ASX CEO CONNECT Paul Weightman - CEO 15 October 2019
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ASX CEO CONNECT
Paul Weightman
CEO
Cromwell Property Group
15 October 2019
CROMWELL PROPERTY GROUP
Important Information and Disclaimer
This presentation (Presentation) is dated 15 October 2019 a transaction and also the tax implications of entering into this on future events. There can be no assurance that actual
and has been prepared by Cromwell Property Group, which proposed transaction, including seeking tax advice in any outcomes will not differ materially from the statements. To the
comprises Cromwell Corporation Limited (ACN 001 056 980) applicable jurisdiction and consult with your own professional fullest extent permitted by law, Cromwell Property Group and
and Cromwell Diversified Property Trust (ARSN 102 982 598) advisers as to the risks involved in making such assessment. its directors, officers, employees, advisers, agents and
of which Cromwell Property Securities Limited (ACN 079 147 To the extent that general financial product advice in respect intermediaries disclaim any objection or undertaking to
809, AFSL 238052) is the responsible entity. Units in the of the issue of Cromwell Diversified Property Trust units as a release any updates or revisions to the information to reflect
Cromwell Diversified Property Trust are stapled to shares in component of Cromwell Property Group stapled securities is any change in expectations or assumptions.
Cromwell Corporation Limited. The stapled securities are provided in this Presentation, it is provided by Cromwell
listed on the ASX (ASX Code: CMW). This Presentation is Property Securities Limited. Cromwell Property Securities Past Performance
confidential and must not be distributed or otherwise provided Limited and its related bodies corporate, and their associates, Past performance information given in this Presentation is
to any person other than to whom it was first given. will not receive any remuneration or benefits in connection given for illustration purposes only and should not be relied
with that advice. Directors and employees of Cromwell upon as (and is not) an indication of future performance.
Summary Information Property Securities Limited do not receive specific payments Actual results could differ materially from those referred to in
This Presentation contains summary information about of commissions for the authorised services provided under its this Presentation.
Cromwell Property Group as at 30 June 2019. The Australian Financial Services Licence. They do receive
information is subject to change without notice and does not salaries and may also be entitled to receive bonuses, Not an offer
purport to be complete or comprehensive. It should be read in depending upon performance. Cromwell Property Securities This Presentation is for information purposes only and does
conjunction with Cromwell Property Group's other periodic Limited is a wholly owned subsidiary of Cromwell Corporation not constitute or form part of any offer, solicitation, invitation
and continuous disclosure announcements lodged with the Limited. or recommendation to purchase or subscribe for any
Australian Securities Exchange, which are available at Cromwell Property Group stapled securities or any other
www.asx.com.au. Financial Information financial products and is not a prospectus, product disclosure
All financial information is in Australian dollars and all statement or other offering document under Australian law or
The information in this Presentation has been obtained from statistics are as at 30 June 2019 unless otherwise stated. the law of any other jurisdiction, and no part of it nor the fact
or based on sources believed by Cromwell Property Group to Any gearing and interest cover ratios for Cromwell Property of this Presentation shall form the basis of or be relied upon in
be reliable. To the maximum extent permitted by law, Group included in the Presentation have been calculated in connection with any investment decision, contract or
Cromwell Property Group, any underwriters, their affiliates, accordance with the formulas stated. These measures are commitment whatsoever. This Presentation is for information
officers, employee, agents and advisors do not make any not measures of, or defined terms of, financial performance, purposes only.
