Cromwell Property Group · ASX:CMW
Cromwell Property — FY2020 Earnings Presentation
52 slides from Cromwell Property's earnings presentation, Aug 27, 2020
Slide 1: ASX cover letter: FY20 Results Presentation
Thursday 27 August 2020 For personal use only ASX Market Announcements Office Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Cromwell Property Group (ASX:CMW) FY20 Results Presentation Attached is a copy of Cromwell Property Group’s FY20 Results Presentation. Yours faithfully CROMWE
Slide 2: FY20 Results Presentation
For personal use only FY20 RESULTS PRESENTATION 27 August 2020 CROMWELL PROPERTY GROUP
Slide 3: Important Information & Disclaimer
Important Information & Disclaimer For personal use only 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 27 August 2020 and has been particular jurisdiction. Heart Trust ARSN 1
Slide 4: Overview
For personal use only Overview CROMWELL PROPERTY GROUP
Slide 5: FY20 Group Financial Highlights
FY20 Group Financial Highlights Overview For personal use only Earnings and Distributions Platform Financial Position Underlying operating Direct Property Investment profit1 $3.0 billion value NTA per unit Liquidity3 $221 million 5.6% WACR 6.2 year WALE $0.99 $667 million up 27.0% (FY19 $174 million
Slide 6: Strategy Summary
Strategy Summary Overview For personal use only 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/For sale Drive outperformance from repositioning
Slide 7: COVID-19 Tenant-Customer Negotiations
COVID-19 Tenant-Customer Negotiations Overview For personal use only Direct Property Investment Portfolio FY20 COVID-19 position – Australian portfolio National Code of Conduct requires landlords to provide rent $250.0 $228.9 relief to SMEs impacted by COVID-19 $219.3 $200.0 Only 93 SMEs represe
Slide 8: COVID-19 Tenant-Customer Negotiations: CPRF
COVID-19 Tenant-Customer Negotiations Overview For personal use only Cromwell Polish Retail Fund (CPRF) FY20 COVID-19 position – CPRF1 The Polish government temporarily suspended retail lease Month Mar Apr May Jun Jul agreements in March 2020 as part of its COVID-19 response plan. Essential retail
Slide 9: Total Securityholder Returns
Total Securityholder Returns Overview For personal use only Cromwell has consistently outperformed its benchmark index over key timeframes CMW total performance returns to 30 June 2020 250% 213% 200% 150% 142% 100% 71% 50% 29% 19% 22% 13% 7% 4% 6% 0% -18% -22% -50% FY20 FY18-20 FY16-20 FY11-20 Cromw
Slide 10: Financial and Capital Management Update
For personal use only Financial and Capital Management Update CROMWELL PROPERTY GROUP
Slide 11: FY20 Headline Results
FY20 Headline Results Financial and Capital Management Update For personal use only Commentary FY20 Performance Versus PCP Cromwell has delivered operating profit of 8.50 cents FY20 FY19 Change per security, exceeding guidance of 8.30 cents per security due to strong underlying business performanc
Slide 12: FY20 Segment Results
FY20 Segment Results Financial and Capital Management Update For personal use only FY20 Commentary FY20 Segment Profit1 Versus PCP Direct Property Investment FY20 FY19 Change Segment profit of $172.2 million (+26.5%) driven by strong like-for-like NOI ($m) ($m) growth across Core and Core+ portfolio
Slide 13: Capital Position
Capital Position Financial and Capital Management Update For personal use only Strong Debt Profile and Balance Sheet Position Group Gearing (2009 to 2020) Substantial liquidity of $667 million consisting of cash 55 and cash equivalents of $194 million with the balance 50 consisting of undrawn dome
Slide 14: Direct Property Investment Segment
For personal use only Direct Property Investment Segment CROMWELL PROPERTY GROUP
Slide 15: Property Portfolio Snapshot (Australian properties only)
