Cromwell Property Group · ASX:CMW
Cromwell Property — Cromwell Group — H1 FY2009 Earnings Presentation
34 slides from Cromwell Property's earnings presentation, Feb 18, 2009
Slide 1: Cromwell Group HY09 Results
For personal use only Cromwell Group HY09 Results 1
Slide 2: Disclaimer
Disclaimer For personal use only This presentation is made on behalf of the Cromwell Group – Cromwell Corporation Limited (ACN 001 056 980) and Cromwell Diversified Property Trust (ARSN 102 982 598) – by Cromwell Property Securities Limited (ACN 079 147 089; AFSL 238052). Cromwell Property Securitie
Slide 3: Agenda
For personal use only Agenda | Highlights | Financial Results | Investment Property | Funds Management | Strategy & Outlook 700 Collins Street, Docklands VIC 3
Slide 4: Highlights
For personal use only Highlights 4
Slide 5: Highlights
Highlights For personal use only | Earnings First half operating earnings of $36.5 million or 5.2 cps in line with forecast Recurring earnings of $31.9 million or 4.5 cps Statutory net loss of $70.9 million or 10.1 cps impacted by fair value adjustments for investment property and interest hed
Slide 6: Highlights
Highlights For personal use only | Gearing and Loan Covenants not an issue Headline gearing of 49% implies 15% headroom in asset valuation across portfolio LVR covenants limited to investment property, not total asset/liabilities Includes Tuggeranong asset held for syndication at a high LVR
Slide 7: Financial Results
For personal use only Financial Results 7
Slide 8: Earnings
For personal use only Earnings | Operating profit of $36.5 million | 88% of operating earnings before tax ($31.9 million) from recurring property investment and funds management activities | Recurring income contributed 4.5 cps of earnings | No material contribution from funds management transaction
Slide 9: Earnings
For personal use only Earnings | Statutory net loss of $70.9 million (10.1 cps) | Negative revaluation adjustments on investment property ($49.0 million) and investment in CPF/TGA ($7.6 million) | Negative fair value adjustment of ($39.9 million) on interest hedges | Write-down of listed property se
Slide 10: Revaluations
For personal use only Revaluations | 48% of assets independently revalued at December 2008. Balance assessed internally | 99% of asset independently revalued since June 2008 | Overall decrease of $49.0 million, or 8.3% | Small increase in Office cap rates (38 basis points) | Revaluations generally r
Slide 11: Financial Position
For personal use only Financial Position | Other financial assets includes cash of $300.6 million held to repay CMBS debt in April 2009 | No goodwill or intangibles | ‘Synergy’ investment property completed November 2008 | Receivables includes $40m loans to CPF 11
Slide 12: Financial Position
For personal use only Financial Position | NTA reduced to $0.86, or $0.89 excluding impact of interest rate hedges | Security price implies 26% discount to asset values and nil value for funds management business1 | Represents 22.5% yield on minimum 9.0 cps distribution1 1. Based on closing price of
Slide 13: Debt Profile
For personal use only Debt Profile | Balance CMBS will be repaid in April 2009 from $300 million cash deposit | Undrawn facility of $55 million put in place during half-year | Synergy facility of $78 million (under negotiation) only debt expiry before March 2011 | Sufficient capacity in surplus cash
Slide 14: Debt Covenants
For personal use only Debt Covenants | Significant interest cover of 2.8 times | Gearing increased to 49% as a result of fair value adjustments | LVR covenants limited to property assets only | No impact of changes in hedge or other asset value on debt covenants | Headroom sufficient to withstand 15
Slide 15: Ready to take advantage of lower interest rates
For personal use only Ready to take advantage of lower interest rates | 69% of debt will be variable by July 2009 | WAIR on expiring hedges of 5.6% | Current swap rates at multi-decade lows | Looking to extend profile again and ‘lock in’ current lower rates 1. Reuters 18 February 2009. Excluding fac
Slide 16: Investment Property
For personal use only Investment Property 16
Slide 17: Portfolio Diversification
For personal use only Portfolio Diversification | No offshore assets | Weighted to office markets at 84% | WALT of 5.4 years | Occupancy at 99.6% | Rents in Melbourne and Canberra will be more resilient | Majority of income from Government and listed entities 17
Slide 18: Security of income stream
For personal use only Security of income stream | Focus on quality tenants | 51% of income from Government, government owned or funded entities | 32% of income from Australian or overseas listed entities or subsidiaries | 59% of next rent reviews are fixed, with an average increase of 3.6% | 21% of
Slide 19: Lease Expiry Profile
For personal use only Lease Expiry Profile | Synergy building completed and 67% leased to QUT for 8 year term | Balance under rent guarantee until May 2010 | In-sourced management delivers results | FY09 expiries 2.2% (including current vacancy) | FY10 expires 8.7% | Concentrating on FY11 and FY12 e
Slide 20: Funds Management
For personal use only Funds Management 20
Slide 21: Funds Management
For personal use only Funds Management | Minimal inflows for unlisted funds in HY09 (but still net inflows) | CPF on hold from January 2009 due to uncertainty around valuations and pricing | Many competitors have scaled back or ceased operations | Well placed to take advantage of recovery in sentime
Slide 22: Group co-investment in unlisted funds
For personal use only Group co-investment in unlisted funds | Cromwell Property Fund (CPF) ($17 million carrying value plus $40 million loan receivable) 86% of income from Government or listed tenants Minimal debt expiry before March 2011 but higher gearing Sale of asset into Syndicate being c
Slide 23: Strategy & Outlook
For personal use only Strategy & Outlook 23
Slide 24: Property Market Outlook
For personal use only Property Market Outlook Office Market | Supply slowing due to credit issues | Demand also showing signs of slowing | Rents more robust in markets where Cromwell is overweight Industrial Market | Have suffered significant more cap rate expansion | Well located properties with lo
Slide 25: Strategy
For personal use only Strategy | Investment Property Minimal leasing and tenant default exposure. Concentrating on FY11 and beyond Pursue value – add projects within existing portfolio (eg. Tuggeranong) Unlikely to acquire assets on balance sheet, given cost of capital constraints | Funds Mana
Slide 26: Earnings and Distributions Guidance
For personal use only Earnings and Distributions Guidance | FY09 Minimum operational earnings of 9.0 cps, assuming no transactional income in second half Still targeting 10.0 cps earnings, with completion of unlisted syndicates. No contribution expected from development activities in FY09 Will
Slide 27: Contacts
Contacts For personal use only Paul Weightman Chief Executive Officer Cromwell Group Level 19, 200 Mary Street Ph: +61 (0) 7 3225 7720 Brisbane QLD Email: paul.weightman@cromwell.com.au Phone: +61 (0) 7 3225 7777 Facsimile: +61 (0) 7 3225 7788 Website: www.cromwell.com.au Daryl Wilson Chief Financia
Slide 28: Thank you for your time
For personal use only thank you for your time 28
Slide 29: Appendix 1: Operating Earnings
For personal use only Appendix 1: Operating Earnings 29
Slide 30: Appendix 2: Balance Sheet
For personal use only Appendix 2: Balance Sheet 30
Slide 31: Appendix 3: Top tenants by rental income
For personal use only Appendix 3: Top 20 tenants by rental income 31
Slide 32: Appendix 3: Core Property Assets
For personal use only Appendix 3: Core Property Assets 32
Slide 33: Appendix 5: Debt Facilities
For personal use only Appendix 5: Debt Facilities 33
Slide 34: Appendix 6: Interest Rate Hedges
For personal use only Appendix 6: Interest Rate Hedges 34