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CROMWELL Property Group (CMW) is back in the black with a strong half yearly result released to the ASX today.
The property and fund manager reported a 24 per cent increase in operating earnings to $45.9 million for the six months to December 2012, with a statutory accounting profit of $29.5 million, compared to a prior year loss of $6.8 million.
The result was driven by a secure revenue stream from its Australian property portfolio and fees from four unlisted funds, which provided $3.56 million in the first half, up 60% from $2.23 million in the same period last year.
CMW had total external funds under management of $718 million as of December 31.
The property division’s purchase of the Cromwell Property Fund portfolio was a key moment, increasing the number of assets to 26 with an average value of $72.9 million and boosting its direct property portfolio to $1.9 billion.
“We achieved a number of significant milestones during the half, including the addition of a range of new properties from the CPF, continued growth of the funds management business and an extremely successful capital raising,” says CMW CEO Paul Weightman (pictured).
The institutional placement raised $143 million; with a share purchase plan for existing security holders adding a further $39 million. Both were materially oversubscribed.
CMW has raised $198 million in cash to fund new property acquisitions and support continued growth of its funds management business.
“We are seeing increased competition for property assets; indicating property values may soon enter a new period of growth as cap rates reduce to close the yield gap between property and other asset classes.” says Weightman.
“We have the skills, resources and capital to take advantage of opportunities for growth, however we remain, committed to maintaining the disciplines that have contributed to our consistent outperformance.”
Net property income increased 22% during the half (3.8% on a like-for-like basis), contributing to the company’s operating earnings of 3.8 cps, which underpinned the payment of first half distributions totalling 3.6 cps.
Cromwell has maintained its FY13 operating earnings guidance of at least 7.5 cps, representing a yield of 8.3% based on a closing price of $0.90 on 13 February, 2013. The anticipated full year distribution of 7.25 cps equates to a distribution yield of 8.1%.
Cromwell shares were up 2.78 per cent to $0.925 this afternoon.
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