Property Portfolio Snapshot (Australian properties only) Direct Property Investment Segment For personal use only Key Core/Core+ Portfolio Metrics1 Core Properties Book value WACR WALE Occupancy NOI growth 10 $2.35 billion 5.34% 7.5 years 99.2% 3.6% Core+ Properties Book value WACR WALE Occupancy NO
Slide 16: Defensive and Diversified Portfolio
Defensive and Diversified Portfolio Direct Property Investment Segment For personal use only Commentary Geographic diversification1 Tenant classification1 Defensive portfolio with 45.3% of gross passing income from government owned 2.5% 10.0% 14.0% ACT and funded entities, <10% are SMEs 9.5% 2 Gov
Slide 17: Lease Expiry Profile Remains Favourable
Lease Expiry Profile Remains Favourable1 Direct Property Investment Segment For personal use only Lease Update and Upcoming Expiry Profile Cromwell Lease Expiry Profile Lease transactions mainly completed in first half with 36 deals 70.0% 58.4% completed for a total of 22,000 sqm 60.0% 50.0% Cor
Slide 18: Portfolio Valuation Proves Resilient
Portfolio Valuation Proves Resilient Direct Property Investment Segment For personal use only All domestic portfolio assets were externally, FY20 Weighted Average Cap Rate Change1 independently valued (except the three held for sale) 5.73% 0.03% 5.57% Fair value increase in investment property o
Slide 19: Development Pipeline
Development Pipeline Direct Property Investment Segment For personal use only Line-of-sight to c.$1.1 billion pipeline of new value add development opportunities LDK Greenway Views, Victoria Avenue, 700 Collins Street, Centenary House, ACT Confidential Projects ACT1 Chatswood NSW Melbourne VIC DA su
Slide 20: Indirect Property Investment Segment
For personal use only Indirect Property Investment Segment CROMWELL PROPERTY GROUP
Slide 21: Segment Results Up 23.1%
Segment Results Up 23.1% Indirect Property Investment Segment For personal use only Operating profit of $55.9 million up 23.1% from $45.4 million in FY19 due to contribution from CPRF and 30.7% interest in CEREIT Key Metrics Commentary Book value Increase quality / resiliency of portfolio, with AUM
Slide 22: CEREIT – 30.7% stake
CEREIT – 30.7% stake Indirect Property Investment Segment For personal use only Commentary Key statistics Sector diversification Leasing momentum continued despite COVID-19. To date impact Book value on CEREIT’s tenant-customers has been limited €394 million 6% Net Property Income of €57.7 milli
Slide 23: LDK Joint Venture – 50% interest
LDK Joint Venture – 50% interest Indirect Property Investment Segment For personal use only Seniors Living opportunity 50% ownership interest in LDK Healthcare (LDK) which has two operational villages (North Sydney and Canberra) The Landings, a 220 home Seniors village on the Upper North Shore,
Slide 24: CPRF – to 30% stake targeted post sell-down
CPRF – 20 to 30% stake targeted post sell-down Indirect Property Investment Segment For personal use only Commentary Key statistics1 The portfolio contains six catchment-dominating shopping or Valuation WALE WACR Assets Occupancy convenience centres, plus a significant effective interest in a €452
Slide 25: Funds and Asset Management Segment
For personal use only Funds and Asset Management Segment CROMWELL PROPERTY GROUP
Slide 26: Segment Profit up 43.2%
Segment Profit up 43.2% Funds and Asset Management Segment For personal use only Key Metrics Commentary Cromwell Funds Under Management Significant investment Wholesale in people and AUM FY20 profit processes, $6.0 billion $30.1 million 78% of platform underpinned by longer term capital Long term re
Slide 27: Europe - Foundations In Place
