to the occupier.
Why has Cromwell been particularly interested in smaller-scale infill industrial assets?
These assets often sit within established metropolitan locations, close to transport infrastructure, skilled labour pools, ports and major customer bases. Because they are generally brownfield sites, core services such as power, water and sewerage are already established, which can help reduce development risk, statutory approval timeframes and authority charges.
As cities grow, industrial land in these locations becomes increasingly scarce. Once an area has developed around a precinct, it can be difficult to create new industrial supply because of competing land uses and planning constraints. That scarcity can make well-located infill assets highly valuable to occupiers and investors alike.
For many occupiers, being closer to customers is not simply a convenience. It directly affects delivery times, operational efficiency, customer service and staffing. A well-located infill asset can therefore become a very important part of a tenant’s operating model.
From an investment perspective, we also think carefully about liquidity on exit. We typically focus on assets within a pricing range of approximately $30 million to $100 million, as these assets tend to appeal to a broader range of investors and owner-occupiers, supporting a deeper buyer pool when it comes time to sell.
In an age of technology and sophisticated logistics networks, why does location still matter so much?
Technology has actually increased the importance of location in many cases.
Customers expect faster service, shorter delivery windows and greater responsiveness than ever before. Businesses are under ongoing pressure to reduce transport costs while maintaining service standards.
Being close to customers, major transport links and labour pools can create a competitive advantage. It can also reduce operational friction for tenants.
Location has always mattered in property, but in industrial real estate, the reasons why it matters continue to evolve.
What separates an average industrial asset from a high-quality one?
It usually comes down to utility and flexibility.
The best industrial assets solve a problem for tenants. That might be superior access to transport infrastructure, specialised building features, proximity to customers or operational efficiencies that are difficult to replicate elsewhere.
We look for assets that are genuinely useful to the businesses occupying them. That often means sites with ‘good bones’, where adaptive re-use is possible, and relatively low site coverage that provides scope to expand the development footprint around tenant requirements.
The more critical an asset becomes to a tenant’s operations, the stronger the potential for long-term occupancy and tenant retention. It is also why strong tenant relationships matter. The more we understand how our tenant partners operate, the better placed we are to support their growth and increase the likelihood of repeat business.
A good example is our long-standing relationship with Coca-Cola European Partners, which began in 2011 when we helped establish its state-of-the-art SA and NT distribution centre in Salisbury, South Australia. Over time, we have continued to develop and adapt the facility to support additional business units and evolving operational requirements. That ongoing investment has helped the asset remain an important part of the tenant’s distribution network and contributed to multiple lease extensions over more than a decade.
How important are specialised tenant requirements?
They’re often underestimated.
Industrial assets are becoming increasingly specialised. Certain tenants require high power capacity, substantial hardstand areas, heavy vehicle access, specialised loading configurations, refrigeration capability or significant fit-outs.
When tenants invest heavily in adapting a facility to their operations, relocating becomes much more complex and expensive. We are particularly attracted to tenants that support key Australian economic sectors, such as agriculture, defence and sovereign manufacturing capability, because these businesses often invest heavily in their facilities and commit to longer tenure.
That creates a different dynamic to sectors where businesses can move more easily between buildings. Because property costs typically represent a relatively small component of their overall operating costs, these tenants are often more focused on maintaining operational efficiency than relocating to achieve modest rental savings.
What trends do you think will shape industrial property over the next decade?
Population growth will remain a major factor, particularly in Australia’s largest cities.
At the same time, supply chains continue to evolve, customer expectations continue to rise, and businesses are becoming more sophisticated in how they utilise industrial space.
We also expect increasing differentiation between assets. Investors and occupiers will become more selective, and the gap between high-quality, strategically located industrial assets and less competitive assets may continue to widen.
What’s the key takeaway for investors today?
Industrial remains a compelling sector, but selectivity matters.
The investors who perform best over the long term are unlikely to be those simply seeking exposure to industrial as a theme. They will be those who understand the drivers of demand at the asset level.
When evaluating an industrial property, the most important question is often the simplest: Why does this asset matter to its tenant?
If the answer is driven by location, functionality, customer proximity and operational necessity, you’re often looking at the characteristics that underpin long-term value.
