Cromwell Property Group · ASX:CMW
Cromwell Property — Investor Presentation (December 2012)
45 slides from Cromwell Property's investor presentation, Dec 7, 2012
Slide 1: Equity Raising
For personal use only Equity Raising December 2012 * Artists impression only Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Information & Disclaimer
Important Information & Disclaimer For personal use only Disclaimer specific payments of commissions for the authorised services provided under its including possible delays in repayments and loss of income and principal invested. This presentation and its appendices ("Presentation") is dated 7 Dece
Slide 3: Contents
Contents For personal use only Overview Box Hill Trust Equity Raising Summary of key risks Appendix pp A – Pro forma balance sheet and capital p management g Appendix B – Portfolio summary Appendix pp C – Key y risks Appendix D – International selling restrictions Glossary Cromwell
Slide 4: Overview
For personal use only S ti 1 Section Overview Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3
Slide 5: Overview
Overview 1 For personal use only Equity Underwritten placements of New Securities up to $143m to seed the Box Hill Trust, reduce debt and provide Raising additional working capital $103m placement to existing and new institutional investors; and $40m placement to Redefine2 (together, the Place
Slide 6: Benefits of the Equity Raising
Benefits of the Equity Raising For personal use only Strengthened Reduction in Gearing to 45% balance sheet Future acquisitions to be funded through a combination of equity, debt and other capital recycling opportunities Expansion of funds The Equity Raising provides additional capital to supp
Slide 7: Investment strategy
Investment strategy For personal use only Consistent, focused Focus on CBD, CBD fringe and established suburban markets investment strategy Maintain defensive portfolio characteristics of strong tenant covenant, long WALE and fixed growth Active recycling programme to secure returns, improve p
Slide 8: Strategy and performance
Strategy and performance For personal use only Strategy 100% Australian, defensive, high quality office portfolio in CBD, CBD fringe and established suburban markets Superior risk adjusted returns through active management Asset recycling strategy to capture returns, returns manage risk and in
Slide 9: Cromwell peer group comparison
Cromwell peer group comparison For personal use only Cromwell offers superior yields compared to its peer group Expected pro forma FY13 EPS yield of 9.6% at the issue price of $0.785 Expected pro forma FY13 DPS yield of 9.2% at the issue price of $0.785 FY13 pro forma EPS yield1 FY13 pro forma
Slide 10: Yield spread expected to drive NTA growth
Yield spread expected to drive NTA growth For personal use only Compression in valuation cap rates expected moving forward, providing potential upside to NTA and Gearing Australian 10 year bond yields and interest rates are currently close to historic lows despite the relatively strong economy N
Slide 11: Box Hill Trust
For personal use only S ti 2 Section Box Hill Trust Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 10
Slide 12: Box Hill Trust
Box Hill Trust For personal use only Box Hill Trust, an unlisted property trust, is expected to build on the strong momentum of ICHT, which closed early and oversubscribed $67m Box Hill Trust equity raise from retail investors expected to be launched in December 2012 and completed during 2013
Slide 13: Box Hill property
Box Hill property For personal use only A new 20 level office building being developed by Grocon will be constructed comprising 19,000 sqm of office space, 680 sqm of retail space and 300 car parking spaces The project is located on Whitehorse Road, Box Hill, Melbourne Completion expected in M
Slide 14: Equity Raising
For personal use only S ti 3 Section Equity Raising Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 13
Slide 15: Equity Raising structure
Equity Raising structure For personal use only Pl Placements t U d Underwritten itt Placements Pl t to t raise i up tto $143 million illi ini two t tranches: t h $103 million offer to existing and new institutional investors $40 million to be subscribed for by Redefine (represents approximatel
Slide 16: Offer pricing
Offer pricing For personal use only New Securities will be offered at $0.785 per Security Issue price metrics 8.7% discount to last closing price1 Issue price $0.785 7.5% discount to 5 day VWAP2 Discount to last close 8.7% Based on the issue price of $0.785 and EPS and DPS guidance for FY13,
Slide 17: Sources and application of funds
Sources and application of funds For personal use only $143 million of proceeds will initially be applied to debt reduction and working capital Cromwell expects to utilise its strengthened balance sheet to take advantage of future acquisition opportunities Sources Applications Placements $143m B
Slide 18: Placements timetable
Placements timetable For personal use only Key Event Date1 Trading halt Friday, 7 December 2012 Announcement of Placements Friday, 7 December 2012 Securities recommence trading Monday, 10 December 2012 Settlement of Placement New Securities Thursday, 13 December 2012 Allotment of and normal trading
Slide 19: Summary of key risks
For personal use only S ti 4 Section Summary of key risks Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 18
Slide 20: Summary of key risks
Summary of key risks For personal use only Due diligence Interest rates and financial instruments B Hill TTrustt equity Box it raising i i D bt covenants Debt t Future acquisitions Environmental matters Competition Inflation E it raising Equity i i I Insurance Change in value a
Slide 21: Appendix A: Pro forma balance sheet and capital management
For personal use only A Appendix di A Pro forma balance sheet and capital management Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 20
Slide 22: Pro forma balance sheet
Pro forma balance sheet For personal use only Post Balance Date Equity Raising A$m 30-Jun-12 June 12 Pro Forma June 12 Pro Forma Adjustments Adjustments2 Cash and Cash Equivalents 59.2 (1.7) 57.4 100.1 157.5 Loans Receivable - Associates 36.6 (23.9) 12.8 16.0 28.8 Investment Properties 1,724.4 168.4
Slide 23: Debt facilities
Debt facilities For personal use only Diversified across a syndicated facility and six bilateral facilities Lenders comprise major Australian banks and one offshore bank Weighted average debt maturity of 2.5 years with weighted average margin of 2% No material maturities until FY14 Discuss
Slide 24: Interest rate hedging extended at lower rates
