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Cromwell Insight Magazine | Winter 2018
The changing
face of the
logistics
sector
INSIDE 10 13 16 20
Six investment Investing in What a time to 20 years - built on
lessons from 15 property within be alive the accomplishments
years of data your SMSF of our people
CONTENTS
3 CEO update 16 What a time to be alive
4 In brief 18 In conversation with...Simon Garing
6 The changing face of the logistics sector 20 20 years - built on the accomplishments of our people
10 Six investment lessons from 15 years of data 26 Cromwell Property Group Foundation sponsors
13 Investing in property within your SMSF Destination Outback 2018 (DO18)
Keeping up to date
LinkedIn.com
Insight Magazine
YouTube.com
Cert no. L2/0008.2010
Published by Cromwell Property Group
www.cromwell.com.au/insights
If you would like to receive the next Insight Magazine in your letterbox,
go to www.cromwell.com.au/insights to subscribe.
Cromwell Property Group (ASX:CMW) is a Real Estate Investor and Manager with operations
on three continents and a global investor base. The Group is included in the S&P/ASX 200. As
at 31 December 2017, Cromwell had a market capitalisation of $2.0 billion, a direct property
investment portfolio in Australia valued at $2.5 billion and total assets under management of
$11.2 billion across Australia, New Zealand and Europe.
Insight Magazine is published by Cromwell for our securityholders, investors and financial
planners in Australia. It is distributed quarterly and features our view of the Australian
property market, industry trends, news and education. We also share our achievements
and report on the progress of each of our investment funds.
This report has been prepared by Cromwell Funds Management Limited, ABN 63 114 782 777, AFSL 333214 (CFM)
and Cromwell Property Securities Limited, ABN 11 079 147 809, AFSL 238052 (CPSL), both of which are wholly
owned subsidiaries of Cromwell Corporation Limited, ABN 44 001 056 980.
All statistics, data and financial information are prepared as at 31 December 2017 unless otherwise indicated. All
dollar figures shown are in Australian dollars unless otherwise indicated.
While every effort is made to provide accurate and complete information, Cromwell does not warrant or represent that
the information is free of errors or omissions or is suitable for your intended use and personal circumstances. Subject
to any terms implied by law that cannot be excluded, Cromwell accepts no responsibility for any loss, damage, cost
or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in the
document.
This document is not intended to provide investment or financial advice or to act as any sort of offer or disclosure
document. It has been prepared without taking into account any investor’s objectives, financial situation or needs. Any
potential investor should make their own independent enquiries, and talk to their professional advisers, before making
investment decisions.
Past performance is not a reliable indicator of future performance. In particular, distributions and capital growth are not
guaranteed.
Various unlisted funds are referred to in this document. At the date of this document, the funds are not offered outside
of Australia and, in some cases, New Zealand.
Neither CFM nor CPSL receive any fees for the general advice given in this document.
Cromwell Property Group (Cromwell) comprises Cromwell Corporation Limited, ABN 44 001 056 980 (CCL or the Company)
and the Cromwell Diversified Property Trust, ARSN 102 982 598 (DPT or the Trust), the responsible entity of which is CPS.
Contact Brisbane Office Sydney Office Melbourne Office
1300 268 078 Cromwell House Level 14 Level 5
invest@cromwell.com.au Level 19, 200 Mary Street 167 Macquarie Street 700 Collins Street
www.cromwell.com.au Brisbane QLD 4000 Sydney NSW 2000 Melbourne VIC 3008
2
29 INVESTMENT REPORTS
33 Cromwell Direct Property Fund 37 Cromwell Property Trust 12
34 Cromwell Australian Property Fund 38 Cromwell Ipswich City Heart Trust
35 Cromwell Phoenix Core Listed Property Fund 39 Cromwell Riverpark Trust
36 Cromwell Phoenix Property Securities Fund 40 Cromwell Phoenix Opportunities Fund
CEO update
Dear Investor,
July 2018 marks the 20-year anniversary of Cromwell Property Group.
Paul Cromwell’s journey began in the early months of 1998 when a number of like-minded
Weightman individuals came to the conclusion that there were a lot of people in the property industry
MANAGING DIRECTOR/ that didn’t put the needs of investors first.
CEO
We collectively thought we could do property investment better. We also thought that we
could do it with the right focus on what investors wanted, and the right ethic in terms of
servicing their needs.
Scraping together every cent possible we managed to recapitalise a listed property
syndicator called Westholme Limited. A new Board of Directors was subsequently appointed
and the name changed to Cromwell Corporation Limited. That was the beginning of our
journey.
Since then there have been many milestones. The first syndicate was Terrace Office Park in
Fortitude Valley in 1998 and 700 Collins Street in the Melbourne Docklands in 2007 was a
major transformative acquisition.
Key subsequent transactions included the Qantas HQ in Mascot in 2010, Northpoint Tower
and the NSW Government portfolio both in 2013 and Cromwell’s European platform in 2015.
The successful listing of the Cromwell European REIT on the Singapore Exchange Securities
Trading Limited (SGX-ST) at the end of last year was another important step.
Cromwell has now grown into a business with 370 employees across 15 countries and
$11.2 billion in assets under management. Throughout the entire journey we have been
unwavering in our focus on always doing the right thing by our investors. I would like to
thank you for your trust and look forward to Cromwell continuing to serve your interests for
the next 20 years.
In this edition of Insight, we touch on the growth of e-commerce and its impact on the
logistics sector, investing in property within an SMSF, life expectancy and In Conversation
features our Chief Capital Officer, Simon Garing. I hope you enjoy your copy.
Yours sincerely,
Paul Weightman
3
In brief
Northpoint Tower completes Development application Cromwell European REIT’s
On 19 March 2018, Cromwell’s lodged for 475 Victoria inaugural results exceed IPO
Northpoint Tower redevelopment
successfully reached practical
Avenue, Chatswood forecast
completion with the support of FDC On 25 May 2018, Cromwell Cromwell EREIT Management Pte.
