Centuria Office Reit · ASX:COF
Centuria Office Reit — Centuria Metropolitan REIT — H1 2017 Earnings Presentation
32 slides from Centuria Office Reit's earnings presentation, Feb 9, 2017
Slide 1: Centuria Metropolitan REIT
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Slide 2: Results Overview
Centuria ‘CONTUBIA METROPOLITAN AILIT § IMITENTORIM RESULTS | CMACASX | OF FEGRUARY 2017 O01. O02. O38. O04 OS. Results Overview Porfolio Overview Capital Mangement Market Outlook Strategy & Guidance
Slide 3: Section 1: Results Overview
CENTURIA METROPOLITAN REIT | 1H17INTERIMRESULTS | GMA:ASX | 09 FEBRUARY 2017 Section 1 Results Overview
Slide 4: Financial Overview
Financial Overview Financial snapshot 1H17 1H16 Statutory profit/(loss) ($m) 27.1 19.3 Distributable earnings1 ($m) 10.9 10.9 Distributable earnings per security (cps) 9.2 9.1 FY17 Distributable earnings yield2,3 (%) 8.4 9.2 Distribution ($m) 10.4 10.1 Distribution per security (cps) 8.75 8.50 FY17
Slide 5: Financial Highlights
Financial Highlights Active management delivering predictable and growing earnings ˃ Statutory net profit of $27.1m 9.2 cps 1H17 Distributable earnings1 ˃ 1H17 Distributable earnings1 of 9.2 cps ˃ 2H17 earnings skew due to 1H17 leases having 2H17 rent commencement 8.75 cps ˃ FY17 earnings reaffirmed
Slide 6: Operating Highlights
Operating Highlights Strong fundamentals in metropolitan office markets coupled with improved occupancy generating value uplift ˃ Substantial leasing success ˃ Secured 7,750 sqm across 22 transactions (new leases and renewals), including; 98.9% ˃ New 3 year lease of 1,705 sqm of expiring space to DC
Slide 7: NTA Movement
NTA Movement Strong metropolitan office market fundamentals and valuation uplift driving NTA growth Movements in NTA Per Security $0.01 $2.35 0.2000 ($0.01) $2.30 ($0.02) $0.16 $2.25 0.1500 $2.32 $2.20 $2.15 $2.10 0.1000 NTA $2.05 $2.18 0.0500 $2.00 14cps $1.95 $1.90 0.0000 +6.4% $1.85 $1.80 (0.0500
Slide 8: Section 2: Portfolio Overview
CENTURIA METROPOLITAN REIT | 1H17INTERIMRESULTS | GMA:ASX | 09 FEBRUARY 2017 Section 2 Portiolio Overview
Slide 9: Portfolio Metrics
Portfolio Metrics Portfolio well positioned for income and value growth Portfolio snapshot 1H17 1H16 11% Number of assets1 (#) 13 13 17% 45% Geographic Book value1 ($m) 417.5 379.2 diversification1 (by value) WACR (%) 7.52 8.15 26% 1H NOI ($m) 15.2 13.3 NSW QLD ACT SA Occupancy (%) 98.9 97.3 Weighte
Slide 10: Tenant Space Requirements
Tenant Space Requirements CMA’s actively managed portfolio is well suited to attract <500sqm SME tenants, being the dominant size cohort Leasing Transactions by Size Cohort 100% - 2% ˃ Metropolitan office markets, like our CBD’s, are dominated by SME’s 5% 5% 13% 13% 90% 14% 21% 80% 0% 37% occupying
Slide 11: Leasing Overview
Leasing Overview Focus on leasing to maximise occupancy and income ˃ Secured 22 lease transactions completed in 1H17 across 7,750 sqm ˃ 14 new leases across 4,640 sqm ˃ 8 renewals across 3,110 sqm 6.9% ˃ Includes 3 leases across 1,132 sqm of FY18 and FY19 expiries ensuring income Portfolio NLA lease
Slide 12: Tenancy Profile
Tenancy Profile Tenant diversity and contracted rental growth delivering predictable and growing earnings ˃ Top 10 tenants account for 54% of gross rental income ˃ Approximately 76 per cent of gross rental revenue derived from listed (ASX & offshore), multinational, national and government tenants ˃
Slide 13: Portfolio Valuations
Portfolio Valuations Valuation uplift driven by active asset management and strong fundamentals in metropolitan office markets $417.5m 4.7% Book value1,2 Increase in Portfolio Valuation1 Key valuation metrics 1H17 FY16 Change Book value ($m) 417.5 398.7 Portfolio WACR (%) 7.52 7.86 Average Capital V
Slide 14: Section 3: Capital Management
CENTURIA METROPOLITAN REIT | 1H17INTERIMRESULTS | GMA:ASX | 09 FEBRUARY 2017 Section 3 Capital Vlanagement
Slide 15: Debt Management
Debt Management Maintained disciplined and conservative capital management ˃ Implemented a multi-bank syndicated debt facility providing diversity of funding sources and increased balance sheet capacity 33.8% Gearing1 ˃ 3 debt tranches with NAB ($140m) and 1 debt tranche with WBC ($40m) ˃ Conservati
Slide 16: Capital Transactions
Capital Transactions Realisation and recycling of capital where asset values have been maximised 14 Mars Road, Lane Cove On 21 December 2016 CMA entered into an unconditional contract to sell 14 Mars Road, Lane Cove, to the incumbent tenant Cochlear Limited for $26.0m1 • Property acquired for $18.5m
Slide 17: Acquisition of 8.8% strategic interest in Centuria Urban REIT
