CROMWELL PROPERTY GROUP — Annual Report 2008

Aug 18, 2008

ASX Announcement 19 August, 2008

==> picture [114 x 39] intentionally omitted <==

CROMWELL DELIVERS STRONG RESULT

HIGHLIGHTS – FULL YEAR TO 30 JUNE, 2008

• Full year net profit after tax (NPAT) of $108.0 million

• Record profit from operations of $70.8 million or 10.1 cents per stapled security (cps)

• Total distributions for the year of 10.0 cps

• NTA stable at $1.01

• Credit-approved terms received for re-financing of CMBS debt

• FY09 earnings to be consistent with FY08 with distributions set to continue at 10.0 cps

• Strong, defensive portfolio with good cash flows through current cycle

Property and funds manager Cromwell Group (ASX: CMW) today reported record full year earnings, with strong underlying cash flows combining with a secure capital base to underpin current and future earnings.

For the year to 30 June, 2008, the Group reported profit from operations of $70.8 million with basic operating earnings of 10.1 cents per stapled security (cps). In the previous year the Group reported profit of $36.6 million and operating earnings of 8.3 cps.

The record result reflected the underlying quality of the Group’s $1.2 billion portfolio of property assets, which continues to generate significant cash flows despite external market conditions. The Group also benefitted from a strategic portfolio realignment in the first half which further streamlined cash flows and provided the resources to significantly reduce debt and undertake opportunistic earnings accretive acquisitions. 81% of operating earnings were derived from recurring property and funds management income.

The Group has forecast FY09 earnings of 10 cps, in line with FY08, with 85% of forecast earnings expected from recurring property and funds management income and the balance to be derived from transactional activity.

In line with the Group’s distribution policy, it has paid distributions close to 100% of operating earnings since stapling, excluding any realised gains. The group will continue with this policy in FY09 and expects to pay 10 cps in distributions.

Credit-approved terms have been received for a new $452 million Syndicated Facility to replace the Group’s CMBS issue which is due to expire in April 2009. The anticipated refinancing rates have been taken into account in forecasting FY09 earnings.

Cromwell Chief Executive Officer Paul Weightman said the Group had delivered its results in line with forecasts despite current market conditions.

“We have now established a 10-year track record of reliability and returns based on a commitment to our core business of buying and managing quality Australian property assets which provide stable and secure returns,” he said.

“The underlying strength of our portfolio will continue to provide the foundation for future earnings and growth of the Group regardless of prevailing market conditions.

“The decision to dispose of a number of assets at the peak of the market in 2007 has provided us with a secure capital base and a streamlined portfolio. The quality of the portfolio leaves us confident of delivering earnings in the current year at least equal to those in FY08.”

Mr Weightman said the Group’s strong capital base combined with the expected refinancing of core debt meant there was no need to raise capital to fund ongoing operations.

Cromwell Corporation Limited ABN 44 001 056 980

Cromwell Property Securities Limited ABN 11 079 147 809 AFSL 238052 as responsible entity for Cromwell Diversified Property Trust ABN 30 074 537 051 ARSN 102 982 598

Level 19, 200 Mary Street, GPO Box 1093, Brisbane QLD 4001 Telephone 07 3225 7777 Facsimile 07 3225 7788 Email cromwell@cromwell.com.au Internet www.cromwell.com.au

==> picture [114 x 39] intentionally omitted <==

“Our strategy will continue to be focused on maximising the value of our existing portfolio, providing the groundwork for a recovery in the funds management sector and taking advantage of opportunities provided by the softening market with selected accretive transactions,” he said.

PROPERTY INVESTMENT

The Group currently holds a portfolio of assets valued at $1.2 billion at 30 June, 2008, compared to $1.1 billion at the same time last year. The value of the portfolio was impacted by total sales during the year of $181 million, the opportunistic acquisition of Tuggeranong Office Park for $166 million and revaluations of existing assets.

At the end of the year the Group’s portfolio had occupancy of 99.8% with a Weighted Average Lease Expiry (WALE) of 5.9 years. Approximately 86% of income is sourced from Government, Government entities and bluechip listed companies.

Mr Weightman said the defensive qualities of the Group’s portfolio left it well positioned to deal with any further deterioration of the domestic economy.

“Through a disciplined and conservative approach to acquisition and capital management we have built a portfolio with strong defensive qualities that will remain valuable for its income-producing qualities regardless of external factors,” Mr Weightman said.

He said the Group would continue to look at opportunities to develop or refurbish existing assets to maximise long-term returns while minimising risk.

FUNDS MANAGEMENT

Earnings from the Funds Management operations were impacted by the downturn in retail and institutional investment activity as a result of the credit crisis. During the year the Group launched the Cromwell Phoenix Property Securities Fund and is currently planning to release a new hybrid property fund, which will aim to take advantage of selected direct property opportunities, coupled with investment in a concentrated group of listed property securities.

Mr Weightman said the Group expected the softening in demand to continue throughout the first half of FY09 before recovering as credit markets begin to return to more historically sustainable levels.

“Funds Management remains a key factor in the Group’s medium-term growth strategy and we will continue to invest in new products and people to ensure we are well positioned when investment markets recover,” he said.

OUTLOOK

The Group forecast FY09 earnings of 10 cps is based on 85% of earnings being generated from recurring income and 15% from transactional income.

“Earnings in the current year will be largely generated from recurring income while we are confident the prevailing market will provide the opportunity to generate the transactional income required to meet our forecast,” Mr Weightman said.

ENDS: Media Enquiries to Paul Weightman on 0411 111 028.

Issued by Cromwell Corporation Limited (ABN 44 001 056 980) and Cromwell Property Securities Limited (ABN 11 079 147 809, AFSL 238052) (“CPSL”) as responsible entity for Cromwell Diversified Property Trust (ABN 30 074 537 051, ARSN 102 982 598), Cromwell Property Fund (ARSN 119 080 410) and Cromwell Phoenix Property Securities Fund (ARSN 129 580 267). This communication has been prepared without taking into account your objectives, financial situation or needs units in the funds are issued by CPSL. Therefore, in deciding whether to acquire or continue to hold an investment in Cromwell Group or any Cromwell Fund, you should consider the applicable PDS and assess, with or without your financial advisor, whether the investment fits your objectives, financial situation or needs. CPSL anticipate a PDS for the new Hybrid Property Fund will be available late 2008.

Cromwell Corporation Limited ABN 44 001 056 980

Cromwell Property Securities Limited ABN 11 079 147 809 AFSL 238052 as responsible entity for Cromwell Diversified Property Trust ABN 30 074 537 051 ARSN 102 982 598

Level 19, 200 Mary Street, GPO Box 1093, Brisbane QLD 4001 Telephone 07 3225 7777 Facsimile 07 3225 7788 Email cromwell@cromwell.com.au Internet www.cromwell.com.au