Cromwell posts $270m loss for HY24 after valuations suffer

Cromwell Property Group announced its results for the half-year ending 31 December 2023 (HY24), recording a loss of $271.4 million after seeing a $240.2 million fall in property valuations. 

Compared to the same time last year the group posted a loss of $141.9 million more, as its operating profit also declined by $3.4 million from $87.1 million in HY23 to $83.7 million in HY24.

The group also attributed this to its ongoing asset sale program that has been in place since late 2021, with over $584 million in asset sales completed since and a further $528 million expected to complete by June 2024.

Cromwell’s total assets under management (AUM) declined by $100,000 from the previous period to $11.4 billion. The group’s statement to the Australian Securities Exchange (ASX) said it had experienced “persistent pressure on valuations both locally and in Europe”.

“The current operating environment continues to be challenging with higher interest rates impacting the real estate sector,” Cromwell Chair, Gary Weiss, said.

“We remain focused on strengthening our balance sheet through prudent capital management and lowering our net debt position.

“Despite the challenges, we continue to drive positive like-for-like net operating income growth and maintain solid occupancy rates across Cromwell’s Australian Investment Portfolio. In Europe, the funds management business contributed to earnings growth through mandate investments, notwithstanding restrained transaction volumes.”

On a like-for-like basis, net operating income in Cromwell’s Australian Investment Portfolio was up by one per cent, which the group said indicates the portfolio’s “ongoing income stability” through the market cycle.

The group recorded $5.9 billion in third-party AUM in Europe and $2.4 billion in Australia and New Zealand. The muted result in the local region reflected “limited inflows and valuation declines”, the ASX statement said.

“The remainder of the financial year will focus on business simplification and completing the current stage of our asset sale program, including the sale of the Cromwell Polish Retail Fund (CPRF),” Jonathan Callaghan, Cromwell chief executive, said.

“We remain committed to preserving and growing securityholder value over time. Our core priority is to have a strong balance sheet by continuing to reduce debt to alleviate gearing pressures, along with ensuring we can continue to deliver stable income from our investments.

“As the market starts to recover, we anticipate being in a position to explore value accretive opportunities to provide longer term growth for our securityholders.”