Cromwell Property Group · ASX:CMW
Cromwell Property — H1 FY2008 Earnings Presentation
32 slides from Cromwell Property's earnings presentation, Feb 20, 2008
Slide 1: Half Year Results FY08
Cromwell HALF YEAR _ RESULTS FY08 SS eee SESS EE ee eee eee
Slide 2: Agenda
AGENDA For personal use only • Highlights • Business Strengths • Financial Results • Property Investment • Funds Management • Transaction / Projects • Outlook 2 OF 32
Slide 3: For personal use only
For personal use only 3 OF 32
Slide 4: Result Highlights
RESULT HIGHLIGHTS For personal use only • Net profit after tax of $79.5m or 11.3 cps • Record half-year operating earnings of $41.8m or 6.0 cps (excluding realised gains of 1.1 cps) • Strong revaluations contributed to 6% increase in NTA - NTA increased from $0.96 at Jun-07 to $1.02 at Dec-07 • Proc
Slide 5: Key Points
KEY POINTS For personal use only Reaffirm guidance of 10.0 cps earnings and distributions for FY08 Minimal risk to earnings for FY08 and FY09 Target 8% earnings growth Funds management earnings will continue to provide platform for growth Approximately 80% of EBITDA from recurring income Well positi
Slide 6: For personal use only
For personal use only 6 OF 32
Slide 7: Business Strengths: Property Investment
BUSINESS STRENGTHS For personal use only PROPERTY INVESTMENT • Target 70-85% of EBITDA (75% expected FY08) • Portfolio of Australian core property assets • Weighted to office markets (78%), with rental growth opportunities • Create value through intensive in-house management • Continue co-investment
Slide 8: Business Strengths: Funds Management
BUSINESS STRENGTHS For personal use only FUNDS MANAGEMENT • Target 15-25% of EBITDA (17% expected FY08) • Provides growth in EPS, with low cost of capital • Focussed around Cromwell Property Fund (core plus diversified unlisted property) • CPF still in growth phase • Loyal, primarily retail (direct
Slide 9: Business Strengths: Transactions & Projects
BUSINESS STRENGTHS For personal use only TRANSACTIONS & PROJECTS • Target 0-10% of EBITDA (9% expected FY08) • Opportunities from internally managed portfolio • Generally provide funding and take-out • Bring in appropriate partner to add value and assume risk. Realise opportunities with conservative
Slide 10: For personal use only
For personal use only 10 OF 32
Slide 11: Financial Results – Financial Performance
FINANCIAL RESULTS – FINANCIAL PERFORMANCE For personal use only 6 months 6 months 6 months Dec-07 Jun-07 Dec-06 1 Total Revenue $144.0m $162.6m $13.8m Revenue, net of fair value adjustments $109.8m $88.3m $13.8m Profit after tax 2 $79.5m $115.8m ($1.8)m Operating Earnings 3 $41.8m $37.9m $3.9m Opera
Slide 12: Financial Results - Financial Position
FINANCIAL RESULTS - FINANCIAL POSITION For personal use only Actual Actual Actual Dec-07 Jun-07 Dec-06 1 Total assets $1,251m $1,295m $1,493m Net assets $724m $672m $546m Net tangible assets $720m $668m $541m Net debt2 $416m $569m $893m Gearing3 35% 44% 60% Securities issued 706m 698m 696m NTA per s
Slide 13: Financial Results - Capital Management
FINANCIAL RESULTS - CAPITAL MANAGEMENT For personal use only Dec-07 Jun-07 Dec-06 Total interest bearing debt $494m $589m $893m Gearing 35% 44% 60% “Look through” Gearing 38% 48% 60% ICR 3.6 2.3 - Facility Balance Maturity WAIR Drawn Undrawn CMBS $429m - Apr-09 6.54% Bank Loan – TGA $27m - Mar-08 1
Slide 14: Financial Results - Capital Management (Hedging)
FINANCIAL RESULTS - CAPITAL MANAGEMENT For personal use only • 100% of net debt hedged Amount Hedged Maturity Date until at least Jun-09 246.0m Jun-09 • Hedges out to Sept-17 15.1m Nov-09 23.1m Jun-10 • Weighted average term 26.7m Jul-10 of hedges 3.7 years 27.0m Aug-10 31.7m Feb-16 86.4m Sep-17 $45
Slide 15: Financial Results - Capital Management (Buy-back)
FINANCIAL RESULTS - CAPITAL MANAGEMENT For personal use only • Announced buy-back Jan-08 • Up to 69m stapled securities (c.10% of issued capital) • 12 month buy-back period • Will buy-back where trading price does not reflect underlying value and is EPS accretive • DRP suspended with effect from nex
Slide 16: For personal use only
For personal use only 16 OF 32
Slide 17: Property Investment Update - Portfolio
