Cromwell Securityholder Presentation - March 2020 CROMWELL PROPERTY GROUP
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Cromwell
Securityholder
Presentation
March 2020
CROMWELL PROPERTY GROUP 1
Important Information & Disclaimer
This presentation including its appendices performance. Any “forward-looking” statements are Property Fund ARSN 153 092 516 (APF), Cromwell
(Presentation) is dated 19 March 2020 and has been based on assumptions and contingencies which are Direct Property Fund ARSN 165 011 905 (DPF),
prepared by Cromwell Property Group, which subject to change without notice. Any forward-looking Cromwell Ipswich City Heart Trust ARSN 154 498 923
comprises Cromwell Corporation Limited (ACN 001 statements are provided as a general guide only and (ICH), Cromwell Phoenix Opportunities Fund ARSN
056 980) and the Cromwell Diversified Property Trust should not be relied upon as an indication or 602 776 536 (POF), Cromwell Phoenix Property
(ARSN 102 982 598) (the responsible entity of which guarantee of future performance. Securities Fund ARSN 129 580 267 (PSF), Cromwell
is Cromwell Property Securities Limited (ACN 079 147 Property Trust 12 ARSN 166 216 995 (C12) and
The information in this Presentation has been
809; AFSL 238052)). Shares in Cromwell Corporation Cromwell Riverpark Trust ARSN 135 002 336 (CRT)
prepared in good faith and has been obtained from or
Limited are stapled to units in the Cromwell Diversified (the funds). In making an investment decision in
based on sources believed by Cromwell Property
Property Trust. The stapled securities are listed on the relation to one or more of the funds, it is important that
Group to be reliable. To the maximum extent
ASX (ASX Code: CMW). you read the product disclosure statement for the fund.
permitted by law, Cromwell Property Group, their
The PDS for each fund is issued by CFM and is
The information in this Presentation is subject to officers, employees, agents and advisors do not make
available from www.cromwell.com.au or by calling
change without notice and does not purport to be any representation or warranty, expressed or implied,
Cromwell on 1300 268 078. APF, ICH, POF, C12 and
complete or comprehensive. It should be read in as to the currency, accuracy, reliability or
CRT are not open for investment. Applications for
conjunction with Cromwell Property Group’s other completeness of the information in this Presentation
units in DPF and PSF can only be made on the
periodic and continuous disclosure announcements and disclaim all responsibility and liability for the
application form accompanying the relevant PDS.
available at www.asx.com.au. information (including, without limitation, liability for
negligence) and do not accept any liability for any This Presentation is for information purposes only and
The information in this Presentation does not take into
harm, loss, costs or damage arising from the use or does not constitute an offer to sell, or the solicitation of
account your individual objectives, financial situation
reliance on the information and are released from all an offer to buy, any securities or any other financial
or needs. Before making an investment decision,
liability of any nature arising out of any loss or damage products in any jurisdiction and is not a prospectus,
investors should consider, with or without a financial or
suffered. product disclosure statement or other document under
taxation adviser, all relevant information (including the
Australian law or any other law.
information in this Presentation) having regard to their To the extent that any general financial product advice
own objectives, financial situation and needs. in respect of Cromwell Property Group stapled © 2020. Cromwell Property Group. All rights reserved
Investors should also seek such financial, legal or tax securities is provided in this Presentation, it is
advice as they deem necessary or consider provided by Cromwell Property Securities Limited.
appropriate for their particular jurisdiction. Cromwell Property Securities Limited and its related
bodies corporate, and their associates, will not receive
Cromwell Property Group does not guarantee any
any remuneration or benefits in connection with that
particular rate of return or the performance of an
advice.
investment in Cromwell Property Group nor do they
guarantee the repayment of capital from any such Cromwell Funds Management Limited ACN 114 782
investment or any particular tax treatment. Past 777 AFSL 333214 (CFM) is the responsible entity of,
performance is not a reliable indicator of future and the issuer of units in the Cromwell Australian
CROMWELL PROPERTY GROUP 2
Protect your investment – why you need to vote
against the election of Dr Gary Weiss
What could happen if ARA's nominee, Dr Gary Weiss, is elected to Cromwell’s Board
WHAT'S AT STAKE IMPACT
GOVERNANCE
DISTRIBUTIONS
BOARD UNITY
RISK
CONFLICTS
VOLATILITY
“We are attracted to the strength and depth of their [Cromwell’s] platforms, track record of value
enhancing real estate strategies and strong corporate governance.”
