Cromwell Property Group · ASX:CMW
Cromwell Property — Macquarie Emerging Property Leaders Conference 2008
18 slides from Cromwell Property's conference presentation, Mar 27, 2008
Slide 1: Macquarie EPLC Presentation - March 2008
For personal use only Macquarie EPLC Presentation - March 2008 1 OF 18
Slide 2: Cromwell Group History
CROMWELL GROUP HISTORY For personal use only • Cromwell Corporation Limited listed since 1972 • Substantial tax losses from property development in early 1990’s • New Board took control in 1998 and recapitalised at 1cps • Acquisition of first property and set up first investment fund in 1999 • Forme
Slide 3: Cromwell Group Profile
CROMWELL GROUP PROFILE For personal use only Property Investment • $1 billion in investment property, generating 75% of EBITDA • $100 million cash • $490 million bank debt Funds Management • Manage $1.5 billion in direct property assets, including $500 million in unlisted Cromwell Property Fund • Pr
Slide 4: What Makes Us Successful?
WHAT MAKES US SUCCESSFUL? For personal use only • Streamlined structure with c. 75% of earnings from property investment with concentration in office sector • Significant level of funds management earnings (c. 20%) with demonstrated growth • Stable and experienced executive team with proven ability
Slide 5: Anticipating the Current Market
ANTICIPATING THE CURRENT MARKET For personal use only • Sale of 4 properties during 2007; gross proceeds of c.$260 million • Proceeds used to reduce gearing and increase cash reserves • Minimal assets acquired for unlisted funds during 2007 • Defensive portfolio with minimal short-term lease expiry
Slide 6: Strong Investment Fundamentals
STRONG INVESTMENT FUNDAMENTALS For personal use only Market Capitalisation 20/03/08 530m Security Price 20/03/08 $0.75 NTA Per Security 31/12/07 $1.02 Operating EPS FY08 guidance 10.0cps Distribution Per Security 10.0cps Gearing 31/12/07 35% (38% ‘look through’) Interest Coverage Ratio 3.6 times Con
Slide 7: Prudent Capital Management
PRUDENT CAPITAL MANAGEMENT For personal use only • 100% of debt hedged until Oct-09, with hedges out to 2017 • Weighted average hedge term 3.7 years • Low refinance risk in CMBS (Apr-09 expiry) - 43% LVR on existing property (excludes cash) - $190m CPF debt refinanced in Mar-08 for 3 year term - $27
Slide 8: Quality Defensive Property Portfolio
QUALITY DEFENSIVE PROPERTY PORTFOLIO For personal use only 1% 15% 21% 10% 36% 12% 5% Number of properties 23 Total Value $983m NLA 424,906 m2 Occupancy 99.6% WALT 5.3 years Gov’t/listed tenant income 78% WACR 7.18% • Stats as at 31.12.07 • Includes 2/3 TGA 8 OF 18
Slide 9: Core Property Assets
CORE PROPERTY ASSETS For personal use only Cap Asset Class Valuation Date Occupancy WALT Rate 700 Collins Street, A Grade $183.5m Dec-07 6.25% 97.5% 7.4 years Melbourne VIC Office 475 Victoria Avenue, A Grade $125.5m Dec-06 7.25% 99.3% 5.1 years Chatswood NSW Office 200 Mary Street, B Grade $100.0m
Slide 10: Lease Expiry Profile
LEASE EXPIRY PROFILE For personal use only • 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 last half-year • Success driven by in-sourced management and tenant relationship program 10 OF 18
Slide 11: Valuations – Impact on NTA
VALUATIONS – IMPACT ON NTA For personal use only Impact on NTA Weighted Average Cap Rate 7.18% 7.43% 7.68% 7.93% 8.18% 0.0% $1.03 $0.98 $0.94 $0.90 $0.86 Change 3.0% $1.07 $1.02 $0.98 $0.93 $0.89 in Market Rental 4.0% $1.09 $1.04 $0.99 $0.95 $0.91 5.0% $1.10 $1.05 $1.00 $0.96 $0.92 Mitigating Factor
Slide 12: Valuations – Impact on Gearing
VALUATIONS – IMPACT ON GEARING For personal use only Impact on Gearing (excluding cash) Weighted Average Cap Rate 7.18% 7.43% 7.68% 7.93% 8.18% 0.0% 45.6% 47.2% 48.8% 50.4% 52.0% Change 3.0% 44.3% 45.8% 47.4% 48.9% 50.5% in Market Rental 4.0% 43.9% 45.4% 46.9% 48.4% 50.0% 5.0% 43.4% 45.0% 46.5% 48.0
Slide 13: Strong Funds Management Business
STRONG FUNDS MANAGEMENT BUSINESS For personal use only • Long-term sustainable inflows $3m per week plus • Loyal retail investor base; long-term supporters • Distribution network continuing to expand • Well placed to grow market share when confidence returns • Property Securities Fund will contribut
Slide 14: Cromwell Property Fund
CROMWELL PROPERTY FUND For personal use only Geographic Diversification • Open-ended, unlisted core-plus fund • Investing in Australian non-residential property • Primarily targeted at retail investors • Research by Lonsec, PIR and Standard & Poors • Widely approved by dealer groups and platforms Se
Slide 15: Cromwell Property Fund Portfolio
CROMWELL PROPERTY FUND PORTFOLIO For personal use only 15-20% co-ownership 12% 1% 31% 34% 22% Number of properties 11 Total Value $464m Occupancy 95.5% WALT 4.6 years Gov’t/listed tenant income 83% WACR 7.02% • Stats as at 31.12.07 • Includes 1/3 TGA 15 OF 18
Slide 16: Summary – Property Investment
SUMMARY For personal use only Property Investment • 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 whether any adjustment to cap rates • Prop
Slide 17: Summary – Funds Management and Opportunities
SUMMARY For personal use only Funds Management and Opportunities • Have demonstrated ability to grow earnings over the long-term • Well placed to increase market share • Continuing to expand distribution network • Current market volatility will present opportunities for acquisitions • Limited relian
Slide 18: 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
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