Singapore Exchange Ltd. · SGX:S68

Singapore Exchange — Cromwell European REIT — FY2019 Earnings Presentation

60 slides from Singapore Exchange's earnings presentation, Feb 25, 2020

  1. Slide 1: Cromwell European REIT Results Presentation 4Q and FY 2019

    CROMWELL EUROPEAN REIT RESULTS PRESENTATION FOR THE FOURTH QUARTER AND FINANCIAL YEAR ENDED 31 DECEMBER 2019 25 February 2020

  2. Slide 2: Disclaimer

    Disclaimer This presentation shall be read only in conjunction with and as a supplementary information to Cromwell European Real Estate Investment Trust’s (“CEREIT”) financial results announcement dated 25 February 2020 published on SGXNet. This presentation is for information purposes only and does

  3. Slide 3: Contents

    Contents 1 CEREIT Investment Case 2 FY 2019 Report Card 3 Portfolio Highlights 4 Transactions Update 5 Financial Performance 6 Treasury Management 7 Key Takeaways 8 European Update and Outlook 9 Appendix RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 3

  4. Slide 4: CEREIT Investment Case

    Parc des Docks Green Office Paris, France Kraków, Poland CEREIT Investment Case RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 4

  5. Slide 5: About Cromwell European REIT

    About Cromwell European REIT Trusted to Deliver Our Purpose: To deliver stable and growing FINLAND distributions and long-term distribution per unit Properties 11 (“DPU”) and net asset value (“NAV”) per unit growth €2.1 BILLION1 POLAND Our Investment Proposition: Cromwell DIVERSIFIED PORTFOLIO Prope

  6. Slide 6: A Selection of Our Properties

    A Selection of Our Properties Haagse Poort De Ruijterkade Bastion Gewerbepark Hamburg-Billstedt Parc Des Grésillons Green Office The Hague, The Netherlands Amsterdam, The Netherlands ’s-Hertogenbosch, The Netherlands Hamburg, Germany Paris, France Kraków, Poland Milano Piazza Affari Bretten Avatar O

  7. Slide 7: Attractive Yield and Total Shareholder Returns

    Attractive Yield and Total Shareholder Returns CEREIT 2019E DPU Yield of 7.1%1 Compares Favourably to Other Global Yield Investment Alternatives Yield Spread to Europe  7.1% Annualised Distribution Yield1 Benchmarks Benchmark US Benchmark Singapore Benchmarks  11.4% premium to NTA per unit2 at cur

  8. Slide 8: CEREIT's Track Record Since IPO

    CEREIT’s Track Record Since IPO More than 50% Growth in Portfolio Size since IPO CEREIT Continues to Target Accretive High-Quality Assets in Strategic, “On-Theme” Cities and Markets €1,993 €2,082 €2,103 €1,795 million million million €1,718 million Portfolio Portfolio Portfolio €1,695 million Portfo

  9. Slide 9: CEREIT FY 2019 Report Card

    Via Paracelso 22-24-26, Avatar Office Lenine Agrate, Italy Kraków, Poland IIvry-Sur Seine, Paris, France CEREIT FY 2019 Report Card RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 9

  10. Slide 10: Financial Highlights: Exceeding Forecasts

    Financial Highlights: Exceeding Forecasts Outperformed Two €116.1 €96.9 €4.08 Years of IPO million million cents Forecasts FY 2019 NPI1 FY 2019 DI2 FY 2019 DPU 40.1% up YoY3 42.6% up YoY 8.8% up YoY 37.4% above the IPO Forecast 38.0% above the IPO Forecast 1.5% above the IPO Forecast4 Active Capital

  11. Slide 11: Portfolio Management: Successful Execution Track Record

    Portfolio Management: Successful Execution Track Record ACQUISITIONS: DISPOSALS: Strong Pipeline and 1st asset disposal executed Ability to Execute €365.3 million in successfully – Parc d’Osny – Transactions Drive assets1 acquired Inorganic Growth 14 properties (now valued at €368 million) in for €1

  12. Slide 12: Sustainability: Achieving Measurable Outcomes

    Sustainability: Achieving Measurable Outcomes Environment, Social 43% YoY Outperforming Rated “A” and Governance increase peer group for public disclosure, compared to an average of “C” for (“ESG”) Matters are in GRESB rating in five of seven rating all GRESB participating funds and our Key Priority

  13. Slide 13: Portfolio Highlights

    Parc des Grésillons Hochstraße 150-152 Gennevilliers, France Duisburg, Germany Portfolio Highlights RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 13