Europe - Foundations In Place Funds and Asset Management Segment For personal use only European Funds Management Update European FUM by Region (€bn) €3.5 billion FUM with 78% underpinned by longer dated capital Total FY20 transactional activity of €0.6 billion in sales and €0.3 Italy € 0.4 € 0.6
Slide 28: Australia – Continued Investor Support for DPF
Australia – Continued Investor Support for DPF Funds and Asset Management Segment For personal use only Retail Funds Management segment profit was $8.3 million and AUM was $2.2 billion ($2.3 billion FY19), slightly lower primarily due to lower equities markets Cromwell Direct Property Fund (DPF)
Slide 29: New Zealand - Oyster Continues Growth
New Zealand - Oyster Continues Growth Funds and Asset Management Segment For personal use only AUM at Oyster Group in New Zealand (50% interest) was up to NZ$2.0 billion (FY19 NZ$1.7 billion) Key activity during the year Syndicated Pastoral House, 25 The Terrace / 92 Lambton Quay in Wellington,
Slide 30: New Growth Opportunities To Expand Platform
New Growth Opportunities To Expand Platform Funds and Asset Management Segment For personal use only Cromwell European Logistics Fund Proposed Stratus Cromwell Data Cromwell Polish Retail Fund Centres Fund Cromwell’s platform in Europe has Heads of Terms to partner with data Temporarily wareho
Slide 31: Guidance
For personal use only Guidance CROMWELL PROPERTY GROUP
Slide 32: FY21 Distributions Maintained
FY21 Distributions Maintained Guidance For personal use only FY21 Distributions Maintained For further information please contact: Business well-positioned to continue to meet further COVID-19 risks with 45% of rental income from government entities, a strong balance sheet with Paul Weightman liqu
Slide 33: Proportional Offer and EGM Update
For personal use only Proportional Offer and EGM Update CROMWELL PROPERTY GROUP
Slide 34: ARA's Takeover By Stealth
ARA's Takeover By Stealth For personal use only November 2019 AGM Majority of Cromwell securityholders REJECTED appointment of ARA nominee Gary Weiss March 2020 EGM Majority of Cromwell securityholders AGAIN REJECTED appointment of ARA nominee Gary Weiss ARA launches a proportional offer for SOME BU
Slide 35: Reasons To Reject ARA's Proportional Offer
Reasons To Reject ARA’s Proportional Offer For personal use only #1 The Offer is an attempt to grab effective control of Cromwell from securityholders, without offering to acquire 100% of their stapled securities at a price that the Cromwell Board believes is significantly below Cromwell's fundament
Slide 36: TSR relative to benchmark indices
TSR relative to benchmark indices1 (based on financial year performance) For personal use only Cromwell has consistently outperformed all ARA managed listed REITs relative to their respective benchmarks over all key timeframes 71 % 13 % 4% 4% 0% 0% N/A N/A N/A (14)% (7)% (16)% (32)% (30)% (26)% (29)
Slide 37: Appendices
For personal use only Appendices CROMWELL PROPERTY GROUP
Slide 38: Appendices Contents
Appendices Contents For personal use only 38 Cromwell Property Group Statistics 39–41 Economic and Real Estate Markets Overview 42 FY20 Operating and Statutory Profit Reconciliation 43 Segment Result - Operating Earnings Detail 44 Balance Sheet 45 Property Portfolio - Top 10 Assets 46 Property Portf
Slide 39: Cromwell Property Group Statistics
Cromwell Property Group Statistics Appendix: All group statistics as at 30 June 2020 For personal use only BroadPortfolio and Deep Property Platform Geographic and Culturally Diverse Team Global Portfolio by Sector and Geography AUM by Sector $ 11.5bn 2.8% AUM 460+ 3.3% 12.2% Office people Retail 15
Slide 40: Global Economic Growth Negative
Global Economic Growth Negative Appendix For personal use only Global Economic Growth 2021 (Select) Forecast GDP Growth Rates 12.0 2020 was originally seen as a ‘go slow’ year with global GDP 10.0 growth, before COVID-19, forecast to be just 2.5% 8.0 All major G7 economies now showing recessiona
