Cromwell Property Group · ASX:CMW
Cromwell Property — Merger or Acquisition (January 2015)
54 slides from Cromwell Property's merger presentation, Jan 27, 2015
Slide 1: Valad Europe Acquisition and Convertible Bond Issue
For personal use only Cromwell Property Group Valad Europe Acquisition and Convertible Bond Issue January 2015
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer This presentation and its appendices ("Presentation") is dated 27 January any potential investor should participate in the offer of Bonds referred to in the acquisition referred to in this Presentation and the use of proceeds. For personal use only 2015 and has bee
Slide 3: Contents
Contents For personal use only Overview Valad Europe Overview Transaction Overview Convertible Bond Terms and Timetable Appendices Overview of Cromwell Pro forma Balance Sheet and Capital Management Valad Europe Management Profiles A$ vs. Euro Key Risks CMW - Valad Europe Acquisiti
Slide 4: Overview
For personal use only S ti 1 Section Overview CMW - Valad Europe Acquisition and Convertible Bond Issue 4
Slide 5: Overview
Overview1 For personal use only Acquisition Cromwell has entered into a conditional2 share purchase agreement to acquire Valad Europe from a Blackstone managed fund and Valad Europe senior management (Acquisition) Pan European real estate investment manager, managing approx. €5.3 billion3 (A$7.6
Slide 6: Why Valad Europe?
Why Valad Europe? For personal use only Why Europe? Greater scope for investment in Europe vs. Australia for funds management at current time Attractive time in the cycle to enter Europe with strong opportunities and competitive advantage Limited capital / balance sheet exposure Provides div
Slide 7: Why Valad Europe?
Why Valad Europe? For personal use only Scale and critical Pan European platform with local on the ground presence through 22 offices in 13 countries mass platform Full suite of funds management services including asset management, property management, acquisitions and disposals, development man
Slide 8: Valad Europe Overview
For personal use only S ti 2 Section Valad Europe Overview CMW - Valad Europe Acquisition and Convertible Bond Issue 8
Slide 9: Valad Europe overview
Valad Europe overview For personal use only The acquisition of Valad Europe provides an opportunity to acquire an established, well respected business with a strong cultural and strategic fit with Cromwell Platform Product and service lines Financial snapshot €5.3 €5 3 (A$7 (A$7.6) 6) billion of
Slide 10: Wide range of investment mandates and investors
Wide range of investment mandates and investors For personal use only Broad asset base across multiple mandates Diverse range of quality investors and partners Others CEE 23% Office 32% 6% Private equity 15% Germany 20% Multi managers 43% SWFs Retail R t il 23% 6% UK 18% Industrial 20% Nordics 14% L
Slide 11: Valad Europe financial metrics
Valad Europe financial metrics For personal use only Strong level of recurring fee income1 Acquisition valuation metrics Other2 € millions A$ millions 1 Accounting 17% Funds management 110.0 158.1 7% Disposal 12% Co-investment stakes 23.0 33.1 Performance fees 2 12.0 17.3 Total purchase price 145.0
Slide 12: Fully integrated suite of services
Fully integrated suite of services For personal use only Valad Europe offers a fully integrated suite of services to its investors and banking partners The Valad Europe team and business are closely aligned with investors through fund/mandate performance related fee structures Development p Tran
Slide 13: Fund types
Fund types For personal use only Valad Europe offers a variety of different investment strategies depending on the opportunities and the preference of individual investors, investors banks or investor clubs Value-add REIM Mandates (Bank workouts) Enhanced returns in exchange g for higher g levels
Slide 14: Existing funds and mandates
Existing funds and mandates For personal use only 24 mandates spanning a broad range of geographies and sectors totaling €3.8 billion AUM F d / mandates Funds d t AuM (€m))1 A M (€ R i Region S t Sector VPRF 568 Poland Retail V+ Nordic 214 Nordic Diversified V+ Nordic 2 147 Nordic Diversified Value
