Cromwell Property Group delivers growth as AUM hits $5 billion
Cromwell Property Group (ASX: CMW) reported operational momentum across its half-year results for the period ending 31 December 2025, with assets under management reaching $5.0 billion (up 13.6% on FY25). Operating profit rose 1.5% to $55.9 million, while net tangible assets per security increased to 58 cents (from 56 cents at FY25). The group’s balance sheet remained conservative, with gearing at 30.2% and liquidity of $418 million.
Key HY26 Financial Metrics:
- Assets Under Management: $5.0 billion (+13.6% on FY25)
- Operating Profit: $55.9 million (+1.5% on HY25)
- NTA per Security: 58 cents (up from 56 cents)
- Gearing: 30.2%
- Liquidity: $418 million
- Distribution: 1.50 cents per security (71% of FFO)
- Interest Rate Hedging: 71.0%
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Investment Portfolio valuations rise on leasing momentum
Cromwell’s Investment Portfolio increased in value by $72 million (+3.6% since FY25) to $2.1 billion, driven primarily by leasing progress at 400 George Street, Brisbane. The Queensland State Government exercised a three-year lease option at the property, extending material FY27 expiries of approximately 20,000 sqm to 2030. This extension reduced near-term re-leasing risk and supported the valuation uplift.
Portfolio fundamentals remained resilient. Occupancy stood at 97.2% (compared to 97.6% at FY25), with a weighted average lease expiry (WALE) of 5.1 years. During the half, Cromwell secured 23,702 sqm of new or renegotiated leases, representing approximately 10% of total net lettable area. The portfolio’s weighted average capitalisation rate expanded by 8 basis points to 7.15%, though this was offset by leasing progress and market rental growth.
Income security is underpinned by a high-quality tenant base. The top five tenants—Qantas Airways, Australian Federal Government, QLD State Government, NSW State Government, and Technology One—account for more than 68% of portfolio income.
| Tenant | % of Gross Income | Credit Rating |
|---|---|---|
| Qantas Airways Limited | 20.5% | Baa2 |
| Australian Federal Government | 19.3% | AAA |
| QLD State Government | 12.7% | AA+ |
| NSW State Government | 11.7% | AAA |
| Technology One Limited | 4.4% | – |
| Total | 68.6% |
Capital works enhance asset quality
Cromwell continued to invest in capital improvements across its portfolio to support leasing and operational efficiency. At 540 Wickham Street, Fortitude Valley, landlord works were completed following major FY25 lease renewals, including amenity refurbishments, energy-efficient lighting, and tenancy reconfigurations. At 207 Kent Street, Sydney, the group’s speculative fit-out strategy delivered results, with over 2,300 sqm of space leased during the half. At 400 George Street, the Building Management System was upgraded to a modern, energy-efficient platform, enhancing NABERS outcomes and building responsiveness.
Environmental performance strengthened during the period. Cromwell’s Investment Portfolio GRESB score improved 12 points to 90/100 (from 78 in FY25), driven by renewed Green Star certifications. This score outperformed the GRESB average of 79 by 11 points. The group maintained its 2025 GRESB A Rating for Public Disclosure and achieved a five-star PRI rating for its first public report.
What is a REIT’s WALE and why does it matter?
Weighted Average Lease Expiry (WALE) measures, on average, how long the leases in a property portfolio have remaining before they expire. It is calculated by weighting each lease’s remaining term by the income it generates or the floor area it occupies. A longer WALE indicates that a greater proportion of a REIT’s income is locked in for an extended period, providing visibility and reducing the risk of near-term vacancies.
For Cromwell’s Investment Portfolio, the WALE is 5.1 years. This means, on average, the group’s leases have just over five years remaining before expiry. A WALE above five years is generally considered strong in the commercial property sector, particularly when combined with high occupancy and investment-grade tenants. The QLD Government’s lease extension at 400 George Street is a practical example of WALE in action. By extending approximately 20,000 sqm of leases from FY27 to 2030, Cromwell pushed out a material expiry, extending income certainty and reducing re-leasing risk during a period when office markets remain in transition.
Longer WALE combined with high-quality government tenants reduces vacancy risk and supports stable distributions. It also provides a buffer against market volatility, as the REIT is less exposed to short-term leasing challenges or downturns in tenant demand.
Industrial platform expansion through Terre Property Partners acquisition
Cromwell completed the acquisition of Terre Property Partners (TPP) in December 2025, together with a 19.9% stake in the Cromwell Industrial Partnership (CIP). The transaction added $567 million of industrial assets under management, diversifying the group’s exposure beyond its core office portfolio.
