Slide 1: Cromwell Group HY10 Results
For personal use only CROMWELL GROUP HY10 RESULTS 1 1
Slide 2: Disclaimer
Disclaimer For personal use only This presentation is dated 18 February 2010 and 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).
Slide 3: Overview
For personal use only Overview 3
Slide 4: Key Messages
Key Messages For personal use only || FY10 Operating Earnings on Track »» Half year operating earnings of $33.4 million (4.7 cps) and distributions of 4.0 cps »» Results underpinned by high level of recurring property income »» On target to achieve full-year earnings of 8.5 cps and distributions of
Slide 5: Key Messages
Key Messages For personal use only || Resilient Portfolio has outperformed the market »» Wholly domestic with large weighting to CBD office markets »» Property values expected to have troughed in December 2009 »» Overall decrease in value of 2.4% during half year »» Peak to trough fall in values of
Slide 6: Financial Results
For personal use only Financial Results 6
Slide 7: Key Financial Results
Key Financial Results For personal use only Results Summary 1H10 2H09 1H09 Statutory accounting profit/(loss) $4.2m $(42.7)m $(70.9)m Operating earnings $33.4m $27.3m $36.5m Operating EPS 4.7cps 3.9cps 5.2cps Distributions $28.3m $28.1m $35.2m Distributions per security 4.0cps 4.0cps 5.0cps Payout R
Slide 8: Operating Earnings
Operating Earnings For personal use only || Operating profit of $33.4 million or 4.7 cps || Result underpinned by $55.2 million net property income || Growth in like-for-like property income of 4.5% in HY101 || Financial costs reduced due to debt repayments and lower variable interest rates Profit s
Slide 9: Statutory Accounting Result
Statutory Accounting Result For personal use only || Statutory accounting profit of $4.2 million (0.6 cps) || Negative revaluation adjustments on investment property $25.0 million (3.1 cps) || Positive fair value adjustment of $3.8 million on interest hedges || Development land write-downs of $4.3 m
Slide 10: Financial Position
Financial Position For personal use only || NTA reduced from $0.76 to $0.73 in half-year due Security Price vs. NTA per Security to asset revaluations A$ || Placement at $0.70 has almost no impact on NTA $1.40 Security Price || Security price implies 3.8% discount to asset $1.20 NTA values and no va
Slide 11: Debt & Capital Management
Debt & Capital Management For personal use only || All debt in Australian dollars, with Australian banks Debt Facility Expiry Profile || Gearing 47% including significant cash resources A$ million which provide flexibility $533m 600 79.0% || Interest cover of 2.7 times 500 || Average cost of debt fo
Slide 12: Property
For personal use only Property
Slide 13: Property Valuations may provide upside
Property Valuations may provide upside For personal use only || Transactions in past 12 months predominantly: »» Assets with long leases and quality tenants »» Lower value assets with private/syndicate purchasers || Higher volume of transactions in last 3 months is a sign of increasing confidence ||
Slide 14: Revaluations Continue to Affirm Portfolio Quality
Revaluations Continue to Affirm Portfolio Quality For personal use only || 47% of assets independently revalued as at Historical Weighted Average Cap Rate December 2009. Balance assessed internally || 100% of assets independently revalued in 2009 10% Cromwell Managed Properties Benchmark (PCA/IPD Al
Slide 15: Portfolio Quality
Portfolio Quality For personal use only Geographic Diversification by Gross Income Gross Income by Tenant Classification Sector Diversification by Income WA 1% SA 8% Private Company 17% Industrial 11% QLD 18% TAS 4% Retail/ Entertainment 5% NSW 12% Listed Company/ VIC 28% Subsidiary 30% Commercial 8
Slide 16: Active Portfolio Management
