Cromwell Property Group · ASX:CMW
Cromwell Property — HY21 Earnings Presentation
53 slides from Cromwell Property's earnings presentation, Feb 25, 2021
Slide 1: ASX announcement cover letter: HY21 Results Presentation
Thursday 25 February 2021 ASX Market Announcements Office Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Cromwell Property Group (ASX:CMW) HY21 Results Presentation I attach a copy of Cromwell Property Group’s HY21 Results Presentation. Yours faithfully CROMWELL PROPERTY GROUP LUCY
Slide 2: HY21 Results Presentation
HY21 RESULTS PRESENTATION 25 February 2021 CROMWELL PROPERTY GROUP
Slide 3: Important Information & Disclaimer
Important Information & Disclaimer This presentation including its appendices they deem necessary or consider appropriate for their Fund ARSN 165 011 905 (DPF), Cromwell Ipswich City (Presentation) is dated 25 February 2021 and has particular jurisdiction. Heart Trust ARSN 154 498 923 (ICH), Cromwel
Slide 4: Agenda
Agenda Introduction and Highlights Acting CEO Michael Wilde Financial and Capital Management Acting CFO Brett Hinton Direct Property Portfolio Head of Property Bobby Binning Investment Management CIO Rob Percy Retail Funds Management Head of Retail Funds Management Hamish Wehl Outlook Acting CEO Mic
Slide 5: Overview
Overview CROMWELL PROPERTY GROUP
Slide 6: Cromwell Property Group Overview
Cromwell Property Group Overview Overview: All group statistics as at 31 December 2020 BroadPortfolio and Deep Property Platform Geographic and Culturally Diverse Team Global Portfolio by Sector and Geography Assets Under Management (AUM) - by Sector $11.6 billion 3.3% AUM 2.8% 440+ 13.4% Office Ret
Slide 7: Strategy Summary
Strategy Summary Overview Core Defensive government base, long WALE, strong covenants, low capex and structured growth Direct Property Core+ Generate leasing upside and take advantage of short term market trends Investment Active Drive outperformance from repositioning and asset enhancement or alter
Slide 8: HY21 Summary
HY21 Summary Overview Earnings and Distributions Platform Financial Position Statutory profit1 Direct Property Investment NTA per unit $146.8 million $3.0 billion value Liquidity3 Equivalent to 5.59 cps 5.5% WACR and 6.3 year WALE $1.0 billion development pipeline $1.00 $610 million (FY20 $0.99) Ind
Slide 9: COVID-19 HY21 Tenant-Customer Negotiations
COVID-19 HY21 Tenant-Customer Negotiations Overview Direct Property Investment Portfolio HY21 COVID-19 position – Australian portfolio $160.0 National Code of Conduct required landlords to provide rent $133.4 $140.0 $124.4 relief to SMEs impacted by COVID-19 $120.0 SMEs represent 8.7% of total g
Slide 10: COVID-19 HY21 Tenant-Customer Negotiations
COVID-19 HY21 Tenant-Customer Negotiations Overview Cromwell Polish Retail Fund (CPRF) Monthly Portfolio Footfall over Pandemic1 Footfall bounced back quickly to 80%+ after each lockdown 3.5 with overall footfall at 79% of 2019. Anecdotal evidence that 2019 2020 3.0 average spend per visit increas
Slide 11: COVID-19 HY21 Valuations Resilient
COVID-19 HY21 Valuations Resilient Direct Property Investment Segment Valuation impacts – Australia Valuation Impacts – Italy Valuation Impacts – Poland 99% of Australian balance sheet All Italian assets being warehoused All Polish assets being warehoused assets were externally, on balance she
Slide 12: Sustainability Supports Operational Resilience
Sustainability Supports Operational Resilience Overview Cromwell’s sustainability framework is comprised of five inter-connected pillars through which it addresses the material 1. Notice: The information provided is for informational, non-commercial purposes only, does not constitute investment advi
Slide 13: Strategic Priorities for 2021
Strategic Priorities for 2021 Overview “The management team is focused on executing our 2021 priorities, maintaining operational resilience and ensuring the business is in a strong position when a new permanent CEO is appointed,” Acting Cromwell CEO Michael Wilde Direct 1. Optimise performance of Co
