Cromwell reports 13.3% rise in statutory profit
Real estate manager, Cromwell Property Group, has reported full-year (FY20) statutory profit of $181.1 million, up 13.3% on the prior year.
The firm said in an announcement to the Australian Securities Exchange (ASX) that its operating profit stood at $221.2 million which represented a 27% increase, beating Cromwell’s original FY20 earnings guidance of 8.30 cps.
The firm said its investment in IT, systems and people had helped to operate smoothly throughout the pandemic, while its rent collection remained relatively unimpacted given its strong skew towards government tenant-customers and larger ASX-listed entities.
However, 93 small and medium enterprises (SMEs) were covered by the Commercial Code of Conduct and a total of $9.6 million was waived or deferred from March to 30 June.
At the same time, FY20 distributions were up 3.4% to 7.50 cps meeting original guidance despite COVID-19 and funds and asset management segment profit was $40.8 million, up 43.2%. Total funds under management (FUM) was $8.2 billion, split into $2.2 billion of retail FUM and $6 billion of wholesale FUM.
“Cromwell’s strategy states that gearing may rise above its ‘through the cycle’ target gearing range of 30-40% on a short-term basis to accommodate ‘invest to manage’ opportunities. As at 30 June gearing is 1.6 percentage points above the range but is expected to reduce due to deleveraging over time,” the company said.
“The sell-down of the Cromwell Polish Retail Fund (CPRF) would, in its own right, see gearing comfortably reduce well into the lower end of the target range.”
In October, 2019 Cromwell acquired all third-party investor interests in CPRF but the Polish government temporarily suspended retail lease agreements in the middle of March 2020 as part of its COVID-19 response plan. The total operating profit impact of rent not charged during the lockdown period was €2.6 million ($4.25 million).
The firm said that although operating profit would be hard to forecast, it had enough confidence in its strategy to maintain distributions at the current level of 7.50 cps, subject to no material adverse change in market markets or other unforeseen events, change in control or change in strategy.
Earlier this month, the company urged its shareholders to reject a takeover bid by ARA Asset Management.
AUTHOR
Oksana Patron
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