PROPERTY INVESTMENT UPDATE - PORTFOLIO For personal use only Actual Actual Dec-07 Jun-07 Number of properties 1 23 27 Total Asset Value 1 $986m $1.12bn NLA (m2) 1 424,906 462,463 Occupancy 1 99.6% 99.0% Weighted average lease expiry (by income) 1 5.3 years 5.1 years Weighted average cap rate 1 7.18%
Slide 18: Property Investment Update - Diversification
PROPERTY INVESTMENT UPDATE - DIVERSIFICATION For personal use only High percentage of income secure Significant office exposure Geographic spread 18 OF 32
Slide 19: Property Investment Update - Leasing
PROPERTY INVESTMENT UPDATE - LEASING For personal use only Lease Expiry Profile • Only 8% expiring in FY08 or FY09 • Of this, 5% in advanced negotiations or subject to Heads of Agreement • 88% existing tenant renewal rate for half year • Success driven by in-sourced management and tenant relationshi
Slide 20: Property Investment Update - CPF
PROPERTY INVESTMENT UPDATE - CPF For personal use only Geographic Diversification • $30m investment in CPF • Unlisted core-plus property fund • 19% interest (maintain 15-20% interest) Dec-07 Number of properties 1 11 Total Asset Value 1 $464m Occupancy 1 95.5% Sector Diversification Weighted average
Slide 21: For personal use only
For personal use only 21 OF 32
Slide 22: Funds Management Update: Cromwell Property Fund
FUNDS MANAGEMENT UPDATE For personal use only CROMWELL PROPERTY FUND • Open-ended, unlisted, diversified • Mix of core and core-plus assets • AUM increased by 20% from $417m to $501m • Lonsec rating upgrade (Oct-07) to Upper Recommended • PIR Rating reaffirmed (Sep-07) to AA- • S&P initial rating pe
Slide 23: Funds Management Update: Cromwell Phoenix Property Securities Fund
FUNDS MANAGEMENT UPDATE For personal use only CROMWELL PHOENIX PROPERTY SECURITIES FUND • Launch March 2008 • Platform friendly • Exclusive retail fund arrangement with Phoenix • Boutique manager with impressive long-term track record • Contribution to earnings in FY09. 23 OF 32
Slide 24: For personal use only
For personal use only 24 OF 32
Slide 25: Transaction / Projects Update
TRANSACTION / PROJECTS UPDATE For personal use only • Sale of Bundall site completed Oct-2007 ($11.9m profit) • Cromwell/PacLib Joint Venture to develop industrial land held by CPF 25 OF 32
Slide 26: For personal use only
For personal use only 26 OF 32
Slide 27: Outlook: Property
OUTLOOK For personal use only PROPERTY • Domestic focus - one of very few A-REITS with earnings totally from Australia and predominantly from Australian Office portfolio • Office market will continue to perform well • Portfolio well positioned to take advantage of rental growth, particularly in Melb
Slide 28: Outlook: Funds Management
OUTLOOK For personal use only FUNDS MANAGEMENT • Retail funds management business provides continuing growth • CPF will continue to be flagship fund • Cromwell/Phoenix Property Securities Fund launch March 2008 • Will consider acquisition of Funds Management and other bolt-on businesses. 28 OF 32
Slide 29: Outlook: Transaction / Projects
OUTLOOK For personal use only TRANSACTION / PROJECTS • Active management model and development capability • PacLib JV expected to result in a number of industrial sales/developments on existing CPF holdings in FY09 • Opportunities for fee income from development of existing unlisted portfolio • Mark
Slide 30: Outlook - Earnings Guidance
OUTLOOK - EARNINGS GUIDANCE For personal use only FY08 EARNINGS GUIDANCE • On target for 10cps operating earnings (excluding realised gains) and distributions in FY08 • Targeting sustainable EPS growth of 8% plus • Strategy does not require growth by acquisition. PROPERTY INVESTMENT • Sustainable gr
Slide 31: Outlook - Earnings Guidance: Funds Management
OUTLOOK - EARNINGS GUIDANCE For personal use only FUNDS MANAGEMENT • FY08 guidance implies further $80m assets acquired for CPF • Aim for 20% pa growth in earnings • Target $3m per week equity into CPF (including 15-20% co-contribution) • Allows for $300-$350m assets to be acquired per annum • Prope
Slide 32: Disclaimer
For personal use only DISCLAIMER This presentation was prepared by Cromwell Corporation Limited ACN 001 056 980 and Cromwell Property Securities Limited ACN 079 147 809, AFSL 238052. This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe
Cromwell Property Group — H1 FY2008 Earnings Presentation on 6ix