Cromwell Property Group · ASX:CMW
Cromwell Property — H1 2012 Earnings Presentation
40 slides from Cromwell Property's earnings presentation, Feb 27, 2012
Slide 1: 1H12 Results Presentation
For personal use only 1H12 Results Presentation 27 February 2012 Cromwell Property Group – 1H12 Results 1
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer For personal use only This presentation including its appendices (“Presentation”) is needs. Investors should also seek such financial, legal or tax financial product advice in respect of Cromwell Property Group dated 27 February 2012 and has been prepared by the ad
Slide 3: Overview
For personal use only S ti 1 Section Overview Cromwell Property Group – 1H12 Results 3
Slide 4: Overview: Cromwell's strategy and performance
Overview For personal use only | Provide defensive, superior risk adjusted returns from a 100% Australian portfolio CROMWELL’S | Invest in high quality office assets in predominantly CBD / core fringe markets STRATEGY | Seek assets which offer the potential for superior returns through active asset
Slide 5: Overview: 1H12 results
Overview For personal use only 1H12 RESULTS | Operating earnings1 increased 13% to $37.0m or 3.8 cents per security IN LINE WITH | Distributions of 3.5 3 5 cents per security GUIDANCE | Statutory accounting loss of $6.8m or 0.7 cents per security, impacted by interest hedges | Property valuations de
Slide 6: Overview: debt, capital and funds management
Overview For personal use only | Refinanced and extended debt maturity profile | No material debt maturity until FY14 DEBT MANAGEMENT | Gearing of 51%, reduced to 50% since balance date1 | Debt spread across all four major Australian and one offshore bank | Transformation of portfolio funded by succ
Slide 7: 1H12 Financial Results
For personal use only S ti 2 Section 1H12 Financial Results Cromwell Property Group – 1H12 Results 7
Slide 8: Key Financial Results
1H12 RESULTS Key Financial Results For personal use only | Operating earnings increased by 13% 1H11 1H12 to $37 $37.0m 0m (3.8 (3 8 cps) Actual Actual Change Statutory accounting profit/(loss) ($'000) 28,916 (6,781) – 123% Æ Increase in like for like property Operating earnings ($'000) 32,867 36,978
Slide 9: Statutory Accounting Result
1H12 RESULTS Statutory Accounting Result For personal use only | Statutory accounting loss of $6.8m (0.7 cps), heavily impacted by fair value adjustments | Fair value decrease of $27.5m on interest rate swaps will unwind over time as swaps expire | Fair value decrease of investment properties of $14
Slide 10: Financial Position
1H12 RESULTS Financial Position For personal use only | Significant growth in asset base arising from the acquisition of two investment properties for Pro-Forma Pro-Forma Jun-11 Dec-11 Adjustments Dec-11 approximately $250m ($’000) ($’000) ($’000) ($’000) | NTA decreased in line with previous guidan
Slide 11: Debt & Capital Management
For personal use only S ti 3 Section Debt & Capital Management Cromwell Property Group – 1H12 Results 11
Slide 12: Debt Facilities
CAPITAL MANAGEMENT G Debt Facilities For personal use only | Diversified across a syndicated facility and six bilateral facilities Interest Cover Ratio | Lenders comprise major Australian banks and one offshore bank Dec-11 Jun-11 Group 2.3 x 2.4 x | No material maturities until FY14 | Weighted avera
Slide 13: Interest Rate Hedging
CAPITAL MANAGEMENT G Interest Rate Hedging For personal use only | High degree of certainty over interest expense to FY14 | W i ht d average swap term Weighted t off 2.1 2 1 years | Will continue to seek opportunities to extend profile if rates are favourable CMW Hedging Profile $1 000 M $1,000 $900
Slide 14: Capital Management
CAPITAL MANAGEMENT G Capital Management For personal use only | Completion of a 2 year capital raising programme commenced in December, 2009 Æ Raised $318m at an average price of $0 $0.70, 70 equivalent to NTA Æ Increased market cap from $520m1 to $816m2 | Proceeds applied in funding acquisition of