ARA CEO John Lim, 7 March 2018
CROMWELL PROPERTY GROUP 3Summary response to ARA's incorrect claims
ARA'S INCORRECT CLAIMS THE FACTS
Cromwell's Board has invited ARA's input into the strategic review process.
"It is vital that any strategic review process...include the
1 participation and input of the largest owners of the business..." FALSE As a direct competitor to Cromwell, ARA is materially conflicted from
contributing to the process at Board level.
"As a fellow securityholder with ~$700m invested in Cromwell,
ARA is directly competing with Cromwell for assets and capital which
2 ARA's objective is to maximise the value of Cromwell for the FALSE deprives Cromwell the opportunity to maximise value for all securityholders.
benefit of all securityholders"
ARA has a control agenda. Its actions at Cromwell's 2019 AGM where it
"ARA has nominated Dr Gary Weiss AM as its nominee to join
used its securityholding to try to vote out two directors and appoint Dr Weiss
3 the Board of Cromwell. If elected, Dr Weiss will be only one of FALSE provides clear proof of its takeover by stealth agenda. If ARA had been
seven directors on the Cromwell Board."
successful, Dr Weiss would have been one of four non-executive directors.
"Nominating one director to a Board of seven directors is ARA's actions at Cromwell's 2019 AGM where it used its shareholding to try
4 neither 'taking control' nor a 'takeover by stealth and any FALSE to vote out two directors and appoint Dr Weiss provides clear proof of its
statement claiming as such is nonsense." takeover by stealth agenda.
“Despite ARA's efforts to work collaboratively, discriminatory Under the ASX Listing Rules, ARA was ineligible to participate in the
actions undertaken by Cromwell, such as excluding ARA from placement. Under the DRP Rules, ARA was ineligible to participate in the
5 the June 2019 placement and dishonouring ARA's election to FALSE DRP. Both of these facts have been extensively explained to ARA.
take-up the DRP, demonstrate a clear intention to subvert Cromwell’s Chair has also repeatedly offered to meet ARA’s CEO, and
securityholder rights..." been rejected each time.
“Dr Weiss has publicly stated that, if elected, he will retire from
the Board of Straits Trading Ltd. Dr Weiss has no other
Dr Weiss remains significantly overcommitted with multiple Board
affiliations with ARA that would cause a conflict of
6 interest...will also review his current portfolio of directorships to FALSE appointments and remains non-independent. For a number of his Board
appointments, Dr Weiss is dealing with material corporate issues.
ensure he can make the required time commitment to
complete his duties as a director of Cromwell."
ARA has used selective and incorrect information to distort the facts and
“ARA has previously raised...serious concerns in relation to didn’t have any concerns when ARA CEO John Lim declared ‘we are
7 Cromwell's strategic direction and operating performance..." FALSE attracted to the strength and depth of their platforms, track record of value
enhancing real estate strategies and strong corporate governance’
CROMWELL PROPERTY GROUP 4Cromwell’s Strong
and Reliable
Performance
CROMWELL PROPERTY GROUP15 years of Consistent and Reliable Returns
Cromwell Total Securityholder Returns (TSR) – Annualised to 31 December 2019
30.0%
26.3%
25.0% 24.1%
20.6%
19.6%
20.0%
15.0% 14.4% 14.1%
11.2% 11.6%
10.4% 11.0%
9.5% 9.3%
10.0%
7.9% 8.0%
4.9%
5.0%
0.0%
1 year 3 year 5 year 10 year 15 year
Cromwell Total Return All Ordinaries Accumulation Index S&P / ASX 300 A-REIT Accumulation Index
CROMWELL PROPERTY GROUP 6Cromwell versus ARA Managed REIT performance
Cromwell’s Total Securityholder Return (TSR) compared to ARA managed REITS
Source: Factset as at 4 March 2020 7
