This article is from the Australian Property Journal archive
CROMWELL’S disciplined approach has delivered a stable 1% gain in operating earnings for FY10.
The group’s full year operating earnings of $64.6 million was slightly higher than $63.76 million last year. But operating earnings per security was 7% lower at 8.5 cents per security.
Cromwell announced a total distribution of 8.0 cps, in line with guidance which is 11% lower than the previous corresponding period of 9 cps, due to changes to the payout ratio from 99% to 94%.
Cromwell CEO Paul Weightman said the stability and security of its portfolio has allowed the group to maintain a relatively steady and consistent level of operating earnings distributions throughout the cycle relative to other REIT’s.
“Unlike many of our peers we have resisted the temptation to raise capital on a dilutive basis. This has ensured that the Group’s distribution yield per security has not been significantly impacted by the $141 million raised,” he added.
During the year, the property portfolio was revalued resulting in a decrease of 2.9% at 30 June 2010 compared to the same time last year. As a result, NTA per security at 30 June 2010, was $0.71, down from $0.76 at 30 June 2009. Its weighted average capitalisation rate of 8.61% at 30 June 2010 compares to 8.40% last year.
In December 2009, Cromwell completed a $73.3 million placement of 104.75 million stapled securities to Redefine Australian Investments Limited, a subsidiary of Redefine Properties Limited, a South African REIT.
As a result of revaluations, offset by the positive impact of the placement to Redefine, headline gearing at 30 June 2010 was 48% compared to 53% at 30 June 2009.
Weightman believes that after more than two years of downward revisions in valuations, the market for quality commercial property has now reached the trough of the valuation cycle and he expects property values will stabilise and then increase in line with economic conditions over the short to medium term.
The group also reaffirmed recent guidance for FY11 operating earnings in a range of 7.3 – 7.8 cents per security and distributions in a range of 7.0 -7.4 cents per security.
“Irrespective of any future transactions, the group remains well placed to return to earnings growth in FY12 through continued growth in underlying property earnings, supplemented by likely improving contributions from the group’s funds management activities,” he concluded.
Australian Property Journal
