Cromwell Property Group · ASX:CMW
Cromwell Property — FY2015 Earnings Presentation
51 slides from Cromwell Property's earnings presentation, Aug 27, 2015
Slide 1: FY15 Results Presentation
For personal use only FY15 Results Presentation 27 AUGUST 2015
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer For personal use only This presentation including its appendices consider appropriate for their particular jurisdiction. 336 (CRT), Cromwell Ipswich City Heart Trust ARSN (“Presentation”) is dated 27 August 2015 and has 154 498 923 (ICH), Cromwell Phoenix Property
Slide 3: Section 1: FY15 Highlights
For personal use only Section 1 FY15 Highlights CMW – FY15 Results 3
Slide 4: FY15 Highlights
FY15 Highlights FY15 RESULTS For personal use only Financial Operating earnings per security of 8.35 cps, distributions per security up 3% at 7.86 cps Profit from operations of $144.9 million ($146.7 million in FY14) Statutory profit of $148.8 million ($182.5 million in FY14) Property Portfoli
Slide 5: FY15 Highlights
FY15 Highlights FY15 RESULTS For personal use only Funds Management Acquisition of Valad Europe for $207m on 31 March 2015 Total AUM increased to $10.1 billion ($3.1 billion in FY14) Australia and New Zealand external AUM increased 27% from $1.2 billion to $1.5 billion European AUM of $5.9 b
Slide 6: Operating Profit Remains Robust
Operating Profit Remains Robust FY15 RESULTS For personal use only Statutory profit of $148.8m Operating earnings impacted by a number of factors: Operating profit1 of $144.9m Decrease in property earnings as a result of asset sales Earnings per security of 8.35cps Lower returns from car
Slide 7: Financial Position Remains Strong
Financial Position Remains Strong FY15 RESULTS For personal use only Jun-15 Jun-15 Jun-14 Pro forma cash of $233m provides (Pro-Forma)1 (Actual) (Actual) flexibility to pursue property acquisitions ($’000) ($’000) ($’000) or funds management initiatives Assets Cash and Cash Equivalents 233,353 108
Slide 8: Property Portfolio
For personal use only Section 2 Property Portfolio CMW – FY15 Results 8
Slide 9: Property Portfolio - Valuations Continue To Rise
Property Portfolio - Valuations Continue To Rise FY15 RESULTS For personal use only Fair value increase in investment property of $25.4m net of capex and incentives Increase in valuation for assets with long leases / decrease for some assets with short-term expiry profiles Spread between prima
Slide 10: Active Management Remains The Focus
Active Management Remains The Focus FY15 RESULTS For personal use only Core portfolio has strong tenant covenants, long WALE and fixed rental escalations Active portfolio involves realising or recycling the asset if it has transformation upside Once transformation has occurred, asset is realis
Slide 11: Active Management Remains The Focus
Active Management Remains The Focus FY15 RESULTS For personal use only 43 Bridge Street, Hurstville, NSW Settlement occurred July 2015 for $37 million Sale price is a 19.3% premium to December 2014 external valuation Northpoint Tower, North Sydney, NSW Purchased in December 2013 with capit
Slide 12: Active Management Transformation Track Record
Active Management Transformation Track Record FY15 RESULTS For personal use only Transformation activities are a key point of difference Cromwell has undertaken over $400 million and 130,000 sqm in refurbishment and construction works on managed and owned assets in Australia over the last three
Slide 13: Property Portfolio - Strong Tenant Profile
Property Portfolio - Strong Tenant Profile FY15 RESULTS Geographic Sector Tenant For personal use only Diversification1 Diversification1 Classification1 1.1% 2.7% 1.3% ACT 6.6% 20.7% NSW 23.1% 2 Government Authority QLD Office 27.4% 45.0% VIC Retail Listed Company/ Subsidary TAS Private Company 41.5
Slide 14: Property Portfolio – Active Management Of Future Expiries
