Cromwell Property Group · ASX:CMW
Cromwell Property — HY22 Earnings Presentation
45 slides from Cromwell Property's earnings presentation, Feb 24, 2022
Slide 1: ASX cover letter: HY22 Results Presentation
Thursday 24 February 2022 ASX Market Announcements Office Exchange Centre 20 Bridge Street SYDNEY NSW 2000 To whom it may concern Cromwell Property Group (ASX:CMW) HY22 Results Presentation I attach a copy of Cromwell Property Group’s HY22 Results Presentation. Yours faithfully CROMWELL PROPERTY GRO
Slide 2: HY22 Results Presentation
HY22 Results Presentation 24 February 2022 CROMWELL PROPERTY GROUP
Slide 3: Important information and disclaimer
Important information and disclaimer The restructure described in this Presentation remains tax advice or other advice as they deem necessary or Property Trust 12 ARSN 166 216 995 (C12) and Cromwell subject to board, regulatory and securityholder approval consider appropriate for their particular ju
Slide 4: Introduction and agenda
Introduction and agenda Acknowledgement of Country Agenda We acknowledge the Traditional Custodians of the Introduction lands on which we meet, and we pay our respects to their Elders past, present and emerging. Dr Gary Weiss AM – Chair HY22 Results Overview Jonathan Callaghan – CEO Financial Result
Slide 5: Cromwell Property Group overview
Cromwell Property Group overview Introduction BroadPortfolio funds management platform Geographically and culturally diverse team Asset management expertise $12.1 billion 450+ 223 Total AUM people properties $7.8 billion Total Third Party FUM 14 3.5 million countries sqm Comprising $5.1 billion Euro
Slide 6: Cromwell's operating platform
Cromwell’s operating platform Introduction Operating across three continents and 14 countries Total AUM by Sector EUROPE AUM 3.7% $5.9 6.2% 11.7% Office Retail billion Industrial / Logistics 12.5% Other 65.9% Property Securities SINGAPORE CEREIT Total AUM by Geography Manager AUSTRALIA AUM $5.2 8.6%
Slide 7: HY22 Results Overview
HY22 Results Overview CROMWELL PROPERTY GROUP
Slide 8: HY22 key achievements
HY22 key achievements Key appointments and reviews for a stabilised business New CEO and key staff appointments Completed strategic review and developed plan for simplification of Cromwell business Group strategy set for growth Progressing strategy to use portfolio of office assets to launch a new e
Slide 9: HY22 financial summary
HY22 financial summary HY22 results overview Earnings and distributions Financial position Statutory profit1 NTA per unit Liquidity2 $132.5 million A 8.7% decrease on the HY21 result of $1.03 $632 million (equivalent to 5.06 cps) $145.2 million (FY21 $1.02) Underlying operating profit1 Weighted aver
Slide 10: HY22 operational summary
HY22 operational summary HY22 results overview Investment portfolio Fund and asset management Portfolio Value Total third party FUM Assets $3.1billion Athe1.3% increase on FY21 balance $7.8 billion 223 sheet of $3.0 billion (FY21 $7.6 billion) WACR WALE Europe Tenant-customers 5.3% 5.9 years $5.1 bi
Slide 11: Financial Results and Capital Management
Financial Results and Capital Management CROMWELL PROPERTY GROUP
Slide 12: HY22 headline results
HY22 headline results Financial results and capital management Commentary FY22 performance versus prior comparable period (PCP) Statutory profit of $132.5 million, equivalent to 5.06 cents per HY22 HY21 Change security (cps), an 8.7% reduction due to higher tax expense in the current half year Sta
Slide 13: HY22 segment results
HY22 segment results Financial results and capital management Commentary HY22 segment profit1 versus prior comparable period Investment portfolio HY22 HY21 Change ($m) ($m) Strong weighting to Government and listed tenants stabilised portfolio, with rent collection largely unimpacted from COVID-19
Slide 14: Capital management
Capital management Financial results and capital management Debt profile and balance sheet Group gearing1 60% Gearing remained steady at just under 42% 55% On the sale of LDK interest and the creation of new European 50% funds with the Italian and Polish portfolios, gearing level is 45% projecte
Slide 15: Strong capital position
Strong capital position Financial results and capital management Substantial headroom to covenants Interest rate hedging Facility Covenant Actual Limit Headroom (value) 58.6% of borrowings at half-year end fixed or hedged through LVR 38% 60.0% $1.10 billion on Aggregate interest rate swaps and cap
