Cromwell Property Group · ASX:CMW
Cromwell Property — HY19 Earnings Presentation
47 slides from Cromwell Property's earnings presentation, Feb 28, 2019
Slide 1: HY19 Results Presentation
For personal use only HY19 RESULTS PRESENTATION 28 February 2019 CMW – HY19 Results 1
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer This presentation including its appendices Cromwell Property Group does not guarantee any (ICH), Cromwell Phoenix Core Listed Property Fund For personal use only (Presentation) is dated 28 February 2019 and has particular rate of return or the performance of an ARS
Slide 3: Overview & Key Highlights
For personal use only SECTION 1 Overview & Key Highlights
Slide 4: Cromwell Property Group Overview
Cromwell Property Group Overview Cromwell is a real estate investor and manager operating on three continents with a global investor base For personal use only Securityholders benefit from stable long term cash flows, demonstrated asset enhancement capabilities and transactional profits, and low
Slide 5: HY19 Key Milestones
HY19 Key Milestones 24 August TechnologyOne, and subsequently AECOM and Bechtel, all renew leases at HQ North For personal use only 26 September Cromwell Ipswich City Heart Trust unitholders vote to extend Trust term to June 2023 28 September CEREIT pays maiden distribution of 2.53 euro cents
Slide 6: Operational indicators and investment strategy on track
Operational indicators and investment strategy on track Capital raising completed; strong, secure balance sheet For personal use only with low gearing, substantial liquidity and long debt tenor HY19 operating profit up 7.6% Portfolio has long WALE, favourable lease expiry profile, low incentives
Slide 7: Financial and Capital Management Update
For personal use only SECTION 2 Financial and Capital Management Update
Slide 8: Cromwell Property Group HY19 Headline Results
Cromwell Property Group HY19 Headline Results1 HY19 COMMENTARY HY19 Performance Versus PCP For personal use only Statutory Profit was $111.1 million up 37.5% on the HY19 HY18 Change prior corresponding period (HY18 $80.8 million) Underlying HY19 Operating Profit was $82.6 million Statutory profi
Slide 9: Financial Update - HY19 Segment Results
Financial Update - HY19 Segment Results1 HY19 COMMENTARY HY19 Segment Profit Versus PCP For personal use only HY19 HY18 Direct Property Investment Segment profit was ($M) ($M) Change $62.7 million, up 1.6% from $61.7 million in the prior period Direct property investment 62.7 61.7 1.6% Indirect
Slide 10: Financial Update – Balance Sheet Strengthens
Financial Update – Balance Sheet Strengthens HY19 FY18 Balance sheet strengthens (Actual $M) (Actual $m) For personal use only Cash and cash equivalents 172.5 204.6 Cash and Cash Equivalents of $172.5 million Investment property 2,520.8 2,451.1 The value of equity accounted investments primarily
Slide 11: Capital Management – Position Improves Further
Capital Management – Position Improves Further Strong Debt Profile For personal use only 60.00 Target Gearing Range CMW Gearing Group gearing1 of 33.7% is currently below minimum 55.00 target gearing range for this point in the cycle 50.00 Group gearing1 on a look-through basis is 40.4% 45.00
Slide 12: Direct Property Investment
For personal use only SECTION 3 Direct Property Investment
Slide 13: Property Portfolio Snapshot
Property Portfolio Snapshot Core Portfolio For personal use only Core portfolio comprises ten assets, two thirds of the portfolio by value with a CORE long WALE, 99% occupancy plus low capex and incentive requirements Like for like NOI increased 4.2%, above target growth of 3.0% 67% NOI yoy grow
Slide 14: Property Portfolio Snapshot (as at December 2018)
Property Portfolio Snapshot (as at 31 December 2018) Focus on secondary assets in CBD, CBD fringe and established suburban markets with potential to outperform For personal use only Core Portfolio Core+ Portfolio Active Portfolio QANTAS GLOBAL HQ 475 VICTORIA AVENUE TUGGERANONG OFFICE PARK Mascot, N
Slide 15: Property Portfolio – Valuations Continue To Rise
Property Portfolio – Valuations Continue To Rise Nine assets were externally revalued in the period representing approximately 49% of the portfolio by value For personal use only Fair value increase in investment property of $44.4 million net of property improvements, lease costs and incentives
Slide 16: Property Portfolio – Tenant Profile Remains Robust
Property Portfolio – Tenant Profile Remains Robust Geographic Diversification1 Sector Diversification1 Tenant Classification1 For personal use only 4.1% 4.1% 3.3% ACT 10.2% 18.7% 7.4% Office 27.0% Government Authority 2 NSW 34.7% 13.8% Mixed use Listed Company/Subsidary QLD Healthcare Private Compan
