Slide 1: Cromwell Group FY08 Results
For personal use only Cromwell Group FY08 Results STRENGTH, CONFIDENCE, OPPORTUNITY 1
Slide 2: Agenda
Agenda For personal use only | Highlights | Financial Results | Investment Property | Funds Management | Strategy & Outlook | Summary Victoria Avenue, Chatswood NSW 2
Slide 3: Highlights
For personal use only Highlights STRENGTH, CONFIDENCE, OPPORTUNITY 3
Slide 4: Highlights
Highlights For personal use only | Earnings FY08 operating earnings 10.1 cps in line with forecast Increase in recurring earnings to 81% of FY08 operating earnings | Capital Structure Simple domestic stapled structure with no capital or FX hedges | Distribution Policy Unchanged – not more th
Slide 5: Financial Results
For personal use only Financial Results STRENGTH, CONFIDENCE, OPPORTUNITY 5
Slide 6: FY08 Earnings
FY08 Earnings For personal use only | First full-year since stapling in Dec-06 | Record operating profit of $70.8 million (10.1 cps) | Excludes profits on investment property sales of $7.4 million (1.1 cps) | Operating earnings delivered without any transactional income in second-half | Statutory NP
Slide 7: FY08 Earnings
FY08 Earnings For personal use only | 81% of operating earnings before tax ($59.3 million) from recurring property investment and funds management activities | Recurring income contributed 8.4 cps of earnings | Expect similar contribution in FY09 after allowances for higher interest costs 7
Slide 8: Distributions
Distributions For personal use only | No change to distribution policy | Will continue to distribute up to 100% of operating earnings excluding gains on sale | Realised profits on investment property sales utilised to fund maintenance capex and leasing | Have crystallised over $12 million in realise
Slide 9: Financial Position
Financial Position For personal use only | NTA stable ($1.01) despite market volatility ($1.02 Dec-07; $0.96 Jun-07) | Includes recent purchase of Tuggeranong Office Park | No requirement to raise capital in current market | Security price implies c.17% discount to asset values and nil value for fun
Slide 10: Financial Position
Financial Position For personal use only | Other financial assets includes cash of $25.7 million held as security for CMBS debt | Minimal investment in development inventory | ‘Synergy’ investment property expected to be completed late 2008, not expected to impact gearing or NTA materially 10
Slide 11: Capital Management
Capital Management For personal use only | Credit-approved terms received for new $452 million syndicated facility | Subject to documentation and satisfaction of conditions precedent | Provides surplus funding of up to $23 million | Have commenced discussions with regards to early repayment of CMBS
Slide 12: Strong Hedge Profile, reducing Interest Rates
Strong Hedge Profile, reducing Interest Rates For personal use only | 73% of debt hedged until at least Jun-09 | Hedges out to Sept-17 | Weighted average term of hedges 3.2 years | Interest rates expected to fall during FY09 380-390 LaTrobe Street, Melbourne VIC 12
Slide 13: Investment Property
For personal use only Investment Property STRENGTH, CONFIDENCE, OPPORTUNITY 13
Slide 14: Portfolio Diversification
Portfolio Diversification For personal use only | Wholly domestic portfolio | Weighted to office markets | Overweight VIC and ACT | 86% of income from Government, and ASX or overseas listed companies 14
Slide 15: Targeting Strong Cashflows
Targeting Strong Cashflows For personal use only | Core assets with strong cash-flows | Focus on quality tenants | Focus on markets with strong medium-term rental growth potential | Some core-plus exposure through Cromwell Property Fund (CPF) investment | Targeting 4% annual increases across portfol
Slide 16: Core Property Assets
Core Property Assets For personal use only | 59% of portfolio value | High quality office assets | Long-term leases to sound tenants 16
Slide 17: Key Property Markets
Key Property Markets For personal use only Office Market | Supply slowing due to credit issues | Demand also showing some signs of slowing | Further strong rental growth expected in Melbourne, subdued elsewhere Industrial Markets | Demand slowing, but construction costs will see rents hold for new f
Slide 18: Lease Expiry Profile
Lease Expiry Profile For personal use only | In-sourced management | Active tenant relationship programme | No leases with > 1% income expiring in FY09 | Only 9% of leases expiring in FY09 or FY10 | Concentrating on FY11 expiries 18