CROMWELL PROPERTY GROUPFunds Management
Track record of growing and transforming Funds Under Management
Growth in Total FUM ($bn)
Cromwell is progressively growing and
14
transforming the composition of its funds Internal Retail Wholesale
12
under management with all components 10
6.7 6.1
growing strongly over the last five years 8 6.7
6.0 5.7 5.3
6
Internal is up 50% to $3.6 billion 2.2
4 0.1 2.3
1.4 1.6 1.8 2.0
1.1
Retail is up 100% to $2.2 billion 2 3.0 2.9 2.8 2.9 3.6
2.4 2.7
0
Wholesale has increased from $0.1 Jan-14
Jun-14 Jan-15
Jun-15 Jun-16
Jan-16 Jun-17
Jan-17 Jan-18
Jun-18 Jun-19
Jan-19 Dec-19
Jan-20
billion to $6.1 billion
Path to Securing European FUM
Total FUM was $3.6 billion in June 2014 and € 9.0
European FUM ($B) % recurring FUM € 8.0
this has increased to $11.9 billion as at 31 € 8.0
€ 7.0
December 2019 75%
€ 6.0
European FUM has also been progressively € 5.0
€ 3.9 € 3.8 € 3.8
€ 4.0 € 3.4
transformed, with 72% of FUM now backed
€ 3.0 72%
by long term or listed funds, securing € 2.0
49%
36%
sustainable revenue for the European funds € 1.0
0%
management platform into the future €-
Jun-17 Jun-18 Jun-19 Dec-19 Medium term
target
CROMWELL PROPERTY GROUP 8ARA Nominee
Dr Gary Weiss
CROMWELL PROPERTY GROUPDr Gary Weiss – Overcommitted and Conflicted
Dr. Weiss remains significantly overcommitted on other publicly listed and private boards, despite announcing his
retirement from Ridley Corporation, and intention to step down from Straits Trading if elected.
Company Position
Ariadne Australia Limited Executive Director Dr. Weiss currently holds 6 board positions, 3 of which
Ardent Leisure Group Chair are as chair and one is as an executive director.
Estia Health Limited Chair Counting the chair roles as 2 positions2, Dr. Weiss holds
Ridley Corporation Limited Chair1 the equivalent of 9 board positions.
Hearts and Minds Investments Ltd NED Upon retiring from the Ridley Corporation Board, Dr. Weiss
Thorney Opportunities Ltd NED will still hold the equivalent of 7 board positions.
Dr. Weiss is conflicted as a result of his directorship of Straits Trading since 2014. Straits Trading is ARA's largest
shareholder owning 21% of ARA. Straits is also co-invested with ARA CEO's, John Lim’s private family office in Straits
Real Estate.
Dr Weiss has a close relationship with ARA and would remain non-independent for the foreseeable future after resigning
from the Straits Board.
Dr. Weiss is not independent but rather aligned with ARA and its takeover by stealth agenda.
1 As of March 2020, Dr Weiss has indicated that he will be stepping down from Ridley Corporation Limited in June 2020.
2 As outlined in the policies of most proxy advisors and investors.
CROMWELL PROPERTY GROUP 10Dr Weiss – Estia, Ridley and Ardent
Over the last few years, Dr. Gary Weiss has been Chair of Estia Health Limited, Ridley Corporation Limited and Ardent
Leisure Group, all of which have performed poorly in terms of share price performance.
Cromwell, on the other hand, has delivered a significant ~29% return on investment.
Share Price Performance Dec 01 2016 – Feb 28 2020
40%
29.25%
20%
0%
-20%
-23.98%
-40% -30.80%
-60%
-63.95%
-80%
Cromwell Property Group Estia Health Limited Ridley Corporation Limited Ardent Leisure Group
Source: Morningstar DatAnalysis
CROMWELL PROPERTY GROUP 11Dr Weiss – Ariadne, Ridley, Thorney, Estia, Ardent, Hearts and Minds
The following are the shareholder returns for Dr. Weiss’s current boards, during his tenure.
Shareholder Returns since Appointment to the Board
20.00%
8.51%
0.00%
-7.48%
-20.00%
-26.85%
-40.00% -32.79%
-60.00%
-80.00%
-78.28%
-84.10%
-100.00%
Ariadne Australia Ridley Corporation Thorney Estia Health Ardent Lesiure Hearts and Minds
Opportunities
Source: Morningstar DatAnalysis. Shareholder return as at 16 March 2020.