Construction & Fitout. Most of the submitted a development Ltd., the manager of the Cromwell
retailers then completed their fit- application (DA) for 475 Victoria European Real Estate Investment
outs, and commenced trading during Avenue, Chatswood. Trust (CEREIT), announced
the months of April and May. CEREIT’s maiden financial results
Head of Property, Bobby Binning,
to the Singapore Exchange
Cromwell acquired 50% of said Cromwell saw significant
Securities Trading Limited (SGX-
Northpoint in 2013 and soon opportunities in North Shore,
ST) on 10 May 2018.
thereafter commenced planning for where the building is located.
a $130 million refurbishment and The Manager is a wholly owned
“With no new supply planned in
overhaul of the landmark site. The subsidiary of Cromwell. Its Chief
the near future, Cromwell’s DA
repositioning includes an integrated Executive Officer, Philip Levinson,
will provide new quality office
retail and dining precinct, updated stated, “Our primary focus since
space and augment the existing
tower façade and a 187-room Vibe listing has been to keep our
amenity in the Chatswood area,
Hotel with a rooftop bar. commitments to investors. I am
increasing options for the growing
delighted to announce that we
Key statistics of the project were: professional and residential
have delivered on the goal of
• 791,978 hours of labour delivered population,” Mr Binning said.
meeting and exceeding our IPO
by over 65 different trades for Cromwell’s DA is for a new low- forecast for the reporting period.”
base building works; rise 3,500 sqm premium-grade
CEREIT recorded gross revenue
• An average of 132 construction office building fronting Victoria
amounting to €41.0 million during
personnel on site each day with a Avenue. It also includes a proposal
the reporting period, up from the
peak of 287; for a new 4.5-star, 156-room,
IPO forecast of €40.7 million.
full service hotel and envisages
• 6,000 tonnes of waste produced Net property income came in at
significant plaza and amenity
from demolition; and €27.0 million, surpassing the IPO
improvements, including new end-
• 92% of waste recycled. forecast of €26.3 million by 2.8%.
of-trip, outdoor, conferencing and
Cromwell has subsequently dining facilities. Distributions per unit for the
partnered with technology firm period were 1.45 Euro cents,
The DA process is subject to
Equiem to create a local Northpoint exceeding the IPO forecast by
Council approval and expected to
community by combining an online 3.5%.
take approximately six months.
portal with exclusive offers and Cromwell owns approximately 35%
content, an Onsite Community of the units in CEREIT.
Manager, and a wide range of
exciting events and activities.
4
Cromwell Ipswich City 207 Kent Street providing Cromwell signs logistics
Heart Trust draws closer to firms with a gateway to partnership with Linkcity
maturity Barangaroo (Bouygues)
The Cromwell Ipswich City Heart Cromwell has attracted a number On 14 May 2018, Cromwell
Trust (Trust) is due to mature in of new tenants to its 207 Kent formally entered into a strategic
December 2018. Street property as financial partnership with Linkcity, a
and professional services firms member of global construction
Cromwell recently asked investors continue to flock to Sydney’s new company, Bouygues Construction,
in the Trust for their feedback landmark waterfront precinct, to invest in the rollout of logistics
on how they would vote if given Barangaroo. and light industrial assets in
the chance to extend the term of
The significant demand from blue- Central Europe.
the Trust past the initial maturity
period, for a further five years. chip firms for office space in prime The portfolio is targeting an
locations and quality A-grade eventual gross asset value of €500
The feedback returned in favour buildings has led to Cromwell million, with assets representing
of extending and will be one of securing gross rents above $1,000 more than 25% of the portfolio
many factors the Cromwell Funds per sqm at Kent Street. already identified. The first asset
Management Board will consider
Cromwell purchased Kent Street in is an 8,000 sqm logistics building.
when examining options at the
2013, and it has since undergone Located just over 100km east of
maturity of the Trust.
extensive modernisation and Prague in the Czech Republic, it
Cromwell Ipswich City Heart Trust refurbishment, including a new is already 88% pre-let and due to
investors are advised that any lobby area completed in 2014. The complete in the coming months.
further decision on the extension 18-level building is now more than Cromwell’s Managing Director
of the term of the Trust will be 95% leased. for Europe, Mark McLaughlin,
communicated to them in due
“This is just another example of said “We are delighted to partner
course.
our value-add capabilities at work, with an experienced developer of
and our focus on delivering value the calibre of Bouygues to create
for our customers,” said Head of a portfolio of premium logistics
Property, Bobby Binning. and light industrial assets that
are already in high demand from
transport and e-commerce related
occupiers.”
The larger second and third
assets, covering a combined
180,000 sqm, are currently seeking
pre-let commitments.
5
The changing face of the
logistics sector
A combination of factors is driving Consumer spending is increasing at its fastest rate
since the GFC, providing a tailwind for overall growth,
increased interest in logistics with the proportion of this expenditure accounted for
real estate assets, including the by e-commerce increasing even faster. For the first
continued growth of e-commerce time, last year e-commerce comprised more than
10% of global retail sales, with this figure set to grow
and ongoing improvements to last- to 17.5% by 2021 while total sales are forecast to
mile logistics, technology and the exceed US$4.8 trillion.
push towards automation. The uptake of e-commerce varies by country. The
UK is leading the way, as e-commerce accounts for
Contemporary logistics
12% of retail sales. The US sits at 10%, but Australia
Logistics is the part of supply chain management lags with only about 7-8% of retail sales coming
that plans, implements and controls the efficient from e-commerce, perhaps showing the immediate
forward and reverse flow and storage of goods and opportunity ahead, and also the challenges faced by
information between the point of origin and the point traditional retailers such as Myer and David Jones.
of consumption.
E-commerce share of total global retail sales from
In conjunction with the cyclical drivers that have
positioned the current logistics landscape, there 2015 to 2021
are also structural drivers shaping the sector, such 20%
as more demanding consumers, the evolution of Forecast >
17.5%
18%
e-commerce in retail, urbanisation, robotics and
15.5%
global investment in logistics real estate assets. 16%
13.7%
Share of retail sales
14%
Global drivers and future trends 11.9%
12%
Cloud’s the limit for e-commerce 10.2%
Recent years have seen a surge in popularity for 10%
8.6%
logistics assets. This is perhaps unsurprising, given 7.4%
8%
that 2017 saw an estimated US$2.23 trillion in
worldwide e-commerce sales, up from US$1.3 trillion 6%
2015 2016 2017 2018 2019 2020 2021
just three years previously.
6
Last-mile logistics driving urban demand
Millennials will comprise 75% of the workforce by
2030. As such, their lifestyle patterns and demand for
instant fulfilment will increasingly impact commercial
real estate investment into the logistics sector.
Broadly, customer expectations are increasing, with
the focus now placed on goods arriving faster, more
flexibly, and often with little to no delivery costs.
The shift towards urban logistics is therefore
underpinned by greater supply chain management,
facilitated by constantly evolving technology. While the
Automation and innovation firsts
need for buffer stock is less, e-commerce operators
require an estimated three times more space than As of early 2017, the world’s largest online retailer,
traditional warehouses, due to the greater diversity of Amazon, employed 45,000 robots in 20 of its US
products and the need to have them readily available. distribution centres. Additionally, British online-
Big data is also having an impact. Companies are only supermarket, Ocado, has recently opened a
analysing the vast, unstructured data sets produced largely automated distribution facility that allows
by internet-connected devices to gain a greater it to process 3.5 million items or roughly 65,000
understanding of who buys what, from where, orders each week.
and then how best to optimise route planning and Chinese e-commerce, retail and technology
minimise the cost of delivery. conglomerate, Alibaba, has committed to investing
US$15 billion over the next five years to increase
These insights are ultimately useful for customer
research and development in logistics data
retention, as on-time delivery motivates 72% of
technology, as well as for the development of smart
consumers to make repeat purchases. Similarly, a
warehousing, smart delivery and global logistics
significant proportion of online shoppers will abandon
infrastructure. Alibaba considers this core to
their purchases if shipping costs appear excessive. All
building the global logistics network of the future.
of these considerations have implications for both the
location and size of logistics assets. Automation along the supply chain also extends
outside of the warehouse. Route optimisation
Technology continues to advance
to better serve the last-mile logistics process
Technological innovation continues to exert
have been in effect as far back as 2013, with UPS
significant, overwhelmingly positive effects on the
developing a predictive system called ORION to
sector. Broad trends include widespread automated
shorten routes for drivers, saving the company
and intelligent manufacturing processes, storage and
millions of dollars in fuel costs.
retrieval systems, and delivery.