Slide 15: Available investment capacity
Available investment capacity For personal use only Valad Europe currently has investment capacity of approximately €1.5 billion 1 (A$2.2 billion) spanning 8 regions within Europe New products, products potential mandates mandates, bank workout projects and corporate opportunities are generated
Slide 16: Strategy for Valad Europe post Acquisition
Strategy for Valad Europe post Acquisition For personal use only Investment of Valad Europe currently has unallocated, committed investment capacity of approximately €1.5 billion available il bl capital it l This capital is intended to be invested over the next 2 years under existing mandates Ne
Slide 17: Strong and stable management team
Strong and stable management team For personal use only Led by Martyn McCarthy and David Kirkby, both of whom have significant experience in the property and funds management industries As part of the Acquisition, Cromwell will retain the existing management and remuneration structure Strongly
Slide 18: Transaction Overview
For personal use only S ti 3 Section Transaction Overview CMW - Valad Europe Acquisition and Convertible Bond Issue 18
Slide 19: Transaction structure and key terms
Transaction structure and key terms For personal use only Key Transaction Terms C Cromwell ll P Property t GGroup ‐ stapled t l d security it The Acquisition will be made by a newly created subsidiary of Cromwell Property Group – Cromwell European Holdings Limited CCL DPT The convertible bond is
Slide 20: Transaction impact on Cromwell
Transaction impact on Cromwell For personal use only CMW Pro Forma Operating Earnings Split CMW Pro Forma Operating Earnings Split Assets Under Management by Type 2 by Source of Income1 By Geography1 Pre Pre 14,000 0.6% 11,159 4.6% 12,000 324 10,000 Property securities 8,000 External direct 6,000 8,
Slide 21: Sources and application of funds
Sources and application of funds1 For personal use only The Acquisition is expected to be funded using the proceeds from the issue of Euro denominated convertible bonds Cromwell currently has cash of approximately $190 million2 leaving funding capacity for future growth opportunities both with e
Slide 22: Acquisition process and due diligence
Acquisition process and due diligence For personal use only 2010 July Early Mid Late Early Mid Late by 9 April 2014 September September October December December January 2015 Cromwell Initial Process Indicative EOI First round Second round Third round Due diligence Anticipated investigated discussio
Slide 23: Convertible Bond Terms and Timetable
For personal use only Section 4 Convertible Bond Terms and Timetable CMW - Valad Europe Acquisition and Convertible Bond Issue 23
Slide 24: Key Convertible Bond terms
Key Convertible Bond terms For personal use only Issuer Cromwell SPV Finance Pty Ltd Cromwell Corporation Limited (“CCL”) ( CCL ) and Cromwell Property Securities Limited in its capacity as responsible Guarantors entity (the “RE”) of Cromwell Diversified Property Trust (“CDPT”) Convertible into Crom
Slide 25: Acquisition and Convertible Bond issue timetable
Acquisition and Convertible Bond issue timetable For personal use only Key Event Date1 Trading Halt Tuesday, 27 January 2015 Announcement of Acquisition and Convertible Bond issue Tuesday, 27 January 2015 C Convertible tibl BBondd offer ff T d 27 January Tuesday, J 2015 Trading recommences Wednesday
Slide 26: Appendix A: Overview of Cromwell
For personal use only A Appendix di A Overview of Cromwell CMW - Valad Europe Acquisition and Convertible Bond Issue 26
Slide 27: Cromwell Property Group snapshot post Transaction
Cromwell Property Group snapshot post Transaction For personal use only Cromwell has evolved organically over 15 years Cromwell Listed fund manager recapitalised by existing Property management in 1998 Group REIT structure created through stapling and merger of unlisted funds in 2006 Market ca
Slide 28: Robust property portfolio