CROMWELL PROPERTY GROUP 12Dr Weiss has a full load!
The news headlines keeping Dr Weiss up at night
Ardent Leisure - Material Adverse Events Estia Health Material - Adverse Events
Financial performance continues to be challenged Royal Commission into the Aged Care Sector
“Ardent Leisure withdraws its FY20 “Estia Health slashes earnings as royal commission
guidance earnings for Main Event” The Market bites” AFR, May 24 2019
Herald 16 March 2020
“No fun for Ardent Leisure as H1 loss grows” aap Class Action
21 Feb 2020
“Estia Health served with class action” AFR, July
"Ardent Leisure struggles to pull itself out of hole" 17 2019
AFR 23 Aug 2019
Ridley Corporation
Potential prosecution Sudden CEO departure, weak performance
“Dreamworld's owner (Ardent Leisure) may face “Ridley’s Tim Hart departs suddenly as profit
prosecution” The Canberra Times 24 Feb 2020 outlook trimmed” Farmonline National 29 Jun 2019
"Dreamworld's parent company Ardent Leisure
could face up to $3million in fines over fatal “New Ridley boss takes razor to jobs in 5m
accident" restructure” Farmonline National 13 Nov 2019
ABC News 25 Feb 2020
CROMWELL PROPERTY GROUP 13Takeover by stealth – Control over the Board
ARA is a direct competitor to Cromwell. Its ongoing hostile attacks are part of a deliberate strategy to gain control of
Cromwell without paying the appropriate value to all securityholders.
ARA has repeatedly tried to influence Cromwell's strategy for their benefit.
ARA has criticised Cromwell's performance on the basis of incorrect and selective information.
ARA's 2019 letter to securityholders dated 7 November 2019, stated that “If Dr Weiss is elected to the Cromwell Board,
he will represent only one voice of potentially eight directors.”
However, ARA voted AGAINST the elections of Ms. Lisa Scenna and Ms. Tanya Cox. This would have resulted
(subsequent to Geoff Levy’s retirement in Feb 2020) in Dr. Weiss currently having 25% control of the Board.
Current Elected Board If ARA succeeded at 2019 AGM
Leon Blitz (NED) Leon Blitz (Chair)
Tanya Cox (NED) Andrew Fay (NED)
Andrew Fay (NED) Jane Tongs (NED)
Lisa Scenna (NED) Gary Weiss
Jane Tongs (NED)
Geoffrey Levy (Chair) – retired in Feb 2020
Cromwell expects that if a second strike is recorded at its 2020 AGM, and ARA (+ Tang Group) vote against Cromwell's
directors on a spill resolution, then ARA can elect a new Cromwell Board full of ARA friendly directors.
CROMWELL PROPERTY GROUP 14Board and
Remuneration
CROMWELL PROPERTY GROUPCromwell Board
The Cromwell Board demonstrates strong corporate governance and comprehensive skills and expertise
Cromwell's Board possesses strong international and Australian experience with deep industry expertise and leadership.
Andrew Fay, Tanya Cox, Jane Tongs have strong ASX-listed experience.
Leon Blitz Andrew Fay Jane Tongs Lisa Scenna Tanya Cox
Independent/ free of conflicts
Overboarded No No No No No
Leadership & culture ● ● ● ● ●
Property & asset mgt ● ●
Funds/ investment mgt ● ● ● ●
Commercial capability ● ● ● ● ●
Financial acumen ● ● ● ● ●
Risk oversight ● ●
Debt Mgt ● ● ●
People ●
Public policy, government, economics ● ●
Sustainability ●
CROMWELL PROPERTY GROUP 16CEO Remuneration – Facts
ARA has been selective about the CEO’s remuneration (and quiet about its own approval of pay structure)
The CEO’s statutory remuneration increased in FY19 compared with FY18 as a result of the shift and structure of his remuneration
to more long-term incentives (securities) which is a positive change as it increases 'skin in the game' and securityholder alignment.
It was a board approved adjustment that was also supported by ARA's nominee, Mr David Blight (the CEO of ARA Australia) who
sat on the Cromwell Board at that time.
The CEO’s statutory remuneration has increased by 3.76% over the last three years (FY17 to FY19) which is median among
peers. ARA has selectively presented information to present a distorted picture.