Slide 16: Investment portfolio overview
Investment portfolio overview Valuations up by 1.9% supported by overall cap rate Medium-term lease expiry profile compression Weighted average lease expiry of 5.85 years, By Gross Income By Area showing a contraction of 0.22 years 10% 10% Vacancy increased on PCP, now at ~7.0% of NLA, 8% 8% r
Slide 17: Positioning assets for leasing success
Positioning assets for leasing success The focus on improvement of our tenant-customers’ experience remains a key driver in the return to office experience 400 George Street – End-of-trip (EOT) Kent Street – Lobby upgrades, HQ North Tower – Entry statement, upgrades EOT expansion lobby works Durin
Slide 18: Funds management platform
Funds management platform Renewed focus on growing funds management business Key highlights Third party funds under management AUM grew by 1.8% since 30 June 2021 3% 9% CPRF Global presence with uniform investment 1% Europe management processes provide the 1% DHL opportunity to be a partner of c
Slide 19: Australia and New Zealand: Retail funds management
Australia and New Zealand: Retail funds management Strong demand for retail fund drives growth Australia Cromwell Direct The fund had gross equity inflows of approximately $75 million with Cromwell now invested for 4.6% Property Fund Gross assets grew from $545 million to just under $700 million
Slide 20: Europe and Singapore
Europe and Singapore Fund and asset management European platform update New European initiatives Continued progress in the review and development of pan-European and regional Cromwell European Logistics Fund (CELF) investment strategies Closed-ended fund with seed portfolio of seven assets wareh
Slide 21: Europe: Co-investment update
Europe: Co-investment update CEREIT Polish retail (CPRF) Cromwell Italy Urban Logistics Fund (CELF) Cromwell’s 28% equity accounted share of Portfolio value $784 million (inclusive of Total portfolio value $90.7 million, up CEREIT’s profit for the half-year was $16.4 million 50% interest in $1
Slide 22: Group ESG performance
Group ESG performance Ratings and benchmarks MSCI ESG Rating Sustainalytics ESG Risk Rating ISS QualityScore as at November 2021 as at February 2022 as at February 2022 AA 11.2 Social 1 E&S Disclosure Environment 3 Low Risk Governance Risk Governance 8 1. Notice: The information provided is for info
Slide 23: Strategy
Strategy CROMWELL PROPERTY GROUP
Slide 24: Global platform for growth
Global platform for growth A trusted, Global Real Estate Fund Manager, with a local presence CROMWELL PROPERTY GROUP 23
Slide 25: Position towards a capital light fund manager
Position towards a capital light fund manager Build on Cromwell’s existing global Fund managers have significantly outperformed other REITs over the last capabilities to focus on funds management 10 years and deliver value from component parts 1000 Uniquely positioned in Australia given 800 Fund
Slide 26: What supports our strategy – Capital
What supports our strategy – Capital Global capital flows have rebounded strongly post European investment volumes have normalised after a pandemic with 23% cross-border in 3Q21 small decline in 2020 Real estate investment volumes by region (2007 – Q3 2021) (US$b)1 European real estate investment vo
Slide 27: What supports our strategy – Real Estate
What supports our strategy – Real Estate Asia Pacific (APAC) investment demand continues to Office value-add remains front of mind as investors look grow including in the Office sector to repurpose aging stock for future workplace needs Asia Pacific transaction volumes by sector (US$b)1 APAC office
Slide 28: What supports our strategy – ESG
What supports our strategy – ESG ESG considerations are increasingly prominent on ESG assets forecast to hit US$53 trillion by 2025, investors’ agendas: no longer just a “nice to have” representing a third of global AUM2 ¾ of global investors integrating environmental factors and sustainability into
Slide 29: Priorities and initiatives
Priorities and initiatives Improve transparency in communications and reporting Simplify the Streamline processes and procedures business Initial refocus on core skill set of active management and value add in Australian office sector Execute on sale of non-core assets and recycle capital to
Slide 30: External REIT project continuing