Robust property portfolio1 For personal use only Geographic Sector Tenant Diversification2 Diversification2 Classification2 2.4% 1.2% 1.1% ACT 7.5% 19.2% 19.4% NSW 3 Government Authority QLD Office 26.3% VIC Retail 50.8% Listed Company/Subsidary TAS 29.8% Private Company 43.5% SA 98.8% % of Gross
Slide 29: Property portfolio – top assets
Property portfolio – top 10 assets1 For personal use only Book Asset State Class Value Cap Rate Occupancy WALE Major Tenants Qantas Global Headquarters NSW Office $335.0m 6.75% 100.0% 17.1 yrs Qantas HQ North Tower QLD Office $197.5m 7.75% 99.8% 4.2 yrs AECOM, Bechtel, Technology One 207 Kent Street
Slide 30: Property portfolio – acquisitions added significant value
Property portfolio – acquisitions added significant value For personal use only Recent acquisitions have generated significant value NSW Government Portfolio ($405m) Health & Forestry House Buildings, QLD ($65m) Acquisition Unlevered Property IRR’s Asset Date Post Acquisition Costs1 207 Kent S
Slide 31: Property portfolio – attractive returns on asset sales
Property portfolio – attractive returns on asset sales For personal use only Acquisition Sale Price Price Acquisition (net proceeds) Sale Properties sold over past three years ($'000) Date ($'000) Date IRR 321 Exhibition Street, VIC 90,200 Aug 10 205,920 Aug 14 14.7% 180 Holt Street, Pinkenba, QLD 1
Slide 32: Funds management – External AUM now $9.0bn
Funds management – External AUM now $9.0bn1,2 For personal use only Unlisted Property Trusts Oyster Property Group – New Zealand 7 funds with AUM of approximately $704m Purchase of 50% stake in 2014 4 closed syndicates AUM of approximately $NZ693m 2 diversified open funds 1 wholesale
Slide 33: Strategy remains unchanged
Strategy remains unchanged For personal use only Objective is to provide defensive, superior risk adjusted returns from commercial properties we own and manage Maintain a property portfolio that provides a balance between defensive investments and assets that can be improved or repositioned with
Slide 34: Consistent strategy delivers consistent outperformance
Consistent strategy delivers consistent outperformance For personal use only Cromwell has significantly outperformed the S&P/ASX 300 A-REIT Accumulation Index Outperformance p of 7.2%, 10.2% and 21.8% p per annum over 3, 5 and 10 yyears2 Cromwell Performance June 2014 Direct Property Returns (An
Slide 35: Appendix B: Pro Forma Balance Sheet and Capital Management
For personal use only A Appendix di B Pro Forma Balance Sheet and Capital Management CMW - Valad Europe Acquisition and Convertible Bond Issue 35
Slide 36: Pro forma balance sheet
Pro forma balance sheet1 For personal use only CMW Pro Forma Balance Sheet Notes: Actual Exhibition St Interest Rate Pro Forma Valad Europe Pro forma 1) A$:EUR exchange rate of 30-Jun-14 30 Jun 14 Sale Cap3 30-Jun-14 30 Jun 14 Impact4,5 30-Jun-14 30 Jun 14 0.6956 A$'000 A$'000 A$'000 A$'000 A$'000 A
Slide 37: Pro forma debt facilities
Pro forma debt facilities For personal use only Facilities are diversified across 8 lenders and the Convertible Bond issue with varying maturity dates Weighted average debt expiry of 3 3.8 8 years Debt Expiry p y Profile1 $600M $44M Australian Major Banks $19M $500M $111M $400M Other Australian
Slide 38: Pro forma hedging profile
Pro forma hedging profile For personal use only Interest rates for $1.2bn of debt are effectively hedged until May 2019 New interest rate cap entered into in Aug 2014 initially over $32.7m increasing to $1bn by December 2017 Cromwell maintains benefit whilst variable interest rates remain belo
Slide 39: Pro forma interest rate hedging
Pro forma interest rate hedging For personal use only Targeting lower interest rates again in FY15 Weighted average hedge term of 4.5 years Weighted average margin of 1 1.3% 3% Long-term Long term cap expiry in May 2019 Expect average interest rates on existing debt to be 5 yr Convertibl
Slide 40: Appendix C: Valad Europe Management Profiles
For personal use only A Appendix di C Valad Europe Management Profiles CMW - Valad Europe Acquisition and Convertible Bond Issue 40