Active Portfolio Management For personal use only || Focus remains on continual improvement in portfolio quality || 3 properties contracted to sell during half year, at combined book valuation »» 4 Marcus Clarke Street, Canberra (Sept-09) for $9.7 million »» Hellmann Logistics Distribution Centre, T
Slide 17: Quality Income Stream
Quality Income Stream For personal use only || Focus on quality tenants Next Review Type % of Total Cumulative % Passing Income || 52% of next rent reviews are fixed, Fixed 1 52.0% 52.0% with an average increase of 3.95% CPI 2 27.1% 79.1% || 27% of next rent reviews are CPI MKT 17.0% 96.1% Holdover
Slide 18: Manageable Lease Expiries
Manageable Lease Expiries Lease Expiry Profile % Gross Income For personal use only 40.3% || Active tenant retention program 40% || Renewal rate of 87.8%1 for 2 years to December 30% 2009 shows benefit of strong internal management || Well advanced on negotiations for FY11 expiries 20% 15.2% || Majo
Slide 19: Sustainability
Sustainability 1 For personal use only || Cromwell has reduced emissions and improved efficiency across the portfolio »» Completed 63 projects to improve energy conservation »» Reduced electrical consumption at managed commercial offices by over 2,000,000 kWhr (11%) »» Reduced water consumption by 8
Slide 20: Funds Management
For personal use only Funds Management 20
Slide 21: Unlisted Direct Property – Market Leader
Unlisted Direct Property – Market Leader For personal use only || Raised $91 million for Riverpark Trust during 2009 – largest unlisted retail property fund raising in 2 years || Riverpark Trust fees booked during first half 2010 || Substantially reduced competition in unlisted property market || Co
Slide 22: Leveraging our outperformance
Leveraging our outperformance For personal use only Cromwell vs. Benchmark Annualised Cromwell Phoenix Property Securities Fund vs. Property Returns (to 30 September 2009) S&P/ASX 300 A-REIT Accumulation Index (to 31 December 2009) -1.7% 30.6% 1 year -4.8% 1 year 9.6% 3.1% 21.0% 7.4% -19.7% Since 3
Slide 23: Existing Funds
Existing Funds For personal use only || Cromwell Riverpark Trust (Syndicate) »» Fund raising completed »» Construction on target for mid 2010 || Cromwell Property Fund (Diversified Property) »» Fund closed to applications/redemptions »» Distributions suspended »» Valuations stabilising but gearing r
Slide 24: Funds Management – Growth Opportunities
Funds Management – Growth Opportunities For personal use only || During second half of 2010 will establish a platform of products on Australian which to base growth for next 3-5 years Property Fund (Hybrid) || Provides complete product range with broad market appeal || Shifts focus towards ongoing f
Slide 25: Strategy & Outlook
For personal use only Strategy & Outlook 25
Slide 26: Reaffirm FY10 Earnings and Distributions Guidance
Reaffirm FY10 Earnings and Distributions Guidance For personal use only || FY10 Operating Earnings »» Expect operating earnings of 8.5 cps »» Assumes no further transactional income || FY10 Distributions »» Distributions of 8.0 cps (2.0 cps each quarter) expected »» Distribution policy of 90-95% of
Slide 27: Redefine - attracted to value through the cycle
Redefine - attracted to value through the cycle For personal use only || Redefine are the 2nd largest South African listed real estate trust || Investment made through 55% owned Ciref plc listed in UK || Attracted to Cromwell as a clean simple Australian property play with ability to grow significan
Slide 28: Strategy
Strategy For personal use only || Property Portfolio »» Portfolio remains well leased with attractive expiry profile »» If economic recovery continues expect substantial potential for increase in asset values as vacancies reduce & rental market improves Well Placed »» Tuggeranong asset represents si
Slide 29: Contacts
Contacts For personal use only Paul Weightman Chief Executive Officer Cromwell Group Ph: +61 (0) 7 3225 7720 Level 19, 200 Mary Street Email: paul.weightman@cromwell.com.au Brisbane QLD Phone: +61 (0) 7 3225 7777 Facsimile: +61 (0) 7 3225 7788 Daryl Wilson Website: www.cromwell.com.au Chief Financia
