Cromwell Property Group · ASX:CMW
Cromwell Property — FY2009 Earnings Presentation
34 slides from Cromwell Property's earnings presentation, Aug 20, 2009
Slide 1: Cromwell Group FY09 Results
For personal use only CROMWELL GROUP FY09 RESULTS 1 1
Slide 2: Disclaimer
Disclaimer For personal use only This presentation is dated 20 August 2009 and made on behalf of the Cromwell Group – Cromwell Corporation Limited (ACN 001 056 980) and Cromwell Diversified Property Trust (ARSN 102 982 598) – by Cromwell Property Securities Limited (ACN 079 147 089; AFSL 238052). Cr
Slide 3: Key Messages
For personal use only key messages 3
Slide 4: Key Messages
Key Messages For personal use only || Resilient Portfolio has performed well in falling market »» Wholly domestic with large weighting to CBD office markets »» Peak to trough fall in values of 8.6% for Cromwell vs PCA/IPD average of 25.9%1 »» Minimal further impact expected on property values »» Hav
Slide 5: Key Messages
Key Messages For personal use only || Funds Management »» Raised over $52 million for Riverpark unlisted syndicate in extremely tough conditions »» Will continue to deliver growth in earnings with low cost of capital || Earnings Guidance »» Highly predictable property earnings in FY10 »» Can maintai
Slide 6: Key Financial Results
Key Financial Results For personal use only Results Summary FY09 FY08 Statutory accounting profit/(loss) $(113.5) m $119.9 m Operating earnings $63.8 m $70.8 m ▼ 10% Operating EPS 9.1 cps 10.1 cps ▼ 9% % from recurring income 99% 81% ▲ 18% Distributions per security 9.0 cps 10.0 cps ▼ 10% NTA per se
Slide 7: Property Valuations Bottoming?
Property Valuations Bottoming? For personal use only || Impact of GFC on Australian economy and unemployment less severe than expected || Transactions in past 12 months predominantly: »» Assets with long leases and quality tenants »» Lower value assets with private/syndicate purchasers || Higher vol
Slide 8: Quality of Management
Quality of Management For personal use only Cromwell vs. Benchmark Annualised Property Returns Total securityholder returns Annual Return 1 year 60% 49.8% 50% Cromwell 40.7% 40% S&P/ASX All Ords 3 years S&P/ASX300 A-REIT 30% 20% 10% 6.7% 6.0% 5 years 0% -0.5% -3.8% -10% -12.9% -8.7% 9 years -20% -21
Slide 9: Property Performance
For personal use only property performance 9
Slide 10: Revaluations have confirmed portfolio quality
Revaluations have confirmed For personal use only Historical Weighted Average Cap Rate portfolio quality Cromwell Managed Properties Benchmark (PCA/IPD All Fund Universe excl. || 56% of assets independently revalued as at 9% Super & Major Regional Shopping Centres) 30 June 2009. Balance assessed int
Slide 11: Timing the market
Timing the market For personal use only || Sold $273 million assets in 2007 || Acquired Tuggeranong Office Park in June 2008 »» $166 million opportunistic buy (current valuation $170 million) »» 10.5% passing yield »» 7.4 year lease to Government with CPI reviews || Since Tuggeranong acquisition: »»
Slide 12: Portfolio Quality
Portfolio Quality For personal use only Geo Diversification by Gross Income Gross Income by Tenant Classification Sector Diversification by Income WA 1% SA 8% Commercial QLD 18% Private Government TAS 4% Company Authority 52% 84% 17% NSW 13% Industrial VIC 28% 12% Listed Co/ Retail/ Subsidiary Enter
Slide 13: Funds Management Performance
For personal use only Funds Management Performance 13
Slide 14: Funds Management
Funds Management Direct Property Fund Flows (excl. co-investment) For personal use only 70 Redemptions 61 || Raised over $52 million for Riverpark Trust during Retail 60 56 Wholesale 53 second half FY09 50 Reinvest Rebate A$ million 40 || Riverpark Trust capital raising will be completed and 30 fees
Slide 15: Investments in unlisted funds
Investments in unlisted funds For personal use only || Riverpark Trust »» Loan of $26 million to facilitate settlement »» Repayable by end Dec 2009 or conversion to units || Cromwell Property Fund »» $6.4 million carrying value plus $45.1 million loans receivable »» Applications/Redemptions currentl
Slide 16: Financial Results
For personal use only FINANCIAL RESULTS 16
Slide 17: Operating Earnings
Operating Earnings For personal use only || Operating profit of $63.8 million or 9.1 cps || Recurring income contributed 9.0 cps of earnings, majority from property || No material contribution from funds management transactions or development || Growth in like-for-like property income of 7.7% in FY0
Slide 18: Statutory Accounting Loss
Statutory Accounting Loss For personal use only || Statutory accounting loss of $113.5 million (16.1 cps) impacted by asset revaluations || Negative revaluation adjustments on investment property ($104.3 million) and investment in unlisted funds ($20.2 million) || Negative fair value adjustment of $
