1H 2024 Half-Year Results Presentation

Good afternoon and welcome to the Cromwell European REIT's first half 2024 results call. We will begin with a presentation by the Cromwell European REIT management team followed by Q&A. During Q&A, please click the raised hand button to be placed in the virtual queue. Alternatively, you can submit text questions via the Q&A feature. Now I will hand across to the CEO of the Manager of the Cromwell European REIT, Simon Gering. Simon, over to you. Thanks, Kyara, and welcome to everyone dialing in this afternoon. We appreciate it. It's a busy time. So thank you for joining us from all European REIT's first half briefing call. So as a reminder, CREIT is the largest diversified pan European logistics and office REIT listed here in Singapore,

attractively priced at around a 35 percent discount to our recently announced NAV, and a 10 percent annualised DPU yield based on the dividend that we announced today of 7.05 cents. CREIT's portfolio comprises of 107 properties across 10 countries, valued at over 2.2 billion euro dollars. The portfolio is now 54 percent weighted to logistics, with 44 percent to office, and with a 90 percent allocation thereabouts to Western Europe. Recalling that the predominantly freehold nature offers value add opportunities throughout the portfolio and is managed locally by a team of more than 200 on the ground Cromwell team members across Europe. Turning to page four to set the scene.

So over the last two and a half years, a perfect storm was caused by high inflation, rising interest rates, slower economic growth, heightened geopolitical conflicts, which all put pressure on Singapore REITs, as well as specifically our REITs, both operational performance, increasing cost of capital and stunting growth. Now, two and a half years ago, we took several significant actions to protect CREIT's balance sheet that we forecast could be impacted from all of these elements. So we paused acquisitions, we divested non-strategic assets at a premium to val, we deferred non-essential capex and minimised the portfolio valuation downside. The impact over the two and a half years, as we announced a couple of weeks ago,

is only three and a half percent over that two and a half period, which has kept NAV relatively high at 2.09 euros per unit. We completed all of our debt refinancing due in the last three years, leaving a very long runway to our next debt maturity in November next year. During this period with valuations around the world falling, we maintained net gearing below 40 percent and managed the rise in interest costs and margins, with our all-in debt costs increasing 144 basis points from 1.7 percent back in the beginning of 2022 to 3.2 percent today. Unfortunately, all of these measures had a negative impact of DPU of approximately 2.5 euro cents

annualised as compared to before the cycle turned in beginning of 2022. However, we weathered the storm without raising diluted equity or expensive sponsor debt. We increased the portfolio weighting to a majority to logistics and light industrial. We've improved the overall asset quality. We've delivered on the 60 million euros of AEI and development projects, all while maintaining a 100 percent distribution payout ratio for you, the investor. So now with the storm largely behind us, we can take a more balanced approach and look to take advantage of opportunities over the next 12 months with greater confidence. And this is really reflected in this next chart where the market has recognised our strategy and coupled with the stabilisation in the European commercial markets,

as well as the beginning of the interest rate cuts from last month in Europe, the positive impact is starting to be reflected in Seawrits unit price performance shown in this chart. And so, again, we're pleased that we're the second best performing Singapore this year, again, being endorsed by an increase in inflows by institutional investors, which now make up 23 percent of the register. And that's at a time when you've seen from SGX that typically institution investors have been leaving Singapore rates. But in our case, they've been building, which is quite pleasing from an endorsement perspective. So looking more broadly on the macro picture with ECB cutting rates for the first time in five years last month and expecting to cut twice more for the remaining part of the year,