16 questions asked at 2022 Cromwell AGM

January 16, 2023

Here is the text of the 15 questions asked at the 2022 Cromwell Property Group hybrid AGM held in Brisbane on November 16, along with a summary of some of the answers and some video grabs. Watch webcast archive.

1. Gary Weiss is the long term CEO of public company Ariadne where he owns a 33% stake worth about $28 million and was paid a salary of $719,328 in 2021-22. How does he find the time to serve on 6 other boards, including being the non-executive chairman of Cromwell?

Answer: I turn up to everything.

2. We claim to have audited net assets of $2.7 billion yet the market current capitalisation is only $1.9 billion. Could auditor David Rodgers from Deloitte comment on just how rigorous the property valuation process was in the full year audit. If the audited book value remains at a 40% premium to the market's assessment during the upcoming half year audit, is he going to change his approach to write-downs?

Answer: long response from auditor - watch video via Twitter.

3. Well done on getting out of the Anglicare joint venture in LDK at a 67% premium to the book value of Cromwell's equity interest in LDK. If we really believe the book value of the rest of our assets, why don't we realise some of them and return the cash to shareholders, proving the market is wrong to impose a huge discount to claimed net assets?

4. It is a good to have a successful property veteran like Joe Gersch on our board. Could Joe share his insights into our controlling shareholder in terms of how it exercises influence through the board. Also, has Joe ever seen a bigger disconnect between book value and market value in the REIT sector and what are his thoughts on whether this will narrow or whether we should attempt to realise assets at close to book value and return the cash to shareholders.

Answer: Joe said he'd never seen property discounts like it. Watch video via Twitter.

5. It was a brutal change of control battle at Cromwell, spread across multiple shareholder meetings. Looking back, could chair Gary Weiss reflect on whether the transaction costs of this battle were too high or worth the effort . Could the representatives of the controlling shareholder also comment as to whether they are happy with their investment.

6. The chair mentioned in his address that our gearing ratio is 39%. But isn't that against book value, as opposed to market value. How large is the net debt today and are there any triggers in our banking covenants relating to market capitalisation?

7. What is the history of how a Brisbane-based ASX-listed company finished up with $720 million of retail assets in Poland. What are our initial responses to the killing of 2 Polish citizens by a stray Russian missile yesterday. What impact has the war in Ukraine had so far on our Polish assets and are we selling in part due to the war? Are we confident of getting near to book value?

8. Could Lisa comment on whether we have enough corporate memory on the board with knowledge of Cromwell's history. Does anyone on the board have an ability to reach out to former CEO Paul Weightman and tap into his knowledge or are those relationships fully

9. When disclosing the outcome of voting on all resolutions today, including this rem report item, could you please advise the ASX how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative adopted by the likes of Metcash, Altium and Dexus last year and Webjet and Tabcorp so far this AGM season.

10. Gary is 69 and is arguably the busiest professional director in Australia, as well as being a public company CEO at Ariadne. How does he juggle all these commitments and is he planning to wind back any of his commitments? Also, is Gary committing to serve a full 3 year term and could he expand on the status of his relationship with the controlling shareholder, who he represented through the shareholder activism campaign.

11. There was a 20% against vote on the proxies. Did one of the proxy advisers recommend against and which shareholders are seeking the removal of our chairman from the board?

Answer: the issue was concern about overboarding with 2 of the proxy advisers recommending a vote against.

12. The notice of meeting talks up Gary's contribution to a 50% reduction in our corporate insurance costs. Please provide more detail on how Gary personally delivered this for shareholders?

Answer: Gary blew his own trumpet - watch video via Twitter.

13. Joe sold his business to Babcock & Brown at one point and then bought it back. Could he explain the history of his dealings with Babcock, which collapsed in 2009 costing shareholders and lenders almost $10 billion, not that Joe was in any way to blame for that.

Answer: chair said not relevant which was the right answer.

14. Cromwell is effectively controlled by the combined holdings of ESR and the Tang family. Could the ESR and Tang family representatives on the board please comment as to whether they are stable long term shareholders of Cromwell and whether their shares in Cromwell are secured or pledged to any financiers through margin loans or other structures.

Answer: chair said not appropriate to go into finances of individual shareholders. Fair enough.

15. We knew all about COVID and the Ukraine war at the full year results. Why weren't the Polish assets written down at that point and how much did we pay for the Polish assets? What changes to book value of these Polish assets have occurred since we bought them?

16. Delighted to hear that the Polish assets are real? Who have we hired to try and assist with the Polish divestment? Is it traditional Wall Street investment bankers, local real estate agents, Warsaw based lawyers or a combination of all three? Have the auditors taken a look at these assets as part of the latest audit process and when were these assets last independently valued?

Answer: Chair said we have a highly competent team in Poland, working with un-named advisers. The last valuation was June 30, 2022 - watch video via Twitter.