Driverless delivery vehicles may be the next wave
The prospects of full automation are appealing. Where
of innovation. In late-2017, Tesla unveiled an
land can be expensive, autonomous warehouses that
autonomous truck, which can drive 800 kilometres
on a single charge of its lithium-ion battery pack.
On a smaller scale, earlier this year tech startup,
Nuro, received US$92 million of funding to develop
fully autonomous self-driving vehicles designed
to bring items from local businesses directly to a
customer’s home.
7
can utilise vertical space efficiently may be the future. Which property sector do you believe is the most
However, as it stands, partial automation rules the attractive for investment purchases?
sector, as occupiers consider operational flexibility and 50%
return on investment.
33% 33%
Supplementary infrastructure
26% 26%
While the trend to acquire urban logistics real estate 21% 20%
is in full swing, there is still a place for traditional 14% 15%
10%10%10% 12%
logistics assets. Infrastructure investment has always 8%
been one of the primary contributors to growth and 2%
major road and transport investment continues to Office Industrial & Retail Hotel/ Resorts Mulitfamily /
Logisitcs Leased Residential
open up less accessible land and locations. This is
EMEA AMERICAS APAC
evident through China’s Belt and Road Initiative (see
breakout adjacent). Source: CBRE Research, Global Investments Survey, 2018
Technological, demographic and economic changes
Investor intentions are nothing new. However, the logistics sector has
Global real estate investment activity rose to US$953 never before experienced the structural shifts
billion in 2017, up slightly from US$941 billion in 2016, spurred on by the continued rise of e-commerce
with economic conditions set to remain favourable and automation, as well as the need for last-mile
through 2018. Logistics assets are the most popular logistics. This has meant a blurring of the lines
amongst investors in 2018, with 36% of respondents between logistics and retail, a transformation
across EMEA, the Americas and APAC scoring it in worldwide supply chains, and has resulted in
as their most attractive sector in CBRE’s Investor increasing levels of capital investment.
Intentions Survey. This is up 4% on 2017.
8
Belt and Road Initiative
The Belt and Road Initiative (BRI) was launched by Michael Nijdam, Port of Rotterdam’s (the world’s
China in 2013 as a means of providing a platform busiest port) Corporate Strategist, said in an
for multilateral cooperation to create new trade interview with IPE that freight trains already carry
routes, economic links and business networks. laptops and other higher-value products from
The development of the built environment across China to Germany, travelling through Kazakhstan,
the BRI, whether infrastructure-related, logistics, Russia, Belarus and Poland in the process.
townships or new urban settlements over the The trains currently haul about 80,000 twenty-foot
coming decades will be considerable. As it stands, equivalent unit (TEU) containers a year, with this
US$1 trillion worth of projects have already been expected to rise to 300,000 TEUs a year.
initiated, with another US$5 trillion worth of
projects expected to begin over the next five years. Transporting goods between China and Germany
via train takes approximately 16 days, which is
The BRI will involve 65 countries with a total less than half of the 36 days required for maritime
population of 4.4 billion and 30% share of the freight.
global economy. In comparative terms, the
project is more than seven times the scale of the Nijdam says there will be increased cargo
Marshall Plan to rebuild Europe after WWII. movement from China to production centres
in Eastern Europe, to Western Europe, then to
The benefits of the BRI include filling the UK, and beyond to the US. “We are already
infrastructure gaps in developing countries such working on improving rail links from the Port of
as Pakistan and Afghanistan, who see it as a Rotterdam, back to Southern Germany, Hungary,
pathway from poverty. It is likely to accelerate the Czech Republic and Poland,” said Mr Nidjam.
economic growth in the countries involved, as well
as China, as it increases trade and facilitates the
transit of goods and international cooperation.
Projects subsumed under China’s
Belt and Road Initiative
Proposed ecomonic corridors
Railroad connections
Existing
Planned or under construction
Gas Pipelines
Existing
Planned or under construction
Oil Pipelines
Existing
Planned or under construction
Ports with Chinese engagement
Existing
Planned or under construction
Silk Road Economic Belt
Maritime Silk Road of the 21st Century
AIIB member states
Source: https://www.merics.org/en/china-mapping/silk-road-initiative
9
Six investment lessons
from 15 years of data
The latest SPIVA (Standard & Poor’s Indices
versus Active) results are in. They provide
important lessons on where to look if you’d like
to find long-term outperforming managed funds.
In their latest scorecard, S&P evaluated returns of 786 Australian equity
funds (large, mid, and small cap, as well as A-REIT), 378 international
Daryl Wilson equity funds, and 109 Australian bond funds. For the first time in
CEO AND PORTFOLIO MANAGER OF
Australia, S&P was able to provide data for a 15-year period. The results
AFFLUENCE FUNDS MANAGEMENT LIMITED
are summarised below:
This article is for general
information only and not an
Percentage of Funds Outperformed by the Index (based on Absolute Return)
investment recommendation. It Fund Category Comparison One- Three- Five- Ten-year 15-year
should not be construed as tax, Index year (%) year (%) year (%) (%) (%)
legal, or investment advice. Australian Equity S&P/ASX 200 59.00 66.77 63.00 73.94 77.00
General
Australian Equity S&P/ASX Mid- 74.04 75.00 55.67 40.00 54.72
Mid- & Small-cap Small
International S&P Developed 52.51 80.93 90.86 88.26 87.10
Equity General Ex-Australia
LargeMidCap
Australian Bonds S&P/ASX 68.63 77.36 85.42 85.00 NA
Australian Fixed
Interest 0+
Index
Australian Equity S&P/ASX 200 43.94 66.18 83.56 71.59 78.08
A-REIT A-REIT
Source: S&P Dow Jones Indices LLC, Morningstar. Data as of Dec 29, 2017. Past performance is no guarantee of
future results. Table is provided for illustrative purposes
The SPIVA study has consistently observed that the majority of Australian
managed funds fail to beat comparable benchmark indices over the
longterm. For example, over the 15-year period ending December 2017,
more than 87% of all international equity funds underperformed their
benchmark after fees. In all categories, over almost all time periods, a
large percentage of managed funds failed to beat a fair benchmark.
But behind the headlines, there are some important lessons to be
gleaned. Here are six investment lessons from 15 years of data.
