Cromwell Property Group · ASX:CMW
Cromwell Property — FY2010 Earnings Presentation
37 slides from Cromwell Property's earnings presentation, Aug 19, 2010
Slide 1: FY10 Results Presentation
CROMWELL GROUP For personal use only FY10 RESULTS PRESENTATION 19 August 2010 Synergy Building, Kelvin Grove QLD Qantas Headquarters, Mascot NSW CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 1
Slide 2: Disclaimer
For personal use only Disclaimer This presentation is dated 19 August 2010 and made on behalf of the Before making an investment decision about the Cromwell Phoenix Cromwell Group – Cromwell Corporation Limited (ACN 001 056 980) and Property Securities Fund or any other Cromwell fund, investors shou
Slide 3: Overview
SECTION 1 For personal use only overview Synergy Building, Kelvin Grove QLD 700 Collins Street, Docklands VIC CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 3
Slide 4: Key Financial Results
Key Financial Results For personal use only Results Summary FY09 Actual FY10 Actual Change Statutory accounting profit/(loss) ($’000) (113,511) 19,053 Operating earnings ($’000) 63,761 64,630 ▲ 1% Operating EPS (cents) 9.1 8.5 ▼ 7% Distributions ($’000) 63,278 60,619 ▼ 4% Distributions per security
Slide 5: Update
Update For personal use only || Capital raising completed August 2010 || Exhibition Street, Melbourne, settled July 2010 »» A total of $68 million raised through »» Refurbishment under way and on target for Placement and Rights Issue completion June 2011 »» Redefine has increased holding to 19.9%. »
Slide 6: Financial Results
SECTION 2 For personal use only Financial Results Synergy Building, Kelvin Grove QLD Henry Waymouth Centre, Adelaide SA CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 6
Slide 7: Operating Earnings robust
Operating Earnings robust For personal use only || Operating profit1 of $64.6 million (8.5 cps) || Growth in like-for-like property income of 6.0% in FY102 || Result underpinned by $65.5 million net contribution from property investment || Interest costs reduced due to debt repayments and lower vari
Slide 8: Statutory Accounting Result
Statutory Accounting Result For personal use only || Statutory accounting profit of $19.1 million (2.5 cps) || Development land write-downs of $6.3 million. Nominal future exposure due to sale of largest || Negative revaluation adjustments on investment parcel post balance date property $32.2 millio
Slide 9: Financial Position
Financial Position For personal use only || NTA reduced from $0.76 to $0.71 during the year Statement of Financial Position primarily due to asset and interest rate hedge FY09 FY10 FY10 Proforma revaluations ($’000) ($’000) ($’000) || Proforma adjustments include capital raising Assets and acquisiti
Slide 10: Debt & Capital Management
Debt & Capital Management For personal use only || All debt in Australian dollars, spread amongst major Debt Facility Expiry Profile Australian banks A$ million || Interest cover remains comfortable at 2.7 times $528m 600 62.4% || Average cost of debt for FY10 was 5.64% (includes average margin of 1
Slide 11: Property portfolio
SECTION 3 For personal use only Property portfolio 475 Victoria Avenue, Chatswood NSW CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 11
Slide 12: Property valuations at a low point?
