Cromwell Group (CMW) Presenter: Daryl Wilson
Finance Director
STRENGTH - CONFIDENCE - OPPORTUNITY
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Disclaimer
Certain statements made in this document are forward-looking statements. These statements are not
guarantees of future performance. Actual results could differ materially from those expressed.
Units in the Cromwell Diversified Property Trust ARSN 102 982 598, Cromwell Property Fund ARSN
119 080 410 and the Cromwell Phoenix Property Securities Fund ARSN 129 580 267 are issued by
Cromwell Property Securities Limited (CPSL). Before making an investment decision in relation to the
funds, investors should read the relevant Product Disclosure Statement (PDS) available from Cromwell
Property Securities Limited at www.cromwell.com.au or by calling us on 1800 334 533.
This document has been prepared without taking into account your objectives, financial situation or
needs. Therefore, in deciding whether to acquire or continue to hold an investment , you should
consider the relevant PDS and assess, with or without your financial or taxation advisor, whether the
product fits your objectives, financial situation or needs.
All statistics as at 30 June 2008 unless otherwise indicated. Past performance is not indicative of future
performance.
Cromwell Corporation Limited (ACN 001 056 980)
Cromwell Property Securities Limited (ACN 079 147 809, AFSL 238052)
as the responsible entity of Cromwell Diversified Property Trust (ARSN 102 982 598)
October 2008
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Cromwell Group History
Cromwell Corporation Limited (CCL) listed since 1972
New Board appointed in 1998 and re-capitalised at 1cps
Acquisition of first property and first property syndicate in 1999
Formed Cromwell Diversified
Property Trust (DPT) in 2003
Passed $1 billion in assets under
management (AUM) in 2005
Stapled CCL to DPT to form
Cromwell Group in December 2006
Completed portfolio rebalance
including significant asset sales
in 2007
10 year history of strong performance with current management
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Stapled Security Structure
20%
80%
Units and Shares are contractually bound and cannot be sold or transferred separately
Units and Shares remain separate for tax purposes
Simple stapled structure
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Cromwell Business Model
Property Investment
$1.2 billion in investment property, generating 80% of operating earnings
Gearing at 44%, including assets held for syndication
Funds Management
Manage $1.7 billion in investment property, including $1.2 billion on balance
sheet and $500 million in unlisted Cromwell Property Fund
Property Securities Fund
New products planned – single property, fixed term syndicates
Development and Other Projects
Value-add within existing portfolio
Undertake selected development projects
Conservative REIT with majority of earnings from recurring
property investment and funds management
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Cromwell Business Strengths
Domestic focus. No exposure to offshore
markets
Defensive portfolio with strong cashflow and
minimal short-term lease expiry
Strong retail direct property brand, reduction
in competition for funds
Loyal, diversified retail investor base for
unlisted property funds
Talented and stable executive team, with
high staff retention rate
10 year history of consistent organic growth
in AUM and earnings
Minimal contributions to earnings from more Tuggeranong Office Park, Greenway, ACT
risky activities such as development or M&A
activity
Simple business structure which can deliver low-risk, organic growth
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Strong Property Credentials
Dedicated, active management style
Insourced, active style delivers superior
property returns
Undertake exhaustive due diligence before any
acquisition
Tenant relationship programme delivers
superior leasing results
Three-year average total returns of 18.9% pa
over entire managed portfolio1
Anticipated current property market
Significant property asset sales in 2007
Booked significant profits on sale and reduced
gearing
Minimal purchases for unlisted fund since late
2006 101 Grenfell Street, Adelaide, SA
Dedicated, active management style produces long-term results
1. Returns calculated for 3 years to March 2008 by PCA/IPD using standard methodology
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Portfolio Diversification
Wholly domestic portfolio
Weighted to office markets
Overweight VIC and ACT
86% of income from Government, and
ASX or overseas listed companies
Defensive portfolio for turbulent times
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Core Property Assets
Largest 5 assets represent 59% of portfolio value
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Key Property Markets
Office Market
Supply slowing due to credit issues
Demand also showing some signs of slowing
Further rental growth expected in Melbourne,
subdued elsewhere
Industrial Markets
Demand slowing, but construction costs will see
rents hold for new facilities
Older properties in inferior locations will suffer
Effect on Cromwell Portfolio
10-year bond rate trending downwards
CPI increases to average 4% in FY09
Well located, quality assets will be less affected
WALT, cashflows and strong tenant covenants will
minimise impact on portfolio
Strong management capability will be an
advantage
Expect some further expansion in Cap Rates by June 2009
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Funds Management
Inflows of $79 million for CPF in FY08
(excluding co-investment)
Very difficult market in current climate
Base of loyal, long-term supporters
Many competitors have scaled back or
ceased operations
Average compound annual growth rate
(CAGR) in AUM of 32% over 3 years and
39% over 5 years
Well placed to take advantage of recovery
in sentiment
Cromwell Private Wealth initiative
Fixed term syndicates likely in 2009
Strong headwinds, but well placed for recovery
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Financial Position
NTA stable ($1.01) despite market
volatility ($1.02 Dec-07; $0.96 Jun-07)
Includes recent purchase of
Tuggeranong Office Park
No requirement to raise capital in
current market
Security price implies c.20% discount
to asset values and nil value for funds
management business 1
Represents 16.9% yield on current /
forecast distribution 1
Significant discount to NTA
1. Based on closing price of $0.59 cents 23 October 2008
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Capital Management and Debt Renewal
Current gearing 44%
Credit-approved terms received for new 3 year $452 million loan facility
Subject to documentation and satisfaction of conditions precedent
Will enable repayment of CMBS issue maturing in April 2009
Provides surplus funding of up to $23 million
Weighted Average Interest Rate of 6.67%1
No market capitalisation covenants in any facilities
94% of debt hedged until at least June 20092
Weighted average term of hedges 2.3 years2
Strong banking relationships are crucial in the current market
1. Based on variable BBSW of 6.15% at 23 October 2008
2. As at 23 October 2008
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Distributions
No change to distribution policy
Will continue to distribute up to 100%
of operating earnings excluding
gains on sale
Realised profits on investment
property sales utilised to fund
maintenance capex and leasing
Have crystallised over $12 million in
realised gains on assets sold in 18
months since stapling
Distributions sourced from
operating earnings
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FY09 Earnings and Distributions Guidance
Guidance for operating EPS for FY09 is 10.0 cps, on par with FY08
Expect 8.5 cps to come from recurring property investment and funds
management. Minimal risk to these revenue streams
Majority of transactional earnings expected to occur in second half
Lower contribution expected from development activities in FY09
Look to return to above-peer EPS growth in FY10 and beyond (minimum
5% year on year)
Expect distributions of 10.0 cps in FY09, on par with operating EPS
guidance
Robust earnings in a more subdued environment
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thank you for your time
STRENGTH - CONFIDENCE - OPPORTUNITY
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