Slide 17: Property Portfolio – Market Leading WALE of 7.2 years
Property Portfolio – Market Leading WALE of 7.2 years WALE of 7.2 years For personal use only Lease Expiry Profile % Gross Income 3 Vacancy by gross income of 5.4%1 60% 57.3% Vacancy excluding the active asset portfolio is 2.9% Average fixed review in next 2.5 years 50% 3.52% over 24% of p
Slide 18: Property Portfolio – Strong Leasing Success
Property Portfolio – Strong Leasing Success Leasing update For personal use only Core portfolio is 99% leased with the core+ portfolio at 95% 45 lease transactions in half for a total of 46,350 sqm comprising 31,343 sqm of lease renewals and 15,007 sqm of new lease deals Major transactions 21,
Slide 19: Property Portfolio – FY19+ Value Enhancement Options
Property Portfolio – FY19+ Value Enhancement Options Asset recycling strategy has been ongoing since Qantas in 2010 For personal use only with over $250 million of assets sold in in last two years Both Soward Way and Northpoint Tower, representing $300 million in capital investment, also reached
Slide 20: Property Portfolio – FY19+ Value Enhancement Options
Property Portfolio – FY19+ Value Enhancement Options Seniors living opportunity For personal use only Cromwell has invested in a 50% ownership interest in LDK Healthcare with LDK Managing Director Paul Browne Progress is well underway on adaptive re-use of existing buildings at Tuggeranong Offic
Slide 21: Indirect Property Investment
For personal use only SECTION 4 Indirect Property Investment
Slide 22: Indirect Property Investment Results Up Strongly
Indirect Property Investment Results Up Strongly CEREIT Key Financial Highlights 2018 For personal use only Operating profit for the segment was $19.4 million up from $7.9 million in the prior period This was mainly due to CEREIT, which announced its Gross revenue up 1.3%2 maiden full year 201
Slide 23: CEREIT Journey Since IPO
CEREIT Journey Since IPO 97 For personal use only 93 properties properties Portfolio value at 90 Portfolio value at €1,795 77 properties €1,718 million properties Portfolio value at million Feb 2019: 75 Portfolio value at €1,695 Completed Jan 2019: properties €1,426 million Completed acquisition of
Slide 24: CEREIT Portfolio Post Completion of Acquisitions
CEREIT Portfolio Post Completion of Acquisitions1 Properties 97 Finland For personal use only Occupancy Rate (by lettable area)2 90.7% Properties 11 Lettable Area (sqm) 61,971 Valuation (€)3 1,794.7 million Valuation (€ million) 113.1 WALE4 / WALB4 4.6 years / 3.8 years % of Portfolio 6.3% % Freehol
Slide 25: Funds and Asset Management
For personal use only SECTION 5 Funds and Asset Management
Slide 26: Funds Management – Strategy on track
Funds Management – Strategy on track Total funds and asset management segment profit was $18.6 million (HY18 For personal use only $25.4 million) with $2.1 billion of assets traded globally Wholesale profit was $11.6 million down from $17.3 million with 45% of AUM in Europe now successfully bein
Slide 27: Funds Management – DPF adds Townsville asset
Funds Management – DPF adds Townsville asset Retail Funds and Asset Management segment profit was $8.1 million For personal use only up from $3.5 million in the prior period Cromwell Direct Property Fund (DPF) DPF purchased its fifth direct asset, 420 Flinders Street, Townsville for $63.5 millio
Slide 28: Funds Management – Trust term extended
Funds Management – Trust term extended Fully Subscribed Funds – Cromwell Ipswich City Heart Trust For personal use only Cromwell Ipswich City Heart Trust had returned 13.7% per annum since inception in December 2011 to 30 December 2018 Unitholders overwhelmingly voted in favour to extend the ter
Slide 29: Funds Management – Oyster Group AUM NZ$1.5 billion
Funds Management – Oyster Group AUM NZ$1.5 billion AUM at Oyster Group in New Zealand (50% interest) was NZ$1.5 For personal use only billion. Key activity during the year Sale of 205 Great South Road, Greenlane, Auckland was settled, returning core retail investors a 9.66% Internal Rate of retu
Slide 30: Outlook and Guidance
For personal use only SECTION 5 Outlook and Guidance
Slide 31: Outlook – Downside Risks Increasing Globally
Outlook – Downside Risks Increasing Globally Global trade tensions, Brexit and the possibility of slower For personal use only Australian GPD Growth Rate economic growth in China, Europe and the US have resulted in downward revisions to global economic growth forecasts The Eurozone economy slowe
Slide 32: Outlook – Australian Commercial Real Estate Snapshot
Outlook – Australian Commercial Real Estate Snapshot Sydney and Melbourne CBDs have cyclical low CBD office Total Vacancy Rate (%) For personal use only vacancy rates (4.1% and 3.2% respectively) 20.0% 18.5% 18.0% Low supply and withdrawn stock in Sydney will keep markets in 16.0% 14.2% 13.0% fa