property valuations at a low point? For personal use only || 55% of assets independently revalued as Historical Weighted Average Cap Rate at June 2010. Balance assessed internally 10% Cromwell Managed Properties || All assets independently revalued Benchmark (PCA/IPD All Fund Universe excl. during F
Slide 13: Portfolio Quality
Portfolio Quality For personal use only Geographical Diversification by Gross Income 2 Gross Income by Tenant Classification 2 Sector Diversification by Income 2 VIC 32% TAS 3% Private Industrial 10% SA 7% Company 12% Retail/ WA 1% Entertainment 3% QLD 13% Listed Co/ Subsidiary 43% Commercial 87% NS
Slide 14: Active Portfolio Management
Active Portfolio Management For personal use only || Focus remains on continual improvement Transactions vs. PCA/IPD Property Index in portfolio quality || 3 properties sold during year, at valuation 1400 PCA/IPD Property Index $600m Net Cromwell Property Transactions »» 4 Marcus Clarke Street, Canb
Slide 15: Quality Income Stream
Quality Income Stream For personal use only || Focus on quality tenants Next Review Type % of Total Cumulative % Passing Income || 60.8% of next rent reviews are fixed, with an average Fixed 1 60.8 60.8 increase of 4.17%. Average rent review increase CPI 2 21.1 81.9 of 3.99% for FY12 and 4.10% for F
Slide 16: Minimal risk from lease expiries
Minimal risk from lease expiries For personal use only Major Lease Expiries and Vacancies1 || Minimal leases expiring over next 5 financial years Property Tenant Expiry Income Comment || Completed renewal for NQX Industrial (NQX 321 Exhibition Vacant Vacant 2.3% Top 4 floors of office Distribution C
Slide 17: Focus on sustainability
Focus on sustainability For personal use only || Cromwell has adopted Global Reporting Initiative (GRI) Portfolio Energy Rating G3 guideline as the framework for reporting on the Group’s (NABERS Star Rating) environmental, economic and social performance. 4.5 4 Star 4.0 3.5 || Environmental Sustaina
Slide 18: Funds Management
SECTION 4 For personal use only Funds Management Synergy Building, Kelvin Grove QLD Energex Building, Newstead QLD CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 18
Slide 19: Fund update
Fund update For personal use only || Cromwell Riverpark Trust (Syndicate) »» Fund raising completed »» Practical completion on target for mid August 2010 »» Valuation increased by 3% at June 2010 || Cromwell Property Fund (Diversified Property) »» Fund closed to applications/redemptions »» Valuation
Slide 20: Unlisted Direct Property – Market Leader
Unlisted Direct Property – Market Leader For personal use only || Raised $91 million for Riverpark Trust – largest || Managers without strong balance sheet are unlisted retail property fund raising in 2 years generally struggling || Riverpark Trust fees booked in FY10 || Demand is evident for simple
Slide 21: Strategy & Outlook
SECTION 5 For personal use only Strategy & Outlook Synergy Building, Kelvin Grove QLD 700 Collins Street, Docklands VIC CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 21
Slide 22: Long Term Focus
LONG TERM FOCUS For personal use only || Aim is to deliver outperformance through the cycle »» Cromwell Group has significantly outperformed over short, medium and long term »» Direct property outperformance independently verified by IPD »» Property Securities Fund outperformance over all periods Cr
Slide 23: FY11 Earnings and Distributions Guidance
FY11 Earnings and Distributions Guidance For personal use only || FY11 Operating Earnings || FY12 and beyond »» Expect operating earnings of 7.3–7.8 »» Return to EPS growth cps »» Property earnings expected to continue to be resilient due to »» Assumes no further transactional favorable lease expiry
Slide 24: Strategy
Strategy For personal use only || FY11 || Medium term »» Continue to focus internally on re-leasing »» Improve liquidity – targeting inclusion in and portfolio improvement opportunities ASX 200 A-REIT index »» Renegotiate FY11 and FY12 debt expiries »» Diversify debt sources and reduce gearing and e
Slide 25: An Attractive Play on a Recovering Economy