Change in Statutory Remuneration from FY17 to FY19
50% 43.98%
40% 34.74% 33.28%
% change in statutory remuneration
31.02%
30%
20%
7.75%
10% 3.76% 1.61% 0.08%
0%
-10% -3.80%
-9.14%
-20%
-30%
-28.96%
-40%
Greg Goodman – Andrew Catsoulis Dan Steinberg – David William Anthony Paul Weightman Timothy Collyer – Bob Johnston – Peter Allen – Susan Lloyd- Mark Steinert -
Goodman Group – National Dexus Harrison – Mellowes – Growthpoint GPT Group Scentre Group Hurwitz – Mirvac Stockland
Storage REIT Charter Hall Shopping Property Aust. Gorup
Centres Australia
CROMWELL PROPERTY GROUP 17CEO Remuneration – Facts
Total statutory remuneration is median among peers
The CEO’s remuneration is not excessive when compared to industry peers as incorrectly asserted by ARA. The below table ranks
the total statutory remuneration of CMW’s peers1.
In addition to this, and as publicly available in the 2019 Cromwell Annual Report, the total vested (actual) remuneration for Paul
Weightman was ~$400k lower in 2019, compared to 20182
CEO Remuneration
Total fixed Other
CEO - Company STI (cash) LTI (amortised) Total remuneration FY19
remuneration remuneration
Greg Goodman – Goodman Group $1,423,199 $0 $11,352,787 $24,773 $12,800,759
Peter Allen – Scentre Group $2,000,000 $1,695,750 $3,937,901 $102,692 $7,157,781
Dan Steinberg – Dexus $1,586,851 $1,500,000 $2,994,799 $35,113 $6,146,763
David William Harrison – Charter Hall $1,454,721 $1,430,000 $1,579,899 $25,026 $4,489,646
Susan Lloyd-Hurwitz – Mirvac Group $1,500,274 $1,153,125 $2,144,743 $24,442 $4,822,584
Paul Weightman $1,656,986 $797,225 $1,456,435 $25,005 $3,935,651
Bob Johnston – GPT Group $1,549,280 $1,210,570 $1,168,869 $0 $3,789,034
Mark Steinert - Stockland $1,578,165 $600,000 $1,193,458 $34,777 $3,406,427
Timothy Collyer – Growthpoint Property Aust. $957,543 $474,583 $743,001 $0 $2,175,127
Anthony Mellowes – Shopping Centres Australia $910,000 $324,290 $735,514 $20,897 $1,990,701
. Andrew Catsoulis – National Storage REIT $985,535 $394,000 $140,000 $22,603 $1,542,138
1 Source: Peer FY19 Remuneration Reports
2 See ‘Total Vested Remuneration for the CEO’ on page 57 of the CMW 2019 Annual Report
CROMWELL PROPERTY GROUP 18ARA claims and
the FACTS
CROMWELL PROPERTY GROUPARA's incorrect and selective claims
The pages that follow provide Cromwell's response to a number of the incorrect claims made by ARA
In each case, ARA has distorted the facts by being selective with information or by providing incorrect information
As a competitor to Cromwell with a takeover by stealth agenda, ARA is disseminating incorrect information to confuse
securityholders into thinking that there is an issue with Cromwell's performance – there is none!
ARA’s behaviour and the lengths it is going to show that it is not acting in the best interests of all securityholders
7 March 2018. John Lim, ARA’s Group CEO, said:
“Asia Pacific remains a focus for ARA even as the company expands its footprint globally. We entered
Australia in 2015 and have been steadily increasing our investments in the market over the last three years.
Australia continues to offer strong investment and capital raising opportunities to support the growth of our
funds platforms. “ARA has agreed, subject to satisfaction or waiver of certain conditions, to acquire a 19.5%
stake in Cromwell from Redefine Properties. We are attracted to the strength and depth of their platforms,
track record of value enhancing real estate strategies and strong corporate governance. We believe
Cromwell will benefit from our deep network of capital partners.”
CROMWELL PROPERTY GROUP 20ARA’s incorrect claims and the facts about Cromwell
Facts Incorrect claims
This statement is incorrect. AUM was $3.6bn in FY14, $10.1bn in FY15 and $11.9bn in FY19.
