Cromwell Property Group · ASX:CMW

Cromwell Property — FY2016 Earnings Presentation

43 slides from Cromwell Property's earnings presentation, Aug 25, 2016

  1. Slide 1: FY16 Results Presentation

    FY16 Results Presentation 25 August 2016

  2. Slide 2: Important Information & Disclaimer

    Important Information & Disclaimer This presentation including its appendices appropriate for their particular jurisdiction. Cromwell Ipswich City Heart Trust ARSN 154 498 923 (Presentation) is dated 25 August 2016 and has been (ICH), Cromwell Phoenix Core Listed Property Fund Cromwell Property Grou

  3. Slide 3: FY16 Highlights

    Section 1 FY16 Highlights CMW - FY16 Results 3

  4. Slide 4: FY16 Highlights – Strong Year Benefits From Transactional Items

    FY16 Highlights – Strong Year Benefits From Transactional Items  Statutory profit1 of $329.6 million (FY15 $149 million) cps  Valuations up $250.3 million (equivalent to 14.3 cps) 9.50  $209 million in disposals realising a net gain on sale of $19.4 million (equivalent to 1.1 cps) 9.00 8.50  Ope

  5. Slide 5: FY16 Highlights – Profit Boosted By Funds Management

    FY16 Highlights – Profit Boosted By Funds Management  Property operating profit of $135.4 million  Like for like NOI income up 1.6% (excl. asset sales) FY16 FY15 Change  68 leasing deals completed FY16 for 97,000+ sqm Statutory profit ($m)1 329.6 148.8 122% Statutory profit (cents per security) 1

  6. Slide 6: FY16 Highlights – Financial Position Continues To Strengthen

    FY16 Highlights – Financial Position Continues To Strengthen Jun-16 Jun-15  Cash and cash equivalents of $95.6 million (Actual $’000) (Actual $’000) Assets  NTA increases to $0.81 due to increase in property Cash and Cash Equivalents 95,590 108,963 Investment Properties 2,224,530 2,098,750 valuati

  7. Slide 7: Property Portfolio

    Section 2 Property Portfolio CMW - FY16 Results 7

  8. Slide 8: Property Portfolio – Valuations Continue To Rise

    Property Portfolio – Valuations Continue To Rise  Fair value increase in investment property of $250.3 million net of property improvements, lease costs and incentives  Weighted Average Cap rate tightened by 0.84% to 7.05% (7.89% FY15)  Cap rates tighter than previous peak but spread to bond rate

  9. Slide 9: Property Portfolio – Tenant Quality Remains Robust

    Property Portfolio – Tenant Quality Remains Robust Geographic Sector Tenant Diversification1 Diversification1 Classification1 ACT 0.1% 9.0% 1.4% Government 19.0% 2 21.2% Authority NSW 27.0% Office 45.7% Listed QLD Retail Company/Subsidiary Other 45.0% VIC 33.1% Private Company 98.5%  Tenant profile

  10. Slide 10: Property Portfolio – Actively Managing Lease Expiry Risk

    Property Portfolio – Actively Managing Lease Expiry Risk  WALE of 6.34 years Lease Expiry Profile % Gross Income  Expiry profile cushioned against current soft conditions 60%  Average fixed review of 3.9% over 53% of 52.0% portfolio in FY17 50%  Average fixed review of 4.0% over 46% of portfolio

  11. Slide 11: Property Portfolio - Actively Managing Lease Expiry Risk

    Property Portfolio - Actively Managing Lease Expiry Risk  Solid leasing year with deals signed for 97,000 sqm or approximately 22% of the total portfolio  New leases for 34,000 sqm (8% of total portfolio)  Renewals for 63,000 sqm (14% of total portfolio) Leases Signed During Year  9,000+ sqm lea

  12. Slide 12: Property Portfolio – Future Lease Expiries FY17, FY18, FY19

    Property Portfolio – Future Lease Expiries FY17, FY18, FY19 Lease Expiries representing >1% income (FY17-FY19) % of Total Property Tenant Area (sqm) Expiry Date Portfolio rental Income FY17 TGA Complex Therapeutic Goods Administration 18,524 30-Jun-17 3.50% Health House * The State of Queensland Dep

  13. Slide 13: Property Portfolio – $300 million Investment For The Future

    Property Portfolio – $300 million Investment For The Future Tuggeranong Office Park, ACT  $172 million investment expected to be completed September 2017  Federal Government signed on 15 year lease over 30,000+ sqm  Also awarded the $42 million fitout due to commence in March 2017  Aiming for 5

  14. Slide 14: Funds Management

    Section 3 Funds Management CMW - FY16 Results 14

  15. Slide 15: Funds Management – Substantial Increase in Operating Profit

    Funds Management – Substantial Increase in Operating Profit  Wholesale Funds operating profit of $19.0 million ($2.6m FY15) Change in AUM ($bn)1  Retail Funds operating profit of $10.0 million ($1.4 million FY15)  Total AUM of $10.3 billion ($10.1 billion FY15)  Wholesale AUM of $5.6 billion ($6