Slide 33: Outlook – Europe Commercial Real Estate Snapshot
Outlook – Europe Commercial Real Estate Snapshot European commercial property investment volumes reached €273 Investment by Sector For personal use only (12 months to December 2018) billion in 2018, the fourth year in a row it was above €250 billion Total activity was down 15% on 2017 but activi
Slide 34: FY19 Guidance
FY19 Guidance For further information please contact: For personal use only Downside risks increasing in all markets Paul Weightman Business well-positioned to meet risks with strong balance sheet with low CEO / Managing Director gearing, long debt tenor, long WALE and favourable lease expiries
Slide 35: Appendices – Additional Information
For personal use only APPENDICES Additional Information
Slide 36: Appendices - Contents
Appendices - Contents For personal use only Cromwell Property Group Statistics 37 Local European Footprint 38 HY19 Operating and Statutory Profit - Reconciliation 39 Segment Result - Operating Earnings Detail 40 Property Portfolio - Top 10 Assets 41 Property Portfolio - Top 20 Leases 42
Slide 37: Cromwell Property Group Statistics
Cromwell Property Group Statistics For personal use only Diverse Product Range Track Record of Successful Partnerships Extensive and Broad Skill Set Portfolio Platform AUM by Sector Office 11.5bn 3.9% 4.9% $ AUM 390+ 12.9% Retail people Industrial / Logistics 16.7% 61.6% Property 280+ Securities Oth
Slide 38: Local European Footprint
Local European Footprint 20 regional offices providing on the ground local market knowledge and expertise For personal use only European Portfolio by Geography 12% 12% Italy 7% UK 6% Benelux €3.7bn Nordics CEE 25% 25% Germany France 13% European Portfolio by Sector 6% BENELUX GERMANY ITALY UK 22% Am
Slide 39: HY19 Operating and Statutory Profit Reconciliation
HY19 Operating and Statutory Profit Reconciliation HY19 ($M) HY18 ($M) For personal use only Profit from operations 82.6 76.8 Operating EPS (cents per security) 4.10 cps 4.32 cps Loss on sale of investment properties - (4.2) Gain on sale of listed securities - 15.7 Finance costs attributable to disp
Slide 40: Segment Result – Operating Earnings Detail
Segment Result – Operating Earnings Detail1 Direct Property Indirect Property Funds And Asset For personal use only Half Year ending 31 December 2018 Investment Investment Management ($M) ($M) ($M) HY19 Segment revenue Rental income and recoverable outgoings 98.4 - - 98.4 Operating profits of equity
Slide 41: Property Portfolio – Top Assets
Property Portfolio – Top 10 Assets Current For personal use only Occupancy % Asset State Class Market Value Cap Rate WALE Major Tenants by NLA ($M) Qantas HQ NSW Office 496.0 5.25% 100.0% 12.8 years Qantas Airways Limited 700 Collins Street VIC Office 303.0 5.25% 100.0% 6.7 years Bureau of Meteorolo
Slide 42: Property Portfolio – Top Leases
Property Portfolio – Top 20 Leases For personal use only Tenant Tenant Classification Expiry Date % of Portfolio Rental Income Qantas Airways Limited Listed Company/Subsidiary Dec-32 15.2% Commonwealth of Australia (Dept of Social Services) Government Authority Sep-32 8.4% Government Property NSW Go
Slide 43: Property Portfolio – Net Property Income
Property Portfolio – Net Property Income1 HY19 ($M) HY18 ($M) Variance ($M) Variance (%) For personal use only Soward Way 7.682 3.991 3.691 92.5% 200 Mary Street 3.416 2.638 0.779 29.5% Kent Street, Sydney 7.963 6.738 1.225 18.2% Victoria Avenue 6.735 6.291 0.444 7.1% 700 Collins Street 8.206 7.786
Slide 44: Property Portfolio – Net Property Income
Property Portfolio – Net Property Income1 HY19 HY18 Variance Variance ($M) ($M) ($M) (%) For personal use only Village Cinema Geelong 0.664 0.652 0.012 1.8% Regent Cinema Centre 0.744 0.649 0.095 14.6% Retail Total 1.409 1.302 0.107 8.2% Borrowdale House (0.052) (0.058) 0.007 (11.2%) Sturton Rd, Edi
Slide 45: Property Portfolio – Movement In Book Value
Property Portfolio – Movement In Book Value Strategy of continuously improving portfolio through acquisitions since 2010 For personal use only Recycling of capital means disposing of assets before asset has large capex requirements In-sourced facilities management model also lowers lifecycle c
Slide 46: Property Portfolio – Balance Sheet Debt Details
Property Portfolio – Balance Sheet Debt Details Drawn Commitment Maturity Fin Yr Years For personal use only Facility Covenants (AUD $M) (AUD $M) Date Expiry Remaining Bank 1 - 5 Year Facility 100.0 100.0 Bank 2 - 5 Year Facility 252.9 250.0 Bank 3 - 5 Year Facility 175.0 250.0 Bank 4 - 5 Year Facil
Slide 47: For personal use only
For personal use only CMW – HY19 Results 47