The Cromwell Group (ASX: CMW) share price is edging lower today after ASX real estate investment trust (REIT) released its half-year FY20 results.
What did Cromwell announce?
Cromwell revealed that statutory profit for the half-year to 31 December 2019 was $227.3 million, up from $111.1 million 1H19. This result is equivalent to 8.78 cents per security (cps), which the company noted is a 59% increase on the 5.52 cps result in the prior period.
Total assets under management (AUM) came in at $11.9 billion, while operating profit for the period was $134.1 million, up from $82.6 million in the prior corresponding half.
Meanwhile, Cromwell's net tangible assets (NTA) increased from $0.99 to $1.04 in the current half. The company also reported that weighted average lease expiry (WALE) was 6.1 years and debt tenor came in at 4.2 years.
Strategy update
Cromwell commented that its 'Invest to Manage' strategy continues to bear fruit. This strategy involves the company investing to acquire or develop assets, creating new funds, selling down to capital partners, and then recycling the proceeds.
Cromwell's achievements during the half-year included the sale of the Northpoint Tower and the recycling of capital into 400 George Street, a joint venture with LDK Healthcare.
The company also announced it has exchanged contracts to sell its 50% interest in 475 Victoria Avenue, Chatswood, to a private fund managed by BlackRock Real Estate. Cromwell further noted that it will enter into a joint venture relationship for the expansion of the asset.
Company outlook and strategy moving forward
Cromwell commented that it anticipates operating profit to be no less than 8.30 cps and distributions no less than 7.50 cps. This, the company added, represents an operating profit per security yield of 7.03% and distributions per security yield of 6.36% based on yesterday's closing price of $1.18.
Cromwell also announced it is undertaking a strategic review in conjunction with its advisers, UBS and Goldman Sachs. The review may incorporate a formal sale process of the group or parts of the group as well as a review of the capital structure required to execute its strategy. The review is expected to conclude prior to the announcement of Cromwell's full-year FY20 results.