Slide 15: Investment Portfolio
For personal use only S ti 4 Section Investment Portfolio Cromwell Property Group – 1H12 Results 15
Slide 16: Continuing Portfolio Improvement
PORTFOLIO Continuingg Portfolio Improvement p For personal use only Transactions since June 2008 | Between June 2008 and January 2012, Cromwell has Æ P Purchased h d 6 assets t with ith an average value l off Purchased Assets Date Price Cap Rate WALT $121m, cap rate of 8.4% and WALT of 8.4 years Bun
Slide 17: Continuing Portfolio Improvement
INVESTMENT Continuing Portfolio Improvement For personal use only | Significant improvement in portfolio quality1 Weighted Average Cap Rate by Sector Æ WALT off 6 6.3 3 years one off the th longest l t in i th the sector t Sector Jun-11 Dec-111 Æ WACR increased slightly to 8.26% from 8.18% in Jun Co
Slide 18: Secure Income Stream
INVESTMENT Secure Income Stream For personal use only | Targeting 4% annual growth in like-for-like net property income, achieved 7.9% growth in 1H121 | 73% of portfolio subject to fixed or minimum rent reviews, with average minimum increase of 4% in FY12 | 85% of gross income leased to government o
Slide 19: Minimal Risk From Lease Expiries
INVESTMENT Minimal Risk From Lease Expiries For personal use only 1.4% Latrobe St 0.9% | Average of only 6.2% lease expiry FY12 – Lease Expiry VIC Elders SA 3.2% FY15 Profile 0.9% 1.0% Collins St VIC Mary St % Gross 70% QLD Victoria 62.3% Ave NSW 1.3% | Marketing of LaTrobe St space generating Incom
Slide 20: HQ North, Brisbane
INVESTMENT HQ North, Brisbane For personal use only | HQ North was completed in 2010 and comprises 28,278 m2 of A-Grade office accommodation d ti over 11 llevels l with ith b basementt parking ki ffor 330 vehicles. hi l It also l has 1,086 m of retail space 2 | Located in Fortitude Valley, Brisbane,
Slide 21: Bundall Corporate Centre
INVESTMENT Bundall Corporate Centre For personal use only | Cromwell originally acquired the asset for $52.9m in December 2005 and sold for $106m in October 2007 | Since the sale the asset has been further improved by the development of a further 8,000 m2 5 star green star building | Passing income
Slide 22: Qantas Global Headquarters, Mascot, NSW
INVESTMENT Qantas Global Headquarters, Mascot, NSW For personal use only | Since acquisition Cromwell has agreed with Qantas Æ A refurbishment f and expansion Æ Lease extension to 2032 Æ Total capital cost of $131.5m Æ Works expected to be completed in April 2014 | Average return on cost of 8.8% in
Slide 23: Funds Management
For personal use only S ti 5 Section Funds Management Cromwell Property Group – 1H12 Results 23
Slide 24: Funds Management – Organic Growth
GROWTH Funds Management – Organic Growth For personal use only | Cromwell intends to continue to grow its funds management business Æ Origins in retail funds management Æ Have raised over $900m for unlisted funds, with the majority merged in FY07 to form Cromwell Property Group Æ 4 existing retail f
Slide 25: Cromwell Ipswich City Heart Trust
GROWTH Cromwell Ipswich City Heart Trust For personal use only | The Ipswich City Heart Building, due to be completed in September 2013, is Artist’s impression the first stage of the Ipswich City Heart ICON Masterplan being developed by Leighton in partnership with the Ipswich City Council | The bui
Slide 26: Cromwell Ipswich City Heart Trust
GROWTH Cromwell Ipswich City Heart Trust For personal use only | Equity raise of $49m for Ipswich City Heart Trust expected to be completed by Artist’s impression 30 June 2012 | Asset specific debt facility of $49m in place | Attractive offering given yield, growth, WALT and tenant quality | Cromwel
Slide 27: Cromwell Real Estate Partners