AN ATTRACTIVE PLAY ON A RECOVERING ECONOMY For personal use only || Solid earnings base || Targeting growth in NTA and EPS over medium term »» Recurring earnings currently >95% »» Have continued to expand AUM over last 3 years »» WALT of 6 years, quality tenant base »» Will benefit from improving va
Slide 26: Contacts
CONTACTs For personal use only Cromwell Group Paul Weightman Level 19, 200 Mary Street Chief Executive Officer Brisbane QLD Ph: +61 (0) 7 3225 7720 Phone: +61 (0) 7 3225 7777 paul.weightman@cromwell.com.au Facsimile: +61 (0) 7 3225 7788 www.cromwell.com.au Daryl Wilson Chief Financial Officer Cromwe
Slide 27: Appendices
Appendices For personal use only 19 NationalSynergy Circuit, Building, Barton ACTKelvin Grove QLD CROMWELL GROUP FY10 RESULTS 19 AUGUST 2010 PAGE 27
Slide 28: Profit from operations by segment
APPENDIX 1 For personal use only Profit from operations by segment FY09 ($’000) FY10 ($'000) Property Funds Property Consoli- Property Funds Man- Property Consoli- Investment Manage- Develop- dated Investment agement Develop- dated ment ment ment Segment revenue and other income Sales to external cu
Slide 29: Reconciliation between Operating Profit and Statutory Profit
APPENDIX 2 For personal use only Reconciliation between Operating Profit and Statutory Profit Jun-09 Jun-10 ($’000) ($’000) Profit from operations 63,761 64,630 Other Items Loss on sale of investment properties – (554) Gain on sale of available-for-sale financial assets – 3,431 Fair value net gains/
Slide 30: Revenue Analysis
APPENDIX 3 For personal use only Revenue Analysis Jun-09 Jun-10 ($’000) ($’000) % change Operating Revenue Rental income and recoverable outgoings 1 114,585 121,180 ▲ 6% Funds management fees 4,863 9,283 ▲ 91% Property development sales 2,847 – ▼ N/A Share of operating profits of equity accounted en
Slide 31: Statement of Financial Position
APPENDIX 4 For personal use only Statement of Financial Position Jun-09 Jun-10 Adjustments Jun-10 Proforma ($000) ($000) ($000) ($000) Assets Cash and Cash Equivalents 66,653 98,469 (43,914) 54,555 Investment Properties 1,117,175 1,064,100 323,654 1,387,754 Investment in Associates 58,295 56,802 (50
Slide 32: Net Property Income
APPENDIX 5 For personal use only Net Property Income FY09 FY10 Variance FY09 FY10 Variance ($’000) ($’000) % ($’000) ($’000) % Tuggeranong Office Park, Elders Woolstore, Gillman SA 1,173 1,231 4.9% Greenway ACT 17,737 18,427 3.9% Kmart Distribution Centre, National Circuit, Barton ACT 3,689 2,580 -3
Slide 33: Top Tenants
APPENDIX 6 For personal use only Top 20 Tenants1 Tenant Building Tenant Classification % of Total Portfolio Commonwealth of Australia Dept of FACSIA Tuggeranong Office Park Government Authority 13.8% Qantas Qantas HQ Listed Company/Subsidiary 9.6% Origin Energy 321 Exhibition Street Listed Company/S
Slide 34: Core Property Assets
APPENDIX 7 For personal use only Core Property Assets Asset Class Valuation Date Cap Rate Occupancy WALE Major Tenants Qantas Headquarters A Grade Office $169.1 m 1 May-10 8.30% 100.0% 10.5 years Qantas Tuggeranong Office Park A Grade Office $167.5 m Jun-10 8.88% 100.0% 6.4 years Gov’t Department of
Slide 35: Valuation Comparison 30-June-09 to 30-June-10
APPENDIX 8 For personal use only Valuation Comparison 30-June–09 to 30-June–10 Building Sector Valuation Cap Rate Change in Value Change in Cap Rate Tuggeranong Office Park, Greenway, ACT Office 167.5 m 8.88% (2.5 m) 0.13% 700 Collins Street, Melbourne, VIC Office 160.0 m 8.00% (2.0 m) 0.50% 475 Vic
Slide 36: Debt Facilities
APPENDIX 9 For personal use only Debt Facilities Jun–10 Jun–10 Actual Proforma Financial Facility Maturity Security ($000) ($000) Covenants 1 All portfolio excluding LVR < 60% Syndicated Facility $430,893 $430,893 Nov-11 assets below ICR>1.5 times Tuggeranong Facility (Tranche A) $107,916 $107,916 J
Slide 37: Interest Rate Hedges
APPENDIX 10 For personal use only Interest Rate Hedges Interest Hedging Profile Amount Base Com- Maturity Years % of Hedged Type Rate mencement Date Remaining Total $800 m Hedged debt ($m) 6.20% $61,510 Variable 4.66%1 Variable 7% $700 m Average base rate 6.00% $31,730 Fixed 5.90% Current Feb-16 5.6
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