Centuria Office Reit · ASX:COF
Centuria Office Reit — HY23 Earnings Presentation
33 slides from Centuria Office Reit's earnings presentation, Feb 2, 2023
Slide 1: Centuria Office REIT HY23 Results
2 FEBRUARY 2023 ASX:COF Centuria Office REIT HY23 RESULTS NISHI, 2 PHILLIP LAW STREET, CANBERRA ACT
Slide 2: Acknowledgement of Country and agenda
ACKNOWLEDGEMENT OF COUNTRY Our group manages property throughout Australia and New Zealand. Accordingly, Centuria pays its respects to the traditional owners of the land in each country, to their unique cultures and to their elders past, present and emerging. 1. Overview 2. Financial results 3. Port
Slide 3: Overview
ASX:COF COF A PORTFOLIO WITHOUT SINGLE MARKET CONCENTRATION Overview SECTION ONE 8 CENTRAL AVENUE, SOUTH EVELEIGH NSW
Slide 4: Key metrics
Key metrics A high-quality, geographically diversified portfolio Financial Portfolio 15.8cpu 8.8% $2.3bn 96.4% FY23 FFO Guidance FY23 DPU Yield1 Portfolio book value Portfolio occupancy4,6 across 23 assets FY23 DPU Guidance 14.1cpu 35.6% $2.40 4.2 yrs 4.8 Gearing2 Net tangible assets Portfolio WALE4
Slide 5: HY23 summary
HY23 summary 818 BOURKE STREET, DOCKLANDS VIC Strong leasing outcomes improve portfolio occupancy • 15,084 sqm of leases executed, representing 5.0% of the portfolio’s NLA • Signed Heads of Agreement received for a further 15,336 sqm, representing 5.0% of portfolio’s NLA, including: Total occupancy
Slide 6: COF: Vision, strategy and objectives
COF: Vision, strategy and objectives VISION To be Australia’s Australia’s largest ASX-listed pure play office REIT. leading pure play COF Overseen by an active management team with deep real estate expertise. Strongly supported by Centuria Capital Group. office REIT A clear and simple strategy Key o
Slide 7: COF provides quality, highly connected and affordable office space
COF provides quality, highly connected and affordable office space Included in the S&P/ASX 300 Index and FTSE/EPRA Nareit Global Developed Index COF portfolio strategic metrics 17yrs Average asset age1 90% 57 WYATT STREET, 100 BROOKES STREET, 101 MORAY STREET, 2 KENDALL STREET, A-grade assets2 ADELA
Slide 8: COF is a geographically diversified portfolio
COF is a geographically diversified portfolio Exposed to outperforming office markets, enabling strong leasing outcomes • Over 150,000 sqm of leasing completed since first impact of COVID in 2020, representing NT c.51% of portfolio NLA COF National portfolio • Many COF exposed markets have QLD 96.4%
Slide 9: Centuria Capital Group: A leading Australasian real estate funds manager
Centuria Capital Group: A leading Australasian real estate funds manager CNI is the manager of COF and is included in the S&P/ASX200 Index $21.2bn Group AUM1 $20.4bn Real estate AUM $6.5bn $13.9bn $0.8bn Listed real estate Unlisted real estate Investment bonds Centuria Life $3.9bn $2.4bn $0.2bn $8.5
Slide 10: Cirque by Centuria
Cirque by Centuria demonstrates CNI’s commitment to office A truly flexible work solution • cirque is Centuria’s national network of flexible workspace sites, initially located at 9 Help Street, Chatswood and 154 Melbourne Street, South Brisbane • Strong focus on technology, state of the art work hu
Slide 11: Financial results
ASX:COF CONNECTIVITY WITH KEY TRANSPORT NODES AND REDUCED COMMUTE TIMES Financial results SECTION TWO 35 ROBINA TOWN CENTRE DRIVE, ROBINA QLD
