Cromwell Property Group (Real Estate)

Cromwell Property Group (ASX:CMW) is a real estate investor and fund manager with operations on three continents and a global investor base.

As at 31 December 2023, Cromwell had total assets under management of €7.0 billion across Australia, New Zealand and Europe.

In Europe, Cromwell manages €3.9 billion of real estate assets across a variety of funds and mandates, encompassing over 165 assets and 1,560 tenants. Cromwell’s strength lies in its real estate expertise drawn from 200+ people in 14 local offices across 12 European countries.

Cromwell is a trusted capital partner and fund manager to a range of global and local investors, capital providers and banking partners and has a strong track record of creating value and delivering superior risk- adjusted returns throughout the real estate investment cycle.

Cromwell’s presence in Europe and Singapore

Cromwell has over 20 years’ of extensive fund and asset management experience across three key sectors in Europe. Investors benefit from a multi-jurisdictional, pan-European real estate investment platform that can take care of all their fund and asset management, transaction, structuring, financing, reporting, accounting and tax requirements, combined with the on-the-ground local property knowledge and expertise required to uncover value.

Cromwell’s Singapore platform currently comprises Cromwell EREIT Management Pte. Ltd., the Manager of Cromwell European REIT (“CEREIT”). The Manager provides a holistic range of services which are performed by its Singapore-based team and the Europe-based teams of the subsidiaries of the Manager.

Investment principles & strategy

Cromwell’s strength lies in its local expertise drawn from teams of experienced property professionals operating on the ground across our local operations. Investors benefit from Cromwell’s depth of experience, local knowledge and a global platform offering a diverse product range across key property sectors. As an investment manager, focus is on creating value and delivering sustainable income. This is driven by our research and investment strategy process, which defines the compelling investment opportunities that we believe lie in and aligns us with the interests of our investors, capital providers and banking partners.

Cromwell operates an integrated investment management platform with local on-the-ground presence. Cromwell provides fund management, research, transactions, asset management, project and development management, financing and other specialist real estate services.

Evaluating ESG factors/risks is an integral part of investment process as those can materially affect the financial performance and competitiveness of the investment. The mandate’s sustainable investment criteria will be considered throughout the investment process, including the investment decision-making process.

Each investment opportunity is assessed by the local team to ensure it meets the investment objective. Assessment includes bottom-up analysis of the financial performance, local market dynamics, the location and the physical condition of the building.

Sector forecasts

LOGISTICS & INDUSTRIAL

Leasing activity across Europe declined by 31% q/q in Q1, with occupiers taking a cautious approach to signing new leases.
The vacancy rate has risen, but remains historically low, particularly for high quality assets in core locations.
Rising costs, and intense competition for land from residential is restricting development activity and will exacerbate the supply shortage.
Industrial property is still attracting capital when compared to the pre-pandemic period, but at a reduced level relative to the boom period in 2021 and early 2022.

OFFICE

Leasing activity across Europe has remained subdued with Q1 take-up falling 25% q/q.
Economic weakness, cost-control strategies, and remote working has altered the need for traditional office spaces.
Vacancy is expected to peak this year at 8.5% for all office assets.
A lack of development activity over the next 12 to 18 months will bring the vacancy rate down.
Investment activity is low with structural shifts like hybrid working and accelerated obsolescence, amplifying the cyclical slowdown.

LIVING

There is a lack of new supply across Europe.
Most cities are already facing a shortage of housing, and the development pipeline is expected to shrink further due to a lack of development funding, high construction costs, lengthy planning procedures and uncertainty around exit values.
Demand for housing will remain strong, particularly in the larger European cities.
This demand will be skewed towards the rental market, as an increase in mortgage rates has made renting relatively more affordable than home ownership.
ESG continues to be essential, with the European Commission’s Energy Performance of Buildings Directive giving clarity on which sustainability targets need to be met, and by when.
The currently low ratings of much of the EU housing stock mean that there is a considerable challenge in renovating existing stock to meet energy efficiency standards.

RETAIL

Retail sales growth should benefit from falling inflation rates and rising real incomes.
Footfall and sales at key retail assets are expected to continue their upward trajectory.
E-commerce growth is expected to continue, but at a more moderate rate than during the pandemic.
Major European markets are expected to grow in line with their pre-pandemic trend, with no accelerated growth.
Rental growth is expected to continue, with the rate exceeding inflation in the second half of 2024.
Occupiers will likely continue their investment in physical stores, focusing more on prime locations.

Performance verification

Cromwell rigorously reports past performance to investors based on the return’s objective of the fund or mandate and includes environmental operating performance such as GRESB portfolio scores where appropriate.

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_{The contents of this profile do not constitute investment advice or a recommendation, offer or solicitation to acquire or dispose of any investment or to engage in any other transaction. Neither Cromwell nor any of its affiliates nor any of their employees, officers or directors have provided or agreed to provide advice on the merits of dealing in or exercising any right to deal conferred by an investment. You should not rely on this profile in making any future investment decision. You must always rely on your own assessment of the legal, regulatory, taxation, financial and other risks and consequences of any investment or transaction. A number of the comments in this profile are considered forward-looking statements. Actual future results, however, may vary materially. No representation is made as to the reasonableness or achievability of any forward-looking information or as to the accuracy or completeness of any modelling or analysis. The opinions expressed are a reflection of Cromwell Property Group’s best judgement at the time this document is compiled and any obligation to update or alter forward-looking statements is disclaimed. Furthermore, these views are not intended to predict or guarantee future performance. Any expression of opinion on present or future market values does not constitute a formal valuation. All quoted research data is provided for illustrative purposes only and may not be relied upon. Actual events and circumstances are difficult or impossible to predict and may differ from assumptions. No guarantees are provided as to performance. The past performance of any investment and returns generated are provided for illustrative purposes only and should not be regarded as an indication of the future performance of any investment, nor are they indicative of potential investment results. There can be no assurance that these or comparable investment results or returns will be achieved, that it will be possible to avoid losses, that it will be possible to make investments similar to the existing and historical investments, or implement its investment strategy.}

_{Unless otherwise stated, all information contained in this profile is as at 4 April 2024.}