Slide 19: Financial Position
Financial Position For personal use only || NTA reduced to $0.76 vs $0.78 on stapling in December 2006. No goodwill or intangibles || 95% of total assets are cash, investment property and unlisted property funds || Security price implies 14% discount to asset values and no value for funds management
Slide 20: Debt Profile
Debt Profile For personal use only Debt Facility Expiry Profile || All debt facilities renewed in past 18 months A$ million $552m || CMBS repaid during FY09 at a discount 600 76.0% 500 || All debt in Australian dollars, with Australian banks 400 300 || Security and covenants on each facility limited
Slide 21: Strategy & Outlook
For personal use only Strategy & Outlook 21
Slide 22: Quality Tenants
Quality Tenants For personal use only || Focus on quality tenants Tenant Industry Diversified (by Gross Income) Resources 2.3% Retail 5.2% || Minimal exposure to troubled sectors Real Estate 0.7% Telco’s 2.6% Prof. Services 2.8% Cinema 3.5% || Active tenant retention program Other 11.0% Construction
Slide 23: Minimal Lease Expiries
Minimal Lease Expiries Lease Expiry Profile – % Gross Income For personal use only 40% 37.7% || FY10 expiries 4.9% with largest in May 2010 30% || Well advanced on negotiations for FY11 expiries 20% || Renewal rate of 73% on FY09 expiries 17.2% 10% 9.2% 9.6% 7.6% 7.8% 6.1% 4.6% 0.3% 0% t r 10 11 12
Slide 24: Quality Income Stream
Quality Income Stream Impact on NTA For personal use only Weighted Average Cap Rate 8.40% 8.65% 8.90% || 60.5% of next rent reviews are fixed, with an 2.0% $0.80 $0.75 $0.70 average increase of 3.19% Change 0.0% $0.76 $0.72 $0.67 in Market || 25.1% of next rent reviews are CPI Rental -2.0% $0.73 $0.
Slide 25: Outlook
Outlook For personal use only || Funds Management »» Will pursue further acquisitions for unlisted retail syndicates as market evolves »» CPF will remain closed until market stabilisation »» Looking at wholesale opportunities || Consolidation »» A-REIT sector likely to consolidate over the next 12 m
Slide 26: Earnings and Distributions Guidance
Earnings and Distributions Guidance For personal use only || FY10 Operating Earnings »» Expect minimum operating earnings of 9.0 cps »» Assumes only transactional income is finalisation of Riverpark Trust »» No contribution expected from development activities || FY10 Distributions »» Expect distrib
Slide 27: Contacts
Contacts For personal use only Paul Weightman Chief Executive Officer Cromwell Group Ph: +61 (0) 7 3225 7720 Level 19, 200 Mary Street Email: paul.weightman@cromwell.com.au Brisbane QLD Phone: +61 (0) 7 3225 7777 Daryl Wilson Facsimile: +61 (0) 7 3225 7788 Chief Financial Officer Website: www.cromwe
Slide 28: FY09 Results Appendices
For personal use only FY09 Results Appendices 28
Slide 29: High Recurring Earnings
Appendix 1 For personal use only High Recurring Earnings FY09 Recurring ($’000) FY09 Transaction ($’000) FY09 Total ($’000) Profit from operations Net Property Income [1] 104,570 0 104,570 Net Funds Management Income [2] 4,475 3 4,478 Net Development Income [3] 0 (1,027) (1,027) Interest & Distribut
Slide 30: Balance Sheet
Appendix 2 For personal use only Balance Sheet FY09 ($’000) % FY08 ($’000) % Assets Cash and Cash Equivalents 66,653 5% 8,283 1% Trade and Other Receivables 53,882 4% 48,473 4% Inventory 0 0% 4,030 0% Investment Properties 1,117,175 85% 1,120,716 82% Investment in Associates 58,295 4% 80,593 6% Prop
Slide 31: Top Tenants
Appendix 3 For personal use only Top 20 Tenants Tenant Building Tenant Classification % of Total Portfolio Commonwealth of Australia Dept of FACSIA Tuggeranong Office Park Government Authority 15.5% AWB Limited AWB Building / Brooklyn Woolstore Listed Co/Subsidiary 7.1% Bureau of Meteorology 700 Col
Slide 32: Core Property Assets
Appendix 4 For personal use only Core Property Assets Asset Class Valuation Date Cap Rate Occupancy WALE Major Tenants 700 Collins A Grade Office $162.0 m Jun-09 7.50% 99.39% 5.99 years Bureau of Meteorology, Street Medibank Private, Vic Urban Tuggeranong A Grade Office $170.0 m May-09 8.75% 100.00%
Slide 33: Debt Facilities at June 2009
Appendix 5 For personal use only Debt Facilities at 30 June 2009 Amount Amount Financial Facility Maturity Security Property Available Drawn Covenants(1) Syndicated Facility Trust property portfolio excluding TGA, LVR < 60% $452 m $452 m Nov-11 (Australian Bank) Tuggeranong, 200 Mary Street and Syne
Slide 34: Interest Rate Hedges
Appendix 6 For personal use only Interest Rate Hedges Amount Hedged Maturity Date Base Rate Years Remaining % of Total $352 m Variable 3.20%[1] 48% $56 m Jul-09 4.88% 0.1yrs 8% $15 m Nov-09 5.72% 0.4yrs 2% $158 m Jul-10 4.13% 1.1yrs 22% $27 m Aug-10 5.50% 1.2yrs 4% $32 m Feb-16 5.90% 6.6yrs 4% $86 m
Cromwell Property Group — FY2009 Earnings Presentation on 6ix