  14. Slide 14: Portfolio Overview as at Dec 2019

    Portfolio Overview as at 31 Dec 2019 Properties 103 Finland Occupancy Rate (by lettable area) 93.2% Properties 11 Valuation (€)1 2,103.0 million Lettable Area (sq m) 61,977 WALE / WALB2 4.4 years / 3.5 years Valuation (€ million) 115.0 % Freehold3 91.6% % of Portfolio 5.5% Average Reversionary Yield

  15. Slide 15: Portfolio Valuation 7.4% higher than Purchase Price

    Portfolio Valuation1 7.4% higher than Purchase Price  €144.6 million increase in portfolio valuation, compared to purchase prices  €42.4 million fair value gain for FY 2019, after taking into account capital expenditure and acquisition costs  Portfolio valuations have benefitted from an experienc

  16. Slide 16: FY 2019 Leasing Highlights

    FY 2019 Leasing Highlights  123,378 sq m of NLA leased in FY 2019 at an average positive rent reversion of 3.7%  Long WALE (4.4 years) and WALB (3.5 years)  Top 10 tenant-customers’ WALE is 4.5 years as at 31 Dec 2019  58% of expiries and breaks up to Jun 2020 have already been de-risked  Pro-a

  17. Slide 17: FY 2019 Major Leasing Successes

    FY 2019 Major Leasing Sucesses Showcasing Strength of CEREIT’s Local Asset Management Teams Leasing Highlights: Haagse Poort, The Netherlands  Renewed lease at Haagse Poort (The Netherlands):  Renewed ~22,000 sq m (out of a total of ~52,000 sq m lease) at a 5.1-year term with key tenant-customer N

  18. Slide 18: 4Q 2019 Asset Management Highlights

    4Q 2019 Asset Management Highlights Further Uplift in Portfolio Occupancy to 93.2% Active leasing continues Occupancy By Country 100.0%  22,354 sq m (45 leases) signed, comprising 9,288 sq m in office leases and 13,066 sq m in light 90.0% industrial / logistics leases 80.0% Further uplift in portfo

  19. Slide 19: 4Q 2019 Office Sector Leasing Highlights

    4Q 2019 Office Sector Leasing Highlights Steady Performance in Challenging European Office Market  19 new office leases (9,288 sq m) and 8 renewals (4,274 sq m) were signed in 4Q 2019  New acquisitions in France and Poland contributed to an improved occupancy rate of 94.6% and further tenant-custo

  20. Slide 20: 4Q 2019 Light Industrial / Logistics Sector Leasing Highlights

    4Q 2019 Light Industrial / Logistics Sector Leasing Highlights Higher Occupancy and Positive Rent Reversions Contribute to CEREIT’s NPI Growth  Light Industrial / Logistics sector occupancy has improved 5 p.p. to 90.7% since IPO  26 new leases (13,066 sq m) and 13 renewals (8,205 sq m) were signed

  21. Slide 21: Diversified High-Quality Tenant-Customer Base

    Diversified High-Quality Tenant-Customer Base Top 10 Tenant-Customers Now Represent 33.3% of the Portfolio (Down from 41% at IPO) Total no. of leases as at 31 Dec 2019 1,154 Total no. of tenant-customers as at 31 Dec 2019 957 Top 10 Tenant-Customers Tenant-Customer Trade Sector Breakdown by Headline

  22. Slide 22: Transactions Update

    Gewerbestraße 62 Cassiopea 1-2-3 Bretten, Germany Agrate, Italy Transactions Update RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 22

  23. Slide 23: Completed Acquisition of Office Property in Agrate, Italy

    Completed Acquisition of Office Property in Agrate, Italy Cassiopea 1-2-3, Via Paracelso 22-24-26, Agrate, Italy Property Type Office Purchase Price €17.7 million AGRATE Land Lease Tenure Freehold Leasable Area 12,218 sq m (including car parks) Purchase Price per sq m €1,449 Occupancy (as at 28 Nov

  24. Slide 24: Proposed Acquisition – Light Industrial Portfolio in Germany

    Proposed Acquisition – Light Industrial Portfolio in Germany Stone Portfolio, Germany, Pforzheim Area Property Type Light Industrial Purchase Price €38.0 million Land Lease Tenure Freehold Leasable Area (sq m) 29,734 Purchase Price (per sq m) €1,278 Occupancy (as at 15 Feb 2020) 100% WALE (as at 15

  25. Slide 25: Proposed Disposal of Light Industrial / Logistics Assets

    Proposed Disposal of 12 Light Industrial / Logistics Assets Sale to be Completed at a 15.2% Premium over Valuation; Proceeds to be Redeployed Shortly  Sale consideration of €65.7 million is €2.6 million above the valuation of the property as at 30 Jun 2019 and €8.7 million over the purchase price 

