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

Occupier demand is expected to pick up in 2024, particularly for new and high-quality space.
In the current climate of emphasising operational cost, businesses may discover that upgrading to new high-quality space, or consolidating in larger premises, is operationally more cost effective.
Online retail will continue to rise and the necessity for logistics properties to meet delivery demands are expected to persist. Furthermore, space demand from manufacturers is poised to persist as the nearshoring trend continues.
The reduced level of leasing activity in 2023 has led to a small rise in vacancy rates. Despite this, some markets still require new supply, particularly where existing stock is older.
As yields begin to stabilise, investment activity will start to recover in 2024 as investors remain confident in the sector.

OFFICE

Most companies, particularly bigger corporates, are either retaining their office space or reducing it, with only a small portion of the market expanding its physical presence.
Whilst the amount of space occupiers require might be less, the focus on quality is paramount.
Grade A offices have shown greater resilience with leasing activity in 2023 falling by only 6% compared with 2022, whilst demand for non-Grade A space has dropped by 17% over the same period according to Cushman and Wakefield.
Investors which are currently active are targeting value-add prospects, aiming to capitalise on the sector’s faster repricing.

LIVING

The occupational fundamentals of the rented living market have proven to be resilient during the current downturn.
In senior living, the consistent aging of our population, coupled with rising life expectancy, serves as the primary catalyst for long-term demand.
In private rented and student accommodation, recent supply has failed to keep pace with robust demand, driven by trends like increased urbanisation, declining homeownership rates, and a rise in student numbers.
Escalating finance and construction costs have exerted a negative influence on a living sector that was already low on supply.

RETAIL

Physical retail has shown it still has value despite online retail but the current consumer environment and the large legacy portfolios of older retailers may create short-term challenges for some but opportunities for others.
Retailers have focussed on prime real estate in order to position themselves in the right properties in the right locations to secure sales revenue, control costs, and preserve and enhance margins. As a result, strong rental growth has been captured in core markets.
Across key markets, the average shift in yields between Q1 2022 and Q3 2023 ranged from 45 to 60 basis points across various retail asset types according to Cushman & Wakefield. This shift is far less pronounced compared to other sectors.
The capital actively pursuing retail assets throughout 2024 is primarily oriented toward value-add pricing and strategy.

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.}