External REIT project continuing Well progressed on using CMW to own a substantial New Australian Listed Regulatory approvals Anticipate timing of launch a material portfolio of co-investment in new REIT Board being being progressed prior to end of financial office assets from balance REIT populated
Slide 31: Restructure to deliver value
Restructure to deliver value The proposed restructure will create two separately listed vehicles that are fit for purpose Creation of a capital light global funds management Creation of one of Australia’s largest pure play, externally platform managed office REITs Global FUM anticipated to be ~$12
Slide 32: Outlook
Outlook CROMWELL PROPERTY GROUP
Slide 33: HY22 outlook
HY22 outlook Outlook [Overarching outlook comment] Outlook Pursue refocused, simplified vision for the business A distribution of 1.625 cents per security is expected to be paid for the March 2022 quarter Pursue key initiatives: drive performance of the portfolio and tenant retention launc
Slide 34: Appendices
Appendices CROMWELL PROPERTY GROUP
Slide 35: Appendices contents
Appendices Contents 35 HY22 Operating and Statutory Profit Reconciliation 36 Segment Result – Operating Earnings Detail 37 Balance Sheet 38 Property Portfolio – Top 10 Assets 39 Property Portfolio – Top 10 Leases 40 Property Portfolio – Net Property Income 42 Property Portfolio – Movement in Book Va
Slide 36: HY22 Operating and Statutory Profit Reconciliation
HY22 Operating and Statutory Profit Reconciliation Appendix HY22 ($M) HY21 ($M) Operating Profit 96.4 99.1 Operating EPS 3.68 cps 3.78 cps Gain / (loss) on sale of investment properties - 5.9 Gain / (loss) on sale of other assets (0.1) - Other transaction costs (0.7) (7.8) Operating lease costs 1.7
Slide 37: Segment Results – Operating Earnings Detail
Segment Results – Operating Earnings Detail Appendix Funds and asset management Co-investments Investment portfolio Cromwell 31 December 2021 $M $M $M $M Segment revenue Rental income and recoverable outgoings - 36.7 107.3 144.0 Operating profit of equity accounted investments 1.7 23.3 - 25.0 Develo
Slide 38: Balance Sheet
Balance Sheet Appendix HY22 ($M) FY21 ($M) Assets Cash and cash equivalents 105.8 142.3 Investment property 3,900.0 3,863.5 Assets held for sale 173.5 - Equity accounted investments 687.7 712.5 Receivables 82.4 228.7 Intangibles 0.7 1.1 Derivative financial instruments 21.4 11.3 Investments at fair
Slide 39: Top Assets
Top 10 Assets1 Appendix Current Market Occupancy % by NABERS NABERS Asset State Sector Value ($M) Cap Rate NLA WALE Energy Water Major Tenants 2 Qantas 203 Coward Street, Mascot NSW NSW Office 560.0 4.75% 100.0% 9.9 years State of Queensland - Dept. of Housing & Public Works George Street, Brisbane
Slide 40: Top Leases
Top 10 Leases1 Appendix Tenant-customer Tenant Classification Expiry Date % of Portfolio Rental Income Federal Government Government Authority 21-Sep-32 18.2% Qantas Airways Limited Listed Company/Subsidiary 20-Dec-32 16.7% NSW State Government Government Authority 10-Jun-28 13.4% QLD State Governme
Slide 41: Net Property Income
Net Property Income Appendix HY22 ($M) HY21 ($M) Variance ($M) Variance (%) 2-6 Station Street, Penrith NSW 1.6 1.5 0.1 6.7% 2-24 Rawson Place, Sydney NSW 7.1 6.8 0.3 4.4% 84 Crown Street, Wollongong NSW 1.5 1.5 0.0 0.0% 117 Bull Street, Newcastle NSW 1.0 1.0 0.0 0.0% 203 Coward Street, Mascot NSW 1
Slide 42: Net Property Income
Net Property Income Appendix HY22 ($M) HY21 ($M) Variance ($M) Variance (%) ACQUISITIONS / DISPOSALS Wakefield Street, Adelaide SA 0.0 0.8 (0.8) (100.0)% Lovett Tower, Canberra ACT 0.0 (0.2) 0.2 (100.0)% Acquired/Sold Assets Total 0.0 0.6 (0.6) (100.0)% Cromwell Polish Retail Fund 18.3 14.6 3.7 25.3
Slide 43: Movement In Book Value
Movement In Book Value Appendix Strategy of continuously improving portfolio through acquisitions since 2010 In-sourced facilities management model also lowers lifecycle capex HY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 $M $M $M $M $M $M $M $M $M $M $M $M $M Opening Balance
Slide 44: Balance Sheet Debt Details
Balance Sheet Debt Details Appendix Drawn Commitment Maturity Fin Yr Years Facility Covenants (AUD $M) (AUD $M) Date Expiry Remaining Facility 1 225.0 325.0 Jun-2023 2023 1.5 yrs Facility 2 42.0 50.0 Mar-2024 2024 2.2 yrs Facility 3 200.0 200.0 Jun-2024 2024 2.5 yrs Facility 4 - 50.0 Mar-2025 2025 3
Slide 45: Cromwell Property Group
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