03 April 2020
COVID-19 continues to have an unprecedented and far-reaching impact across the world. Cromwell recognises the urgent nature of the emergency, the responsibility to help ‘flatten the curve’ and contribute to the ensuing recovery in all of the countries, cities and communities in which we operate.
Cromwell CEO, Paul Weightman, stated, “Almost every business in Australia has been impacted by COVID-19 in some way. The impact of the virus will undoubtedly be far reaching but at the moment it is very hard to quantify.”
Cromwell’s Head of Retail Funds Management, Hamish Wehl, discussed the implications of COVID-19 on the Cromwell Direct Property Fund (DPF/Fund).
“DPF is an unlisted property fund. Unlisted property funds, by their nature, are significantly less volatile than the share market. However, quantifying the impact to investors is extremely difficult in the current environment in which government policy is continually changing, and the duration of social distancing is unknown,” explained Mr Wehl.
“DPF’s underlying portfolio is robust with 42.9% of income attributable to government tenants and a further 30.9% of income attributable to high quality listed tenants with a Weighted Average Lease Expiry across the portfolio of 7.6 years as at 29 February 2020. Cromwell will continue to keep all investors and advisors informed of DPF’s status”. Updates will be available on the Fund’s webpage www.cromwell.com.au/dpf.
“We will be working tirelessly with all of our tenants/customers to assist with their needs where possible and continually review the rapidly changing situation,” stated Mr Wehl.
DPF is prudently managed, and as the COVID-19 situation continues to unfold, the Fund is in an excellent capital management position. Some key statistics include:
- Distributions remain at 7.25 cents per unit per annum paid monthly;
- DPF held cash of $29.7m at 31 March 2020;
- Direct gearing (LVR) was 22.7% and the look through LVR was less than 25.0%; and
- $68.5m of undrawn debt is available from lenders remaining within covenant.
The capital position of the Fund should ensure that monthly redemptions continue as per Section 7.4 the PDS, which allows for the greater of an amount equal to 0.5% of the Fund’s net asset value and (if management believes it appropriate given the Fund’s future cash requirements) the amount by which the Fund and its sub-trust’s cash exceeds 6% of its net asset value.
If the amount required to meet withdrawal requests in any month exceeds the amount CFM determines to be available, withdrawal requests will be met pro-rata.
“Cromwell and DPF are in good shape to deal with the challenges and opportunities of the COVID-19 situation as they arise. We remain open, operational and well-placed to continue to add value for unitholders,” Mr Wehl concluded.
If you have any questions or would like to speak to someone about your investment, please contact Cromwell’s Investor Services Team on 1300 268 078 or email email@example.com.