Cromwell Property Group · ASX:CMW
Cromwell Property — Merger or Acquisition (November 2011)
51 slides from Cromwell Property's merger presentation, Nov 22, 2011
Slide 1: Acquisition & Equity Raising
For personal use only Acquisition & Equity Raising 22 November 2011 CROMWELL PROPERTY GROUP (ASX:CMW) Not for distribution or release in the United States or to US persons or persons acting for the account or benefit of US persons
Slide 2: Important Information and Disclaimer
Important Information and Disclaimer For personal use only Disclaimer provided by Cromwell Property Securities Limited. Cromwell Property Past Performance This presentation and its appendices ("Presentation") is dated 22 November Securities Limited and its related bodies corporate, and their associa
Slide 3: Contents
Contents For personal use only | Overview 4 | Acquisition 8 | Impact of Acquisition & Equity Raising 13 | Summary of Key Risks 24 | Summary of FY11 Results 26 | Ipswich City Heart Syndicate 29 | Appendix A – Management Team & Cromwell History 34 | Appendix B – Key Risks 37 | Appendix C – Internation
Slide 4: Overview
For personal use only Section 1 Overview CROMWELL PROPERTY GROUP (ASX:CMW) 4
Slide 5: Transaction Overview
Transaction Overview For personal use only Acquisition | Acquisition of HQ North, Fortitude Valley, Brisbane, for $186m (the Acquisition) | Recently constructed, award winning asset1 | WALT of 6.9 years, yield of 8.25%, quality tenants Funding | Equity raising of up to $145.4m to partly fund the Acq
Slide 6: Strategy & Historical Performance
Strategy & Historical Performance For personal use only Cromwell’s | Defensive, high quality office assets in predominantly CBD / core fringe markets Strategy | Investment, consistent with strategy, that offers superior returns through active management | Continued reweighting to larger, high qualit
Slide 7: Cromwell Peer Group Comparison
Cromwell Peer Groupp Comparison p For personal use only FY12 EPS yield Weighted average capitalisation rate1 Weighted average debt maturity years 12% 10% 5 10% Avg: 8% 4 3.3 yrs 8% Avg: Avg: 6% 7.9% 3 6% 8.6% 10.7% 8 9% 8.9% 9 1% 9.1% 9 1% 9.1% 9 2% 9.2% 4% 7 6% 7.6% 7 7% 7.7% 7 7% 7.7% 7 9% 7.9% 7
Slide 8: Acquisition
For personal use only Section 2 Acquisition CROMWELL PROPERTY GROUP (ASX:CMW) 8
Slide 9: HQ North - Overview
HQ North - Overview For personal use only | HQ North was completed in 2010 and comprises 28,278 sqm of A-Grade office accommodation over 11 levels with basement parking for 330 vehicles. It also has 1,086 sqm of retail space | Located in Fortitude Valley, Brisbane, adjoining the CBD | 100% occupancy
Slide 10: HQ North – Tenancy Details
HQ North – Tenancyy Details For personal use only | Asset approximately 1% under rented | WALT of 6.9 years, leased to high quality tenants Leasing Rates Office rental Actual Market rate1 Variance Rate / m2 (net) $466 $469 (0.6%) Tenancy Details T en a nt % NLA E xp iry d at e T erm R e vi ew s truc
Slide 11: HQ North – Comparable Sales
HQ North – Comparable p Sales For personal use only | HQ North initial yield of 8.26% is attractive relative to recent comparable sales Ass et In itia l yield S ale p ric e S ale d ate M ajor ten an ts W AL T Ag e Co m m e nt H Q N orth Tow e r, A EC OM R e ce ntly 8 .2 6 % $ 1 8 6. 0 m N o v-1 1 6
Slide 12: Fortitude Valley, Brisbane Market Overview
Fortitude Valley, y Brisbane Market Overview For personal use only Brisbane Near City Supply Additions, Net Absorption & Vacancy | Brisbane Near City supply cycle has come to an endd after ft 294 294,000 000 sqm was added dd d over 3 years tto the end of 2010 | The new supply over this period in the
Slide 13: Impact of Acquisition & Capital Raising
For personal use only S ti 3 Section Impact of Acquisition & Capital Raising CROMWELL PROPERTY GROUP (ASX:CMW) 13
Slide 14: Equity Raising – Structure
Equity q y Raisingg – Structure For personal use only | Up to $145.4m Equity Raising, via combination of Placement and non-renounceable Entitlement Offer Æ Issue price of $0.68 Æ Redefine has agreed to participate in the Equity Raising, and potential future placement, for up to $77.5m1 Æ Redefine ho
Slide 15: Source & Application of Funds
Source & Application pp of Funds For personal use only | The Acquisition is to be funded using a combination of debt and equity | Credit approved debt facility has been negotiated negotiated, subject to agreement and execution of final documentation Æ Core HQ North three year facility of up to $102.
