This article is from the Australian Property Journal archive
Cromwell Property Group is looking at active asset management to drive value from its $2.1 billion investment portfolio and at platform acquisitions to increase scale as it moves forward with a simplified business after letting go its European platform.
The group reported a statutory loss of $28.6 million, or 1.09c per security, driven by valuation decline of assets of $99 million as revaluations continued to wash through the property sector. Additional losses from derivatives were partially offset by profits from the sale of the European platform.
Cromwell entered into an agreement in May to sell the Cromwell Italy Urban Logistics Fund and €2.2 billion Cromwell European REIT to Stoneweg for $457 million, with the deal settling late last year. That deal came just after Cromwell sealed the $465 million sale of its portfolio of Polish shopping centres to Prague-based SCF.
“We are pleased to have completed the sale of the European platform at the end of 2024, simplifying the business in line with the group’s strategy. Cromwell is now in a strong gearing and liquidity position, with low group net debt as the market starts to show signs of recovery,” said Gary Weiss, Cromwell chair.
“We are well positioned to drive growth for our securityholders through active asset management, and expansion of our investment management platform.”
First half operating profit was $55.1 million, or 2.10c, representing a 34.4% decline on the prior corresponding period, principally due to non-core asset sales. Net tangible asset value was similarly impacted, down 4c to $0.57, due to investment portfolio revaluations.
Adjusted funds from operations payout ratio was 106.4%, up from 62.6% on the pcp.
Headline and look-through gearing are both now 29.1% and group liquidity stands at $538.5 million after significant debt repayment in January.
Cromwell’s investment portfolio comprises eight assets and is 95.8% occupied with a weighted average lease expiry of 5.1 years.
The portfolio weighted average capitalisation rate expanded 40 basis points to 7%, with the pace of expansion slowing and the market showing early signs of recovery, Cromwell said. Net operating income over the period was $78 million, consistent with the same period 12 months prior.
The tenant profile remains spans a diverse range of sectors. Stable rental income is generated from Qantas and government tenants, which together account for more than 60% of the portfolio income. Some 16,000 sqm (6.5% of the portfolio’s net lettable area) of new or renegotiated leases were signed during the six-month period. On a like-for-like basis, portfolio net operating income increased by 2.7%, largely driven by fixed rental increases and an increase in portfolio occupancy.
Ongoing fees from Cromwell’s fund management business, which manages $2.2 billion across Australia and New Zealand, remained steady, with operating profit up 2.6% on the pcp. Transaction activity has been muted and valuations in the Cromwell Direct Property Fund are down 5% to $470 million.
Unitholders in the Cromwell Riverpark Trust, which owns Energex House in Brisbane, voted in favour of extending the investment term of the trust for an additional two years.