Mark Brammy is Cromwell Property Group’s Head of Industrial, Transactions & Development and has more than 20 years’ experience across industrial and logistics property investment, development and asset management.
Want to learn more about investing in property?
Information on commercial property investing, plus the latest industry research and insights, are available on our learn page to help you start planning your investment journey.
Demonstrating Cromwell's growing industrial capability, Kilsyth Connect has reached a major milestone, with practical completion now achieved at the 4…
Kilsyth Connect has reached a significant milestone, with practical completion of the final office-warehouse buildings marking the completion of the redevelopment program at 40 Garden Street, Kilsyth. The project showcases the industrial development and asset enhancement expertise Cromwell has integrated into the business, supporting the transformation of underutilised assets into high-quality industrial facilities aligned with occupier demand.
The redevelopment has successfully repositioned Kilsyth Connect as a modern prime-grade logistics estate and has already attracted strong occupier demand. Jenera has been secured for a purpose-built 10,000sqm advanced manufacturing facility, while AFL Global occupies the refurbished existing warehouse and office.
As a strategic industrial hub, Kilsyth Connect is also attracting local occupiers, with Yarra Valley Transport committing to a new 5-year lease over 3,305sqm of quality existing industrial space. As a leading local 3PL operator, Yarra Valley Transport’s commitment further strengthens the site’s targeted manufacturing and logistics mix. This leasing outcome increases occupancy to 85% following completion of the remaining warehouse space.
Project Phase 1
Partial demolition of existing warehouse to optimise site coverage and improve access, traffic flow and operational efficiency
Reduction of the office footprint from approximately 3,200 sqm to 2,000 sqm, with a comprehensive upgrade to a modern prime-grade standard.
Strategic repositioning of an underutilised industrial asset through a combination of refurbishment, redevelopment and new construction.
Completed: July 2025
Project Phase 2
Development of 12,000 sqm of new industrial warehouse space, further enhancing the site’s logistics capability.
Delivery of high-specification industrial facilities designed to support modern manufacturing and logistics operations.
Construction of two new warehouses, each incorporating integrated office accommodation.
Additional upgrades included enhanced car parking, landscaped areas and expansive hardstand space to support operational efficiency and future growth.
Delivered in collaboration with 2Construct.
Practical Completion: June 2026
About Kilsyth Connect
Kilsyth Connect Logistics Park is a 37,138 sqm logistics estate located in Melbourne’s established outer-eastern industrial corridor. Positioned close to key transport infrastructure, including EastLink and Maroondah Highway, the estate provides efficient access to Melbourne’s major distribution networks, population centres and regional markets.
Its strategic location supports streamlined freight movements, reduced transit times and enhanced supply chain efficiency, making it an attractive destination for manufacturing, warehousing and logistics operators seeking a well-connected industrial facility.
Looking ahead
The completion of Kilsyth Connect further reinforces Cromwell’s focus on managing high-quality industrial assets in strategically located markets. With strong leasing interest and demand for well-connected logistics facilities continuing across Melbourne, the development is well positioned to support occupier growth while contributing to Cromwell’s long-term asset management capability.
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Gold Exposed Stocks – An Update
In the performance commentary section of the September 2025 quarterly report, we discussed the portfolio’s exposure to gold miners and gold-exposed securities, a theme that had grown into a meaningful part of the portfolio. Given the eventful period that has followed, an update is warranted.
As a reminder, the Fund seeks out securities trading at discounts to readily assessable net asset values (NAVs), or special situations offering strong risk-adjusted returns. Gold miners are unusually well suited to this approach. Unlike most businesses, the value of a gold miner’s primary output can be observed directly, in a deep and liquid spot and futures market, which makes its NAV genuinely assessable. Towards the end of 2024, the share prices of many gold miners were simply not reacting to a rising gold price. A clear gap opened up between the value of the underlying assets and the prices being asked for them, and we saw an opportunity.
Our exposure
We established a meaningful exposure in November 2024, to a basket of particularly attractively priced stocks. As the gold price climbed, we generally topped up. This may seem counterintuitive, buying more as the commodity became more expensive, but it followed directly from the leverage described previously. A higher gold price lifted the NAVs of these miners faster than the metal itself, while their share prices continued to lag. In many cases the discount to NAV widened rather than narrowed, and we added accordingly.