Slide 16: Equity Raising - Pricing Metrics
Equity q y Raisingg - Pricingg Metrics For personal use only | New Securities will be offered at $0.68 per Security Equity Raising pricing metrics Æ 4.2% discount to pro forma NTA Offer price $0.68 | New Securities issued under Equity Raising will Premium / (discount) to last close1 3.8% receive i p
Slide 17: Transaction Impact - Earnings
Transaction Impact p - Earnings g For personal use only | Transaction is FY12 EPS and DPS neutral | At the issue price of $0.68, the New Securities are expected to offer Æ 2.1% EPS yield premium to peer group average Æ 3.0% DPS yield premium to peer group average FY12 EPS & DPS FY12 EPS yield i ld –
Slide 18: Transaction Impact – NTA, Gearing, Market Cap
Transaction Impact p – NTA, Gearing, g Market Capp For personal use only | Pro forma NTA decreases from $0.73 to $0.71 per security, predominantly due to Acquisition transaction costs | 30 June 2011 pro forma gearing changes from 49% to between 46% and 50%1 | 30 June 2011 pro forma weighted average
Slide 19: Transaction Impact – Portfolio Metrics
Transaction Impact p – Portfolio Metrics For personal use only | Strong geographical diversification – exposure to key markets of VIC, NSW and QLD Æ Increased exposure to Brisbane market at the right time in the cycle | Office exposure increases marginally to 91% | WALT increases marginally to 6.9yr
Slide 20: Transaction Impact – Portfolio Quality
Transaction Impact p – Portfolio Qualityy For personal use only | Transaction represents another significant step in the Transactions since June 2008 upgrading of Cromwell’s investment portfolio A i d Assets Acquired A t D t Date Pi Price C Rate Cap R t WALT | Since June 2008, Cromwell has HQ North
Slide 21: Transaction Impacts - Property Portfolio
Transaction Impacts p - Property p y Portfolio For personal use only Valuation Cap Asset Sector ($m) Rate Occupancy WALT Major Tenant/s HQQ North, Fortitude Valley, Q QLD Commercial C 186 0 186.0 82 % 8.25% 100 0% 100.0% 6 9 AECOMM, 6.9 CO Technology One O Tuggeranong Office Park, Canberra, ACT Comm
Slide 22: Pro Forma Balance Sheet
Pro Forma Balance Sheet For personal use only Actual Jun-11 Adjustments $77.5m Equity Raise Pro forma Jun-11 $145.4m Equity Raise Pro forma Jun-11 ($’000) ($’000) ($’000) ($’000) ($’000) ($’000) ASSETS Cash and cash equivalents 46,572 612 (250) 46,934 28,174 75,108 Investment properties 1,444,850 25
Slide 23: Timetable
Timetable For personal use only Key Event Date Announce Placement and Entitlement Offer (before market opens) Tuesday, 22 November 2011 Existing Securities trade 'ex-entitlement' Thursday, 24 November 2011 Settlement of Placement (ex Redefine) Friday, 25 November 2011 Allotment of Placement New Secu
Slide 24: Summary of Key Risks
For personal use only Section 4 Summary of Key Risks CROMWELL PROPERTY GROUP (ASX:CMW) 24
Slide 25: Summary of Key Risks
Summaryy of Keyy Risks For personal use only | Acquisition completion risk | Leasing and tenant defaults | G General l economici conditions diti | F di Funding | Debt facility documentation risk | Investment in funds and joint ventures | Syndication of Ipswich City Heart | Refinancing requirements |
Slide 26: Summary of FY11 Results
For personal use only Section 5 Summary of FY11 Results CROMWELL PROPERTY GROUP (ASX:CMW) 26
Slide 27: FY11 Results Summary
FY11 Results Summary For personal use only | Statutory accounting profit of $88.1m or 9.6 cents per Security FY11 RESULTS IN LINE WITH | Operating p g pprofit of $65.3m, in line with gguidance GUIDANCE | Operating earnings per Security of 7.1 cents | Distributions per Security of 7.0 cents | Limited
Slide 28: FY11 Results Summary
FY11 Results Summary 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 IMPROV
Slide 29: Ipswich City Heart Syndicate
For personal use only Section 6 Ipswich City Heart Syndicate CROMWELL PROPERTY GROUP (ASX:CMW) 29
Slide 30: Syndication Strategy
Syndication y Strategy gy For personal use only | Cromwell intends to launch a new unlisted property syndicate in November 2011 to acquire Ipswich City Heart | $49m equity raise expected to be completed by 30 June 2012, asset specific debt facility of $49m | Cromwell recently completed a placement o
Slide 31: Ipswich City Heart Overview
Ipswich p Cityy Heart Overview For personal use only | Ipswich City Heart, due to be completed in September 2013, is the first stage of the Ipswich City Heart Masterplan being developed by Leighton in partnership with the Ipswich City Council | The building will comprise 15,600 sqm of A-Grade office
Slide 32: Ipswich City Heart Tenancy Details & Comparable Sales
Ipswich p Cityy Heart Tenancyy Details & Comparable p Sales For personal use only | Asset underpinned by 15 year lease to Queensland State Government | Asset price is attractive relative to recent comparable sales Leasing Rates Office rental Actual Market rate1 Variance Rate / m2 (gross) $455 $455 0
Slide 33: Ipswich CBD Regeneration