Slide 14: Financial and Capital Management Update
Financial and Capital Management Update CROMWELL PROPERTY GROUP
Slide 15: HY21 Headline Results
HY21 Headline Results Financial and Capital Management Update Commentary HY21 Performance Versus PCP Statutory profit of $146.8 million, equivalent to 5.59 cps, a HY21 HY20 Change 35.4% reduction due to a lower fair value gain on investment properties versus the prior comparable period Statutory p
Slide 16: HY21 Segment Results
HY21 Segment Results Financial and Capital Management Update Commentary HY21 Segment Profit1 Versus Prior Comparable Period Direct Property Investment HY21 HY20 Change ($m) ($m) Segment profit of $77.1 million, a reduction on the prior comparable period which benefitted from the sale of Northpoint D
Slide 17: Strong Capital Position
Strong Capital Position Financial and Capital Management Update Debt Profile and Balance Sheet Group Gearing1 60.00 Target ‘through the cycle’ gearing of 30% – 40% with 55.00 liquidity to be used on a short term basis to execute the 50.00 ‘Invest to Manage’ strategy 45.00 40.00 Gearing is curren
Slide 18: Strong Capital Position
Strong Capital Position Financial and Capital Management Update Substantial Headroom to Covenants Facility Covenant Actual Limit Headroom (value) LVR 36.20% 60.00% $1.14 billion on Aggregate Value Senior Secured WALE 6.3 years 3.0 years 3.3 years Facility ICR 6.4 x 2.0 x $60.4 million on Net Operati
Slide 19: Direct Property Investment Segment
Direct Property Investment Segment CROMWELL PROPERTY GROUP
Slide 20: Property Portfolio Snapshot
Property Portfolio Snapshot (Australian properties only) Direct Property Investment Segment Key Core/Core+ Portfolio Metrics1 Core Properties Book value WACR WALE Occupancy NOI growth 10 $2.4 billion 5.26% 7.4 years 98.5% 4.6% Core+ Properties Book value WACR WALE Occupancy NOI growth 6 $0.6 billion
Slide 21: Back-to-the-office
Back-to-the-office Direct Property Investment Segment Tenant-Customer Focus Property Council CBD Back-to-the-office statistics Cromwell has been focused on providing safe workplaces for all tenant-customers in accordance with relevant guidelines 100% 96% 94% 94% 90% 90% 87% 86% Occupancy rates h
Slide 22: Portfolio Demonstrates Resiliency
Portfolio Demonstrates Resiliency Direct Property Investment Segment Occupancy and Leasing Status Cromwell Lease Expiry Profile1 Weighted Average Lease Expiry of 6.3 years (FY20 6.2 years) 70.00% 63.8% 60.00% Vacancy by gross passing income of 4.2% 50.00% Favourable future expiry profile with
Slide 23: Development Pipeline To Improve Portfolio Quality
Development Pipeline To Improve Portfolio Quality Direct Property Investment Segment Line-of-sight to c.$1.0 billion pipeline of new value add development opportunities 19 National Circuit, 700 Collins Street, Victoria Avenue, Confidential Projects Barton, ACT Melbourne VIC Chatswood NSW This proper
Slide 24: Indirect Property Investment Segment
Indirect Property Investment Segment CROMWELL PROPERTY GROUP
Slide 25: Segment Operating profit of $22.6 million
Segment Operating profit of $22.6 million Indirect Property Investment Segment Key Metrics Commentary Increase quality / resiliency of Book value AUM WALE Properties portfolio, with 75%+ in Western CEREIT €399 million €2.2 billion 4.6 years 96 Europe and 75%+ in office and light industrial / logisti
Slide 26: CEREIT – Outstanding COVID-19 Performance
CEREIT – Outstanding COVID-19 Performance Indirect Property Investment Segment Resilience and diversification Key statistics Sector diversification No blanket provisions for “rent relief” or across-the-board rent Book value (30.7%) waivers; less than €40,000 in rent abatements and fortnightly 6% t
Slide 27: LDK – Additional Greenfield Sites Identified