AUM has grown substantially from FY14 (note the careful selection of FY15 to flatten the
trajectory). The composition of the AUM has then also changed as Cromwell has deliberately AUM growth flat since FY15
sought to replace transactional lower value AUM, with longterm AUM which generates recurring
revenue and is less volatile and more reliable.
“Cromwell has again engaged in unjustified
discriminatory behaviour toward its largest
owner...
Cromwell's DRP Rules set out that securityholders with a registered address in Australia and
New Zealand are eligible to participate. ARA has a registered address in Singapore and is
Despite ARA electing to participate in the
therefore, upon reading of the scheme booklet which is available on Cromwell’s website
DRP by taking up securities in Cromwell
and dated back to 2010, clearly ineligible to participate. ARA was paid the distribution in
rather than electing to take the distribution in
cash. The DRP Rules have previously been announced to the ASX.
cash, Cromwell has determined to cash settle
the recent distribution to their largest
securityholder without notice or explanation.”
This is an outrightly false and incorrect claim by ARA. Cromwell’s free cashflow (FCF) for
1H20 was $123.1m and not the $62.9m claimed by ARA. Cromwell realised $20.8m from the
sale of CEREIT units. These units were earned from fees from managing CEREIT. Furthermore,
Distributions have remained materially above
Cromwell did not pay out $50.1m in lease incentives during the half year. $39.4m of unpaid
free cash flow (FCF) reaching 155% of FCF in
incentives were recognised by Cromwell on the acquisition of 400 George Street. The actual
1H20
lease incentives paid during the half year were $10.7m. When these two obvious errors are
corrected, Cromwell’s free cash flow for 1H20 was $123.1m and not the $62.9m claimed by
ARA. Distributions of $97.5m represent 79% of free cash flows and not the 155% ARA claim.
Cromwell did not earn any performance fees from acquiring third party investor interests in Cromwell's earnings have benefited from
CPRF. This is a completely false claim by ARA. various non-recurring items in 1H20 which
include $12.8m CPRF performance fee
CROMWELL PROPERTY GROUP 21ARA’s incorrect claims and the facts about Cromwell
Facts Incorrect claims
Cromwell has invited input from all securityholders but oversight is the responsibility of the
Board (free of conflicts) and cannot, and should not, be opened up to a competitor. Any notion
that ARA should participate at Board level presents material risks to non-affiliated “Cromwell’s “strategic review” should have the
securityholders as ARA competes with Cromwell for assets and capital and its nominee would input and oversight of the largest owner.”
be heavily conflicted.
Cromwell’s funds management businesses in Australia, New Zealand, Singapore and Europe
all have the ability to earn transactional fees from acquisition fees, disposal fees and
Despite the strong headline numbers in
performance fees and have done so, year on year, every year. They are not “one-off, non-
Cromwell's 1H20 result, underlying
recurring items”.
performance was poor...of significant concern
is the inclusion of non-cash ...and non-recurring
Cromwell earned $32.0m as part of its sale of its 50% interest in Cromwell Partners Trust to
one-off items in operating profit.
Early Light International. The $32.0m was received in cash and forms part of operating profit.
In FY18, the Cromwell Board, including ARA nominee David Blight at the time, decided to
invest into its global platform as part of its growth strategy. Cromwell now operates 6 licenced
Cromwell’s corporate costs have ballooned
entities across Australia, Singapore, UK and Europe and maintains the governance and
from FY18 to FY19 by 48.3% while EPS & DPS
compliance regimes needed to work in multiple jurisdictions. The deliberate and strategic
have declined
investment in growth for the benefit of all securityholders has led to an increase in corporate
costs but has also started to pay benefits as evidenced by FY19 results and FY20 guidance.
The target gearing range of 30% - 40% refers to headline gearing. Cromwell’s headline gearing “Pro forma gearing at 31 December 2019 is
is expected to return to within target range following the announced sale of 50% of 475 Victoria above the Board's preferred range of 30%-
Avenue. The sale of 50% of the asset to a significant capital partner is part of the Invest to 40%.“ "Elevated gearing increases risks
Manage strategy. for securityholders.”
