Cromwell Property Group · ASX:CMW
Cromwell Property — FY2018 Earnings Presentation
55 slides from Cromwell Property's earnings presentation, Aug 23, 2018
Slide 1: FY18 Results Presentation
For personal use only FY18 RESULTS PRESENTATION 23 August 2018 CMW – FY18 Results 1
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer This presentation including its appendices appropriate for their particular jurisdiction. Cromwell Ipswich City Heart Trust ARSN 154 498 923 For personal use only (Presentation) is dated 23 August 2018 and has been (ICH), Cromwell Phoenix Core Listed Property Fund
Slide 3: Overview & Key Highlights
For personal use only SECTION 1 Overview & Key Highlights
Slide 4: Cromwell Property Group Overview
Cromwell Property Group Overview Cromwell is a real estate investor and manager operating on three continents with a global investor base For personal use only Cromwell offers securityholders an attractive combination of stable long term cash flows, demonstrated asset enhancement capabilities an
Slide 5: FY18 Key Milestones
FY18 Key Milestones 30 September Soward Way, ACT (FY18 valuation of $260 million) reaches practical completion For personal use only 4 October Sold 9.83% stake in Investa Office Fund (ASX: IOF), profit of $25 million, IRR of 18% 29 November Health and Forestry House sold for $66 million, IRR 2
Slide 6: Increased Investment Focus To Drive Future Growth
Increased Investment Focus To Drive Future Growth Cromwell is positioning itself to deliver future For personal use only Cromwell Annualised Performance Returns to 30 June 2018 operating profit growth by utilising existing liquidity and ongoing asset recycling initiatives 30.0% Success of CEREIT
Slide 7: Increased Investment Focus To Drive Future Growth
Increased Investment Focus To Drive Future Growth The ‘Invest To Manage’ strategy involves connecting FY18 saw successful execution of this strategy with For personal use only different capital sources to a range of different pipeline the warehousing of three Dutch assets for the opportunities s
Slide 8: Recycling And Reinvestment Delivers Results
Recycling And Reinvestment Delivers Results FY18 EPS exceeds guidance benefitting from continued For personal use only recycling and reinvestment strategy FY18 EPS exceeds guidance Capital raising completed; strong, secure balance sheet with low gearing, substantial cash and long debt tenor NTA
Slide 9: Financial and Capital Management Update
For personal use only SECTION 2 Financial and Capital Management Update
Slide 10: Financial Update – FY18 Headline Results
Financial Update – FY18 Headline Results FY18 COMMENTARY FY18 Performance Versus Prior Year For personal use only Statutory profit was $204.1 million down from FY17 FY18 FY17 Change ($277.5 million) Statutory profit ($M) 1 $204.1 $277.5 (26.5%) Operating profit was $156.8 million up 3.0% on the
Slide 11: Financial Update – FY18 Segment Results
Financial Update – FY18 Segment Results1 FY18 COMMENTARY FY18 Segment Performance Versus Prior Year For personal use only Property Investment profit was $115.0 million, an 8% FY18 FY17 decrease on the prior year mainly due to asset sales ($M) ($M) Change and Tuggeranong vacancy Property Investment
Slide 12: Financial Update – Balance Sheet Strengthens
Financial Update – Balance Sheet Strengthens FY18 FY17 Balance Sheet Strengthens (Actual $m) (Actual $m) For personal use only Cash and cash equivalents 204.6 86.9 Cash and Cash Equivalents has increased by a sizeable Investment property 2,451.1 2,357.8 136% to $204.6 million from $86.9 million in
Slide 13: Capital Management – Position Improves Further
Capital Management – Position Improves Further FY18 Capital Management Initiatives For personal use only The sale of the Investa Office Fund (ASX:IOF) stake in October 2017 saw the repayment of the $123 million margin loan FY18 asset sales totalled over $154 million Surplus proceeds from the a
Slide 14: Capital Management – Position Improves Further
Capital Management – Position Improves Further Strengthening Debt Profile Debt Expiry Profile For personal use only June 2018 refinance now sees nine lenders + CB issues with greater diversity across global and domestic lenders Weighted average debt expiry increased to 5.2 years with majority ex
Slide 15: Property Investment Segment