warranty, express or implied, as to the currency, accuracy, liquidity or value under AIFRS or US GAAP. Moreover,
reliability or completeness of the information in this certain of these measures may not be comparable to similarly This Presentation does not constitute an offer to sell, or the
Presentation and disclaim all responsibility and liability for the titled measures of other companies. solicitation of an offer to buy, any securities or any other
information (including, without limitation, liability for financial products in the United States or any other
negligence). Future performance jurisdiction. Cromwell Property Group stapled securities have
This Presentation may contain "forward looking" statements. not been, and will not be, registered under the US Securities
Not Financial Product Advice Act of 1933, as amended (Securities Act) or the securities
The words "anticipated", "expected", "projections", "forecast",
This Presentation is not investment or financial advice, a "estimates", "could", "may", "target", "consider", and "will" and laws of any state or other jurisdiction of the United States and
recommendation, guidance or proposal to acquire Cromwell other similar expressions are intended to identify forward may not be offered or sold in the United States or to, or for the
Property Group stapled securities or any other financial looking statements. Forward looking statements, opinions account or benefit of, a person in the United States unless
product. It has been prepared without taking into account any and estimates are based on assumptions and contingencies they have been registered under the Securities Act, or are
investor's objectives, financial decision, situation or needs. which are subject to change without notice, as are statements offered or sold in a transaction exempt from, or not subject to
Cromwell Corporation Limited is not licensed to provide about market and industry trends, which are based on the registration requirements of the Securities Act and any
financial product advice in respect of Cromwell Corporation interpretations of current market conditions. other applicable securities laws.
Limited shares or Cromwell Property Group stapled securities.
Before entering into any transaction you should take steps to Forward-looking statements including projections or This Presentation is not for distribution or release in the
ensure that you understand the transaction and have made an indications on future earnings or financial position and United States.
independent assessment of the appropriateness of the estimates are provided as a general guide only, should not be © 2019. Cromwell Property Group. All rights reserved
transaction in light of your own objectives and circumstances, relied upon as an indication or guarantee of future
including the possible risks and benefits of entering into such performance and is based on the current view of management
CROMWELL PROPERTY GROUP 2
History and Timeline
Cromwell Property Group
2002 - 2003 2010 2017 2019
14 properties acquired in Qantas GlobalHeadquarters €1.4 billion CEREIT launcheson Cromwell acquires ‘The Landings’
five states for more than acquired $143 million SGX-ST Seniors Village for $60 million
$300 million €400 billion new AUM in Italy Pirelli R&D Facility in Milan acquired
2013 2015 €300 million new AUM in on behalf of Korean capital partner
Finland post Neptune portfolio for €88 million
Portfolio of seven assets
2004 €900 million European $260 million Soward Way, ACT - Cromwell’s 50% interest in
acquired from the NSW State
Diversified Fund launched practical completion Northpoint Tower sold to Early Light
Government $405 million
700 Collins Street acquired for $300 million
$133 million Northpoint Tower acquired €500 million Health & Forestry house sold for
$278 million Netherlands Diversified A$66 million Pre-emptive right exercised for GAV
Partnership €600 million Cromwell Polish Retail
Included in S&P/ASX 300
Index Fund
1998 2006 2014 2016 2018
Cromwell Corporation Cromwell Corporation Limited Acquired Cromwell Nordics Cromwell enters into a strategic
Limited recapitalised stapled to the Cromwell 50% interest Retail fund launches partnership with Linkcity (Bouygues
and new Board of Diversified Property Trust, in Oyster in across Sweden, Construction) in Central Europe.
Directorsappointed forming the ASX-listed New Zealand Finland, Denmark CEREIT acquires 23 propertiesfor
Cromwell Property Group €384.4 million,
Northpoint Tower reaches
practical completion
European Platform History & Timeline
1980 1996 2002 2007 2011 2013 2015
Scarborough Buys into Teesland floated, Teesland IOG Blackstone Group Investment Cromwell acquires
Group Teesland acquires IOG, purchased by buys Valad, Adviser and Valad Europe for
formed in UK Group European Valad Property creates Valad Asset Manager A$208 million
platform Group Europe of GE Capital’s
established Polish Retail
Fund acquired
CROMWELL PROPERTY GROUP 3
Cromwell Property Group Overview
Cromwell is a real estate investor and manager operating on three continents with a global investor base
Office Locations Portfolio Platform
A$11.9bn
€7.5bn 420+
AUM people
270+ 15
properties countries
3.7m 29
sqm offices
3,800+
tenants
CROMWELL PROPERTY GROUP 4
Cromwell Property Group Overview
Cromwell is a real estate investor and manager operating on three continents with a global investor base
Objective:
To provide stable, secure and growing distributions with potential for capital growth underpinned by:
stable long-term cash flows from long-dated direct property investment portfolio;
recurring profits from indirect investments and stakes held in assets, funds and JV’s; and
transactional profits from funds management and asset enhancement capabilities.