CIP is a logistics portfolio comprising 7 assets valued at $466 million, located in Bayswater (Victoria) and Salisbury South and Port Adelaide (South Australia). The portfolio has an occupancy rate of 98.4% and a WALE of 4.95 years, leased to high-quality tenants including Raytheon, Coca-Cola, Noumed, Incitec, and Wengfu. The weighted average capitalisation rate for the portfolio is 6.09%.
The TPP team brings deep sector expertise and a strong track record in value-add industrial projects. In addition to CIP, the platform manages two active development sites: Kilsyth Connect in Melbourne, a repositioning of a 3.7-hectare industrial estate in a sub-1% vacancy market, and Cavan Connect in Adelaide, where a 7,200 sqm facility was delivered for DGL Group at a five-hectare logistics estate.
CIP Portfolio Overview:
- Portfolio Value: $472 million
- Occupancy: 98.4%
- WALE: 4.95 years
- Cap Rate: 6.1%
- Geographic Mix: 70% South Australia, 30% Victoria
Industrial exposure diversifies Cromwell beyond office, accessing a sector with strong rental growth fundamentals and constrained supply. The group’s growth strategy includes bringing in new capital partners to accelerate expansion, with a focus on opportunities on Australia’s East Coast.
Barton1 development on track for mid-2027 completion
Cromwell’s Barton1 office development in Canberra is progressing in line with time and budget expectations. The 19,800 sqm building is being constructed on an existing Cromwell landholding in Barton, ACT, under a fixed-price contract. The development is 100% pre-leased to a major Commonwealth Government department on a 15-year lease with a five-year extension option, providing income certainty from completion.
Construction progress as at 31 December 2025 includes core structure completed to Level 2, basement structure complete, and above-ground structure on track to top out mid-2026. Completion is scheduled for mid-2027. The building is targeting a 6-star NABERS Energy Base Building rating and will be all-electric, supporting Cromwell’s ESG objectives.
A capital raise of approximately $102 million is underway for this asset. The fixed-price contract, secured pre-lease, and strong tenant covenant position make this a compelling opportunity for recapitalisation with new partners.
Barton1 Development Summary:
- Office Area: 19,800 sqm
- Levels: 6 above ground plus basement car parking
- Lease Term: 15 years (with 5-year option)
- NABERS Target: 6-star
- Building Services: All electric
- Expected Completion: Mid-2027
Balance sheet and capital management
Cromwell’s financial position remained disciplined. Gearing stood at 30.2%, at the lower end of the group’s target range, with liquidity of $418 million. Borrowings increased during the half due to the acquisition of the CIP stake and Barton1 development costs. Weighted average debt maturity was 2.4 years, with interest rate hedging at 71.0%. The weighted average hedge cost was 3.1%, and the weighted average debt cost was 4.8%.
Net financing costs fell 47.4% to $15.2 million, following debt repayments from the sale of Cromwell’s European platform (including CEREIT) in December 2024. This reduction was partially offset by increased borrowings for the CIP investment and Barton1 development, as well as higher rates on variable debt.
Key Debt Metrics:
- Gearing: 30.2% (lower end of target range)
- Interest Rate Hedging: 71.0%
- Weighted Average Debt Maturity: 2.4 years
- Weighted Average Hedge Cost: 3.1%
- Weighted Average Debt Cost: 4.8%
- Net Financing Costs: $15.2 million (down 47.4% on HY25)
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FY26 outlook and distribution guidance
Cromwell reaffirmed its annual distribution guidance of 3.0 cents per security for FY26, to be paid quarterly. The HY26 distribution of 1.5 cents per security represented 71% of funds from operations (FFO).
Management outlined its strategic priorities for the remainder of FY26: continuing to expand the Cromwell platform through the launch of new products focused on industrial, office, and retail sectors; maintaining strong Investment Portfolio occupancy through targeted leasing campaigns and value-add initiatives; and preserving gearing headroom to enable opportunistic transactions.
FY26 Distribution Guidance
“The Group reaffirms its expectation of an annual distribution of 3.0 cents per security for the 2026 financial year, to be paid quarterly.”
Cromwell noted that a constrained supply pipeline and rising economic rents across commercial property support the outlook for rental growth. Development remains largely unfeasible due to elevated construction costs, with office and industrial economic rents having increased by 50-70% and 60-90% respectively since 2020. This dynamic is expected to persist over the medium term, underpinning demand for existing assets.
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