Slide 41: Valad Europe management profiles
Valad Europe management profiles For personal use only In his role as Executive Chairman of Valad Europe, Martyn has worked with the executive team and sits on various mandate Boards providing strategic direction and new business introductions. Having been involved with Valad Property Group since 20
Slide 42: Valad Europe management profiles
Valad Europe management profiles For personal use only Christian Joined Valad Europe in 2010 as Head of Corporate Development. He leads new business initiatives on corporate acquisitions acquisitions, fund takeovers takeovers, and matching capital partners with real estate acquisition opportunities
Slide 43: Appendix D: A$ vs. Euro
For personal use only A Appendix di D A$ vs. Euro CMW - Valad Europe Acquisition and Convertible Bond Issue 43
Slide 44: Historical A$:€ exchange rate
Historical A$:€ exchange rate For personal use only AUDEUR Exchange Rate 0.85 0.80 0.75 0.70 0.65 0.60 Source: Bloomberg CMW - Valad Europe Acquisition and Convertible Bond Issue 44
Slide 45: Appendix E: Key Risks
For personal use only A Appendix di E Key Risks CMW - Valad Europe Acquisition and Convertible Bond Issue 45
Slide 46: Key risks – Convertible Bonds
Key risks – Convertible Bonds For personal use only There is a lack of public market for the Bonds The Issuer or the Cromwell Property Group may in the future incur Bonds in cash. Approval in-principle has been given for the listing of the Bonds on the further indebtedness and other liabilities. The
Slide 47: Key risks – Convertible Bonds
Key risks – Convertible Bonds For personal use only No rights as Bondholders of Stapled Securities until conversion of Government and monetary authorities may impose (as some have done The Trustee may request Bondholders to provide an indemnity the Bonds in the past) exchange controls that could adv
Slide 48: Key risks – Acquisition
Key risks – Acquisition For personal use only Due diligence on Valad Europe adversely affect the Valad Europe’s operations and the expected significant expansion of the Cromwell Property Group's current The Cromwell Property Group and its advisers have performed certain benefits of the Valad Acquisi
Slide 49: Key risks – Cromwell Property Group
Key risks – Cromwell Property Group For personal use only Future acquisitions the market value of properties may be adversely affected by a number As a result, the Cromwell Property Group can have significant non-cash The Cromwell Property Group proposes to acquire further properties or of factors,
Slide 50: Key risks – Cromwell Property Group
Key risks – Cromwell Property Group For personal use only Unforeseen capital expenditure and other costs which may be required as a result of future change. The Cromwell Property Group’s income and asset values. This is There is a risk that the Cromwell Property Group’s properties will require Cromw
Slide 51: Key risks – Cromwell Property Group
Key risks – Cromwell Property Group For personal use only Investment in funds and joint ventures • competing development projects adversely affecting the overall return Interest rates and financial instruments The Cromwell Property Group expects to hold interests in, and provide achieved. Adverse fl
Slide 52: Key risks – General
Key risks – General For personal use only Changes in accounting policy impact returns and the ability of the Cromwell Property Group to meet insured economically. A force majeure event may adversely affect the The Cromwell Property Group must report and prepare financial obligations under financing
Slide 53: Key risks – General
Key risks – General For personal use only Counterparty/credit impact earnings or affect the value of the Cromwell Property Group’s Counterparty credit risk is the risk of a loss being sustained by the assets or securities. Cromwell Property Group as a result of payment default or non- Occupational,
Slide 54: For personal use only
For personal use only well versed well timed well considered
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