10Funds that invest in smaller companies do better
The best performing group of funds by far over five, ten and 15 years were those
that invested in Australian smaller companies. More than 60% outperformed
over ten years and around 45% over five and 15 years. While that’s still not
great, it’s way better than all other categories, where success rates are
generally less than 25%.
It’s often pointed out that the Australian small caps index is poorly constructed
and easy to beat, which makes it a low hurdle. There is some truth in that.
But it’s also true that smaller company funds delivered a greater total return
compared to larger company funds, as can be seen below:
Average Fund Performance (Asset-Weighted)
Index/Peer Group One-year Three-year Five-year Ten-year 15-year
(%) annualised annualised annualised annualised
(%) (%) (%) (%)
S&P/ASX 200 11.80 8.63 10.23 4.14 9.49
Australian Equity 11.90 8.47 10.58 4.60 9.38
General
S&P/ASX 200 Mid-Small 21.16 15.79 12.17 2.30 9.66
Australian Equity Mid- & 17.04 14.04 12.45 5.47 10.85
Small-cap
S&P Developed Ex- 14.51 11.72 18.93 6.96 7.09
Australia LargeMidCap
International Equity 16.61 11.39 17.51 6.55 7.01
General
S&P/ASX Australian 3.61 3.04 4.10 6.20 NA
Fixed Interest 0+ Index
Australian Bonds 3.54 2.79 3.82 5.83 5.32
S&P/ASX 200 A-REIT 5.72 11.00 13.23 1.89 5.99
Australian Equity A-REIT 7.26 10.96 12.98 2.09 5.90
Source: S&P Dow Jones Indices LLC, Morningstar. Data as of Dec 29, 2017. All returns in AUD. Past performance is no
guarantee of future results. Table is provided for illustrative purposes
Over all time periods, mid-small company funds beat their larger company
peers.
So, Lesson One, it’s a good idea to have some exposure to smaller companies
in the equities part of your investment portfolio.
Overall returns aren’t as great as most people think
The Table above also shows that the best 15-year returns came from small to
mid-sized companies at around 10% p.a. Funds investing in larger companies
delivered 9-10% p.a. on average, depending on whether you had an active
manager or an index fund. That excludes franking credits, which probably would
have added up to another 1% p.a. So that’s pretty good.
In comparison, international shares fared worse at around 7% annual returns.
This is the case even though global shares have performed much better
over the past five years. It supports our current positioning in the Affluence
11Investment Fund Portfolio. We maintain a low Lesson Four, allocations to both growth and value
allocation to global shares because compared to styles are likely to outperform at different times.
Australian shares, we believe they’re significantly You might get the same long-term result, but perhaps
more overvalued. a smoother overall result if you have both in your
portfolio.
Bringing up the rear returns-wise, over 15 years
Australian bonds have delivered just over 5%. A-REITs
(or listed property trusts) returned around 6% p.a. The recent stars are more likely to be future
laggards
This means on average, a balanced portfolio of
60% shares/property, 40% bonds/cash might have One of the common trends we see is the herd piling
delivered investors around 7.5% p.a. This compares into last year’s best performing funds. That’s usually
well to the average balanced super fund, which a big mistake. Our experience is that an equity fund
according to Chant West has delivered around 6.8% delivering above 12% p.a. over 10 years or more is
p.a. over the past 15 years, after tax. extremely rare. So, if you invest in one that just did
20% p.a. for the last two years, chances are that a
Lesson Two, recognise that average returns aren’t big part of that performance was due to the fact that
that great, and make sure your return target is the assets or market they have invested in is now
realistic. overvalued. Or their investment style has had a good
But there’s also more to this story. On average, run. Or they had a low amount of funds to manage but
investors do far worse than this. That’s because they now they have a lot. Maybe all three.
tend to invest near market highs and sell near lows. Any or all of these things don’t bode well for the
Many credible studies show the impact of poor timing next few years’ returns from that fund. Last year’s
is that the average investor will achieve returns outperformers can be next year’s laggards.
2-3% p.a. worse than the average, mostly because of
poor timing decisions. So, Lesson Five, be wary of funds that have
delivered high returns in recent years. In many
Lesson Three, unless you’re very comfortable going cases, it’s just not repeatable.
against the crowd, any strategy that delivers more
consistent returns should be preferred. It means you The best funds might not actually be in the
aren’t tempted by wild valuation swings to buy and
sell at the wrong times.
survey
The SPIVA survey is limited. They do include over
Growth vs Value 1,300 funds, which is a lot. But their data set is limited
to those funds included in Morningstar’s database
Although the Australian study doesn’t look at
and in the categories stated. In our experience,
differences in returns from investment styles, the
many of the best funds, including a great number
much bigger US study does. It showed that over 15
available only to wholesale investors, are not on the
years, there was not a large amount of difference
Morningstar database. Or they pursue an investment
between value and growth styles. But within shorter
strategy not covered in the SPIVA survey.
periods, there could be quite a big difference. For
example, over the past year, US large-cap growth So finally, and most importantly, Lesson Six. Despite
funds delivered almost 30% returns, compared to what this study suggests, great funds and managers
value funds at just 15%. There have been other times who can outperform over the long term are out
when the reverse has occurred, although rarely to the there. If you know where to look. And what to look
same degree. for. Much of the answer to that is encompassed in
our motto, Invest Differently.
There is not a lot of difference over the longer term.
Over 15 years, large-cap growth funds outperformed By the way, if you’re interested, the full SPIVA
large value funds slightly. And small-cap value report can be found at https://au.spindices.com/
outperformed small-cap growth slightly. These documents/spiva/spiva-australia-year-end-2017.pdf
results are perhaps not what you would expect. Take care and all the best with your investing.
12Investing in property within
your SMSF
Direct property One of the most appealing features SMSFs and direct property
of SMSFs is the control trustees
investment remains and members can exercise over
investment
a popular investment their investment choices. Property Superannuation funds have always
been able to invest directly in
option for self- is the third most popular asset
property, but historically many
class for SMSFs, and an asset
managed super fund class that most investors are SMSFs didn’t have sufficient funds
(SMSF) investors. But familiar with. to do so. The introduction of limited
recourse borrowing arrangements
it requires careful However, investing within a SMSF (LRBA) in 2007 put direct property
consideration before poses a specific set of risks, rules investment within reach of many
taking action. Other and possible outcomes, which more SMSF investors by allowing
should prompt trustees to compare
property asset classes the risk, return and tax scenarios
them to borrow funds to purchase
assets within their fund.