Slide 30: HY10 Results Appendices
For personal use only HY10 Results Appendices 30
Slide 31: Profit from Operations
Appendix 1 For personal use only Profit from Operations 1H10 2H09 1H09 ($’000) ($’000) ($’000) Net Property Income (incl. share of associates) 55,238 53,469 51,101 Net Funds Management Income 4,493 2,239 2,239 Net Development Income (1,944) (1,390) 363 Interest & Distribution Income 2,662 6,391 6,24
Slide 32: Reconciliation between Operating Profit and Statutory Profit
Appendix 2 For personal use only Reconciliation between Operating Profit and Statutory Profit 1H10 1H09 ($’000) ($’000) Profit from operations as assessed by the directors 33,353 36,477 Reconciliation to profit/(loss) for the half-year: Property development – minority interest share – (1,761) Loss o
Slide 33: Revenue Analysis
Appendix 3 For personal use only Revenue Analysis 1H10 1H09 % Change ($’000) ($’000) Operating revenue Rental income and recoverable outgoings 60,768 56,002 +8.5% Funds management fees 7,687 2,500 +207.5% Property development sales (stapled securityholder share) – 1,424 N/A Share of operating profit
Slide 34: High Recurring Earnings
Appendix 4 For personal use only High Recurring Earnings 1H10 Recurring 1H10 Transaction 1H10 Total ($’000) ($’000) ($’000) Profit from operations Net Property Income1 55,238 0 55,238 Net Funds Management Income2 1,539 2,954 4,493 Net Development Income 3 0 (1,944) (1,944) Interest & Distribution In
Slide 35: Statement of Financial Position
Appendix 5 For personal use only Statement of Financial Position Dec-09 Jun-09 ($’000) % ($’000) % Assets Cash and Cash Equivalents 104,769 8% 66,653 5% Trade and Other Receivables 60,163 5% 53,882 4% Inventory 0 0% 0 0% Investment Properties 1,074,200 82% 1,117,175 85% Investment in Associates 57,1
Slide 36: Net Property Income
Appendix 6 For personal use only Net Property Income 1H10 2H09 Variance ($’000) ($’000) % Office Tuggeranong Office Park, Greenway ACT 9,017 8,916 1.1% National Circuit, Barton ACT 1,295 1,266 2.4% 700 Collins Street, Melbourne VIC 6,286 5,792 8.5% Grenfell Street, Adelaide SA 1,686 1,609 4.8% AWB B
Slide 37: Top Tenants
Appendix 7 For personal use only Top 20 Tenants Tenant Building Tenant Classification % of Total Portfolio Commonwealth of Australia Dept of FACSIA Tuggeranong Office Park Government Authority 16.5% Australian Wheat Board AWB Building & Brooklyn Woolstores Listed Company/Subsidiary 7.3% Bureau of Me
Slide 38: Core Property Assets
Appendix 8 For personal use only Core Property Assets Asset Class Valuation Date Cap Rate Occupancy WALE Major Tenants 700 Collins A Grade Office $156.0 Nov-09 8.00% 99.5% 5.5 years Bureau of Meteorology, Street Medibank Private, Vic Urban Tuggeranong A Grade Office $170.0 m Dec-09 8.75% 100.0% 6.9
Slide 39: Debt Facilities at December 2009
Appendix 9 For personal use only Debt Facilities at 31 December 2009 Amount Amount Financial Facility Maturity Security Property Available Drawn Covenants(1) Trust portfolio excluding 200 Mary Street, TGA, LVR < 60% Syndicated Facility $434 m $434 m Nov-11 Tuggeranong Office Park and Synergy ICR > 1
Slide 40: Interest Rate Hedges
Appendix 10 For personal use only Interest Rate Hedges Amount Hedged Maturity Date Base Rate Years Remaining % of Total $372m Variable 4.20%1 55% $158m Jul-10 4.13% 0.6yrs 23% $27m Aug-10 5.50% 0.7yrs 4% $32m Feb-16 5.90% 6.1yrs 5% $86m Sep-17 5.95% 7.7yrs 13% $675m 1] 30 day BBSY as at 31 December
Slide 41: Impact on NTA
Appendix 11 For personal use only Impact on NTA Weighted Average Cap Rate 8.04% 8.29% 8.54% 8.79% 9.04% 5.0% $0.88 $0.84 $0.79 $0.75 $0.72 2.0% $0.84 $0.80 $0.75 $0.71 $0.68 Change in Market 0.0% $0.81 $0.77 $0.73 $0.69 $0.65 Rental -2.0% $0.78 $0.74 $0.70 $0.66 $0.63 -5.0% $0.74 $0.70 $0.66 $0.62 $