Property Portfolio – Active Management Of Future Expiries FY15 RESULTS Active management of FY16 and FY17 expiries For personal use only Leasing incentives in range of 20 – 30% (gross) depending on local market Lease Expiries representing >1% current passing gross income (FY16-FY18) % of Total E
Slide 15: Property Portfolio - De-Risking Lease Expiry Profile
Property Portfolio - De-Risking Lease Expiry Profile For personal use only Leasing expiries in FY15, FY16 and FY17 have been actively de-risked Lease Expiry Profile FY141 Lease Expiry Profile FY151,2 30.0% 30.0% A number of Heads of Agreement have been 25.0% 24.1% 25.0% signed post 30 June which h
Slide 16: Property Portfolio - Rent Review Profile
Property Portfolio - Rent Review Profile FY15 RESULTS For personal use only Next Review Type3 WALE of 6.5 years1 improving on FY14 (5.9 years) 100% Vacancy 5.4% vs. CBD office average of 11.87%2 90% 25% 80% 35% Expiry profile cushioned against current soft conditions 70% 15% No Review Averag
Slide 17: Property Portfolio - Sustainability Drives Operational Efficiency
Property Portfolio - Sustainability Drives Operational Efficiency FY15 RESULTS For personal use only 700 Collins Street, Melbourne VIC New extended end of trip facilities and water efficient fittings. NABERS Ratings – Cromwell Office Portfolio3 New LEG light fittings installed to 12,000 sqm of o
Slide 18: Property Portfolio - Tenant Requirements Are Changing
Property Portfolio - Tenant Requirements Are Changing FY15 RESULTS For personal use only Smaller space requirements, more ‘boutique’ and less ‘corporate’ Co-working space initiatives Launching the Cromwell Business Hub at 200 Mary Street Appointed Regis as partner to manage Free for Cromwe
Slide 19: Funds Management
For personal use only Section 3 Funds Management CMW – FY15 Results 19
Slide 20: Funds Management Platform Grows
Funds Management Platform Grows FY15 RESULTS For personal use only Significant evolution of funds management business in FY15 Growth in AUM and Investment Capacity1,2 FY15 FUM grows to $11.9 billion1,2 European business provides AUM of $5.9 billion Investment capacity of $1.8 billion 30+
Slide 21: Funds Management – External AUM of $7.4 billion
Funds Management – External AUM of $7.4 billion For personal use only Valad Europe Retail Funds Management, Australia and New Zealand Completed on 31 March 2015 Total AUM grew 25% from $1.2 billion to $1.5 billion AUM of €4.1 billion ($5.9 billion) as at 30 June 2015, Seven funds in Australi
Slide 22: Funds Management – European Funds And Mandates
Funds Management – European Funds And Mandates For personal use only 27 mandates spanning a broad range of geographies and sectors totaling €4.1 billion AUM Funds / mandates AUM (€m)1 Region Sector VPRF 564 Poland Retail V+ Nordic 219 Nordic Diversified V+ Nordic 2 117 Nordic Diversified Value - add
Slide 23: Retail Funds Management – Cromwell Funds Performance
Retail Funds Management – Cromwell Funds Performance FY15 RESULTS For personal use only Riverpark Trust (CRT) Ipswich City Heart Trust (ICH) Box Hill Trust (BHT) Property Trust 12 (C12) NAV Price $1.32 NAV Price $1.02 NAV Price $1.11 NAV Price $0.99 Distribution CPU1 9.50 p.a Distribution CPU1 8.75
Slide 24: Cromwell Box Hill Trust (BHT) Update
Cromwell Box Hill Trust (BHT) Update FY15 RESULTS For personal use only Cromwell Funds Management has signed a conditional contract of $156 million for the ATO Building in the Cromwell Box Hill Trust (BHT) This is an 18.6% premium to the March 2015 valuation of $131.5 million and demonstrates th
Slide 25: Capital Flows Are Global
Capital Flows Are Global FY15 RESULTS For personal use only Asian outbound up 60% in 2015 focusing on gateway cities such as London, Frankfurt, Sydney and Melbourne European banks are disposing of their unwanted loan portfolios at a record rate. Up 65% YOY to €150bn in 2015 Aus/NZ increasingly
Slide 26: Capital Management
For personal use only Section 4 Capital Management CMW – FY15 Results 26