As those discounts eventually began to close, and as the gold price reached levels that we found somewhat uncomfortably high, we started to slowly decrease our exposure to the sector. With the benefit of hindsight, these sales were both too early and not significant enough.
Recent performance
Amid a volatile macroeconomic and geopolitical environment, the gold price retreated from its highs over the period. It fell approximately 12% during the quarter and now sits around 25% below its January 2026 peak. After a long period in which the gold price moved rapidly higher, the direction of travel reversed.
In this environment, gold stocks detracted from performance. It is worth keeping this in perspective. Despite the weakness of the period, these securities have been significant contributors to returns over the life of the Fund. Over the quarter, ASA Ltd (NYSE:ASA) was down 16.4%, Oceana Gold (TSX:OGC) fell 20.6% and Alkane Resources (TSX:ALK) was more resilient, off 3.0%. One holding, however, disappointed for reasons that went well beyond simple weakness in the sector.
APAC Resources
APAC Resources (SEHK:1104) is a holding company with major exposure to a variety of mining companies. Its key holdings are based in Australia and have been well known to Phoenix for a long time. We initiated a position at the very start of the Fund’s life, drawn by underlying assets we found attractive and by a very large discount to NAV, with that NAV predominantly made up of listed securities, and therefore readily assessable.
We also formed the view that the market’s perception of APAC, related to its poor governance, was overstated. Over time, we believed the company’s actions validated that view. There were numerous positive changes, including improved disclosures, the initiation of investor presentations, the publication of monthly NAVs, and a corporate restructure that could potentially have allowed more capital to be released from the vehicle. The underlying investments also performed extremely well, including a managed fund of mining securities that produced spectacular performance.
As the NAV grew and the discount closed, we realised much of our position. Those sales more than covered the original cost of the shares, and we still retained a position of around 2%. To that point, the investment had unfolded very much as we had hoped.
APAC then disappointed. During the June 2026 quarter the company announced a rights issue at roughly a 33% discount to the last traded share price and a massive discount of approximately 71% to the prevailing NAV. A deeply discounted rights issue of this kind transfers value from those who cannot, or choose not to, participate. While the rights issue would at least have allowed us to participate and so minimise our own dilution, it was clearly a poor reflection on APAC’s governance.
Subsequently, weakness in markets and in the gold price led the underwriters of the rights issue to terminate their contract, and the rights issue was cancelled. While the dilution will now no longer take place, the reputational damage has been done. APAC dropped around 44% over the quarter and closed the period trading at more than a 66% discount to its NAV. We retain a 1.7% position and will decide what to do with it as more information is disclosed.
“For all the frustration of its recent conduct, it is worth recording that the investment has been extremely successful over its life, delivering an internal rate of return of 37.2% across the five and a half years it has been held in the portfolio. “
Where to from here?
The remaining gold positions continue to look attractive at current gold prices, though the opportunity is no longer as extreme as it once was. Reflecting both our earlier trimming and the moves within the sector, total exposure to gold securities, including APAC, now sits at approximately 9.5% of the portfolio.
This exposure hurt over the period, and the episode with APAC was a genuine disappointment. Taking a step back, however, the theme has been a meaningful contributor to the Fund, both in absolute terms and relative to the benchmark over its life. As ever, we will keep a watchful eye on the sector and let valuation guide our positioning from here.
Explore the Stock in Focus series
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As Phoenix Funds marks its 20‑year anniversary, we are revisiting a selection of past investments that continue to offer relevant lessons for investors today. This case study on Sunland Group forms part of our 20:20 Stock Stories series — a retrospective look at listed businesses that illustrate enduring principles of long‑term investing. Sunland Group was an ASX‑listed property developer for much of its corporate life, and Phoenix initiated a position in the company in 2014, remaining invested until its delisting in 2023. While market cycles, sentiment and conditions have evolved over that period, the core themes highlighted by this investment — earnings volatility, management alignment and the importance of after‑tax returns — remain as pertinent today as they were at the time. It is these timeless insights that make the Sunland story worth revisiting and sharing with our investor community.