Ipswich p CBD Regeneration g For personal use only | Ipswich is approximately 38km west of Brisbane CBD | Leighton is undertaking a broad redevelopment of the Ipswich CBD in partnership with the Ipswich City Council | Backed by Queensland State Government plan to decentralise the Brisbane CBD and a
Slide 34: Appendix A – Management Team & Cromwell History
For personal use only A Appendix di A Management Team & Cromwell History CROMWELL PROPERTY GROUP (ASX:CMW) 34
Slide 35: Experienced and Stable Management Team
Experienced p and Stable Management g Team For personal use only Paul Weightman (13/28)1 Daryl Wilson (12/21)1 Managing Director/CEO Finance Director | Solicitor for more than 20 years with extensive experience in property | Member of the Institute of Chartered Accountants development and investment
Slide 36: Cromwell History
Cromwell Historyy For personal use only | Cromwell Property Group (ASX:CMW) is an internally managed Australian Real Estate Investment Trust (A (A-REIT) REIT) and property fund manager | Assets under management of approximately $1.9 billion Æ $1.4 billion of property is owned by Cromwell Æ $0.4 bill
Slide 37: Appendix B Key Risks
For personal use only Appendix B Key Risks CROMWELL PROPERTY GROUP (ASX:CMW) 37
Slide 38: Key Risks
Keyy Risks For personal use only Acquisition completion risk Syndication of Ipswich City Heart Environmental matters Cromwell has undertaken what it regards as a thorough due diligence The ability of Cromwell to market and sell down the equity of the Cromwell is exposed to a range of environmental r
Slide 39: Key Risks
Keyy Risks For personal use only Changes in accounting policy Competition Change in value and income of investment properties The Group must report and prepare financial statements in The value of property held by the Group may be negatively affected Returns from investment properties largely depend
Slide 40: Key Risks
Keyy Risks For personal use only Leasing and tenant defaults Funding Realisation of assets Tenants may default on their rent or other contractual obligations, Property investment is highly capital intensive. The ability of Property assets are by their nature illiquid investments. This may leading to
Slide 41: Key Risks
Keyy Risks For personal use only Development Employees The Group is involved in the development and refurbishment of The Group is reliant on retaining and attracting quality senior property from time to time. time Generally, Generally property development has a executives and other employees. employ
Slide 42: Appendix C International Selling Restrictions
For personal use only Appendix C International Selling Restrictions CROMWELL PROPERTY GROUP (ASX:CMW) 42
Slide 43: International Selling Restrictions
International Sellingg Restrictions For personal use only New Zealand United States | This Presentation does not constitute a prospectus or investment statement and | This Presentation does not constitute an offer, offer invitation or recommendation to has not been registered, filed with or approved
Slide 44: International Selling Restrictions
International Sellingg 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 cir
Slide 45: International Selling Restrictions
International Sellingg Restrictions For personal use only Ireland | This Presentation and any other related material relating to Ireland 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 Invest
Slide 46: International Selling Restrictions
International Sellingg 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 ad
Slide 47: International Selling Restrictions
International Sellingg Restrictions For personal use only Singapore | The offer which is the subject of this Presentation is not allowed to be made to the retail public. This Presentation is not a prospectus as defined in the Securities and Futures Act (Cap (C 289)) off Singapore S (the ( "SFA"). S
Slide 48: International Selling Restrictions
International Sellingg Restrictions For personal use only Jersey | This Presentation relates to a private placement and does not constitute an offer to the public in Jersey to subscribe for Securities offered hereby. No regulatory approval has been sought to the offer in Jersey and it must be distin
Slide 49: International Selling Restrictions
International Sellingg Restrictions For personal use only South Africa Placement | 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 for the sale of or subscription for, or
Slide 50: Glossary
Glossaryy For personal use only $ All dollar values are in Australian dollars The land and building at 520 Wickham Street, Fortitude Valley, HQ North Brisbane, QLD 1H The period from 1 July to 31 December The land and buildingg to be constructed at 171 Brisbane 2H The period from 1 January to 30 Jun
Slide 51: For personal use only
For personal use only well versed well timed well considered CROMWELL PROPERTY GROUP (ASX:CMW)
Cromwell Property Group — Merger or Acquisition (November 2011) on 6ix