CROMWELL PROPERTY GROUP 5
Financial Update - FY19 Headline Results
FY19 Highlights FY19 Performance Versus FY18
FY19 FY18 Change
FY19 operating profit up 11.1% Statutory profit ($M) $159.9 $204.1 (21.7%)
NTA per unit of $0.97 Statutory profit
7.53 10.89 (30.9%)
(cents per security)
AUM up to $11.9 billion
Operating profit ($M)1 $174.2 $156.8 11.1%
WALE of 6.9 years
Operating profit
8.21 8.36 (1.8%)
(cents per security)
Gearing of 35.0% (pro-forma capital raising 23.9%)
Distributions ($M) $157.5 $157.1 0.2%
Debt tenor of 4.5 years
Distributions
7.25 8.34 (13.1%)
Operating profit > guidance by 0.21 cps (cents per security)
Distributions of 7.25 cps met guidance Payout ratio 90% 100% (10.0%)
CROMWELL PROPERTY GROUP
Financial Update - FY19 Segment Results1
FY19 Commentary FY19 Segment Profit Versus FY18
Direct Property Investment Segment profit was FY19 FY18
($M) ($M) Change
$136.1 million, up 12.9% from the prior period,
driven by strong like-for-like NOI growth Direct property investment 136.1 120.6 12.9%
Indirect Property Investment Segment profit, Indirect property investment 45.4 23.3 94.9%
primarily representing Cromwell’s interest in
Funds and asset management 28.5 35.0 (18.6%)
CEREIT, increased 94.9% to $45.4 million
Total segment results 210.0 178.9 17.4%
Funds and Asset Management segment profit
was $28.5 million, down from $35.0 million
Finance income 4.8 9.0 46.7%
Corporate costs include investing into future-
Corporate costs2 (39.6) (26.7) (48.3%)
proofing the platform, establishing the
management team in Singapore and the set-up of Income tax expense (1.0) (4.4) 77.3%
an AIFM in Luxembourg in preparation for Brexit
Operating profit 174.2 156.8 11.1%
Operating profit (cents per security) 8.21 8.36 (1.8%)
1. See Annual Results presentation for further details of segment results, operating profit and reconciliation to statutory profit
2. Includes non-segment specific corporate costs pertaining to Group level functions such as finance and tax, legal, risk and compliance, corporate secretarial and marketing and other corporate services
CROMWELL PROPERTY GROUP
Financial Update – FY19 Capital Management Results
Strong Debt Profile Group Gearing
60.00
Cromwell has been progressively reducing gearing and is Target Gearing Range CMW Gearing
55.00
now targeting a 30 – 40% gearing range through the cycle
50.00
45.00
Group gearing1 of 35.0% (42.3% look-through) is in the
40.00
middle of the revised, through the cycle, target gearing
35.00
range
30.00
Leverage capacity will be used on a short term basis to 25.00
execute the ‘Invest to Manage’ strategy. Pro-forma 20.00
gearing post capital raises is below target gearing range
at 23.9%
Weighted average debt expiry is 4.5 years, diversified Debt Expiry Profile
across 12 domestic and international lenders and two $ 700 M
$ 600 M
Convertible Bond issues
Debt Balance ($M)
$ 500 M
$ 400 M
Interest Rate Hedging $ 300 M
99.9% of balance sheet hedged with a weighted average $ 200 M
$ 100 M
hedge term of 3.3 years
$0M
FY FY FY FY FY FY FY
On a look through basis 89.3% hedged with a weighted 2020 2021 2022 2023 2024 2025 2026
average hedge term of 2.9 years Australian Other $ 0.0 M $ 0.0 M $ 0.0 M $ 0.0 M $ 0.0 M $ 0.0 M $ 60.0 M
Convertible Bond $ 88.0 M $ 0.0 M $ 0.0 M $ 0.0 M $ 0.0 M $ 353.3 $ 0.0 M
1. Gearing calculated as (total borrowings less cash)/(total tangible assets less cash). Look through gearing adjusts Australian Major Banks $ 0.0 M $ 0.0 M $ 0.0 M $ 368.0 $ 0.0 M $ 0.0 M $ 0.0 M