Slide 19: Revaluations
Revaluations For personal use only | 48% of assets revalued at 30 June 2008 (excluding Tuggeranong Office Park purchase) | Overall increase of $24 million, or 4.5% | Minimal increase in Office cap rates (13 basis point), offset by rental increases | Average 42 basis point increase in Industrial cap
Slide 20: Funds Management
For personal use only Funds Management STRENGTH, CONFIDENCE, OPPORTUNITY 20
Slide 21: Strong headwinds, but well placed for recovery
Strong headwinds, but well placed for recovery For personal use only | Inflows of $79 million for CPF in FY08 (excluding co-investment) | Very difficult market in second half, but net inflows every month | Base of loyal, long-term supporters – minimal redemptions | Many competitors have scaled back
Slide 22: Cromwell Property Fund
Cromwell Property Fund For personal use only | Rating by Lonsec (Recommended (Upper End)), PIR (AA-) and Standard & Poors (3 Stars) | Mix of core and core-plus assets | $30 million co-investment by Cromwell | 86% of income from Government or listed tenants | Will pursue accretive acquisitions in FY0
Slide 23: Cromwell Phoenix Property Securities Fund
Cromwell Phoenix Property Securities Fund For personal use only | Rated by Lonsec (Recommended) and Advisor Edge (3.5 Stars) | Ratings delayed due to timing of sector reviews | Targeting $100m inflows in FY09 | Platform friendly | Exclusive retail arrangement with Phoenix 23
Slide 24: Strategy & Outlook
For personal use only Strategy & Outlook STRENGTH, CONFIDENCE, OPPORTUNITY 24
Slide 25: Business Strengths
Business Strengths For personal use only | Domestic focus. No exposure to offshore markets | Defensive portfolio with strong cashflow and minimal short-term expiry | Strong retail direct property brand, reduction in competition for funds | Loyal, diversified retail investor base for unlisted funds |
Slide 26: Strong Property Credentials
Strong Property Credentials For personal use only | Dedicated, active management style Insourced, active style delivers superior property returns Undertake exhaustive due diligence before any acquisition Tenant relationship programme delivers superior leasing results Three-year average total
Slide 27: Strategy – Property
Strategy – Property For personal use only | Market turmoil is expected to produce opportunities | Investment Property Will pursue opportunistic acquisitions as market evolves Likely to partner asset ownership with unlisted funds and high net worth investors Completion of Synergy expected Nov-0
Slide 28: Strategy – Funds Management
Strategy – Funds Management For personal use only | Existing Funds | Single-asset syndicates a possibility CPF inflows expected to rebuild gradually Fixed term property trusts as climate improves Tuggeranong asset possible example Target inflows $75m net in FY09, Similar fee structure to C
Slide 29: FY09 Earnings and Distributions Guidance
FY09 Earnings and Distributions Guidance For personal use only | Guidance for operating EPS for FY09 is 10.0 cps, on par with FY08 | Expect 8.5 cps to come from recurring property investment and funds management. Minimal risk to these revenue streams | Majority of transactional earnings expected to
Slide 30: Summary
For personal use only Summary STRENGTH, CONFIDENCE, OPPORTUNITY 30
Slide 31: Summary
Summary For personal use only | FY08 earnings as forecast at 10.1 cps | Simple asset rich structure | Domestic | Transparent | Distributions from cash operating earnings | Debt refinancing approved 8 months before maturity | Assets at fair value | 81% of earnings from recurring income, increasing to
Slide 32: Contacts
Contacts For personal use only Paul Weightman Chief Executive Officer Ph: +61 (0) 7 3225 7720 Email: paul.weightman@cromwell.com.au Daryl Wilson Chief Financial Officer Ph: +61 (0) 7 3225 7724 Email: daryl.wilson@cromwell.com.au Melissa McLaughlin Head of Investor Relations Ph: +61 (0) 7 3225 7726 E
Slide 33: Disclaimer
Disclaimer For personal use only Certain statements made in this document are forward-looking statements. These statements are not guarantees of future performance. Actual results could differ materially from those expressed. Units in the Cromwell Diversified Property Trust ARSN 102 982 598, Cromwel
Slide 34: Thank you for your time
For personal use only thank you for your time STRENGTH, CONFIDENCE, OPPORTUNITY 34