“Volatility creates opportunity for investors who are able to look through the peaks and troughs and focus on long‑term value.” — Stuart Cartledge, Co‑founder and Managing Director, Phoenix Portfolios
The first key lesson for us:
Volatility of earnings creates opportunities for those able to look through the peaks and troughs.
Looking through the volatility
Sunland Group was established in 1983 by architect Dr Soheil Abedian as a Queensland based property development company and was responsible for many projects across the east coast of Australia, spanning both iconic towers such as Australia’s tallest building, Q1 on the Gold Coast and house and land projects in emerging suburbs.
Except for a failed offshore expansion, and the difficult period during the Global Financial Crisis, Sunland has been a highly profitable and well managed business. Its core “House and Land” business consistently delivered solid returns which is a highly valued attribute of any listed company.
The high-rise business created iconic towers that produced some large profits upon completion. However, by its very nature, this led to a volatile income stream – something that many share market investors are uncomfortable with.
The second key lesson for us:
An aligned management team is more likely to make sensible strategic long term decisions.
Alignment of interest
The founding Abedian family maintained a large stake in Sunland throughout its listed life, thereby maintaining a strong alignment of interest with minority shareholders. However, the share market did not value the company appropriately, and over the period from 2009 through to 2020, the stock traded at a significant discount to its book value. A low share price does however enable a financially astute management team to buy back their own stock, reduce the number of shares on issue, and increased the value per share of all remaining shares. Using a combination of retained profits and inventory selldowns, Sunland bought back and cancelled over 55% of its own shares. This is a low-risk way of adding value.
The combination of good capital allocation, an aligned management team and a compelling valuation was attractive to Phoenix and a position in the stock was initiated in August 2014. This position was ultimately held until the company delisted in October 2023.
The third key lesson for us:
The market does not fully value franking credits. After-tax returns can be materially enhanced by holding companies delivering abundant fully franked distributions.
Franking credits
The de-listing was not a bad news story!Despite years of buying back stock at a discount, a strategic review was undertaken and announced to the market in October 2020 which essentially involved either completing projects, or selling them, and returning all capital to shareholders.At the time of the announcement, the share price reflected around half of the capital value of the business.
However, given an extended period of profitability and a substantial franking credit balance, a significant portion of sales proceeds were delivered to shareholders as fully franked dividends.For Australian superannuation investors and foundations, this form of distribution is extremely tax effective and therefore very important from an after-tax return perspective.
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Enhancing Asset Performance for the Future – Electrification at 700 Collins Street
While the transition to a lower-carbon economy is not linear, expectations for commercial real estate continue to shift toward stronger energy performance, electrification and asset resilience. At 700 Collins Street in Melbourne, Cromwell is undertaking a broader program of capital investment to enhance the building’s long-term performance, relevance and appeal to high quality occupiers. As part of this strategy, the building is being transitioned from gas-powered systems to advanced electric technologies, including reverse-cycle heat pumps and heat recovery chillers. The project places 700 Collins Street among a small number of Melbourne CBD high-rise office buildings undertaking electrification retrofits at this scale, and among even fewer doing so while the building remains occupied.
Benefits of electrification
The upgrade is intended to improve operational efficiency, lower carbon intensity and strengthen the asset’s long-term resilience, efficiency and competitiveness.
It is also expected to remove approximately 2.28 million megajoules of natural gas from annual consumption, reducing reliance on fossil fuels and lowering energy intensity. Over time, this positions the building to benefit from grid decarbonisation and greater integration of renewable energy, supporting improved long-term energy performance.
The upgrade reinforces 700 Collins Street’s existing 5.5 Star NABERS Energy rating while aiming to lift the building’s Renewable Energy Indicator (REI) from 75% to a targeted ~99% (with the diesel generator retained). In a market where energy performance is increasingly influencing tenant demand and capital allocation, assets with strong performance credentials are better placed to attract and retain high-quality occupiers.
Proposed performance outcomes
~2.28 million MJ of natural gas removed annually
5.5-Star NABERS energy rating maintained
Targeted ~99% Renewable Energy Indicator (REI) rating
For tenants, the transition to high-efficiency electric systems enhances workplace quality through more consistent temperature control and improved indoor environmental conditions, while also supporting tenants’ own sustainability objectives – factors that are becoming increasingly important in leasing decisions.