For personal use only SECTION 3 Property Investment Segment
Slide 16: Property Portfolio Snapshot (as at June 2018)
Property Portfolio Snapshot (as at 30 June 2018) Focus on secondary assets in CBD, CBD fringe and established suburban markets with potential to outperform For personal use only Core Portfolio Core+ Portfolio Active Portfolio Long WALE, full occupancy Medium term WALE with Vacant, near vacant and /
Slide 17: Property Portfolio Snapshot
Property Portfolio Snapshot Core Portfolio For personal use only Core portfolio comprises nine assets, majority of portfolio by value CORE with a long WALE, essentially full occupancy plus low capex and incentive requirements 58% Wale: 11.1 yrs Like for like NOI increased 4.6% Occupancy 99.9% NO
Slide 18: Property Portfolio – Valuations Continue To Rise
Property Portfolio – Valuations Continue To Rise All assets were revalued over the course of the year For personal use only Fair value increase in investment property of $85.7 million net of property improvements, lease costs and incentives Weighted Average Cap Rate tightened by 0.52% to 6.04%
Slide 19: Property Portfolio – Strong Leasing Success
Property Portfolio – Strong Leasing Success Strong Leasing Success For personal use only Strong leasing activity in year with 100 transactions in total for 75,000 sqm. Major transactions have included: TechnologyOne renewed for 9,613 sqm at HQ North until 2026 ANAO renewed their lease for 12 y
Slide 20: Property Portfolio – Market Leading WALE of 7.2 years
Property Portfolio – Market Leading WALE of 7.2 years Vacancy, excluding the active asset portfolio, Lease Expiry Profile % Gross Income3 For personal use only 60% is 2.5%. 54.1% WALE of 7.2 years 50% Average fixed review in next 3 years. 3.81% over 65% of portfolio in FY19 40% 3.75% over
Slide 21: Property Portfolio – Minimal Future Lease Expiries
Property Portfolio – Minimal Future Lease Expiries There are four future expiries >1% income over the next three years For personal use only Lease Expiries representing >1% income (FY19-FY21) % of Total Property Tenant Comment Area (sqm) Expiry Date Portfolio Rental Income FY19 Lovett Tower Departme
Slide 22: Property Portfolio – Tenant Profile Remains Robust
Property Portfolio – Tenant Profile Remains Robust Geographic Diversification1 Sector Diversification1 Tenant Classification1 For personal use only 1.7% 1.6% 4.1% Office ACT 4.1% 10.0% 18.9% 6.9% Mixed use 28.6% Government Authority 2 NSW 35.1% 15.5% Healthcare QLD Listed Company/Subsidary VIC Retai
Slide 23: Property Portfolio – Asset Recycling Continues
Property Portfolio – Asset Recycling Continues Assets Realisations For personal use only Continued strategy to realise value for assets at the end of their optimal investment term and recycle the capital More than $154.5 million in assets sold or contracted to sell in FY18 including: Health Ho
Slide 24: Property Portfolio – FY18 Value Enhancements Complete
Property Portfolio – FY18 Value Enhancements Complete Both Soward Way and Northpoint Tower, representing a combined $300 For personal use only million in capital investment, reached practical completion in FY18. Soward Way, ACT Bespoke 30,704 sqm new building constructed for Department of Social S
Slide 25: Property Portfolio – FY19+ Value Enhancement Options
Property Portfolio – FY19+ Value Enhancement Options Victoria Avenue, Chatswood For personal use only Development application submitted April 2018 to add new four storey office building, hotel, retail and other amenity to site Result of DA expected November 2018, with construction, subject to Co
Slide 26: Funds Management Segments
For personal use only SECTION 4 Funds Management Segments
Slide 27: Funds Management – Strategy Realises Benefits
Funds Management – Strategy Realises Benefits Total funds management operating profit was $39.6 million Funds Management Share of Operating Profit For personal use only (FY17 $27.7 million) continuing its growth trajectory and above the previous target of > 20% of earnings (FY18 25.3%) Internal
Slide 28: Funds Management – CEREIT Debuts and Outperforms
Funds Management – CEREIT Debuts and Outperforms € 0.65 CEREIT now has two consecutive quarters of results after For personal use only successful listing on Singapore Exchange Securities Trading Limited € 0.60 (the SGX-ST) on 30th November 2017 € 0.55 Exceeded IPO forecast for all key performanc