may help SMSF of all the different types of property
Since then, SMSF borrowing has
investors achieve the investment vehicles available to
gained momentum, reaching $25.4
them – including direct property
same outcome but in a investments, unlisted funds, and billion in 2016 (the latest dates for
better way. trusts. which we have figures) with 93%
of that borrowing being invested
in real property assets. However,
13if borrowing through an LRBA, particularly when investors have Liquidity
an additional level of cost and an affinity with a certain type of Liquidity is a major consideration
regulation can be added to the fund property (such as residential or for SMSFs and again can be
and its assets. industrial), a location, or based on similarly challenging if a significant
past market experience. proportion of members’ financial
Whether investing in direct
property within your SMSF While choosing a direct property resources are tied up in an
via lending or accumulated on this basis may appeal to illiquid investment. This can be a
capital, the investment should the control element desired by significant issue on the occurrence
be evaluated for its suitability many SMSF trustees, this same of an unplanned event, like the
based on characteristics such sentiment can potentially cloud death or disablement of a trustee,
as diversification, liquidity, some of the inherent risks of or a divorce, each of which can
management and cashflow. Most holding such a large amount of the require the fund to sell part or all
important is the investment’s fund in the one asset. of the investment.
potential to contribute to the main This, in turn, introduces its
Lack of diversification can increase
purpose of superannuation, to members to sequencing risk as the
the risk of breaching SMSF
provide an income in retirement. trigger of the sale might be during
regulations. SMSFs are required
to report their investment strategy an inopportune time, for example a
Diversification to the Australian Taxation Office dip in the market. This may prevent
Depending on the overall fund (ATO), and if the majority of capital the other members of the SMSF
balance, the level of capital is directed into a single asset, from being able to realise the
required to invest in direct property like an investment property, the capital growth they were relying on
can restrict diversification within ATO may find that the investment for their own retirement planning.
the fund, and therefore increase strategy is not diverse enough The fund also needs to cover
overall allocation risk. Investing to provide sufficient stability and the costs to hold and manage
in direct property can sometimes achieve returns in line with the the property – including council,
have a sentimental element, fund’s investment objectives. strata, water rates, maintenance
and property management fees.
Familiar direct property capital
growth strategies, like renovating
an older property to sell at a higher
price, can still be implemented
but must be funded from money
outside of any LRBA.
14While the risks discussed can same market value, including Distributions from unlisted
all be present in various degrees parcels of identical shares property funds and REITs can also
across all property asset classes, (in one company) or units (in include a tax-deferred component,
the concentration of a large a managed fund). Gaining representing a distribution of
amount of capital in the one asset their property exposure in non-assessable income. This is
within an SMSF requires additional this way also relieves SMSF made possible when the taxable
consideration given the heightened trustees of the responsibility income for the fund is less than
overall risk to the fund. of asset management, leaving the distribution income paid to
the leasing, maintenance and investors, due to factors such as
Unlisted property funds and financing elements to specialist depreciation. The distributions
Real Estate Investment Trusts managers. have the effect of reducing the cost
base of the units, ‘deferring’ the
(REITs) Fund selection can be tailored
tax payable until capital gains are
A more flexible option could be to to capital growth or regular
crystallised on sale.
invest in an unlisted commercial distributions, or both, depending
property fund or a property on the objectives of the SMSF For SMSF investors, this provides
trust that can provide liquidity, strategy and life-stage of tax planning opportunities around
diversification, capital growth and members. Liquidity can vary the timing of the sale of the units.
regular returns more in line with depending on maturity terms, Reduced or nil tax is payable on
an SMSFs investment objectives, with suitability again depending the distributions when received
particularly if it is a smaller fund. on the needs of the fund’s within the accumulation phase of
members. superannuation due to the non-
Reports reveal that unlisted assessable portion. By deferring
property funds are one of the best Another investment option,
sale of the units until the SMSF
performing asset classes in the REITs, offer investors a property
account is in the tax-free pension
country, with an average annual investment with the liquidity of
phase, the tax payable on the
return of 20.5% for the year ending shares. This can be especially
distribution income can potentially
March 2018, and total annualised useful when investors need
be eliminated altogether.
returns of 19.6% over the five years access to cash or, in the case
to the same period. of insurance pay-outs, pension Superannuation and property can
payments or SMSF members be complicated, so it’s a good idea
Borrowing to invest in unlisted exiting the fund, a partial sell to do your research. This should
property funds or REITs is still down of the investments is include finding an accountant or
an option for SMSFs, as the rules required while still protecting adviser who is qualified to provide
allow for investment in a collection the long-term interests of the advice on SMSFs, and who can
of identical assets that have the remaining members. explain the complete range of
options – including, but not limited
to, borrowing to invest in direct
property and the advantages of
the potential alternatives such as
unlisted property funds and REITs.
15What a time to be alive
Medical, economic and societal advances have allowed people to continue to live
and age in a way that was previously thought of as
advances mean people are impossible. There isn’t a single country in the world
drastically outliving life that currently has a lower life expectancy than the
countries with the highest life expectancy in 1800.
expectancy estimates from only a
century ago. Further, morbidity, Further, child mortality, defined as the number of
children who died prior to their fifth birthday, has also
the time people are ill at the substantially declined. In 1800, in Sweden, perhaps
end of their lives, is shorter the most advanced country in the world at the time,
over 30% of children did not reach their fifth birthday.
than ever before. While this is Even the most disadvantaged countries in the world
all great news, living a longer now have rates substantially below this.
and healthier life does require It’s not just childhood mortality that is on the retreat.
greater financial resources. The last global case of Small Pox was in 1977.
Measles deaths have dropped 75% across the globe
If you are currently 65 years of age, your life and have been eradicated in most affluent countries.
expectancy at birth was around 68 for males and 74 Polio cases have declined 99% since 1988. There is no
for females. However, don’t start counting down the shortage of statistics on reduced deaths from disease.
remaining days just yet! You are obviously still living
and breathing, and there’s some more good news. Additionally, external factors like war, violence,
With all the recent advances we have alluded to, as a drought and famine, while still prevalent - particularly
65 year old, you are now, on average, expected to live in third world countries - are increasingly less likely
another 19.5 years if you are a male, and 22.3 years if to be a factor when viewed at a global level. Despite
you are a female. everything that you might see and hear in the media,
there has never been a better time to be alive.
Perhaps most staggering is that, of all people in the
200,000 years of human existence to ever live beyond This is all unequivocally good news. However, within
65 years of age, more than half are alive right now. As these statistics and figures lies a potential hazard.
a matter of fact, at 65, males have a 42% chance of People have been progressively, and sometimes
living beyond 90, and females have a 55% chance. significantly, outliving their previously estimated
lifespans. This means they are becoming more likely
When you were born, there was no telling whether to be impacted by longevity risk. The risk that they
or not you were going to survive until your given life simply run out of money because they have lived
expectancy. That’s exactly why the life expectancy longer than expected.
average is a measure taken at birth. Therefore, the
longer someone lives, the more likely it is that they Consideration is required in order to manage this
will exceed their initial life expectancy. risk. A better understanding of how long you, or your
spouse, will actually live can underpin and guide
There is an abundance of reasons as to why superannuation and investment decisions. Being
humans are living longer. Quality-of-life continues better informed can help ensure your lifestyle in
to drastically increase through advances in medical retirement can be maintained.