The electrification program has been delivered through a structured, seven-stage pathway, ensuring careful consideration of building systems, infrastructure capacity, and technology selection. The works have also been sequenced to support continuity of building operations during delivery.
Electrification Pathway
McKell Building, Sydney
This approach has already been demonstrated within the portfolio. At Rawson Place in Sydney, the Group completed a “Sydney-first” electrification upgrade of the McKell Building, converting a multi-storey CBD office asset from gas to an advanced electric heat-recovery system. As the first project of its kind at this scale, it improved energy efficiency while helping future-proof the asset.
From a portfolio perspective, initiatives like this are critical in future-proofing assets against regulatory change and evolving market expectations. As ESG considerations become more embedded in investment decisions, proactively upgraded buildings are better positioned to support tenant demand, maintain long-term asset relevance, enhance investment appeal and deliver resilient long-term returns.
Ultimately, the electrification of 700 Collins Street reflects an active approach to managing and enhancing assets in response to structural market trends, supporting long-term value creation for investors.
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The Bollore Galaxy – An Update
As many readers may be aware, the portfolio has long held an exposure to entities controlled by the Bollore Family. The portfolio’s largest holding is Compagnie de l’Odet (Odet), a French-listed holding company controlled by the Bollore’s. Past generations of Bollore’s were in the business of thin paper manufacturing for uses such as rolling tobacco. In the 1980’s Vincent Bollore was an investment banker. He saw that the old family business was struggling mightily and decided to acquire the distressed business and recapitalise it. Bollore needed to raise external capital to diversify the company’s business interests but wanted to maintain operational control. Like any good investment banker, Bollore achieved this through complex structuring.
The current organisational chart is presented below to demonstrate this complexity, but for the sake of this article there are two key entities, both listed in France. They are:
Compagnie de l’Odet (Odet)
Bollore SE
These two companies own meaningful stakes in each other, creating an “ownership loop”. This structure can make the group difficult to analyse at first glance and importantly obscures the true value of the underlying assets.
Simplicity hidden by complex structure
Once one picks through the complex structure, understanding the underlying assets owned by both Bollore SE and Odet is relatively simple.
Odet predominantly derives its value from its stake in Bollore SE, while Bollore SE owns:
5.6 billion euros in net cash (mostly raised through the timely sale of its logistics business at the top of the cycle)
An 18.4% stake in Amsterdam-listed Universal Music Group (UMG), the world’s largest music publisher
Smaller media and other investments (Including Vivendi)
Some action towards discount closure
At period end, valuing UMG at its prevailing share price, Odet’s net asset value is more than 280% above its share price (not a typo!). As such, nirvana for Odet’s external investors has always been the prospect of simplification of the corporate structure and perhaps assets being distributed, so that the discount is captured (ignoring any tax complexities). The actions of Vincent Bollore have always been unpredictable. To date, steps towards simplification have been erratic and incremental, however the direction of travel has broadly been positive. Bollore SE and Odet released their annual results during the period. Given the simple nature of the underlying assets, the results held very few surprises. The one major surprise was the announcement that Bollore SE would pay a special dividend of 1.50 euros per share, which represented more than one third of Bollore SE’s share price at the time of announcement. Furthermore, Odet announced that it would pay out two thirds of the dividend it received to its shareholders.
A special dividend is particularly important to holding companies trading at discounts to their NAV. When a holding company trades at a discount, investors are essentially buying $1.00 of underlying assets for a lower price, such as $0.50. A special dividend unlocks this “trapped” value because every dollar distributed is paid out at 100% of its worth, allowing shareholders to realize the full value of the assets regardless of the stock’s discounted market price. Odet’s share price rallied on the dividend news, but after one ascribes full value to thespecial dividend payment, the discount to NAV has actually widened.
In essence, the vast majority of Odet’s value is driven by cash and its indirect holding in UMG.
“At period end, valuing UMG at its prevailing share price, Odet’s net asset value is more than 280% above its share price (not a typo!)”