for the 50% interest in Northpoint Tower and 35% of CEREIT and 50% in LDK Joint Venture International Banks $ 0.0 M $ 0.0 M $ 7.6 M $ 295.9 $ 200.0 $ 0.0 M $ 0.0 M
CROMWELL PROPERTY GROUP
Cromwell Total Securityholder Return
TSR since stapling event in December 2006 to 30 September 2019
400
350
300
250
200
150
100
50
0
Cromwell Property Group S&P/ASX 300 A-REIT Accumulation Index
CROMWELL PROPERTY GROUP 9
European Office Markets
CROMWELL PROPERTY GROUP 10Property Portfolio – Component Snapshot (as at 30 June 2019)
69% 28% 3%
Core Portfolio Core+ Portfolio Active Portfolio
Wale: 9.4 years Wale: 3.1 years Wale: 0.6 years
Occupancy: 99% Occupancy: 95% Occupancy: 52%
NOI growth: 3.3% NOI growth: 5.3% NOI growth: 120.6%
2
QANTAS GLOBAL HQ 207 KENT STREET TUGGERANONG CAR PARK
Mascot, NSW Sydney, NSW Greenway, ACT
MCKELL BUILDING 475 VICTORIA AVENUE LOVETT TOWER
9 Sydney, NSW Chatswood, NSW Woden, ACT
1
7 STATION STREET REGENT CINEMA CENTRE BORROWDALE HOUSE
Penrith, NSW Albury, NSW Woden, ACT
2
CROWN STREET ORACLE BUILDING 19 NATIONAL CIRCUIT
Wollongong, NSW Lyneham, ACT Barton, ACT
FARRER PLACE TGA COMPLEX WAKEFIELD STREET
Key Portfolio Metrics Queanbeyan, NSW Symonston, ACT Adelaide, SA
No. properties on balance sheet 211 BULL STREET 200 MARY STREET
Newcastle, NSW Brisbane, QLD
Value A$2.5bn 700 COLLINS STREET
Docklands, VIC
WACR 5.8%
VILLAGE CINEMAS
Occupancy by NLA 91.7% Geelong, VIC
HQ NORTH TOWER
WALE 6.9 yrs Fortitude Valley, QLD
1. Note: Northpoint is equity accounted and excluded.
SOWARD WAY
Greenway, ACT
CROMWELL PROPERTY GROUPProperty Portfolio – c.$1 Billion Development Pipeline
Asset recycling strategy has been ongoing since 2010 with $520 million of assets sold since start FY18
Funds have facilitated development of a c.$1 billion pipeline of new value add opportunities
700 Collins Street,
Greenway, ACT1 Victoria Avenue, Chatswood NSW Confidential Projects
Melbourne VIC
Additional permissions sought from DA submitted July 2019 for an
Construction has commenced Council. Public notice period additional 13,000 sqm of office, Negotiations on
converting office buildings to completed, expecting response 182 room hotel and c. 280 redevelopment of existing
Description
Seniors Living, with 35,000 sqm towards end of year with residential accommodation assets with new and
capacity for further development construction, subject to Council units. Response expected mid existing tenants
approval, starting early in 2020 2020
Status Current Announced Awaiting DA Approval New
Estimated
>$150m c.$100m c.$350m >$500m
development cost
Proposed timing FY19-21 FY20-22 FY21-24 FY20+
1. Cromwell has a 50% ownership interest in LDK Healthcare, the operator of a planned Seniors Living community at Greenway, ACT
CROMWELL PROPERTY GROUPIndirect Investment - CEREIT Portfolio as at 30 June 2019
(Excluding the Acquisitions of Six Predominantly Office Properties in France and Poland)
Properties 97 Finland
Occupancy Rate (by lettable area) 91.6% Properties 11
Lettable Area (sq m) 61,977
Valuation (€)1 1,834.5 million
Valuation (€ million) 115.5
WALE / WALB2 4.7 years / 3.8 years % of Portfolio 6.3%
% Freehold3 90.6% Average Reversionary Yield 7.8%
Average Reversionary Yield4 6.7% Germany
Denmark Properties 11
Properties 13 Lettable Area (sq m) 166,738
Lettable Area (sq m) 151,491 Valuation (€ million) 118.6
Valuation (€ million) 83.2 % of Portfolio 6.5%
% of Portfolio 4.5% Average Reversionary Yield 6.9%
Average Reversionary Yield 7.8%
The Netherlands Poland
Properties 17 Properties 3
Lettable Area (sq m) 260,205 Lettable Area (sq m) 34,362
Valuation (€ million) 73.2
Valuation (€ million) 627.0
% of Portfolio 4.0%