science, technology, education and better nutrition
In our Autumn 2018 edition of Insight we discussed
and hygiene. We are continually trying to find ways to
strategies relating to property investment to combat the
live longer and healthier lives. It is something that
longevity risk. To find this article and more, visit
we, as humans, have been very successful at. www.cromwell.com.au/insights/
The fact is, remarkable technological and medical
16LIFE EXPECTANCY
more years
more years
At 65, women,
on average, are At 65, men, on
expected to live average,are
another 22.3 expected to live
years more than another 19.5
the 74 years years more than
estmated when the 68 years
they were born estimated when
they were born
Life expectancy (expected age at death in years) at different ages by sex, 1960-1962 and 2013-2015
Age (years) Females Females Males Males
1960-1962 2013-2015 1960-1962 2013-2015
0 74.2
74.2 84.5 67.9
67.9 80.4
1 75.5 84.8 69.5 80.7
15 76.0 84.9 70.1 80.8
25 76.3 85.1 70.8 81.1
45 77.4 85.6 72.4 82.1
65 80.7 87.3
87.3 77.5 84.5
84.5
85 89.8 92.2 89.1 91.2
95 97.6 98.3 97.3 98.0
17In conversation with...
Simon Garing
Simon Garing joined Cromwell in December
2017 as Chief Capital Officer. He started his
career as an accountant with IBM, then jumped
into financial markets with Citibank, becoming
an investment manager in the burgeoning
LPT (Listed Property Trust) sector in the early
1990s.
Simon’s career has taken him I started as a traditional can’t help but broaden your world
through some of the more storied accountant, crunching numbers at view. I really enjoyed it.
names in real estate investment IBM. That was a great grounding
banking including BZW, Merrill but I decided I didn’t want to do What attracted you to
Lynch and UBS where he was another 40 years there. Financial
Cromwell?
Global Coordinator of REIT markets seemed the logical step,
Research. He returned to Merrill and LPTs were starting to take off I’ve known Cromwell since about
Lynch in 2010, spending the last at the time. The combination of 2009 when it was a ‘stock’ our
four years in Hong Kong as Deputy markets, numbers and property team covered. That’s when I first
Director of APAC Research, was the perfect mix. met Paul [Cromwell CEO Paul
with oversight of coverage of Weightman]. Our paths have
1,200 companies. We sat down You moved to Hong Kong in crossed at different times, and in
with Simon to delve into his 2013. Why? different countries, since then.
background, career to date at I’ve watched with interest as the
I’ve been travelling to Asia for
Cromwell and passions outside of business has developed and grown.
20 years, and I love the different
work. cultures and how busy and I like how Paul has always been
industrious it all is. Hong Kong very clear about putting investors’
Why Property? is obviously a major financial interests first, and isn’t afraid
I guess property is in the blood. centre, but it’s also the gateway to to call a spade a spade. As an
It was the family business. My a wider Asia. From a professional Australian, I appreciate that.
grandfather was the first person to point of view, the sheer breadth of I was also attracted to the global
import foamed concrete for high rise opportunity is fantastic.
buildings from Denmark to Australia orientation, focus on Asian capital
in the 1950s, and we have always I was also fortunate to see the start and the European platform. It is a
been around property for as long as of the rise of ‘Asian capital’ first- clear point of differentiation from all
I can remember. It has always been hand, which is now having such of our local peers. It took courage
a focus, and no matter where we go, a prominent role in real estate and conviction to stand out from the
my wife complains I spend too much markets around the world. From crowd and buy a platform in Europe
time staring into the window of the a personal perspective, spending in the first place, but Cromwell has
local real estate agency. time in a place like Hong Kong often gone against trend.
18Photo Courtesy of Guy Nowell
When the opportunity arose, it Finally, MiFID II, which stands for I travel a lot, both for work and for
was a conversation I was happy to the second Markets in Financial pleasure. My mum was born in
have. I love that Cromwell is not Instruments Directive, is a bit of Denmark and we still have family
institutional. It still has the essence arcane legislation, but is already there, as well as Portugal, Spain,
of an entrepreneurial business - beginning to have a huge impact on the UK and obviously Australia.
one that gets things done. financial markets, particularly the We try and do family get togethers
provision of investment research. reasonably regularly, generally in
What does a Chief Capital As intermediaries are unable to Europe.
Officer do? subsidise research, and clients have
In a nutshell, I am here to help
to pay for it upfront, the number of Do you have a favourite
stocks being covered is falling. destination?
connect our investors, who provide
capital, to real estate opportunities This is both an opportunity and Yes. Northern Italy. When I was
across our Australian and a challenge. Companies like with UBS I spent a lot of time in
European platforms. Cromwell have to work harder to Zurich, and Milan was only a short
sell their story, but they can also trip away. The lakes around Como
With the successful IPO of the
take this story direct to investors, in Northern Italy are fantastic.
Cromwell European REIT late
and effectively hold their future in Great food, wine, beautiful
last year, and also the investment
their own hands. I’m really excited countryside and a great lifestyle.
in Cromwell by ARA Asset
about the opportunity that this La Dolce Vita!
Management, we are really
presents.
starting to get noticed in Asia. We
have a unique ability to connect Lake Como, near George
Asian capital to some compelling
What do you do outside of Clooney’s villa? Do you have
investment opportunities. work? any stories?
Not enough! I have four fantastic Just one. But it would require at
I’ve also spent a lot of time in
kids, three boys and one girl - least a bottle of good Italian red for
bigger businesses with substantial
aged from 23 to 14 - all of whom me to tell it.
international operations. I know
I’m really proud of. I love getting
how they work and what they Thanks for your time, Simon.
on to the water, and racing J/80
require. I’m working with Paul and
sportsboats is a passion. I also
the rest of the Executive team to
cycle, and like most middle-aged
help Cromwell get ready for the
men, wear lycra.