Slide 12: Funds from operations (FFO)
Funds from operations (FFO) 825 ANN STREET, FORTITUDE VALLEY QLD REVENUE HY23 HY22 VARIANCE Gross property income $m 92.0 90.8 1.2 Total revenue $m 92.0 90.8 1.2 EXPENSES Direct property expenses $m (19.9) (18.1) (1.8) Responsible entity fees $m (6.6) (6.1) (0.5) Finance costs $m (15.7) (9.4) (6.3)
Slide 13: Capital management overview
Capital management overview Substantial undrawn debt, ample debt covenant headroom, and no debt expiry until FY25 Debt maturity profile ($m) 390 6 273 Quality debt lenders • No debt tranche expiring 175 until FY25 125 • Significant covenant headroom ICR 4.9x $101.5m FY23 FY24 FY25 FY26 FY27 FY28 Fac
Slide 14: Portfolio
ASX:COF A YOUNG PORTFOLIO OF QUALITY ASSETS Portfolio SECTION THREE 57 WYATT STREET, ADELAIDE SA
Slide 15: Portfolio overview
Portfolio overview High quality portfolio underpinned by excellent tenant covenants PORTFOLIO SNAPSHOT HY23 FY22 Tenant mix (income) Number of assets # 23 23 Book value $m 2,310.0 2,335.2 7% 14% 26% ASX Listed Government 79% Listed multinational of income derived from WACR % 5.75 5.58 Multinational
Slide 16: Staggered lease expiry: 86% of leases expiring at or beyond FY25
Staggered lease expiry: 86% of leases expiring at or beyond FY25 HY23 was a strong leasing period increasing occupancy to 96.4%1,3 CURRENT VACANCY (>1,500 SQM) NLA (SQM) Weighted average lease expiry 201 Pacific Highway, St Leonards 3,326 60% (50% ownership) 50.5% 154 Melbourne Street, South Brisban
Slide 17: Valuation summary
Valuation summary Reduced transaction volumes demonstrate investor bifurcation based on quality and leasing risk Portfolio valuation summary2,3 12 of 23 HY23 VALUATION FY22 VALUATION VALUATION MOVEMENT2,3 HY23 WACR4 FY22 WACR4 MOVEMENT WACR4 assets externally ($M) ($M) ($M) (%) (%) (bps) revalued in
Slide 18: Sustainability at Centuria Capital Group
Sustainability at Centuria Capital Group Developing a flexible and relevant sustainability framework Conscious of climate change Environment Green Building 5 Star Green Star GRESB pilot rating Climate Action COF 4.81 Star NABERS Membership development pipeline COF undertook a pilot Ongoing solar ins
Slide 19: Market outlook and guidance
ASX:COF CLOSE PROXIMITY TO KEY AMENITY Market outlook and guidance SECTION FOUR 235 WILLIAM STREET, NORTHBRIDGE WA
Slide 20: Key themes for COF markets
Key themes for COF markets COF Increased Robust tenant demand for Inflation Strong employment growth leasing activity metropolitan locations impacts • Tenants demonstrating flight to • Demonstrated tenant demand for • Increased fitout costs direct • 469,700 new jobs created in the quality / experien
Slide 21: Strong net absorption in COF exposed office markets
Strong net absorption in COF exposed office markets Australian office market net absorption2 Many Australian office markets have demonstrated robust tenant demand 100,000 through 2022 80,000 Negative absorption concentrated in 60,000 Sydney and Melbourne CBD, markets COF has limited or no exposure t
Slide 22: FY23 guidance
FY23 guidance 203 PACIFIC HIGHWAY, ST LEONARDS NSW Distribution per unit1 14.1c Forecast FY23 distribution yield 8.8% 1,2 FFO per unit1 15.8c Distributions paid in equal quarterly instalments 1. Guidance remains subject to unforeseen circumstances and material changes in operating conditions 2. Base