  16. Slide 16: Funds Management – Wholesale Platform Building

    Funds Management – Wholesale Platform Building  Wholesale trust managing Northpoint to show similar results until redevelopment completed  €2.4 billion in assets traded in Europe, continuing with operational integration of European platform including new hires, new products and launch of single br

  17. Slide 17: Funds Management – Retail Generates Results For Investors

    Funds Management – Retail Generates Results For Investors  Retail Funds operating profit of $10.0 million and FUM of $1.7 billion  Significant transactional income from Cromwell Box Hill Trust asset ($7 million). Asset sold in September 2015 for $156 million following a unitholder vote, an 18.6% p

  18. Slide 18: Funds Management – Oyster Group Grows AUM 34%

    Funds Management – Oyster Group Grows AUM 34%  Oyster Group AUM grew in the twelve months to 30 June 2016 from NZ$733 million to NZ$983 million, an increase of NZ$250 million or 34%  Growth came from a broad range of initiatives  The NZ $100 million Cider building syndication closed fully subscri

  19. Slide 19: Capital Management and Operational Platform

    Section 4 Capital Management and Operational Platform CMW - FY16 Results 19

  20. Slide 20: Capital Management – Managing To Cycle and Opportunity

    Capital Management – Managing To Cycle and Opportunity  Cromwell’s strategy is to be able to access different CMW Group Gearing sources of capital at different points in the cycle  Interest rate exposure capped until May 2019  Current Cash and Cash Equivalents of $95.6 million  Group gearing1 of

  21. Slide 21: Capital Management – Diversified Debt Profile

    Capital Management – Diversified Debt Profile1  Facilities are diversified across eight lenders and a Convertible Bond issue with varying maturity dates  Weighted average debt expiry of 3.6 years with 86% not expiring until FY19 and beyond Debt Expiry Profile - Summary $700.00 Key Terms of Convert

  22. Slide 22: Capital Management – Interest Rate Hedging

    Capital Management – Interest Rate Hedging  Targeting lower interest rates again in FY17  Interest rates for $1.2bn are hedged or fixed until May 2019  Weighted average margin of 1.52% on all current facilities  Accreting interest rate cap entered into in August 2014 will cover $1bn by December

  23. Slide 23: Operational Platform – Sustainability Performance Improves

    Operational Platform – Sustainability Performance Improves GRESB Rankings  Cromwell has been reporting on its Sustainability performance since 2009  Sustainability is about who we are and what we strive to be i.e. our commitment to continuous improvement  Focus is on benchmarking against key glob

  24. Slide 24: Outlook

    Section 5 Outlook CMW - FY16 Results 24

  25. Slide 25: Outlook – Australian Economy Transitioning, Property Demand High

    Outlook – Australian Economy Transitioning, Property Demand High  Economic growth suppressed in near term due to end of mining boom and forecast fall in residential construction  Falling A$ from US$0.96 to US$0.75 is providing some offset by boosting tourism, education, exports, currency sensitive

  26. Slide 26: Outlook – Market Disruption, Opportunity in Europe

    Outlook – Market Disruption, Opportunity in Europe European Deal Volumes, 2007 – Q2 2016 (€ in billions) €350  Brexit has inserted some uncertainty into UK market, likely €300 to be volatility in short term until exit finalised €250  European transactions volumes softer in 2016, down from €200 pea

  27. Slide 27: Outlook – Strategic Benefits of European Platform

    Outlook – Strategic Benefits of European Platform  Breadth of Opportunity - 6/10 of largest Commercial Global Real Estate markets are in Europe comprising 35% of total global volume  Most liquid market in world, with cross-border capital accounting for 45% of transactions  European investors are

  28. Slide 28: Outlook – Strategy Remains Consistent And Conservative

    Outlook – Strategy Remains Consistent And Conservative cps  FY17 operating profit guidance of not less than 8.40 cps 9.40 9.00  FY17 distribution guidance of not less than 8.34 cps 8.60  Conservative assumptions that recognise the potential 8.20 downside risks including Brexit, China slowdown, US

  29. Slide 29: Contact Us

    Contact Us Paul Weightman Ross McGlade CEO / Managing Director Investor Relations Manager paul.weightman@cromwell.com.au ross.mcglade@cromwell.com.au Phone: +61 7 3225 7720 Phone: +61 2 8278 3613 Michael Wilde Jodie Clark Chief Financial Officer Chief Operations Officer michael.wilde@cromwell.com.au

  30. Slide 30: Additional Information

    Appendix Additional Information CMW - FY16 Results 30

  31. Slide 31: Appendices - Contents

    Appendices - Contents  Cromwell Property Group Statistics 32  Cromwell Property Group Performance 33  FY15 Operating and Statutory Profit Reconciliation 34  Segment Result – Operating Earnings 35  Property Portfolio – Top 10 Assets 36  Property Portfolio – Top 20 Leases 37  Property Portfolio