Interest rate hedging extended at lower rates For personal use only Hedge profile extended to take advantage of favourable interest rate conditions, at no cost Average g hedged g borrowingg rate reduced byy 0.2% from November 2012 Weighted average hedge term increased from 2.6 years to 3.25 ye
Slide 25: Appendix B: Portfolio summary
For personal use only A Appendix di B Portfolio summary Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 24
Slide 26: Cromwell investment portfolio snapshot
Cromwell investment portfolio snapshot For personal use only Collins St, VIC Exhibition St, VIC 25.0% 23.2% 4.9% 19.9% 26.2% Qantas HQ, NSW HQ North, QLD 0.8% Chatswood Towers, NSW Synergy, QLD Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 25
Slide 27: Continued portfolio repositioning
Continued portfolio repositioning For personal use only Since June 2008, Cromwell has successfully: Transactions since June 2008 Acquired 5 assets (exc. CPF Properties) with a value of Purchased Assets Date Price Cap Rate WALE $811m and a WALE of 12.7 years Bundall Corporate Centre, QLD Mar-12 $
Slide 28: Secure income stream - minimal short term lease expiries
Secure income stream - minimal short term lease expiries For personal use only Lease Expiry Profile % Gross Income Average of only 5.9% p.a. lease expiry FY13 – FY15 Terms agreed for La Trobe Street vacancy 70% 1 4% 1.4% Latrobe St 62% VIC 60% 100 Waymouth Street $12m refurbishment commenced 1
Slide 29: Top tenants
Top 20 tenants For personal use only CMW Top 20 Tenants % of Total Portfolio Tenant Building Tenant Classification Gross Income Commonwealth of Australia Tuggeranong Office Park Government 10.8% Qantas Airways Limited Qantas Global Headquarters Aviation 7.9% Origin Energy Services Limited 321 Exhibi
Slide 30: Appendix C: Key risks
For personal use only A Appendix di C Key risks Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 29
Slide 31: Key risks
Key risks For personal use only Due diligence Competition Change in value and income of investment properties It is possible that the due diligence undertaken to date on Box Hill has The value of property held by Cromwell may be negatively affected Returns from investment properties largely depend o
Slide 32: Key risks
Key risks For personal use only Changes in accounting policy Funding Environmental matters Cromwell must report and prepare financial statements in Property investment is highly capital intensive. The ability of Cromwell is exposed to a range of environmental risks which may accordance with prevaili
Slide 33: Key risks
Key risks For personal use only Leasing and tenant defaults Development Realisation of assets Tenants may default on their rent or other contractual obligations, Cromwell is involved in the development and refurbishment of Property assets are by their nature illiquid investments. This may leading to
Slide 34: Key risks
Key risks For personal use only Employees Cromwell is reliant on retaining and attracting quality senior executives and other employees. The loss of the services of any senior management or key personnel, or the inability to attract new qualified personnel, could adversely affect Cromwell’s operatio
Slide 35: Appendix D: International selling restrictions
For personal use only A Appendix di D International selling restrictions Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 34
Slide 36: International selling restrictions
International selling restrictions For personal use only New Zealand United States This Presentation does not constitute a prospectus or investment statement and This Presentation may not be distributed or released in the United States has not been registered, filed with or approved by any New Z
Slide 37: International selling restrictions
International selling restrictions For personal use only United Kingdom This Presentation has not been approved pp byy a pperson authorised under the United Kingdom g Financial Services and Markets Act 2000 (("FSMA")) and its distribution in the United Kingdom is only being made to persons in circ
Slide 38: International selling restrictions
International selling restrictions For personal use only Ireland This Presentation and any other related material relating to Cromwell do not, of themselves, or in conjunction with any other material, constitute i. a prospectus within the meaning of the Companies Act 1963 or Part 5 of the Investme
Slide 39: International selling restrictions
International selling restrictions For personal use only Hong Kong Important information for "professional" and other legally permitted Hong Kong investors: WARNING The contents of this Presentation have not been reviewed or approved by any regulatory authority in Hong Kong. Recipients are adv
Slide 40: International selling restrictions
International selling restrictions For personal use only Singapore The offer or invitation which is the subject of this Presentation is only allowed to be made to the persons set out herein. This Presentation has not been, and will not be, registered as a prospectus in Singapore with the Monetar
Slide 41: International selling restrictions
International selling restrictions For personal use only Jersey Netherlands This Presentation relates to a private placement and does not constitute an The New Securities will only be offered, sold, transferred or delivered at any offer to the public in Jersey to subscribe for Securities offered
Slide 42: International selling restrictions
International selling restrictions For personal use only Norway This Presentation has not been approved by, or registered with, any Norwegian securities regulators pursuant to the Norwegian Securities Trading Act of 29 June 2007, as amended. d d Thi This P Presentation t ti andd any other th mater
Slide 43: International selling restrictions
International selling restrictions For personal use only South Africa Placement This Presentation does not constitute a solicitation for investments from members of the public in terms of the Collective Investment Schemes Control Act 45 of 2002; or an offer for the sale of or subscription for, or
Slide 44: Glossary
Glossary For personal use only $ All dollar values are in Australian dollars NLA Net lettable area AEDST Australian Eastern Daylight Savings Time NTA Net tangible assets per Security Australian Securities Exchange or ASX Limited or the financial p.a. p Per annum ASX market which it operates as the c
Slide 45: For personal use only
For personal use only well versed well timed well considered * Artists impression only Cromwell Property Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
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