GROWTH Cromwell Real Estate Partners For personal use only | Cromwell Real Estate Partners based in our expanded Sydney office | Boutique real estate funds management enterprise which complements Cromwell’s existing platform | Partnership with highly credentialed, experienced management team with so
Slide 28: Outlook & Guidance
For personal use only S ti 6 Section Outlook & Guidance Cromwell Property Group – 1H12 Results 28
Slide 29: Summary
GROWTH Summary For personal use only | Highly defensive investment with attractive growth potential Æ 100% of 1H12 earnings g derived from recurrent earnings g Æ Strong and secure capital structure Æ Targeting 4% growth in annual net property income | A number of achievements made during 1H12, deliv
Slide 30: Summary
GROWTH Summary For personal use only | Solid earnings base | Targeting medium-term growth in NTA and operating earnings per security Æ Recurring g earnings g currently y >95% Æ Will benefit from improving p g valuations Æ WALT of 6.3 years, quality tenant Æ Will continue disciplined approach to tran
Slide 31: Contacts
Contacts For personal use only Paul Weightman Cromwell Property p y Group p Chief Executive Officer Level 19, 200 Mary Street Ph: +61 7 3225 7720 Brisbane QLD paul.weightman@cromwell.com.au Phone: +61 7 3225 7777 Facsimile: +61 7 3225 7788 Daryl Wilson WWW.CROMWELL.COM.AU Chief Financial Officer Cro
Slide 32: Appendix: Additional Information
For personal use only A Appendix di Additional Information Cromwell Property Group – 1H12 Results 32
Slide 33: Investment Portfolio – Summary
Investment Portfolio – Summary For personal use only | Top 10 assets account for 77% of portfolio with occupancy of 99.9% and a WALT of 7.3 years Top 10 Property Assets Asset Location Class Valuation Date Cap Rate Occupancy WALT Review Major Tenants Fortitude Valley, Valley AECOM, Bechtel AECOM Bech
Slide 34: Top tenants
Top 20 tenants For personal use only Tenantt T B ildi Building Tenantt Classification T Cl ifi ti % off TTotal t l P Portfolio tf li GGross IIncome Commonwealth of Australia Dept of FaCSIA Tuggeranong Office Park Government 11.5% Qantas Airways Limited Qantas Global Headquarters Aviation 8.4% Origin
Slide 35: Property Portfolio – Focus on Sustainability
Property Portfolio – Focus on Sustainability For personal use only | Cromwell has adopted Global Reporting Initiative (GRI) G3 guideline as the framework for reporting on the Group’s environmental, economic and social performance | Governance Æ Since 2007, Cromwell has applied the National Australia
Slide 36: Net Property Income
Net Property Income For personal use only 1H11 1H12 Variance 1H11 1H12 Variance ($’000) ($’000) (%) ($’000) ($’000) (%) Tuggeranong Office Park, Greenway ACT 9,464 9,552 0.9% Elders Woolstore, Gillman SA 639 671 4.9% National Circuit, Barton ACT 1,376 1,373 (0.2%) Masters Distribution Centre, Hopper
Slide 37: Reconciliation between Operating and Statutory Earnings
Reconciliation between Operating and Statutory Earnings For personal use only 1H 11 1H12 1H11 (cents per 1H12 (cents per ($’000) security) ($’000) security) Profit from operations 32,867 3.7 36,978 3.8 Gain/(loss) on sale of investment properties 6 N/A - Gain/(loss) ( ) on sale of available-for-sale
Slide 38: Detailed Balance Sheet
Detailed Balance Sheet For personal use only Jun 11 Jun-11 Dec-11 Dec 11 Pro-Forma Pro Forma Pro-Forma Pro Forma ($’000) ($’000) Adjustments Dec-11 ($’000) ASSETS Cash and cash equivalents 46,572 28,483 36,955 65,438 Investment properties 1,444,850 1,663,920 63,483 1,727,403 Investment in associates
Slide 39: Glossary
Glossary For personal use only 1H The period from 1 July to 31 December 2H The period from 1 January to 30 June ASX Australian Securities Exchange Bundall Corporate Centre The land and buildings at Corporate Court, Bundall, QLD CCL Cromwell Corporation Limited CFM Cromwell Funds Management Limited C
Slide 40: For personal use only
For personal use only wellll versedd well timed well considered Cromwell Property Group – 1H12 Results 40
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