This article is from the Australian Property Journal archive
CROMWELL Property Group will continue along its diversification path, entering into an agreement with LDK Healthcare to operate its Tuggeranong aged care facility that will seed a new fund, and will also look further to Europe for growth prospects.
It posted an annual statutory profit of $204.1 million, down from last year’s $277.5 million, while operating profit grew by 3.0% to $156.8 million.
Guidance does assume reinvestment of some distributable cash back into the business for further growth with a distribution payout ratio of approximately 90% of operating earnings to be targeted in FY19.
Initial guidance for FY19 is operating profit is expected to be no less than 8.00 cps and distributions no less than 7.25 cps, for an operating profit of 6.96% and 6.30% respectively based on closing price of $1.15 on 22 August 2018.
Cromwell revealed it has invested in a 50% ownership interest in LDK Healthcare, which will operate the 350-apartment, 500-resident, aged care and retirement community at its former office building at the Tuggeranong Office Park in Canberra, and will be the seed asset for a new aged care fund.
Works having started on the site and the first sales suite due to open next year.
“This is an investment theme which we believe has great potential and we are actively looking for further development sites and conversion opportunities,” Weightman said. “The opportunity has attracted strong interest from potential capital partners.”
Cromwell’s property investment segment saw an operating profit slip of 7.8% to $115.0 million, partly due to $154 million in asset sales.
Its $2.45 billion portfolio has three components; Core, Core+ and Active. The fully occupied core portfolio has nine assets representing 58%, $1.4 billion, of the portfolio, with a WALE of more than 11 years. Net operating income growth is 4.6%. The Core+ portfolio comprises seven assets or 36% of the portfolio, at $0.9 billion, and has a WALE of 3.8 years and NOI growth of 1.6%. Its Active portfolio has seven assets with a 2.9-year WALE and occupancy of 79.8%, and its NOI decreased 14.8%.
There were 100 leasing transactions secured over 75,000 sqm of the portfolio, with WALE is 7.2 years due in part to the commencement of the new Department of Social Services lease at Soward Way. There are just four individual expiries, representing more than 1% of income over the next three years.
Both Soward Way and Northpoint Tower, representing a combined investment of $300 million in value add activity, reached practical completion during the year. Cromwell is expecting a decision in November on its development application to add a new four storey office building, hotel, retail and other amenity to Victoria Avenue in Sydney’s Chatswood.
Cromwell’s funds management operating profit grew by 43% to $39.6 million. CEREIT has now announced two quarters of results to the Singapore stock exchange, and is trading at a premium to its €0.55 per unit debut.
It also opened a management office in Singapore, “the largest wealth management centre in Asia” last year.
“Having a local, on the ground presence in Singapore and in 12 different European countries means we are well placed to provide capital partners with valuable insight and identify the right investment opportunities,” Weightman said.
“The CEREIT IPO has increased exposure to institutional investors and allowed the business to identify new capital providers interested in both Australian and European opportunities.
“I expect there will be more substantive transactions involving CEREIT in FY19.”
Cromwell’s wholesale funds management business, which deploys capital into Europe, Australia and New Zealand, posted an operating profit was $16.4 million, and retail funds management contributed operating profit of $3.8 million.
Australian Property Journal