  26. Slide 26: Financial Performance

    Herstedvang 2-4 Veemarkt Albertslund, Denmark Amsterdam, The Netherlands Financial Performance RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 26

  27. Slide 27: Results Driven by Acquisitions

    Results Driven by Acquisitions Key Performance Metrics for FY 2019 FY 2019 vs 12M 20181 FY 2019 vs IPO Forecast2  Gross revenue up 42.1%  Gross revenue up 39.4%  NPI up 40.1%  NPI up 37.4%  Income available for distribution  Income available for distribution up 42.6% up 38.0%  DPU of €4.08 ce

  28. Slide 28: Key Financial Metrics

    Key Financial Metrics Quarterly NPI and DI have been growing steadily Net Property Income (€‘000) Income Available for Distribution (€‘000) € ‘000 € ‘000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 33,563 15,000 15,000 25,772 26,286 27,715 28,449 26,419 22,394 22,446 10,000 20,739 21,508 20,929

  29. Slide 29: Ongoing Focus on Driving Distributable Income

    Ongoing Focus on Driving Distributable Income Key Performance Metrics for FY 2019 • Gross Revenue and NPI outperformance driven by new acquisitions • Total Return includes €42.4 million fair value gains (€60.1 million gain in 12M 20181) • Distributable Income is €96.9 million, 38.0% above the IPO Fo

  30. Slide 30: CEREIT Distributions, Distribution Policy and Fees

    CEREIT Distributions, Distribution Policy and Fees Distribution Timetable for 2H 2019 Distribution Last Day of Trading on a “cum” Basis 2 March 2020 (Monday) Ex-Date 3 March 2020 (Tuesday) Record Date 4 March 2020 (Wednesday) Deadline for submitting Currency Election Notice 19 March 2020 (Thursday)

  31. Slide 31: Balance Sheet Analysis

    Balance Sheet Analysis Balance Sheet  Total assets increased by 24.2% mainly due to acquisitions in 1Q 2019 and 3Q 2019  Net assets increased by 17.5% to €1.3 billion  NTA per unit increased to €51.6 cents due to revaluation gains, partially offset by 16.8% increase in units in issue  Current as

  32. Slide 32: Treasury Management

    Parsdorfer Weg 10 Boekweitstraat 1 - 21 & Luzernestraat 2 - 12 Kirchheim, Germany Nieuw-Vennep, The Netherlands Treasury Management RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 32

  33. Slide 33: Treasury Management

    Treasury Management High Interest Cover is well-protected by near 100% hedging  Aggregate leverage1 of 36.8% which remains within the 35 – 40% range set by the Board  97.5% of total (drawn) gross debt is hedged as at 31 Dec 2019  All-in interest rate of less than 1.5% per annum  Interest Coverag

  34. Slide 34: Transformational Debt Refinancing in 4Q 2019

    Transformational Debt Refinancing in 4Q 2019 Access to European Debt Markets Delivering Low Debt Cost and Robust Interest Cover  €625.0 million debt refinancing completed, providing potential to access debt capital markets and credit rating  CEREIT now has total debt facilities of ~€1.0 billion, i

  35. Slide 35: European Update and Outlook

    Haagse Poort Piazza Affari The Hague, The Netherlands Milan, Italy European Update and Outlook RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 35

  36. Slide 36: European Commercial Real Estate Commentary

    European Commercial Real Estate Commentary Investment by Sector  Europe’s real estate market ended 2019 on a (12 months to Dec 2019) 2% high, enjoying an incredibly strong finish to the Office year 4% 8% Apartment  Offices remain a clear target for investors, Retail accounting for 42% of 4Q 2019 t

  37. Slide 37: Global Capital Flows to Europe – A strong finish to 2019

    Global Capital Flows to Europe – A strong finish to 2019 Cross-border activity: Twelve Months to 4Q 2019 • European property investment volumes reached €110.9 billion in 4Q 2019 – the second most active quarter on record – bringing the year’s trading volume to €308 billion, 2% behind 2018 • Cross-bo

  38. Slide 38: Investing in Europe

    Investing in Europe  High risk premiums (cap rate – risk free rate) and lower capital values (per sq m) support the case for investing in European markets  Europe offers higher and more attractive risk premiums (6.23%-5.07%) compared to US (4.58%), Singapore (3.61%) and Hong Kong (1.07%)  Europe