The UMG conundrum
Music has proven to have universal appeal (excuse the pun) across all ages and regions. UMG is the world’s largest music publishing business, having represented 9 of the top 10 artists globally across each of the past three years, including Taylor Swift and Lady Gaga. For readers of a different generation, UMG also owns timeless assets such as rights over The Beatles back catalogue. UMG can be thought of as a toll booth on music consumption.
Since its separate listing in 2021, UMG has typically traded at a premium valuation, given the high-quality nature of its business. Very recently, concern has grown that artificial intelligence (AI) may threaten the quality of this business, both by enabling solo artists to self-publish and by allowing AI to create the music itself. This threat has caused UMG’s share price to drop from a high of almost 29 EUR per share to lows of approximately 15.50 EUR per share. According to S&P CapitalIQ consensus estimates, UMG trades at a 2026 Price to Earnings ratio less than of 16x, which compares to the S&P 500’s price to earnings ratio of just under 26x.
The quality of the music business has been tested before. Physical sales of music, mostly CDs, peaked in 1999. The proliferation of music piracy meant that it took until 2021 for music sales to reach that absolute level again (see below). Adjusted for inflation, music sales are still below that 1999 level.
Streaming services, and their global appeal completely changed the game for musicians and publishers. UMG’s more bullish investors would say that these streaming services have pricing power beyond what they currently charge and are also supported by the tailwind of a growing global middle class that can afford these services. If this is true it would likely mean robust earnings growth for the company for many years to come. UMG’s detractors would say AI developments will take power away from music publishers and extreme believers in AI would say it takes relevance away from the skill and creativity of musicians and songwriters.
Should concerns turn out to be overblown and UMG once again trades at its previous highs, Odet’s NAV would expand to a ~370% premium to its current share price! Alternatively, even assigning zero value to UMG leaves Odet’s NAV at a ~65% premium to the prevailing share price, showing the high margin of safety inherent in this investment. While there are legitimate debates about the future of music, we believe the long-term appeal of professionally produced content remains strong. However, an investment in Odet could still be an excellent investment, even if that belief proves to be optimistic.
The Longer Game
The ultimate result for investors would be a return to glory for UMG, alongside a return of capital from Odet. In recent times, the number of boxes in the organisational chart above has reduced as some simplification has occurred. The Bollore Family has also tried to remove more entities from that chart, yet faced resistance from minority shareholders. Odet itself has bought more and more Bollore shares. This activity (which effectively amounts to a buyback) has accelerated since the entities released their full year results. Most importantly, the recently announced special dividend shows a willingness to return capital to external shareholders and also moves cash around the different entities within the Bollore Galaxy. This may be tactical and act as a prelude to Vincent Bollore’s next move. Possibilities are the basis of much speculation amongst shareholders, but only the Bollore’s know the true endgame. In the short term the distribution allows shareholders to receive a meaningful portion of the NAV back at 100 cents on the dollar. Not a bad outcome for now.
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Cromwell’s continues to be part of the NABERS Sustainable Portfolios Index 2026
Cromwell has been recognised in the NABERS Sustainable Portfolios Index (SPI) 2026, reflecting the strength of our portfolio‑wide approach to sustainability and asset performance.
Cromwell Diversified Property Trust (DPT) ranked 3rd in the 2026 Office EnergySPI for our investment portfolio. Across nine properties (222,309 sqm), the Renewable Energy Indicator (REI) increased from 21% to 57%, driven by the integration of onsite solar energy, the continued purchase of 100% green power where Cromwell purchases electricity at operationally controlled assets since Jan 2024, and electrification initiatives at HQ North and the McKell Building.
Additionally, Cromwell Direct Property Fund (DPF), managed by Cromwell Funds Management, ranked 4th in the index. Across seven assets (63,153 sqm), the Renewable Energy Indicator (REI) increased from 36% to 82%, driven by the integration of onsite solar energy into the portfolio. This increase is further supported by the continued purchase of 100% green power for the majority of Cromwell’s operationally controlled assets since 2024, with full 100% green power procurement achieved by January 2025.
The NABERS SPI benchmarks the performance of building portfolios like ours across energy and water efficiency, waste management, indoor environment quality and carbon neutrality, spanning Australia’s office, shopping centre and hotel sectors.