LDK – Additional Greenfield Sites Identified Indirect Property Investment Segment Seniors Living opportunity 50% ownership interest in LDK Healthcare (LDK) which has two operational villages (The Landings and Greenway Views) The Landings, a 220 home Seniors Living village on the Upper North Shor
Slide 28: CPRF – Opportunity for Capital Partners
CPRF – Opportunity for Capital Partners Indirect Property Investment Segment Commentary Key Statistics1 Valuation Details The portfolio contains six catchment Value (€m) Value (€m) WALE Occupancy dominating shopping or convenience Valuation Portfolio Dec 20 June 20 (years) (%) centres, plus a sign
Slide 29: CULF – Opportunity for Capital Partners
CULF – Opportunity for Capital Partners Indirect Property Investment Segment Commentary Key statistics During the half-year Cromwell, in partnership with Korean Valuation WALE WACR Assets Occupancy real estate investment manager, IGIS Asset Management, €54.5 10.2 settled on seven logistics assets
Slide 30: Funds and Asset Management Segment
Funds and Asset Management Segment CROMWELL PROPERTY GROUP
Slide 31: Segment Profit of $22.3 million
Segment Profit of $22.3 million Funds and Asset Management Segment Key Metrics Commentary Cromwell Funds Under Management Wholesale Significant opportunity FUM HY21 profit to scale post-COVID-19, 79% of platform $6.1 billion $7.9 million underpinned by longer term recurring capital Long term recurri
Slide 32: Europe – Executing through COVID-19
Europe – Executing through COVID-19 Funds and Asset Management Segment European Funds Management Update European FUM by Region (€ billion) €3.7 billion FUM with 78% underpinned by longer dated capital (FY20 €3.5 billion) Italy € 0.4 € 0.7 Transactional activity essentially stopped for six months
Slide 33: Europe – Executing through COVID-19
Europe – Executing through COVID-19 Funds and Asset Management Segment Announced acquisition of seven logistics assets in Italy for €51 million, with IGIS 29 Jul 2020 Asset Management Entered into partnership with Goldman Sachs to develop a sustainable 24,078 13 Aug 2020 sqm office building in Amste
Slide 34: Australia – Continued Investor Demand for Income
Australia – Continued Investor Demand for Income Funds and Asset Management Segment Retail Funds Management segment profit was $14.4 million and AUM was $2.1 billion, slightly lower ($2.2 billion FY20) due to the sale of the Rand Distribution Centre Cromwell Property Trust 12 The Rand Distributi
Slide 35: Australia – Continued Investor Demand for Income
Australia – Continued Investor Demand for Income Funds and Asset Management Segment Cromwell Direct Property Fund (DPF) Withdrawal event associated with the end of DPF’s initial seven-year term closed on 31 July 2020. Investors representing 90.1% of issued capital elected to continue with their in
Slide 36: New Zealand - Oyster Industrial Limited to Reopen
New Zealand - Oyster Industrial Limited to Reopen Funds and Asset Management Segment Total AUM at Oyster Group in New Zealand (50% interest) was essentially unchanged at NZ$1.9 billion (FY20 NZ$2.0 billion) Key recent activity Oyster Industrial Limited has contracted to purchase three additional
Slide 37: Outlook
Outlook CROMWELL PROPERTY GROUP
Slide 38: Global Economic Growth Hit by COVID-19
Global Economic Growth Hit by COVID-19 Outlook Global Economic Growth 2021 (Select) Forecast GDP Growth Rates 9.0 Major economies are expected to show strong positive 8.0 economic growth for 2021 after COVID-19 driven contractions 7.0 6.0 % in the previous year 5.0 4.0 Australia had two quarters
Slide 39: Australian Real Estate Snapshot
Australian Real Estate Snapshot Outlook Australian CBD Office Markets Total Australian CBD Office Vacancy (%) 25.0% Australian CBDs impacted by COVID-19 with occupancy 20.0% rates still substantially below pre-COVID-19 norms 20.0% 16.0% Sydney CBD (8.6%) and Melbourne CBD (8.2%) office 15.0% 13.