  39. Slide 39: Rent and Vacancy Rates (Office Sector by CBD region)

    Rent and Vacancy Rates (Office Sector by CBD region) Commentary Office Vacancy Rates (%) • As of 4Q 2019, office vacancy rates are the lowest 20.00 in the central business district (“CBD”) regions of Vacancy Rate (%) 15.00 Paris and Amsterdam (1.36% and 1.6% 10.00 5.34% respectively) 5.00 4.67% 4.58

  40. Slide 40: Rent and Vacancy Rates (Logistics Sector by Country)

    Rent and Vacancy Rates (Logistics Sector by Country) Commentary Logistics Vacancy Rates (%) • As of 4Q 2019, logistics vacancy rates are the 14 12 Vacancy Rate (%) lowest in Denmark (2.3%), with the majority of 10 8 7.07% activity concentrated around key import / export 6 locations with the Greater

  41. Slide 41: Commentary on the European Economy

    Commentary on the European Economy  The Eurozone economy gained some momentum, albeit modest, towards the end of 2019, but the 2020 Gross Domestic Product (“GDP”) is expected to be steady at 0.8% growth  The services sector continues to show positive momentum, although there will be headwinds from

  42. Slide 42: Key Eurozone Economic Indicators

    Key Eurozone Economic Indicators  Consumer prices are expected to grow slower in 2020 but increase gradually in 2021 and beyond  Short-term interest rates are expected to remain negative for three years, while long-term interest rates are expected to rise modestly only in 2022 and beyond  2020 GD

  43. Slide 43: Key Takeaways

    Bastion Riverside ’s-Hertogenbosch, The Netherlands Warsaw, Poland Key Takeaways RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 43

  44. Slide 44: Key Takeaways

    Key Takeaways Outperformed 2 Years of IPO Forecasts  FY 2019 NPI up 40.1% YoY and up 37.4% vs. IPO Forecast  FY 2019 DPU of €4.08 cents up 8.8% YoY and 1.5% above the IPO Forecast Providing Resilient Income through Portfolio Diversification and Active Leasing  Resilient Pan-European portfolio wel

  45. Slide 45: Appendix

    Parsdorfer Weg 10 Boekweitstraat 1 - 21 & Luzernestraat 2 - 12 Kirchheim, Germany Nieuw-Vennep, The Netherlands Appendix RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 45

  46. Slide 46: Well-Balanced and Diversified Pan-European Portfolio

    Well-Balanced and Diversified Pan-European Portfolio €2.10 billion1 Pan-European Portfolio Diversified across Asset Classes and Geography Portfolio Breakdown by Asset Class Portfolio Breakdown by Geography Denmark Finland Others 4% 6% 5% Germany Light Industrial / 6% The Netherlands Logistics 30% 31

  47. Slide 47: Country Data by Sector

    Country Data by Sector No. of Reversionary Number of NLA Valuation Occupancy NPI FY 2019 Assets Yield Leases The Netherlands (total) 17 260,205 sq m €636,141,747 5.7% 96.5% €32.2 million 254 Office 7 177,891 sq m €557,450,000 5.5% 96.1% €26.3 million 47 Light Industrial & Logistics 10 82,314 sq m €7

  48. Slide 48: Office Sector – Occupancy and Lease Expiry Profile

    Office Sector – Occupancy and Lease Expiry Profile High Occupancy and Long WALE Though Impacted by Market Trends  Occupancy by area for the office sector increased from 94.2% in 3Q 2019 to 94.6% in 4Q 2019  Long WALE and WALB at 4.6 years and 4.1 years albeit slightly reduced QoQ due to ongoing ma

  49. Slide 49: Light Industrial / Logistics Sector – Occupancy and Lease Expiry Profile

    Light Industrial / Logistics Sector – Occupancy and Lease Expiry Profile Further De-risking of the Light Industrial / Logistics Portfolio Through Leasing and Sale  Occupancy by lettable area for the Light Industrial / Logistics sector increased from 88.9% in 3Q 2019 to 90.7% in 4Q 2019, mainly due

  50. Slide 50: Portfolio Overview – The Netherlands

    Portfolio Overview – The Netherlands Haagse Poort - Den Haag Central Plaza, 2 – 25 (retail) / Weena 580 – 618 (offices), Rotterdam Bastion, Willemsplein 2 – 10, ’s-Hertogenbosch Moeder Teresalaan 100 / 200, Utrecht De Ruyterkade 5, Amsterdam Koningskade 30, Den Haag Blaak 40, Rotterdam Veemarkt 27-7