next stage of its growth.1998: RECAPITALISATION OF WESTHOLME LIMITED I 1998: FIRST SYNDICATE: TERRACE OFFICE PARK, FORTITUDE VALLEY, QUEENSLAND I
1999: RESIDENTIAL DEVELOPMENTS I 2000: LAUNCHED CROMWELL PROPERTY SECURITIES LIMITED, CROMWELL MORTGAGE TRUST AND
CROMWELL SELECT INCOME FUND I 2000: CROMWELL RECORDED A NET PROFIT OF $1,330,992 FOR THE 12 MONTHS TO 30 JUNE 2000 I FIRST
FULL
1998: FINANCIAL
RECAPITALISATION
YEAR 1999/2000
OF WESTHOLME I 2001:
LIMITED
CREATION
I 1998:OFFIRST
CROMWELL
SYNDICATE: DIVERSIFIED
TERRACE OFFICE
PROPERTY
PARK,TRUST
FORTITUDE I 2001:
VALLEY,
ACQUIRED
QUEENSLAND
CURRENT
I 1999:
HEADQUAR-
RESIDEN-
TERS,
TIAL DEVELOPMENTS
200 MARY STREET I 2000:
BRISBANE
LAUNCHED QUEENSLAND
CROMWELL PROPERTY
I 2001:SECURITIES
SET 5-YEAR LIMITED,
TARGET
CROMWELL
OF $1 BILLION
MORTGAGE ASSETSTRUST
UNDER
AND CROMWELL
MANAGEMENT SELECT
(AUM)INCOME
AND
AFUND
SHARE I 2000:
PRICECROMWELL
OF $0.50 RECORDED
I 2003: ACQUISITION
A NET PROFITOFOFCHALLENGER
$1,330,992 FORPORTFOLIO
THE 12 MONTHS
I 2003:
TO FUND
30 JUNE
THOUGH2000 IOF FIRST
700 FULL
COLLINS
FINANCIAL
STREETYEAR
MELBOURNE
1999/2000
I 2003:2001: INVESTEC
CREATION UNDERWRITE
OF CROMWELL DIVERSIFIED
I 2004: AS FUND PROPERTY MANAGERS,
TRUST I CROMWELL
2001: ACQUIRED
BE- COMES
CURRENTRESPONSIBLE
HEADQUARTERS, FOR
11
200TRUSTS
MARY AND
STREETSYNDICATES
BRISBANE QUEENSLAND
HOLDING 26 PROPERTIES
I 2001: SET VALUED
5-YEAR TARGET
AT MORE OF
THAN
$ 1 $650
BILLIONMILLION
ASSETS UNDER I 2005:MANAGE-
ASSETS UNDER
MENT (AUM)MAN-
AGEMENT
AND A SHAREINCREASED PRICE OF BY
$0.5035%I
TO
2003:$732ACQUISITION
MILLION I 2005:
O F
FINAL
CHALLENGER DIVIDEND O F
1.50
PORTFOLIO CENTS I
P2 0 E0 3 R:
SHARE,
FUND
UNDERPINNED
THOUGH OF BY ON- GOING
700 MAN-
COL-
AGEMENT
LINS FEE
STREETIN- COME
MEL- IBOURNE
2005: CROMWELL
I 2003:
ANNUAL
INVESTEC REPORT UNDER- 2WRITE
005 -I AFTER
2004:TAX
ASPROFIT
FUND
OF
MANAGERS,
$3.54 MILLION
CROMWELLAND THEBECOMES
DECLARA- RE- TSPON-
ION OF
SIBLE A PARTLY
FOR 11 TRUSTS
FRANK-
ED
ANDDIVIDEND
SYNDICATESOF 1.5C
HOLDINGPER 26
SHAREPROP-I 2ERTIES
006: FIVE-YEAR
VALUED AT GOALMORE
MET
ITHAN
2006:$650STAPLING
MILLION
AND I 2005:
CREATION
ASSETS OF REIT
U N -I 2007:
DER MANAGEMENT
ASSET SALES
AND
INCREASED
DE-GEARINGBY 35%I 2007:TOCROM-
$732 W
M EI L L- HALF-YEAR
LION I 2005:RESULT:FINAL
CROMWELL
DIVIDEND OF 1.50 DECLARES
CENTS PER UN- D
S HEA R E-, LYING
UNDERPINNEDNET PROFIT BY
AFTER
ONGOING TAX (NPAT)
MANAGEMENT
FOR SIX M
FEEO N T HIN- S TO
COME31I 2005:DECEMBER,
CROM-
2006,
WELL OF ANNUAL
$3.96 MILLION
REPORT BEFORE
2005 - AFTER ONE- OFF
TAX STAPLING
PROFIT OFCOSTS
$3.54
OF
MILLION
$6.95 MILLION
AND THEI 2008:
DECLARATION
RESISTING MARKET
OF A PARTLY PRESSURE
FRANK-
IED 2008:
DIVIDENDCROM-OF WELL
1.5C PERRELEASES SHARE A NEW
I 2006:INVESTMENT
FIVE-YEAR
VEHICLE
GOAL MET
TO THE
I 2006:MARKET,
STAPLING AND THE CROMWELL
CREATION OFPHOENIXREIT I
PROPERTY
2007: ASSET SECURITIES
SALES AND DE-GEARING
FUND (PSF)I I2007:CROMWELL
2009: RESISTING
PH RA EL SF - SURE
YEAR FORRESULT:
DILUTIVE
CROMWELL
CAPITAL RAISE
DECLARES I 2009:UNDER-
REDE-
FLYING
INE SECURED
NET PROFITA AFTER
15% SHARE
TAX (NPAT) OF CROMWELL
FOR SIX MONTHS I 2009:
TO
31 ENERGEX
DECEMBER,SYNDICATION
2006, OF $3.96
I 2010:MIL-RE- TAIL
LION BEFORE
SYNDICATIONS
ONE-
COMMENCE
OFF STAPLINGCROMWELL
COSTS OF RELAUNCHED
$6.95 MIL- THEIR
LION IRETAIL
2008: RESIST-
FUNDS
MANAGEMENT
ING MARKET PRESSURE
BUSINESS I I 2008:
2010:CROM-RAISE CAPITAL
WELL RELEASES
OFFSHORE A
INEW
2010:
INVESTMENT
CROMWELLVEHICLE
PRIVATETOWEALTH
THE MARKET,
I 2010: QANTAS
THE CROMWELL
GLOB-
AL
PHOE- HQ ACQUI-
N I X
SITION
PROP-
IE R2011:
T Y
CS EENCT UR O- RI-
PROPOSAL
TIES FUNDI 2011:
(PSF)
ORCHARD
I 2009: RE- BID ISISTING
2011:
FIRST
PRESSURE IOF PRO-
FOR POSAL
D I L U T I V EI
2012:
CAPITAL CROMWELL
RAISE I 2009:
REP IR E D2012:
E F I CPF
NE
MERGER
SECURED I A2013:
15%ACQUISITION
SHARE OF OF
CROMWELL
NSW GOVERNMENT
I 2009:
ENERGEX SYNDICATION I 2010: RETAIL SYNDICATIONS COMMENCE CROMWELL RELAUNCHED THEIR RETAIL FUNDS MANAGEMENT BUSINESS I 2010:
RAISE CAPITAL OFFSHORE I 2010: CROMWELL PRIVATE WEALTH I 2010: QANTAS GLOBAL HQ ACQUISITION I 2011: CENTRO PROPOSAL I 2011: ORCHARD
BID I 2011: FIRST IOF PROPOSAL I 2012: CROMWELL REP I 2012: CPF MERGER I 2013: ACQUISITION OF NSW GOVERNMENT PORTFOLIO I 2013: 28%
INCREASE IN OPERATING EARNINGS I 2013: CROMWELL ENTERS THE S&P/ASX 300 INDEX I 2013: NORTHPOINT ACQUISITION I 2014: 43% INCREASE
IN OPERATING PROFIT TO A RECORD $146.7 MILLION I 2014: ACQUISITION OF A 50% SHARE OF NEW ZEALAND’S OYSTER GROUP I 2015: EMBRACING
SUSTAINABILITY I 2015: VALAD ACQUISITION I 2015: IOF ACQUISITION I 2015: DSS PROPOSAL I 2016: INVESTMENT METHODOLOG I 2016: REBRAND :WE
ARE CROMWELL I 2017: SALE OF IOF I 2017: CROMWELL EUROPEAN REIT INITIAL PUBLIC OFFERING I 2017: HAIYI INVESTMENT I 2018: REDEFINE SALE
TO ARA I 2018: AGED CARE JV WITH ASPIRE
built on the
accomplishments
of our people
20This July will mark the Early Days (1998 – 2001)
1998 2001
20-year anniversary
of Cromwell Property
Group. What began
as five like-minded “There was a group of Creation of Cromwell Diversified
individuals identifying five of us in the early Property Trust
an opportunity to months of 1998, who Between 1998 and 2003, Cromwell
purchased 14 properties in five
better service the looked to build the states with a value of more than
needs of real estate business from nothing.” $300 million. Of this, $58 million
investors has grown – PAUL WEIGHTMAN becomes part of the Cromwell
Diversified Property Trust (CDPT).
