Slide 1: FY11 Results Presentation
For personal use only FY11 Results R lt Presentation 18 August 2011 Cromwell Property Group – FY11 Results 1
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer For personal use only This presentation including its appendices (“Presentation”)is financial, legal or tax advice as they deem necessary or Cromwell Corporation Limited is not licensed to provide dated 18 August 2011 and has been prepared by the consider appropria
Slide 3: Contents
Contents For personal use only | Overview | FY11 Financial Results | Debt & Capital Management | Investment Portfolio | Funds Management | Outlook & Guidance | Additional Information Cromwell Property Group – FY11 Results 3
Slide 4: Overview
For personal use only S ti 1 Section Overview Cromwell Property Group – FY11 Results 4
Slide 5: Overview: FY11 Results in Line with Guidance
Overview For personal use only | Statutory accounting profit of $88.1m or 9.6 cents per security FY11 RESULTS | Operating profit of $65.3m, in line with guidance IN LINE WITH | Operating earnings per security of 7.1 cents GUIDANCE | Distributions per security of 7.0 cents | Limited funds management
Slide 6: Executed strategy to improve portfolio quality
Overview For personal use only | Executed strategy to improve portfolio quality CONTINUING PORTFOLIO | Sale of smaller non-core assets and acquisition of Qantas Global Headquarters, 321 Exhibition Street and balance of TGA Complex has continued to increase quality of the portfolio IMPROVEMENT | Term
Slide 7: Cromwell has significantly outperformed the S&P/ASX 300 A-REIT Accumulation Index
Overview For personal use only | Cromwell has significantly outperformed the S&P/ASX 300 A-REIT Accumulation Index since listing CONTINUED | Outperformance of 3.5%, 3 5% 4646.3% 3% and 55 55.9% 9% over 1 1, 3 and 5 years respectively OUTPERFORMANCE | Cromwell was one of the few A-REITs not to undert
Slide 8: FY11 Financial Results
For personal use only S ti 2 Section FY11 Financial Results Cromwell Property Group – FY11 Results 8
Slide 9: Key Financial Results
FY11 RESULTS Key Financial Results For personal use only FY10 FY11 Actual Actual Change Statutory accounting profit ($m) 19.1 88.1 + 361% Operating earnings ($m)1 64.6 65.3 + 1% Operating EPS (cents) 8.5 7.1 – 16% Distributions ($m) 60.6 65.0 + 7% Distributions per security (cents) 8.0 7.0 – 13% Pay
Slide 10: Operating Earnings
FY11 RESULTS Operating Earnings For personal use only | Operating earnings of $65.3m (7.1 cps) | Underpinned by $65.9m $65 9m net contribution from property investment Æ Some impact from one-off higher lease expiries in FY11 Æ Interest costs increased as facilities reset to current margins g | Limit
Slide 11: Statutory Accounting Result
FY11 RESULTS Statutory Accounting Result For personal use only | Statutory accounting profit of $88.1m (9.6 cps) | F i value Fair l iincrease off iinvestment properties i off $33 $33.7m d driven i b by Q Qantas and d Melbourne M lb CBD assets | Fair value decrease of $1.9m on interest rate swaps ref
Slide 12: Financial Position
FY11 RESULTS Financial Position For personal use only | Significant growth in asset base arising Jun-10 Jun-11 from the acquisition q of three investment (($m)) (($m)) properties for approximately $260m, Assets capital expenditure of $57m and positive Cash and Cash Equivalents 98.5 46.6 net revaluat
Slide 13: Debt & Capital Management
For personal use only S ti 3 Section Debt & Capital Management Cromwell Property Group – FY11 Results 13
Slide 14: Debt and Capital Management
CAPITAL MANAGEMENT Debt and Capital Management For personal use only | Diversified across a syndicated facility and four Debt Expiry Profile bilateral facilities | Lenders comprise major Australian banks and one offshore bank | No material maturities until July 2013 | Weighted average debt maturity
Slide 15: Debt and Capital Management: Interest Rate Swaps
CAPITAL MANAGEMENT Debt and Capital Management For personal use only | High degree of certainty over interest expense to FY14 Interest Rate Swaps | Weighted average swap term of 3.2 years Amount Swapped Base Maturity Years | May look to further extend profile if rates are favourable ($‘000) Type Rat
