This article is from the Australian Property Journal archive
CROMWELL will continue to sell off non-core Australian assets as it seeks to reduce debt amid challenging market conditions, on its road to becoming a capital-light fund manager.
Cromwell, which has $12 billion in assets under management, swung from a $132.5 million profit to a $129.5 million loss in the first half due to a fall in property valuations. Operating profit fell $9.3 million to $87.1 million, equivalent to 3.33c per security.
“In the face of challenging market conditions, the Cromwell team has made progress in the delivery of its strategy, with a series of key initiatives either completed or advanced: simplification of Cromwell’s operating structure, improved staff engagement and management of the balance sheet through non-core asset sales.
Cromwell sold down $381 million worth of non-core Australian assets during the 2022 calendar year, including its Brisbane office tower headquarters for $108.5 million, plus a Village Cinemas in Geelong and a Canberra building leased to the Therapeutic Goods Administration.
“Cromwell continues to test market conditions for a suitable opportunity to take its Australian investment portfolio off the balance sheet,” Weiss said.
Cromwell Property Group also sold its half-stake in LDK Healthcare for a 67% premium to the book value of its equity interest during the period.
Cromwell CEO Jonathan Callaghan said, “Through the remainder of FY23 we will continue our programme of non-core asset sales, applying proceeds to debt reduction in the first instance to ensure security through an ongoing difficult operating environment.
“Any redeployment will be measured and disciplined without unduly increasing gearing risks.
“We will continue testing market conditions for a suitable opportunity to take the Australian asset portfolio off the balance sheet and possible reallocation of capital for appropriate growth opportunities, which continues to underpin our strategy of moving to a capital-light fund manager.”
Cromwell’s portfolio occupancy is 95.1% by income with a weighted average lease expiry of 4.6 years, with 51% of income weighted to government tenants.
Market-wide valuation impacts led to revaluations down 1.31%
Gearing was 41.8% at the end of the period, attributed to the fall in valuations.