% of Portfolio 34.2%
Average Reversionary Yield 8.5%
Average Reversionary Yield 5.7%
Italy France
Properties 17 Properties 25
Lettable Area (sq m) 335,977 Lettable Area (sq m) 370,090
Valuation (€ million) 458.6 Valuation (€ million) 358.5
% of Portfolio 25.0% % of Portfolio 19.5%
Average Reversionary Yield 6.0% Average Reversionary Yield 8.2%
1. Valuations as at 30 June 2019
2. WALE and WALB as at 30 June 2019. WALE is defined as weighted average lease expiry by headline rent based on the final termination date of the agreement (assuming the tenant-customer does not terminate the lease on any of the permissible break date(s), if
applicable); WALB is defined as the weighted average lease break by headline rent based on the earlier of the next permissible break date at the tenant’s election or the expiry of the lease
3. % freehold and continuing / perpetual leasehold by value
4. A proxy to present cap rate. Reversionary Yield is the net market rental value per annum (net of non-recoverable running costs and ground rent) expressed as a percentage of the net capital value. The reversionary yield for the portfolio and sub portfolios is the
average reversionary yield weighted by the valuation
CROMWELL PROPERTY GROUPFunds Management – Foundations In Place (30 June 2019)
Total Funds and Asset management segment profit
Cromwell Funds Under Management
was $28.5 million (FY18 $35.0 million)
Total segment AUM increased 3.2% to $9 billion
driven by an increase in retail AUM to $2.3 billion
(FY18 $2 billion) while wholesale AUM was
unchanged at $6.7 billion
European Funds Management Update
FUM within Europe was steady at €3.8 billion but just
under half (49%) is now successfully underpinned by
Path to Securing European FUM1
longer dated capital
€ 9.0 € 8.0
Post completion of recent CEREIT acquisitions and € 8.0
successful acquisition of investor interests in € 7.0
75%
Cromwell Polish Retail Fund this will increase to 64% € 6.0
€ 5.0
€ 3.9 € 3.8 € 4.0
This will provide the business with steady, recurring € 4.0 € 3.4
earnings and make it less prone to transactional € 3.0 64%
€ 2.0 49%
income 36%
€ 1.0
Platform is ready to scale with medium term target of €- 0%
Jun-17 Jun-18 Jun-19 Proforma medium
€8 billion and 75% of earnings from recurring income term target
1. Based upon successful completion of CEREIT properties plus Cromwell Polish Retail Fund. There is no European FUM ($B) % recurring FUM
certainty that this will complete.
CROMWELL PROPERTY GROUPFY20 Guidance Reaffirmed
30.0%
FY20 operating profit affirmed at top end
25.0%
of previous guidance range at no less than
8.30 cps
20.0%
FY20 distribution guidance affirmed at no
less than 7.50 cps 15.0%
Representing an operating profit yield of
10.0%
6.53% and a distribution yield of 5.90%
respectively1
5.0%
0.0%
1 year 3 year 5 year 10 year 15 year
CMW Total Return 27.5% 19.5% 14.6% 15.8% 23.8%
S&P / ASX 300 A-REIT Accum. Index 18.4% 9.5% 13.8% 11.1% 5.6%
CMW Excess Performance 9.1% 10.0% 0.8% 4.6% 18.2%
Investor Services Brisbane Office Sydney Office London Office Auckland Office Singapore Office
1300 276 693 Level 19, Level 14 7 Seymour Street Oyster Property Group 50 Collyer Quay
invest@cromwell.com.au 200 Mary Street 167 Macquarie Street London, W1H 7JW Level 2, 14 Normanby Road, #07-02 OUE Bayfront
www.cromwell.com.au Brisbane QLD 4000 Sydney NSW 2000 UK Auckland, New Zealand Singapore 049321
1) Based on CMW closing share price of $1.27 as at 10 October 2019
CROMWELL PROPERTY GROUPCROMWELL PROPERTY GROUP 16
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