Slide 16: Investment Portfolio
For personal use only S ti 4 Section Investment Portfolio Cromwell Property Group – FY11 Results 16
Slide 17: Strategy and Key Achievements
INVESTMENT Strategy and Key Achievements For personal use only | Cromwell has a focused and defined investment portfolio strategy Æ Core strategy gy to invest in defensive, high g qquality y office assets in p predominantly y CBD and core fringe g markets • Mature assets with high occupancy, long WA
Slide 18: Investment Portfolio – Summary
INVESTMENT Investment Portfolio – Summary For personal use only | Top 10 assets account for 80% of portfolio with occupancy of 99.8% and a WALT of 7.6 years Top 10 Property Assets Val Val Cap Occup- Review Asset Location Class ($m) Date Rate ancy WALT Structure Major Tenants Tuggeranong Office Park
Slide 19: Secure Income Stream
INVESTMENT Secure Income Stream For personal use only | Target 4% annual growth in like-for-like net % of Total Cumulative property income Next Review Type Passing Income % Fixed1 75.6% 75.6% | 75% of portfolio subject to fixed or CPI2 17.7% 93.3% minimum rent reviews, with average minimum increase
Slide 20: Minimal Risk From Lease Expiries
INVESTMENT Minimal Risk From Lease Expiries For personal use only Lease | Average of only 6.5% vacancy/lease Expiry expiry in each of next 4 financial Profile years % Gross Income | Hoppers Crossing Distribution C Centre 100% % leased during ffirst halff | Lease signed for 100% of Synergy Building’s
Slide 21: Continuing Portfolio Improvement
INVESTMENT Continuing Portfolio Improvement For personal use only | Significant improvement in portfolio quality Weighted Average Cap Rate by Sector Æ WALT increased to 6.8 years1 from 4.9 years Sector Dec-10 Jun-11 Æ WACR reduced to 8.18% from 8.31% Commercial 8.23% 8.09% Æ Average asset size incre
Slide 22: Investment Portfolio – Valuations
INVESTMENT Investment Portfolio – Valuations For personal use only | Net revaluation gain of approximately $34m, driven by Qantas HQ and Melbourne CBD assets Top 10 Property Assets Jun-11 Jun-10 Jun-11 Jun-10 Asset Cap Rate Cap rate Valuation Valuation Change Comments 700 Collins Street 7.75% 8.00%
Slide 23: Qantas Global Headquarters, Mascot, NSW
INVESTMENT Qantas Global Headquarters, Mascot, NSW For personal use only | Cromwell acquired the property in August 2010 for $144m at a capitalisation rate of 8.3% | Since acquisition Cromwell has agreed with Qantas1 Æ A refurbishment and expansion Æ Lease extension to 2032 Æ Total capital cost of $
Slide 24: Exhibition Street, Melbourne, VIC
INVESTMENT 321 Exhibition Street, Melbourne, VIC For personal use only | Cromwell acquired the property in July 2010 for $90 2m on a capitalisation rate of 8 $90.2m 8.0% 0% | Heads of agreement for 10 year lease with Origin Energy over 78% of building at time of acquisition | Si Since acquisition i
Slide 25: Office Market Outlook
INVESTMENT Office Market Outlook For personal use only Melbourne Finance and business services sector employment growth, supplemented by mining Weighting Forecast companies, i expected t d tto more th than offset ff t any slowing l i in i public bli sector t employment l t growth th Limited new supp
Slide 26: Funds Management
For personal use only S ti 5 Section Funds Management Cromwell Property Group – FY11 Results 26
Slide 27: Funds Management – Overview & Update
GROWTH Funds Management – Overview & Update For personal use only | Cromwell intends to continue to grow its Gross Assets Under Management funds management g business Æ Origins in retail funds management Æ Have raised over $900m for unlisted property funds, funds with the majority stapled in FY07 to
Slide 28: Riverpark Trust Case Study
GROWTH Riverpark Trust Case Study For personal use only | Strength of Cromwell’s syndication platform demonstrated through the success of Cromwell Riverpark Trust raising Æ $91m equity raising completed within 9 months Æ NTA uplift of 13% since launch Riverpark Trust – Key Statistics Equity raised $