Slide 27: Capital Management – Transforming Debt Platform
Capital Management – Transforming Debt Platform FY15 RESULTS For personal use only Maintaining appropriate gearing is a key focus Convertible bond issued to fund Valad Europe acquisition Gearing reducing via asset sales and valuation increases The offer was 2.3 times covered at final price
Slide 28: Capital Management – Diversified Debt Profile
Capital Management – Diversified Debt Profile1 FY15 RESULTS For personal use only Facilities are diversified across eight lenders and the Convertible Bond issue with varying maturity dates Weighted average debt expiry of 3.5 years with 64% not expiring until FY19+ Debt Expiry Profile1 $700M $600
Slide 29: Capital Management - Interest Rate Hedging
Capital Management - Interest Rate Hedging FY15 RESULTS For personal use only Targeting lower interest rates again in FY16 Weighted average hedge term of 3.5 years Weighted average margin of 1.34% on current facilities1 Long term interest rate cap expiry in May 2019 Average interest rates
Slide 30: Capital Management - Hedging Profile Extended
Capital Management - Hedging Profile Extended FY15 RESULTS For personal use only Interest rates for $1.2bn of debt are effectively hedged or fixed until May 2019 Interest rate cap entered into in August 2014 will cover $1bn by December 2017 The cap allows Cromwell to benefit from low variable
Slide 31: Outlook
For personal use only Section 5 Outlook CMW – FY15 Results 31
Slide 32: Outlook – Market Conditions
Outlook – Market Conditions For personal use only Modest net absorption to continue in near future Sydney incentives reducing, modest rental growth Each market has its own individual challenges Melbourne is stable, Brisbane weak Values driven by strong investor flows Canberra turning cor
Slide 33: Outlook – Strategy Remains Consistent
Outlook – Strategy Remains Consistent FY15 RESULTS Active Portfolio Management For personal use only Recycle non-core assets Maintain a disciplined and focused approach to new acquisitions Focus on transformation opportunities to add value Grow Funds Management Synergy Building, Kelvin Grove,
Slide 34: Outlook – Conservative Guidance
Outlook – Conservative Guidance FY15 RESULTS For personal use only FY16 operating earnings guidance of not less than 9.00 cps FY16 target of 3% distribution growth to 8.10 cps Assumes limited transactional revenue and cash is not deployed in an accretive fashion Peer FY16 EPS Yield1 Peer FY16
Slide 35: Outlook – FY15 Summary
Outlook – FY15 Summary For personal use only FY15 has been a year of significant achievement and expansion Cromwell Property Forward leasing profile has been significantly de-risked through Group active management Market cap: $1.8 bn1 Proceeds of asset sales are being recycled Security price:
Slide 36: Contact Us
Contact Us FY15 RESULTS For personal use only Paul Weightman Martyn McCarthy CEO / Managing Director Executive Chairman, Valad Europe paul.weightman@cromwell.com.au Martyn.mccarthy@valad.co.uk Phone: +61 7 3225 7720 Michael Wilde Jodie Clark Chief Financial Officer Chief Operations Officer michael.w
Slide 37: Appendix: Additional Information
For personal use only Appendix Additional Information CMW – FY15 Results 37
Slide 38: Appendices - Contents
Appendices - Contents For personal use only Cromwell Property Group Statistics 39 Cromwell Property Group Performance 40 Funds Management – European Activity 41 FY15 Operating and Statutory Profit Reconciliation 42 Segment Result – Operating Earnings 43 Property Portfolio – Top 10 Assets
Slide 39: Cromwell Property Group Statistics
Cromwell Property Group Statistics For personal use only Global platform offering diverse product range across key property sectors Diverse Product Range Track Record of Successful Partnerships Extensive and Broad Skill Set AUM by Sector Portfolio Platform $ 11.9 bn FUM 1 330+ people 30+ funds 15 co
Slide 40: Cromwell Property Group Performance