into a business with Recapitalisation of Westholme
Acquired current headquarters,
370 employees across Limited
200 Mary Street, Brisbane, QLD
Property syndicator Westholme
15 countries and Limited was recapitalised, resulting Set 5-year target of $1 billion
$11.2 billion in assets in a new Board of Directors and Assets Under Management (AUM)
under management. a name change to Cromwell and a share price of $0.50
Corporation Limited. Cromwell, as
we know it, was born.
“We saw that there were a lot of
people in the industry at the time
that probably didn’t put the needs
200 Mary Street, Brisbane
of investors first. We thought we
could do it well, and we thought
that we could do it with the right
focus on what investors wanted,
and the right ethic in terms of
servicing their needs,” Paul
Weightman said.
First syndicate: Terrace Office
Park, Fortitude Valley, QLD
Cromwell Directors (left to right): Richard Foster, Ross
Stiles, Greg Poole, Paul Weightman
21Gaining Ground (2002 – 2009)
2002-4 2005-6
2003: Lodged $133 million offer Cromwell showcased its Bundall Corporate Centre
for 700 Collins Street opportunistic abilities through
Bundall Corporate Centre
October 2004: 700 Collins Street
settled 2006: Five-year goal met
The landmark $133 million In FY06, AUM increased by 87% to
purchase of 700 Collins $1.37 billion. Final dividend of 4.50
Street, Melbourne, formed the cents per share and security price
cornerstone investment in the of $0.974.
CDPT. By 2004, Cromwell’s
Cromwell’s 2006 Annual Report
portfolio included 11 trusts and
stated ‘The CDPT holds total assets
syndicates, holding more than 26
valued in excess of $724 million,
properties valued at over $650
has more than 6,500 investors
million. AUM increased by 35% to
and has attracted more than $445
$732 million.
million in subscriptions. According
August 2005: Initial
to industry analyst PIR, as at May
purchase of Corporate
2006, it was the largest unlisted Centre at Bundall for $54
direct property trust in Australia.’ million.
2006: Stapling and creation of October 2007: Building
REIT Five of Cromwell’s unlisted is sold in a booming
syndicates were successfully market for $106 million,
merged with the Cromwell almost doubling the
Diversified Property Trust. Units in original acquisition price
700 Collins Street, Melbourne the consolidated Trust were then in just over two years.
stapled to Cromwell Corporation Throughout this time,
Cromwell’s in-house team
Limited shares to form Cromwell
improved the onsite appeal
Property Group stapled securities
of the building through
(ASX:CMW) , providing investors greater management and
with liquidity and the ability to sell maintenance practices. A
their units (now stapled securities) development application
on the listed market. (DA) was also lodged for
a second building on the
existing site.
2006 Annual Report
Performance Highlights
January 2012: Purchased
2006 Highlights
• Record full year net profit of $7.9 million, up 63 per cent.
Bundall Corporate Centre
•
•
Revenue of $25.4 million, up 33 per cent.
Assets under management increased by 87 per cent to $1.37 billion.
once again for $63.5
million, however, a second
• Final dividend of 4.50 cents per share, up from 1.50 cents in
2005.
• Acquired or contracted to purchase a further $575 million
building, constructed at
investment property for managed funds.
• Over $200 million investment inflows for the Cromwell
Diversified Property Trust (CDPT).
a cost of $40 million, has
Assets Under Management been added to the site off
1,350
1,200
1,050
1,368
the back of Cromwell’s DA.
900
June 2017: Sold for $89
750 732
Million $
2006
600 544
450
ANNUAL REPORT 300 294
351
million.
CROMWELL CORPORATION LIMITED 150
ABN: 44 001 056 980 0
2002 2003 2004 2005 2006
Year
2
22“To our knowledge, we are the only REIT that didn’t have to undertake a dilutive
capital raise in 2008-09 to pay down our debt. We were in a position where
we were able to continue paying distributions and meet the demands of our
investors.” – PAUL WEIGHTMAN
A Significant Foothold (2010 – 13)
2007-8 2009 2010-13
2007: Geoff Levy AO joined the Resisted market pressure for 2010: Qantas Global HQ acquisition
Board as Independent dilutive capital raise off the back In August 2010, Cromwell acquired
Non-executive Chairman of the 2008 GFC the Qantas Global HQ in Mascot
May 2008: Cromwell released a Cromwell Riverpark Trust for $143 million with intentions to
new investment vehicle to the Cromwell raised $91 million redevelop the existing buildings.
market, the Cromwell Phoenix for the launch of the Cromwell 2013: Northpoint acquisition
Property Securities Fund (PSF) Riverpark Trust. Riverpark closed Cromwell acquired 50% of the
To date, the fund has returned to applications fully subscribed on landmark North Sydney building,
8.8% per annum annualised since 23 December 2009, a significant Northpoint Tower, in a joint venture
inception (as at 31 March 2018, achievement in the immediate with South African REIT, Redefine
after fees and costs). post-GFC commercial property Properties for $278 million.
market. Units in the Trust are
Geoff Levy AO Cromwell entered the S&P/ASX
currently worth $1.86, and paying
300 Index
an annual distribution of 11.25
cents per unit per annum.
Redefine investment Northpoint, North Sydney
South African REIT, Redefine
Properties, invested $73.3 million
and secures a 15% share of
100 Waymouth Street, Adelaide Cromwell. The strategic alliance
with Redefine was a key part of
Cromwell’s growth strategy at
the time, and allowed us to make
acquisitions that were of long-term
value to the Group.
Energex HQ, Brisbane
“Our successful
capital raisings,
and the growth that
we were able to
achieve from the
redevelopment and
243 Northbourne Avenue, Canberra
improvement of
assets, saw us grow
in terms of market
capitalisation.”
– PAUL WEIGHTMAN
23You can also read