Slide 29: Outlook & Guidance
For personal use only S ti 6 Section Outlook & Guidance Cromwell Property Group – FY11 Results 29
Slide 30: FY12 Guidance
GUIDANCE FY12 Guidance For personal use only | Minimum EPS of 7.3 7 3 cps expected | DPS of 7.0 cps expected to be maintained | 100% recurrent earnings – no transaction income assumed | Increased cost of debt fully factored into FY12 guidance | Move towards 90% p payout y ratio over time,, assuming
Slide 31: Summary
GROWTH Summary For personal use only | A number of achievements made during FY11, delivering superior returns to securityholders Æ Significant improvement to portfolio scale and quality Æ WALT increased to 6.8 years1 from 4.9 years Æ Net portfolio valuation uplift, driven by active management and al
Slide 32: Contacts
Contacts For personal use only Paul Weightman Cromwell Property p y Group p Chief Executive Officer Level 19, 200 Mary Street Ph: +61 (0) 7 3225 7720 Brisbane QLD pweightman@cromwell.com.au Phone: +61 7 3225 7777 Facsimile: +61 7 3225 7788 Daryl Wilson WWW.CROMWELL.COM.AU Chief Financial Officer Cro
Slide 33: Additional Information
For personal use only A Appendix di Additional Information Cromwell Property Group – FY11 Results 33
Slide 34: Property Portfolio
Property Portfolio For personal use only Valuation Cap Asset Sector ($m) Rate Occupancy WALT Major Tenant/s Tuggeranong Office Park, Park Canberra, Canberra ACT Commercial 172 8 172.8 8 75% 8.75% 100 0% 100.0% 5 5 Government Department (FaHCSIA) 5.5 700 Collins Street, Melbourne, VIC Commercial 172.
Slide 35: Top tenants
Top 20 tenants For personal use only % of Total Portfolio Tenant Building Tenant Classification Gross Income Commonwealth of Australia Dept of FACSIA Tuggeranong Office Park Government 13.3% Qantas Airways Limited Qantas Global Headquarters Aviation 9.9% Origin 321 Exhibition Street Recources 8.8% A
Slide 36: Property Portfolio – Focus on Sustainability
Property Portfolio – Focus on Sustainability For personal use only | Cromwell has adopted Global Reporting Initiative (GRI) G3 Portfolio NABERS Energy Rating guideline as the framework for reporting g p g on the Group’s p environmental, economic and social performance | Governance Æ Since 2007, Crom
Slide 37: Profit from Operations by Segment
Profit from Operations by Segment For personal use only FY10 ($’000) FY11 ($’000) Property Funds Property Property Funds Property Investment Management Development Consolidated Investment Management Development Consolidated Segment revenue and other income Sales to external customers 121,180 9,283 -
Slide 38: Net Property Income
Net Property Income For personal use only FY10 FY11 Variance FY10 FY11 Variance ($’000) ($’000) (%) ($’000) ($’000) (%) Tuggeranong Office Park, Greenway ACT 18,427 18,916 2.7% Elders Woolstore, Gillman SA 1,231 1,287 4.6% Distribution Centre, Hoppers Crossing, VIC3 4,381 3,679 (16.0%) 19 National C
Slide 39: Reconciliation between Operating and Statutory Profit
Reconciliation between Operating and Statutory Profit For personal use only FY10 FY11 ($’000) ($’000) Profit from operations 64,630 65,297 Gain/(loss) on sale of investment properties (554) (195) Gain/(loss) on sale of available available-for-sale for sale financial assets 3,431 - Fair value net gai
Slide 40: Detailed Balance Sheet
Detailed Balance Sheet For personal use only Jun-10 Dec-10 Jun-11 ($’000) ($ 000) ($’000) ($ 000) ($’000) ($ 000) ASSETS Cash and cash equivalents 98,469 40,378 46,572 Investment properties 1,064,100 1,395,710 1,444,850 Investment in associates 56,802 6,816 5,492 Development inventory 4,925 5,107 3,
Slide 41: Debt Facilities
Debt Facilities For personal use only Debt Facilities Facility Jun-11 Actual ($’000) Maturity Security Financial Covenants Syndicated facility $397,815 May-14All portfolio excluding assets below LVR ≤ 60% ICR ≥ 1.5 times Tuggeranong Facility (Tranche A) $107,917 Jul-15Tuggeranong Property LVR ≤ 65%
Slide 42: For personal use only
For personal use only wellll versedd well timed well considered Cromwell Property Group – FY11 Results 42