  32. Slide 32: Cromwell Property Group Statistics

    Cromwell Property Group Statistics Global platform offering diverse product range across key property sectors Diverse Product Range Track Record of Successful Partnerships Extensive and Broad Skill Set AUM by Sector Portfolio Platform $ 10.3bn 350+ 9.3% 6.1% Office FUM 11.4% Retail people 57.3% Indu

  33. Slide 33: Cromwell Property Group Performance

    Cromwell Property Group Performance  Active Portfolio Management  Grow Funds Management  Recycle non-core assets that don’t meet hurdle rates  Long term target is 20% earnings contribution  Maintain a disciplined approach to new acquisitions  Focus on leading global capital flows  Focus on tr

  34. Slide 34: FY16 Operating and Statutory Profit Reconciliation

    FY16 Operating and Statutory Profit Reconciliation Year ending 30 June 2016 FY16 ($’000) FY15 ($’000) Profit from Operations 164,503 144,876 Operating EPS 9.41 CPS 8.35 CPS Other Items Gain/(Loss) on sale of investment properties 19,352 1,032 Gain/(Loss) on disposal of other assets -254 251 Business

  35. Slide 35: Segment Result - Operating Earnings

    Segment Result - Operating Earnings1 Funds Funds Property Property / Funds Management Property Year ending 30 June 2016 Management FY16 ($’000) Investment Mgt Internal External Development External Retail Wholesale Segment revenue Sales to external customers 226,882 5,505 14,839 76,552 0 323,778 Sal

  36. Slide 36: Property Portfolio – Top 10 Assets

    Property Portfolio – Top 10 Assets Asset State Class Book value Cap Rate Occupancy WALE Major Tenants Qantas HQ NSW Office 435,000,000 5.50% 100.00% 15.2 yrs Qantas Airways Limited 700 Collins Street VIC Office 231,000,000 6.00% 91.29% 9.2 yrs Bureau of Meteorology Kent Street NSW Office 227,500,000

  37. Slide 37: Property Portfolio – Top 20 Leases

    Property Portfolio – Top 20 Leases Asset Tenant Tenant Classification Expiry Date % of Portfolio Rental Income Qantas HQ Qantas Airways Limited Listed Company/Subsidiary Dec-32 13.30% Tuggeranong Office Park Commonwealth of Aust. Dept of FaHCSIA Government Authority Aug-17 10.90% McKell Building Gov

  38. Slide 38: Property Portfolio – Net Property Income

    Property Portfolio – Net Property Income FY15 Variance Variance FY16 ($’000) Comments ($’000) ($) (%) HELD ASSETS - OFFICE1 50 Huntingfield Avenue, Kingston 3,182 2,091 1,091 52% Lease surrender payment Lovett Tower 10,773 7,638 3,135 41% Lease surrender payment 700 Collins Street, Melbourne 12,346

  39. Slide 39: Property Portfolio – Net Property Income

    Property Portfolio – Net Property Income FY16 ($’000) FY15 ($’000) Variance ($) Variance (%) Comments ASSETS SOLD Henry Waymouth Centre, SA 2,138 4,662 -2,524 -54% Bligh Street, Sydney NSW 555 5,050 -4,495 -89% Terrace Office Park, Bowen Hills QLD 554 2,035 -1,481 -73% 321 Exhibition Street, Melbour

  40. Slide 40: Property Portfolio – Movement In Book Value

    Property Portfolio – Movement In Book Value  Portfolio significantly improved through acquisitions since 2010  In-sourced facilities management model delivers consistently low lifecycle capex  Average 0.24% of valuation over past 6 years FY16) FY15 FY14 FY13 FY12 FY11 FY10 ($’000 ($’000) ($’000)

  41. Slide 41: Debt Platform Facility Details

    Debt Platform Facility Details  Facilities ranked in order of maturity Amount Maturity Fin Yr Years Facility Covenants ($'000) Date Expiry Base Margin All up Remaining Bank 1 5 yr Facility 123,500,000 Mar-21 2021 1.90% 1.65% 3.55% 4.7 yrs Bank 2 5 yr Facility 100,000,000 Mar-21 2021 1.90% 1.60% 3.5

  42. Slide 42: Interest Rate Hedging Details

    Interest Rate Hedging Details Amount Maturity Years Rate Type % of Total ($'000) Date Remaining 86,450,000 5.95% Fixed Sep-17 2.9 yrs 6% 100,000,000 3.99% Fixed Nov-17 2.9 yrs 7% 100,000,000 4.15% Fixed Dec-17 2.9 yrs 7% 100,000,000 4.38% Fixed Jul-16 2.9 yrs 7% 80,000,000 3.86% Fixed Aug-16 2.9 yrs

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