Cromwell Property Group · ASX:CMW
Cromwell Property — Merger or Acquisition (May 2013)
47 slides from Cromwell Property's merger presentation, May 23, 2013
Slide 1: Acquisition & Equity Raising
For personal use only Acquisition & Equity Raising May 2013 Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer For personal use only Disclaimer To the extent that general financial product advice in respect of the issue of conditions. This presentation and its appendices ("Presentation") is dated 23 May 2013 and Cromwell Diversified Property Trust units as a component of th
Slide 3: Contents
Contents For personal use only Overview NSW Portfolio Acquisition Equity Raising Summary of key risks Appendix A – Pro forma balance sheet Appendix B – Portfolio summary Appendix C – Key risks Appendix D – Control implications Appendix pp E – International selling g restrictions
Slide 4: Overview
For personal use only S ti 1 Section Overview Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3
Slide 5: Overview
Overview 1 For personal use only Acquisition Cromwell has entered into unconditional agreements to acquire a portfolio of seven office assets (NSW Portfolio) from the New South Wales ((NSW)) State Government Total portfolio purchase price of $405 million representing an initial yield of 9.0% C
Slide 6: Benefits of the Acquisition and Equity Raising
Benefits of the Acquisition and Equity Raising For personal use only Continued portfolio The acquisition of the NSW Portfolio will increase Cromwell’s investment property portfolio from $1.9 billion to $2.3 billion and income gy of defensive office pproperty Consistent with strategy p y with hig
Slide 7: NSW Portfolio overview
NSW Portfolio overview For personal use only The NSW Portfolio consists of seven assets being sold by the NSW State Government The total consideration for the NSW Portfolio is $405 million which represents an initial portfolio yield of 9 9.0% 0% and an average value of $4,690 psm Other than Sy
Slide 8: Sources and application of funds
Sources and application of funds For personal use only The Acquisition will be funded using a combination of a new debt facility and equity Credit approved three year debt facility of up to $260 million has been negotiated, subject to agreement and execution of final documentation Facility exp
Slide 9: NSW Portfolio
For personal use only S ti 2 Section NSW Portfolio Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 8
Slide 10: NSW Portfolio – Symantec House
NSW Portfolio – Symantec House For personal use only A-grade Sydney office building occupying a prominent position on Kent Street, Sydney overlooking Darling Harbour Adjacent to Sydney’s new office precinct at Barangaroo Will benefit from improved access and facilities Attractive rental comp
Slide 11: NSW Portfolio – McKell Building
NSW Portfolio – McKell Building For personal use only Significant B-grade 23 level high-rise office tower located on Rawson Place, Sydney 100% leased to the NSW State Government for a period of 15 years with two further 5 year options Central position in one of Sydney’s most accessible locatio
Slide 12: NSW Portfolio – Bligh House
NSW Portfolio – Bligh House For personal use only Bligh House is a 17 level commercial building located on Bligh St in the Sydney CBD 95% leased to the NSW State Government for a period of 5 years Current 4 star NABERS energy rating Given strategic Sydney CBD location, opportunity to further
Slide 13: NSW Portfolio – Regional assets
NSW Portfolio – Regional assets For personal use only Portfolio of 4 regional NSW assets all leased to 1 3 Government Property NSW Assets A t allll fform partt off NSW State St t Government G t de- d centralisation strategy providing long term 15 year leases with two further 5 year options Inc
Slide 14: Equity Raising
For personal use only S ti 3 Section Equity Raising Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 13
Slide 15: Equity Raising pricing metrics
Equity Raising pricing metrics For personal use only New Securities will be offered at $1.00 per Security FY14 CMW pro forma EPS yield3 10% 3.4% discount to last closing price of $1.0351 130 bps premium 8% Peer average 6.7% 3.8% discount to five-day VWAP of $1.0402 6% 4% 8.0% Based on the is
Slide 16: Equity Raising structure
Equity Raising structure For personal use only Underwritten Equity Raising of $250 million via a combination of Placement and non-renounceable Entitlement Offer Issue price of $1.00, representing a 3.8% discount to five-day five day VWAP All New Securities issued under the Equity Raising will