  51. Slide 51: Portfolio Overview – Italy

    Portfolio Overview – Italy Milano Affari, Piazza degli Affari 2, Milan Roma Amba Aradam, Via dell’Amba Aradam 5, Rome Roma Pianciani, Via Pianciani 26, Rome Assago Palazzo F7-F11, Viale Milanofiori 1, Milan Milano Nervesa, Via Nervesa 21, Milan Via Camillo Finocchiaro Aprile 1, Genova Ivrea, Via Gug

  52. Slide 52: Portfolio Overview – France

    Portfolio Overview – France Paryseine, Ivry-Sur Seine Parc Locaparc 2, 59-65 rue Edith Cavell, Vitry-sur-Seine Lénine, Ivry-Sur Seine Parc de Champs, 40 boulevard de Nesles, ZAC le Ru du Nesles, Champs sur Marne Parc de Meslay, ZI du Papillon, Cap Mermoz, Maisons-Laffitte Parcay-Meslay Parc des Dock

  53. Slide 53: Portfolio Overview – Poland

    Portfolio Overview – Poland Business Garden Poznań 6 Green Office, Kraków Riverside Park, Fabryczna 5, Warsaw Avatar Office, Kraków Grojecka 5, Warsaw Arkońska Business Park, 3 1 Arkonska 1&2, Gdansk 5 2 4 LEGEND Office RESULTS PRESENTATION FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2019 53

  54. Slide 54: Portfolio Overview – Germany

    Portfolio Overview – Germany Gewerbe- und Logistikpark München-Kirchheim West, Parsdorfer Weg 10, Kirchheim Gewerbe-und Logistikpark Stuttgart-Frickenhausen, 7 Siemensstraße 11, Frickenhausen 5 Gewerbe- und Logistikpark Frankfurt-Bischofsheim, An der Kreuzlache 8-12, Bischofsheim Gewerbepark München

  55. Slide 55: Portfolio Overview – Finland

    Portfolio Overview – Finland Opus Business Park, Hitsaajankatu 20-24 , 2,3, 7 Helsinki 4 6,11 Plaza Vivace, Äyritie 8C, Vantaa Plaza Forte, Äyritie 12C, Vantaa 5 Grandinkulma, Kielotie 7, Vantaa Liiketalo Myyrinraitti, Torpantie 2 2, Vantaa Pakkalan Kartanonkoski 3, Pakkalankuja 6, 8 Vantaa 9 Plaza

  56. Slide 56: Portfolio Overview – Denmark

    Portfolio Overview – Denmark Priorparken 700, Brøndby 4 Naverland 7-11, Glostrup 7 8 Priorparken 800, Brøndby 11,2 Islevdalvej 142, Rødovre 5 1 Herstedvang 2-4, Albertslund 10 9 3 Stamholmen 111, Hvidore Naverland 8, Glostrup Fabriksparken 20, Glostrup Hørskætten 4-6, Tåstrup 6 Hørskætten 5, Tåstrup

  57. Slide 57: European Debt Map

    European Debt Map Comparison of Core (Prime) vs. Core+ (Regions) Office Financing Opportunities Core/Core+ (loan term | LTV)  5yrs | 40.0% Sweden Core/Core+ (CBD) 1.00% - 1.40% p.a. Core/Core+ – upfront fees  40 to 70 b.p. (Italy 100 b.p.) Core/Core+ (Regions) 1.40% - 1.80% p.a. Repayment  Intere

  58. Slide 58: CEREIT's Sustainability Commitments

    CEREIT’s Sustainability Commitments Sustainability Commitments CEREIT Materiality Matters CEREIT Targets Pillar Owners Sustainable Economic • FY 2019 income available for distribution to meet or exceed IPO forecast • Chief Financial Officer Value Creation Economic • FY 2019 portfolio occupancy to me

  59. Slide 59: Backed by Strong and Committed Sponsor

    Backed by Strong and Committed Sponsor Cromwell Property Group is a Real Estate Investor and Manager Operating Across Three Continents with 200+ People Working on the Ground in Twenty European cities A$11.9 (€7.5)1 3.7+ million billion sqm AUM2 A$3.0 270+ (€1.8) properties billion Market capitalisat

  60. Slide 60: Thank You

    THANK YOU If you have any queries, kindly contact: Cromwell EREIT Management Pte. Ltd., Chief Operating Officer & Head of Investor Relations, Ms Elena Arabadjieva at elena.arabadjieva@cromwell.com.sg, Tel: +65 6920 7539, or Newgate Communications at cereit@newgatecomms.com.sg.

Cromwell European REIT — FY2019 Earnings Presentation on 6ix