Slide 40: European Real Estate Snapshot
European Real Estate Snapshot Outlook European Commercial Real Estate Markets Investment Volumes by Sector 400 €76.2 billion was invested in the fourth quarter of 2020, 55% above the previous quarter and on par with the first quarter of 350 2020 bringing the total 2020 volume to €255 billion – onl
Slide 41: Outlook
Outlook Outlook FY21 Guidance For further information please contact: The roll out of vaccination programmes provides confidence that COVID-19 Michael Wilde impacts will gradually become more manageable over time Acting CEO However the economic and social impacts of the pandemic will continue to
Slide 42: Appendices
Appendices CROMWELL PROPERTY GROUP
Slide 43: Appendices Contents
Appendices Contents 43 HY21 Operating and Statutory Profit Reconciliation 44 Segment Result - Operating Earnings Detail 45 Balance Sheet 46 Property Portfolio - Top 10 Assets 47 Property Portfolio - Top 10 Leases 48-49 Property Portfolio - Net Property Income 50 Property Portfolio - Movement in Book
Slide 44: HY21 Operating and Statutory Profit Reconciliation
HY21 Operating and Statutory Profit Reconciliation Appendix HY21 ($M) HY20 ($M) Profit from operations 99.1 134.1 Operating EPS (cents per security) 3.79 cps 5.18 cps Gain on sale of investment properties 5.9 2.9 Loss on disposal of other assets - (2.8) Other transaction costs (7.8) (17.2) Restructu
Slide 45: Segment Results – Operating Earnings Detail
Segment Results – Operating Earnings Detail Appendix Direct Property Indirect Property Funds And Asset Half Year ending 31 December 2020 Investment Investment Management ($M) ($M) ($M) HY21 Segment revenue Rental income and recoverable outgoings 110.0 33.1 - 144.1 Operating profits of equity account
Slide 46: Balance Sheet
Balance Sheet Appendix HY210 ($M) FY20 ($M) Cash and Cash Equivalents 150.3 194.1 Investment Property 3,811.5 3,752.3 Equity accounted investments 717.7 718.0 Receivables 279.4 251.3 Other assets 80.1 74.8 Total assets 5,039.0 4,990.5 Interest bearing liabilities (2,234.7) (2,191.2) Derivative finan
Slide 47: Top Assets
Top 10 Assets1 Appendix Current Market Value Occupancy % Asset State Class ($M) Cap Rate by NLA WALE Major Tenants Qantas HQ NSW Office 540.0 5.13% 100.0% 10.9 years Qantas Airways Limited 400 George Street QLD Office 533.0 5.25% 94.0% 5.0 years QLD Government, Federal Government 700 Collins Street
Slide 48: Top Leases
Top 10 Leases1 Appendix Tenant-customer Tenant Classification Expiry Date % of Portfolio Rental Income Qantas Airways Limited Listed Company/Subsidiary Dec-32 16.0% Commonwealth of Australia (Dept of Social Services) Government Authority Sep-32 8.9% QLD State Government Government Authority Dec-26 8
Slide 49: Net Property Income
Net Property Income Appendix HY21 ($M) HY20 ($M) Variance ($M) Variance (%) Station Street, Penrith 1.5 1.5 0.0 0.0% McKell Building 6.8 6.9 (0.1) (1.4%) Crown Street, Wollongong 1.5 1.5 0.0 0.0% Bull Street, Newcastle 1.0 0.9 0.1 11.1% Qantas HQ 14.9 14.9 0.0 0.0% 700 Collins Street 8.5 8.3 0.2 2.4
Slide 50: Net Property Income
Net Property Income Appendix HY21 ($M) HY20 ($M) Variance ($M) Variance (%) ACQUISITIONS / DISPOSALS Cromwell Italy Urban Logistics Fund 1.0 - 1.0 N/A Cromwell Polish Retail Fund 14.6 5.8 8.8 151.7% Wakefield St, Adelaide 0.8 8.7 (7.9) (90.8%) Lovett Tower (0.2) (0.3) 0.1 (33.3%) Borrowdale House 0.
Slide 51: Movement In Book Value
Movement In Book Value Appendix Strategy of continuously improving portfolio through acquisitions since 2010 In-sourced facilities management model also lowers lifecycle capex HY21 FY20 FY19 FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M)
Slide 52: Balance Sheet Debt Details
Balance Sheet Debt Details Appendix Drawn Commitment Maturity Fin Yr Years Facility Covenants (AUD $M) (AUD $M) Date Expiry Remaining Jun-2023 Bank 1 - 5 Year Facility 100.0 100.0 2023 2.5 Bank 2 - 5 Year Facility - 250.0 Jun-2025 2025 4.5 Bank 3 - 5 Year Facility 179.0 250.0 Jun-2023 2023 2.5 Bank
Slide 53: Cromwell Property Group
CROMWELL PROPERTY GROUP