Slide 41: Australian Real Estate Snapshot
Australian Real Estate Snapshot Appendix For personal use only Australian CBD Office Markets Total Australian CBD Office Vacancy (%) Australian CBD’s still being impacted by COVID-19 with 20.0% 18.4% Melbourne in lockdown and Sydney and Brisbane CBD offices 14.2% 15.0% 12.9% operating at reduced c
Slide 42: European Real Estate Snapshot
European Real Estate Snapshot Appendix For personal use only European Commercial Real Estate Markets Investment volumes by sector 400 Gateway cities continue to perform well, targeted by international 350 capital, which accounts for 40% of all deals 300 European property investment volumes reach
Slide 43: FY20 Operating and Statutory Profit Reconciliation
FY20 Operating and Statutory Profit Reconciliation Appendix For personal use only FY20 ($M) FY19 ($M) Profit from operations 221.2 174.2 Operating EPS (cents per security) 8.50 cps 8.21 cps Gain on sale of investment properties 3.3 0.7 Loss on disposal of other assets (3.6) (0.3) Other transaction c
Slide 44: Segment Results – Operating Earnings Detail
Segment Results – Operating Earnings Detail Appendix For personal use only Direct Property Indirect Property Funds And Asset Full Year ending 30 June 2020 Investment Investment Management ($M) ($M) ($M) FY20 Segment revenue Rental income and recoverable outgoings 228.9 40.9 - 269.8 Operating profits
Slide 45: Balance Sheet
Balance Sheet Appendix For personal use only FY20 ($M) FY19 ($M) Cash and Cash Equivalents 194.1 101.6 Investment Property 3,708.5 2,520.9 Investment Property held for sale 44.0 - Equity accounted investments held for sale 49.8 - Equity accounted investments 668.2 814.5 Receivables 251.3 194.2 Intan
Slide 46: Top Assets
Top 10 Assets1 Appendix For personal use only Current Market Value Occupancy % Asset State Class ($M) Cap Rate by NLA WALE Major Tenants 400 George Street QLD Office 525.0 5.38% 96.6% 4.4 years QLD Government, Federal Government Qantas HQ NSW Office 520.0 5.25% 100.0% 11.3 years Qantas Airways Limit
Slide 47: Top Leases
Top 20 Leases1 Appendix For personal use only Tenant Tenant Classification Expiry Date % of Portfolio Rental Income Qantas Airways Limited Listed Company/Subsidiary Dec-32 15.1% Commonwealth of Australia (Dept of Social Services) Government Authority Sep-32 8.4% QLD State Government Government Autho
Slide 48: Net Property Income
Net Property Income Appendix For personal use only FY20 ($M) FY19 ($M) Variance ($M) Variance (%) McKell Building 13.5 12.2 1.3 10.3% Station Street, Penrith 2.9 2.7 0.2 9.8% 700 Collins Street 17.0 16.4 0.6 3.7% Bull Street, Newcastle 1.8 1.7 0.1 3.5% Qantas HQ 30.0 29.0 1.0 3.4% HQ North Tower 16.
Slide 49: Net Property Income
Net Property Income Appendix For personal use only FY20 ($M) FY19 ($M) Variance ($M) Variance (%) ACQUISITIONS / DISPOSALS Cromwell Polish Retail Fund 23.5 - 23.5 N/A George Street, Brisbane 25.1 - 25.1 N/A Borrowdale House (0.1) (0.1) N/A N/A 1 Victoria Avenue 11.7 13.0 (1.3) (10.0%) Wakefield St,
Slide 50: Movement In Book Value
Movement In Book Value Appendix For personal use only Strategy of continuously improving portfolio through acquisitions since 2010 In-sourced facilities management model also lowers lifecycle capex FY20 FY19 FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M) ($M
Slide 51: Balance Sheet Debt Details
Balance Sheet Debt Details Appendix For personal use only 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 3.0 Bank 2 - 5 Year Facility - 250.0 Jun-2023 2023 3.0 Bank 3 - 5 Year Facility 168.0 250.0 J
Slide 52: For personal use only
For personal use only CROMWELL PROPERTY GROUP
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