Slide 29: Funds Management – Heavy Wholesale Trading Volume
Funds Management – Heavy Wholesale Trading Volume Strong activity in wholesale funds segment with $4.7 billion of assets traded For personal use only Australia. JV with Early Light International at Northpoint Tower announced and discussions for further investment opportunities have commenced C
Slide 30: Funds Management – Retail Funds Continue to Perform
Funds Management – Retail Funds Continue to Perform Cromwell Direct Property Fund (DPF) For personal use only DPF purchased its fourth direct asset in Brisbane for $42 million Performance since inception (Aug 2013) is 11.0% annualised Highly recommended rating from independent research houses
Slide 31: Funds Management – Retails Funds Continue to Perform
Funds Management – Retails Funds Continue to Perform Fully Subscribed Funds – Cromwell Ipswich City Heart Trust For personal use only Voting has commenced to extend the term of the Trust from December 2018 to June 2023 Trust has returned 14.0% per annum since inception in December 2011 Distrib
Slide 32: Funds Management – Oyster Group Reaches NZ$1.4bn
Funds Management – Oyster Group Reaches NZ$1.4bn AUM at Oyster Group in New Zealand (50% interest) was For personal use only up 15% to NZ$1.4 billion (FY17 $1.2 billion). Activity during the rear included; Purchase of the 6.2 hectare Central Park Corporate Centre for NZ$209 million with joint ve
Slide 33: Outlook and Guidance
For personal use only SECTION 5 Outlook and Guidance
Slide 34: Outlook - Australian Economic Growth Moderate
Outlook - Australian Economic Growth Moderate Australia continues to slowly re-balance away from For personal use only resources to more broad-based economic growth Business confidence has climbed higher and capex surveys are positive for non-mining business investment. Public investment is supp
Slide 35: Outlook – Offshore Capital Continues to Chase Assets
Outlook – Offshore Capital Continues to Chase Assets Occupational For personal use only Sydney and Melbourne CBDs have strong underlying demand with low vacancy rates, and this is spilling over to fringe locations Low supply and withdrawn stock in Sydney will keep markets in favour of landlords.
Slide 36: Outlook - European Economic Recovery Pauses
Outlook - European Economic Recovery Pauses Eurozone economic growth slowed in the first two quarters of EU GDP Growth Rate Maintained For personal use only 2018 but is still expected to be >2.0% for 2018 The purchasing managers index (PMIs) subsequently rose again in June, driven by stronger ac
Slide 37: Outlook - European Commercial Real Estate
Outlook - European Commercial Real Estate Occupational Transactional Volume For personal use only The desire for quality space has pushed prime rental rates in some CBD and City Centre locations high enough that occupiers are being forced to consider non-CBD and more peripheral, secondary location
Slide 38: FY19 Guidance
FY19 Guidance For further information please contact: For personal use only Strong balance sheet with low gearing, extended debt tenor coupled with Paul Weightman long WALE and favourable lease expiries leaves business well-positioned CEO / Managing Director ‘Invest To Manage’ strategy will look
Slide 39: FY19 Guidance
FY19 Guidance For further information please contact: For personal use only Guidance assumes maintainable transactional and funds management revenues consistent with historical performance Paul Weightman CEO / Managing Director Guidance does not include potential impact of investments into platf
Slide 40: FY19 Guidance
FY19 Guidance For further information please contact: For personal use only Initial Guidance: Paul Weightman FY19 operating earnings expected to be not less than 8.00 cps CEO / Managing Director FY19 distributions expected to be not less than 7.25 cps paul.weightman@cromwell.com.au Phone: +61 7
Slide 41: Appendices – Additional Information
For personal use only APPENDICES Additional Information
Slide 42: Appendices - Contents
Appendices - Contents For personal use only Cromwell Property Group Statistics 43 Local European Footprint 44 CEREIT Portfolio Overview 45 Sustainability 46 FY18 Operating and Statutory Profit - Reconciliation 47 Segment Result - Operating Earnings Detail 48 Property Portfolio - Top 10