Slide 17: Entitlement Offer structure
Entitlement Offer structure For personal use only Underwritten Entitlement Offer to comprise an accelerated Institutional Entitlement Offer and a Retail Entitlement Offer Institutional Accelerated Institutional Entitlement Offer of approximately $65 million Entitlement New Securities in respec
Slide 18: Equity Raising timetable
Equity Raising timetable For personal use only Key Event Date1 Trading Halt Wednesday, 22 May 2013 Announcement of Acquisition and Equity Raising Thursday, 23 May 2013 Placement And Institutional Entitlement Offer Opens Thursday, 23 May 2013 Placement And Institutional Entitlement Offer Closes Frida
Slide 19: Summary of key risks
For personal use only S ti 4 Section Summary of key risks Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 18
Slide 20: Summary of key risks
Summary of key risks For personal use only Due diligence Interest rates and financial instruments Documentation Debt covenants Future acquisitions Environmental matters Competition Inflation Equity Raising Insurance Change in value and income of investment Leasing and tenant
Slide 21: Appendix A: Pro forma balance sheet and capital management
For personal use only A Appendix di A Pro forma balance sheet and capital management Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 20
Slide 22: Pro forma balance sheet
Pro forma balance sheet For personal use only 31/12/2012 Post Balance Date Dec 12 Pro Forma Transaction Dec 12 Pro Forma A$m Actual Adjustments (Pre Transaction) Adjustments (Post Transaction) Cash and Cash Equivalents 140.5 77.6 218.2 (66.8) 151.4 Loans Receivable - Associates 19.6 (19.6) - - - Inv
Slide 23: Pro forma debt facilities
Pro forma debt facilities For personal use only Diversified across eight facilities with varying maturity dates Lenders mostly comprise major Australian banks Weighted average debt maturity of 2.0 years with weighted average margin of 2% Credit approved terms for new three year facility for
Slide 24: Pro forma interest rate hedging
Pro forma interest rate hedging For personal use only Weighted average hedge term 2.8 years As hedges expire, Cromwell’s interest cost will gradually reduce if variable rates remain below hedged rates which provides potential future earnings upside CMW Hedging Profile (as at 31 March 2013) $1,20
Slide 25: Appendix B: Portfolio summary
For personal use only A Appendix di B Portfolio summary Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 24
Slide 26: Pro forma investment portfolio
Pro forma investment portfolio For personal use only Collins St, VIC Exhibition St, VIC Qantas HQ, NSW HQ North, QLD Chatswood Towers, NSW Synergy, QLD Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 25
Slide 27: Pro forma lease expiry profile
Pro forma lease expiry profile For personal use only Pro forma WALE of 6.7 years – one of the longest in the sector Average of 8.1% lease expiry FY14 – FY16 Majority of expiries weighted to FY16 100 Waymouth Street $12m refurbishment recently completed Agreement for lease signed for 15 yea
Slide 28: Pro forma property portfolio – key assets
Pro forma property portfolio – key assets For personal use only CMW Top 10 Property Assets (as at 31 March 2013, adjusted for the Acquisition) Asset State Class Book Value Cap Rate Occupancyy WALE Major j Tenants Review Qantas Global Headquarters NSW Office $232.0 m1 7.25% 100.0% 19.7 Qantas CPI Min
Slide 29: Pro forma property portfolio – top tenants
Pro forma property portfolio – top 20 tenants For personal use only CMW Top 20 Tenants (adjusted for Acquisition) % of Total Portfolio Tenant Building Tenant Classification Rental Income NSW State Government NSW Portfolio, Bridge Street Government 14.7% Commonwealth of Australia Dept of FaHCSIA Tugg
Slide 30: Appendix C: Key risks
For personal use only A Appendix di C Key risks Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 29
Slide 31: Key risks
Key risks For personal use only Due diligence Competition Change in value and income of investment properties It is possible that the due diligence undertaken to date on the NSW The value of property held by Cromwell may be negatively affected by Returns from investment properties largely depend on
Slide 32: Key risks
Key risks For personal use only Changes in accounting policy Funding Environmental matters Cromwell must report and prepare financial statements in accordance Property investment is highly capital intensive. The ability of Cromwell to Cromwell is exposed to a range of environmental risks which may r
Slide 33: Key risks