Acquisition of 8.8% strategic interest in Centuria Urban REIT (CUA) The acquisition of units in CUA is an investment in, and exposure to, similar underlying assets as CMA Background CMA’s Intentions Benefits of a potential Merger • Centuria Capital Limited (CNI) acquired • The CUA portfolio and inve
Slide 18: Proposed Corporate Simplification
Centuria’ Proposed Corporate Simplification -) CURRENT STRUCTURE Corporate Simplification will generate operating efficiencies — —————— > CMAis currently structured as a stapled trust scheme, where La Lie to + securityholders own securities in each of Centuria Metropolitan REIT #1 (CMR1) and Centuri
Slide 19: Section 4: Market Outlook
CENTURIA METROPOLITAN REIT | 1H17INTERIMRESULTS | GMA:ASX | 09 FEBRUARY 2017 Section 4 MViarket Outlook
Slide 20: Market Outlook
Market Outlook Supply and demand fundamentals for metropolitan office markets remain strong ˃ Constrained supply side fundamentals CBD Office vs Metro Office 5 Year Net Effective Rental Growth ˃ Continued withdrawal of metropolitan office space for residential conversion and major infrastructure pro
Slide 21: Market Outlook
Market Outlook Capital market inflows to metropolitan office assets continuing to strengthen ˃ Investor demand for quality, well leased metropolitan assets continues to strengthen against a backdrop of limited sellers/available stock ˃ Global low interest rate environment coupled with global and pol
Slide 22: Market Outlook: Equity Markets Outlook
Market Outlook Equity Markets Outlook ˃ World economic and political uncertainty is driving domestic and international investors towards defensive investments ˃ Capital inflows into the A-REIT sector remain strong due to generally low gearing and conservative management delivering reliable earnings
Slide 23: Strategy & Guidance
Strategy & Rlidance
Slide 24: Strategy
Strategy CMA’s strategy and ongoing focus remains unchanged Fund Strategy > Acquire quality ‘fit for purpose’ metropolitan real estate assets delivering a stable and secure income streams > Maintain a disciplined capital structure > Grow accretively through meaningful acquisitions that are in the be
Slide 25: Guidance
Guidance ˃ FY17 distributable earnings guidance of 18.7 – 19.0 cps reaffirmed ˃ Minimal impact from the sale of 14 Mars Road, Lane Cove due to deferred settlement ˃ FY17 distribution of 17.5 cps delivered in equal quarterly payments ˃ 2 quarterly payments of 4.375 cps remaining ˃ Payout ratio of app
Slide 26: Closing
Closing ˃ CMA’s portfolio remains in a strong position ˃ Portfolio valuation has increased and there is potential for further capital gain ˃ Robust portfolio occupancy of 98.9% and WALE of 4.2 years ˃ Strong tenancy profile with contracted rental growth greater than forecast CPI ˃ 94% of leases subj
Slide 27: Appendices
CENTURIA METROPOLITAN REIT | 1H17INTERIMRESULTS | GMA:ASX | 09 FEBRUARY 2017 Aopendices
Slide 28: Appendix A – Income Statement
Appendix A – Income Statement 31 Dec 2016 Revenue Gross property income ($’000) 19,280 Straight lining of rental income1 ($’000) 840 Interest income ($’000) 41 Total revenue ($’000) 20,161 Expenses Direct property expenses ($’000) (4,074) Responsible entity fees ($’000) (1,138) Finance costs ($’000)
Slide 29: Appendix B – Distribution Statement
Appendix B – Distribution Statement 31 Dec 2016 Statutory net profit ($’000) 27,104 Straight lining of rental income1 ($’000) (840) Investment properties revaluation gain / (loss) ($’000) (14,966) Loss on fair value of derivatives financial instrument ($’000) (1,574) Net Loss on fair value of TOF in
Slide 30: Appendix C – Balance Sheet
Appendix C – Balance Sheet 31 Dec 2016 Cash ($’000) 8,653 Investment properties ($’000) 417,500 Other assets1 ($’000) 14,408 Total assets ($’000) 440,561 Interest bearing liabilities2 ($’000) 138,554 Derivative financial instruments ($’000) 1,532 Other liabilities3 ($’000) 23,677 Total liabilities (
Slide 31: Appendix D – Investment Portfolio
Appendix D – Investment Portfolio1 WALE2 Property State Book value $/Sqm Cap rate NLA (sqm) (years) Occupancy1 Office 9 Help Street, Chatswood NSW 62.2 6,617 6.75% 9,400 2.6 100.0% 203 Pacific Highway, St Leonards3 NSW 47.5 8,096 7.00% 11,734 4.0 100.0% 3 Carlingford Road, Epping NSW 27.0 5,743 6.25
Slide 32: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited Limited (ABN 11 086 553 639, AFSL 231 149) (‘CPFL’) as responsible entity of the stapled entities Centuria Metropolitan REIT No.1 (ARSN 124 364 718) and Centuria Metropolitan REIT No.2 (ARSN 124 364 656), collectively
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