Slide 43: Cromwell Property Group Statistics
Cromwell Property Group Statistics For personal use only Diverse Product Range Track Record of Successful Partnerships Extensive and Broad Skill Set Portfolio Platform AUM by Sector Office 11.5bn 9.2% $ AUM 380+ 5.7% 12.6% Retail people Industrial / Logistics 54.4% Property 320+ 18.1% Securities Oth
Slide 44: Local European Footprint
Local European Footprint 20 regional offices providing on the ground local market knowledge and expertise For personal use only European Portfolio by Geography 11% 11% 9% 8% €3.9bn 24% 25% 12% Italy UK Benelux Nordics CEE Germany France European Portfolio by Sector 5% BENELUX GERMANY ITALY UK 22% Am
Slide 45: CEREIT Portfolio Overview
CEREIT Portfolio Overview Unique opportunity to invest in scale and diversification across Europe For personal use only Properties1 75 Occupancy Rate (by LA)1,3 88.7% Denmark Properties 13 Valuation (€ million)2,4 1,390.4 Lettable Area (sq m)1 151,483 WALE / WALB1 4.9 years / 4.1 years Valuation (€
Slide 46: Committed To A Sustainable Business
Committed To A Sustainable Business Cromwell is committed to building a sustainable business for all stakeholders, across its five pillars For personal use only framework inclusive of a sustainable target distribution payout ratio that allows for reinvestment in people, platform and capital accret
Slide 47: FY18 Operating and Statutory Profit Reconciliation
FY18 Operating and Statutory Profit Reconciliation FY18 ($M) FY17 ($M) Profit from operations 156.8 152.2 For personal use only Operating EPS (cents per security) 8.36 8.65 (Loss) on sale of investment properties (5.0) (0.9) Gain on sale of listed securities 15.7 - Finance costs attributable to disp
Slide 48: Segment Result – Operating Earnings Detail
Segment Result – Operating Earnings Detail Property Asset Services Funds Management Funds Management Funds Management FY18 Full Year ending 30 June 2018 For personal use only Investment ($M) ($M) Internal ($M) Retail ($M) Wholesale ($M) ($M) Segment revenue Sales – external customers 199.6 8.6 0.2 8
Slide 49: Property Portfolio – Top Assets
Property Portfolio – Top 10 Assets Book Value Occupancy % For personal use only Asset State Class Cap Rate WALE Major Tenants ($M) by NLA Qantas HQ NSW Office 490.0 5.25% 100.0% 13.2 years Qantas Airways Limited Northpoint Tower1 NSW Mixed use 297.3 5.25% 89.2% 5.2 years CPT Operations, Griffith Hac
Slide 50: Property Portfolio – Top Leases
Property Portfolio – Top 20 Leases For personal use only Tenant Tenant Classification Expiry Date % of Portfolio Rental Income Qantas Airways Limited Listed Company/Subsidiary Dec-32 14.8% Commonwealth of Australia (Dept of Social Services) Government Authority Sep-32 8.2% Government Property NSW Go
Slide 51: Property Portfolio – Net Property Income
Property Portfolio – Net Property Income1 FY18 ($M) FY17 ($M) Variance ($M) Variance (%) For personal use only 200 Mary Street 5.7 4.9 0.8 16.3% 700 Collins Street 16.0 14.0 2.0 14.3% HQ North Tower 18.3 17.4 0.9 5.2% Kent Street, Sydney 14.2 13.6 0.6 4.4% Qantas HQ 28.1 27.2 0.9 3.3% TGA Complex 7.
Slide 52: Property Portfolio – Net Property Income
Property Portfolio – Net Property Income1 FY18 ($M) FY17 ($M) Variance ($M) Variance (%) For personal use only Village Cinema Geelong 1.3 1.3 0.0 0.0% Regent Cinema Centre 1.3 1.3 0.0 0.0% Retail Total 2.6 2.6 0.0 0.0% TOTAL HELD PROPERTIES1 147.6 145.6 2.0 1.4% Wakefield St, Adelaide 4.4 - 4.4 N/A
Slide 53: Property Portfolio – Movement In Book Value
Property Portfolio – Movement In Book Value Strategy of continuously improving portfolio through acquisitions since 2010 For personal use only Recycling of capital means disposing of assets before asset has large capex requirements In-sourced facilities management model also lowers lifecycle c
Slide 54: Property Portfolio – Balance Sheet Debt Details
Property Portfolio – Balance Sheet Debt Details Drawn Commitment Maturity Fin Yr Years For personal use only Facility Covenants (AUD $M) (AUD $M) Date Expiry Remaining Bank 1 - 5 Year Facility 100.0 100.0 Bank 2 - 5 Year Facility 180.0 250.0 Bank 3 - 5 Year Facility 200.0 250.0 Bank 4 - 5 Year Facil
Slide 55: For personal use only
For personal use only CMW – FY18 Results 55
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