Key risks For personal use only Leasing and tenant defaults Development Realisation of assets Tenants may default on their rent or other contractual obligations, Cromwell is involved in the development and refurbishment of property Property assets are by their nature illiquid investments. This may m
Slide 34: Key risks
Key risks For personal use only Employees Cromwell is reliant on retaining and attracting quality senior executives and other employees. The loss of the services of any senior management or key personnel, or the inability to attract new qualified personnel, could adversely affect Cromwell’s operatio
Slide 35: Appendix D: Control implications
For personal use only A Appendix di D Control implications Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 34
Slide 36: Control Implications
Control Implications For personal use only The Entitlement Offer is structured as a pro rata issue and if all of Cromwell existing Securityholders take up their entitlements under the Entitlement Offer, the E titl Entitlementt Offer Off will ill have h no effect ff t on the th control t l off Crom
Slide 37: Appendix E: International selling restrictions
For personal use only A Appendix di E International selling restrictions Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 36
Slide 38: International selling restrictions
International selling restrictions For personal use only New Zealand United States This Presentation does not constitute a prospectus or investment statement under This Presentation does not constitute an invitation or recommendation to New Zealand Law. It may not contain all the information an
Slide 39: International selling restrictions
International selling restrictions For personal use only United Kingdom This Presentation has not been approved pp byy a pperson authorised under the United Kingdom g Financial Services and Markets Act 2000 (("FSMA")) and its distribution in the United Kingdom is only being made to persons in circ
Slide 40: International selling restrictions
International selling restrictions For personal use only Ireland This Presentation and any other related material relating to Cromwell do not, of themselves, or in conjunction with any other material, constitute i. a prospectus within the meaning of the Companies Act 1963 or Part 5 of the Investme
Slide 41: International selling restrictions
International selling restrictions For personal use only Hong Kong Important information for "professional" and other legally permitted Hong Kong investors: WARNING The contents of this Presentation have not been reviewed or approved by any regulatory authority in Hong Kong. Recipients are advised
Slide 42: International selling restrictions
International selling restrictions For personal use only Singapore The offer or invitation which is the subject of this Presentation is only allowed to be made to the persons set out herein. This Presentation has not been, and will not be, registered as a prospectus in Singapore with the Monetar
Slide 43: International selling restrictions
International selling restrictions For personal use only Jersey Netherlands This Presentation relates to a private placement and does not constitute an The New Securities will only be offered, sold, transferred or delivered at any offer to the public in Jersey to subscribe for Securities offered
Slide 44: International selling restrictions
International selling restrictions For personal use only Norway This Presentation has not been approved by, or registered with, any Norwegian securities regulators pursuant to the Norwegian Securities Trading Act of 29 June 2007, as amended. d d Thi This PPresentation t ti andd any other th materi
Slide 45: International selling restrictions
International selling restrictions For personal use only South Africa This Presentation does not constitute a solicitation for investments from members of the public in terms of the Collective Investment Schemes Control Act, 45 of 2002; or an offer ff ffor th the sale l off or subscription b i ti
Slide 46: Glossary
Glossary For personal use only $ All dollar values are in Australian dollars New Securities Securities to be issued under the Equity Raising Acquisition Acquisition of the NSW Portfolio NLA Net lettable area AEST Australian Eastern Standard Time NTA N t tangible Net t ibl assets t per S Security it
Slide 47: For personal use only
For personal use only well versed well timed well considered Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Cromwell Property Group — Merger or Acquisition (May 2013) on 6ix