Cromwell Property Group Performance FY15 RESULTS For personal use only Active Portfolio Management Grow Funds Management Recycle non-core assets that don’t meet hurdle rates Long term target is 20% earnings contribution Maintain a disciplined approach to new acquisitions Focus on leading
Slide 41: Funds Management – European Activity
Funds Management – European Activity FY15 RESULTS For personal use only European banks are disposing of their unwanted loan portfolios at a record rate. Up 65% to €150bn in 2015 Substantial opportunity for platforms with track record Completes €175 Acquires €25 Trades portfolio of 10 assets in T
Slide 42: FY15 Operating and Statutory Profit Reconciliation
FY15 Operating and Statutory Profit Reconciliation For personal use only FY15 FY15 FY14 FY14 ($’000) (CPS) ($’000) (CPS) Profit from operations 144,876 8.35 146,721 8.52 Gain/(Loss) on sale of investment properties 1,032 3,152 Gain/(Loss) on disposal of other assets 251 (559) Fair value adjustments:
Slide 43: Segment Result - Operating Earnings
Segment Result - Operating Earnings1 For personal use only Property / Funds Funds Funds Management Management Property Management External External Property Investment Internal Retail Wholesale Development Jun-15 Segment revenue ($'000) ($'000) ($'000) ($'000) ($'000) ($’000) Sales to external custo
Slide 44: Property Portfolio – Top Assets
Property Portfolio – Top 10 Assets For personal use only Book Asset State Class Value Cap Rate Occupancy WALE Major Tenants Qantas Global HQ NSW Office $353.0m 6.50% 100.0% 16.1 yrs Qantas Airways Limited 207 Kent Street NSW Office $200.0m 6.75% 96.7% 4.4 yrs Symantec, Sydney Ports, HLB Mann Judd HQ
Slide 45: Property Portfolio – Top Leases
Property Portfolio – Top 20 Leases For personal use only Tenant Category Building Expiry Date Rental Income Qantas Airways Limited Listed Company/Subsidiary Qantas Global HQ Dec-32 11.5% Dept of FaHCSIA Federal Government Tuggeranong Office Park Aug-17 9.5% NSW State Government NSW State Government
Slide 46: Property Portfolio – Net Property Income
Property Portfolio – Net Property Income Like for like income growth FY15 FY14 Variance YOY For personal use only ($’000) ($’000) ($’000) Variance Comments Henry Waymouth Centre, SA 4,662 612 4,050 661.8% Now 100% let Qantas Global HQ, Mascot NSW 25,417 22,517 2,900 12.9% Kent Street, Sydney NSW 13,
Slide 47: Property Portfolio – Net Property Income
Property Portfolio – Net Property Income For personal use only Like for like income growth FY15 FY14 Variance YOY ($’000) ($’000) ($’000) Variance Comments Village Cinemas, Geelong VIC 1,199 1,178 21 1.8% Regent Cinema Centre, Albury NSW 1,310 1,306 4 0.3% Retail1 Total retail 2,509 2,484 25 1.0% To
Slide 48: Property Portfolio – Movement In Book Value
Property Portfolio – Movement In Book Value For personal use only Portfolio significantly improved through acquisitions since 2010 In-sourced facilities management model delivers consistently low lifecycle capex Average 0.25% of valuation over past 6 years FY15 FY14 FY13 FY12 FY11 FY10 ($’000)
Slide 49: Debt Platform Facility Details
Debt Platform Facility Details For personal use only Facilities ranked in order of maturity Amount Facility Maturity Date Years Remaining Covenants ($‘000) $123,500 Bank 1 5yr Facility May-19 3.9 $100,000 Bank 2 5yr Facility May-19 3.9 $123,500 Bank 3 5yr Facility May-19 3.9 $50,000 Bank 4 5yr Fac
Slide 50: Interest Rate Hedging Details
Interest Rate Hedging Details For personal use only Amount Years Rate Type Maturity Date % of Total ($’000) Remaining1,2 $86,450 5.95% Fixed Sep-17 3.9 7.0% $31,730 5.90% Fixed Feb-16 3.9 2.6% $100,000 3.99% Fixed Nov-17 3.9 8.1% $100,000 4.15% Fixed Dec-17 3.9 8.1% $100,000 4.38% Fixed Jul-16 3.9 8
Slide 51: well versed, well timed, well considered
For personal use only well versed well timed well considered
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