CROMWELL PROPERTY GROUP 22ARA’s incorrect claims and the facts about Cromwell
Facts Incorrect claims
“A significant percentage of Cromwell’s issued
Votes for Dr Weiss at the 2019 AGM were almost entirely made up of ARA’s securityholding securities supported Dr Weiss’s election
(~23.7%) and that of the Tang family who owned (at the time of the 2019 AGM, increased since reflecting the growing dissatisfaction with
then) ~13.7% of Cromwell’s issued securities. ARA and the Tang family have a long-standing Cromwell’s performance and governance
business relationship. amongst a large proportion of the capital
base.”
“Cromwell is in disarray and needs the stability
of its largest investor.”
Cromwell delivered strong HY20 results. These results show successful execution of strategy -
the exact opposite of ‘disarray’ including 59% increase in statutory profit per security and an
“Cromwell’s operating business has
Underlying operating profit of $134.1 million, up 62% or 26% on a cents per security basis
consistently underperformed.”
ARA has been selective in the information it has chosen to use so it can distort the facts.
The distribution was 7.00 cps in 2011 and increased consistently every year to 8.34 cps in
2017. Cromwell then launched its Invest to Manage strategy which included a deliberate
decision to reinvest some of the distribution into growth opportunities. This strategy was
“Over a 10 year period negative distributions
approved by the Board, which included ARA’s nominee at the time.
growth of 1.1%”
FY20 guidance is that the distribution will be no less than 7.50 cps for FY20. Over the 10 year
period however Cromwell has delivered total annualised securityholder returns of 14.7%
outperforming the ASX/AREIT 200 index of 11.6%.
- NTA is up to $1.04 (FY19 $0.99)
“Cromwell has failed to reward securityholders
- Cromwell will pay distributions of 7.50 cps for FY2020, 3.4% higher than last year
during a strong real estate market.”
- TSR of 14.7% p.a. over 10 years has outperformed the ASX/AREIT 200 index of 11.6%.
CROMWELL PROPERTY GROUP 23ARA’s incorrect claims and the facts about Cromwell
Facts Incorrect claims
The CEO’s statutory remuneration increased in FY19 compared with FY18 due to reporting two
years of potential future performance options in the one financial reporting year. This was a board
CEO Paul Weightman’s statutory
approved adjustment that was also supported by ARA's nominee, Mr David Blight (the CEO of
remuneration package increased by 34.1%
ARA Australia) who sat on the Cromwell Board at that time. The CEO’s statutory
from FY18 to FY19
remuneration has only increased by 3.76% over the last three years (FY17 to FY19) which is
median among peers. ARA has selectively presented information to distort the facts.
Cromwell hosted135 people at a pre-planned marketing event, and as an international business,
and as part of its planned marketing activities, Cromwell has, or will, organise investor events in
Hosting 135 people at the 2019 Rugby
Australia, UK, Netherlands, France, Singapore, Germany and Japan this financial year. All of
World Cup in Japan
Cromwell’s events are included in its marketing budget, which is not material to earnings, and
costs are included within record HY20 result of EPS 5.2 cents per security.
The equity investment i.e. securityholders money, available in Cromwell's results, as at 31
In 2019 Cromwell invested more than A$1bn
December 2019 was $574.1 million. The investment is accretive to earnings. The portfolio is due
of Securityholders’ money into Polish
to be sold down as part of the ‘Invest to Manage’ strategy. Cromwell is targeting a 20 to 30%
shopping centres
holding which represents approx. $120 million to $170 million of securityholders’ investment.
European FUM is now 72% backed by long term or listed funds, securing the sustainable revenue
“Cromwell has a poor track record
for the European funds management platform into the future. Cromwell's overseas segments are
overseas.”
performing strongly with operating profit up 31% from the prior comparable period.
ARA has been selective in the information it has chosen to use so it can distort the facts.Operating
earnings were 7.10 cps in 2011 and increased to a high of 9.41 cps in 2016. This result included
substantial one-off transactional income from Cromwell’s investment in Investa Office Fund. Operating earnings lowest since FY 13
Cromwell’s 'Invest to Manage' strategy, which was approved by the Board, including ARA’s board EPS growth FY 10 to FY 19 negative 0.4%
nominee at the time involves reinvesting some of the distribution into building additional revenue
streams to support future operating earnings. Guidance is now not less than 8.30 cps in FY20.
CROMWELL PROPERTY GROUP 24You can also read