We are proud to be part of a growing community of leaders who are setting the standard for sustainable practices in the built environment.
See the highlights of the NABERS SPI 2026 here or the full results here.
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Redefining the arrival experience at 400 George Street
At Cromwell, we believe that strategic asset management goes beyond maintaining properties, it’s about anticipating market shifts, understanding tenant expectations, and making targeted investments that enhance long-term value. The transformation of the lobby at 400 George Street exemplifies this approach in action.
Working alongside Shape Australia, Woods Bagot and ADP, we’re proud to deliver a new and refreshed arrival experience at 400 George Street.
Designed to set a new benchmark, the transformation enhances the building’s position as a premium workplace destination. The upgraded lobby complements the building’s existing premium amenities and reflects evolving workplace trends, with a strong focus on wellness, sustainability and connectivity.
A Design-Led response to evolving workplace trends
The redesigned lobby sets a new benchmark for premium workplace destinations, reflecting how the best commercial spaces now compete. Today’s tenants expect more than efficient floorplates—they’re seeking environments that support wellness, sustainability, and connectivity from the moment they walk through the door.
The transformation delivers on these expectations through several key features:
A new street-facing entryway and feature internal staircase that improve flow and create a stronger connection to the surrounding precinct
Flexible lobby zones designed for both informal collaboration and formal meetings, recognising that work now happens throughout the building—not just at desks
Increased natural light and integrated greenery that enhance occupant wellbeing and bring biophilic design principles into the everyday experience
Talwalpin durenma dutta, a newly-commissioned public artwork by Sonja Carmichael, curated and fabricated by UAP, adding cultural depth and a distinctive sense of place
These elements complement the building’s existing premium amenities while signalling a clear commitment to ongoing investment in the asset.
Karla Bowdler, General Manager at 400 George Street oversaw the delivery of the project. The upgrade positions 400 George Street as a highly competitive destination within Brisbane’s thriving North Quarter.
We’ve focused on creating an environment that supports contemporary ways of working, enhances functionality and delivers an elevated experience for tenants.
Karla Bowdler, General Manager at 400 George Street
Upgrading a landmark building in a busy CBD environment presents real challenges. The project team successfully navigated a number of challenges, including delivery within a live and busy environment, tenant impacts, and the careful management to minimise disruption to daily operations.
Thanks to collaboration from the wider team including:
The revitalised lobby is just one part of our continued investment in 400 George Street. We’re excited to announce that a new food and beverage offering will also be added, further enriching the tenant and visitor experience.
Strategic asset management means making decisions today that strengthen an asset’s position for years to come. At 400 George Street, we’re proud to be doing exactly that.
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Post update: The repositioning of 400 George Street continues to generate value, with repositioning works and leasing activity underpinning a $98 million valuation uplift to $450 million at 30 June 2026.
Discover the story
Created by Sonja Carmichael and curated and fabricated by UAP, Talwalpin durenma dutta, 2026 (Hibiscus tilliaceus cotton tree grows strong) contributes a unique cultural narrative to 400 George Street. The artwork deepens the connection between people and place, creating a meaningful and memorable experience for visitors.
The project reflects the collaboration and dedication of many contributors. Cromwell extends its thanks to Sonja Carmichael, UAP, our project partners and internal teams for helping bring this significant artwork to life.
Photo credit: Rachel See, Courtesy of UAP | Urban Art Projects
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As Phoenix Funds marks its 20‑year anniversary, we are revisiting a selection of past investments that continue to offer relevant lessons for investors today. This case study on Sunland Group forms part of our 20:20 Stock Stories series — a retrospective look at listed businesses that illustrate enduring principles of long‑term investing. Sunland Group was an ASX‑listed property developer for much of its corporate life, and Phoenix initiated a position in the company in 2014, remaining invested until its delisting in 2023. While market cycles, sentiment and conditions have evolved over that period, the core themes highlighted by this investment — earnings volatility, management alignment and the importance of after‑tax returns — remain as pertinent today as they were at the time. It is these timeless insights that make the Sunland story worth revisiting and sharing with our investor community.