Slide 23: Appendices
ASX:COF A PORTFOLIO PROVIDING AFFORDABLE ACCOMODATION SOLUTIONS Appendices SECTION FIVE Appendix A: Australian office market metrics Appendix B: COF leasing history Appendix C: Income statement Appendix D: FFO reconciliation Appendix E: Balance sheet Appendix F: Portfolio valuation summary Appendix
Slide 24: Appendix A: Australian office market metrics
Appendix A: Australian office market metrics RENTAL 6 MTH NET 12 MTHS NET UPCOMING VACANCY DISCOUNT TO MARKET1 ABSORPTION ABSORPTION SUPPLY (%) SYDNEY CBD (SQM) (SQM) (SQM) (%) Adelaide 16.5 4,121 (544) 63.1 126,998 Melbourne CBD 15.4 1,653 (13,789) 46.9 249,453 Melbourne fringe 14.4 38,147 82,299 5
Slide 25: Appendix B: COF leasing history
Appendix B: COF leasing history Since the COVID-19 outbreak, COF has leased over 150,000 sqm, c. 51% of portfolio NLA 100 BROOKES STREET, FORTITUDE VALLEY QLD FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 HY23 Leasing executed Leasing executed Leasing executed Leasing executed Leasing executed Leasing exe
Slide 26: Appendix C: Income statement
Appendix C: Income statement 483 KINGSFORD SMITH DRIVE, HAMILTON QLD $'000 HY23 HY22 Gross property income 91,977 90,777 Interest income - 1 Total revenue 91,977 90,778 Direct property expenses (19,852) (18,118) Responsible entity fees (6,648) (6,092) Finance costs (15,660) (9,433) Management and ot
Slide 27: Appendix D: FFO reconciliation
Appendix D: FFO reconciliation 42-46 COLIN STREET, WEST PERTH WA $'000 HY23 HY22 Statutory net profit (17,363) 63,630 (Gain)/loss on fair value of investment properties 51,367 (11,677) (Gain)/loss on fair value of derivatives 1,540 (5,427) Straight-lining of rental income and amortisation of leasing
Slide 28: Appendix E: Balance sheet
Appendix E: Balance sheet 203 PACIFIC HIGHWAY, ST LEONARDS NSW $'000 31-Dec-22 30-Jun-22 Cash 19,487 26,558 Investment properties1 2,341,401 2,366,770 Trade and other receivables 9,976 7,450 Derivative financial instruments 7,557 7,133 Other assets 12,816 9,995 Total assets 2,383,680 2,410,773 Inter
Slide 29: Appendix F: Portfolio valuation summary
Appendix F: Portfolio valuation summary STATE HY23 VALUATION1 FY22 VALUATION1 VALUATION MOVEMENT2 HY23 WACR1,3 FY22 WACR1,3 MOVEMENT WACR3 ($M) ($M) ($M) (%) (%) (%) (BPS) NSW 584.5 589.6 (5.1) (0.9) 5.53 5.37 16 QLD 490.5 501.6 (11.1) (2.2) 6.19 5.96 23 VIC 551.0 562.2 (11.2) (2.0) 5.27 5.11 16 ACT
Slide 30: Appendix G: Investment property portfolio
Appendix G: Investment property portfolio OWNERSHIP BOOK VALUE CAPITALISATION AREA AREA WALE OCCUPANCY PROPERTY STATE (%) ($M) RATE (%) (SQM) ($/SQM) (YRS)1 (%)1 8 Central Avenue, Eveleigh NSW 50% 205.5 5.13% 36,619 5,612 7.2 96.5% 203 Pacific Highway, St Leonards NSW 100% 138.0 5.75% 11,736 11,759
Slide 31: Appendix H: Environmental data
Appendix H: Environmental data Unit of FY22 FY21 Measure Environmental Data reported is for financial years 2021 and 2022. Financial year 2023 data will be reported in the Centuria 2023 Sustainability Report Net lettable area sqm 295,128 304,589 Total energy MWh 27,671 21,280 Reported figures repres
Slide 32: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited (ABN 11 086 553 639, AFSL 231 149) (CPFL) as responsible entity of Centuria Office REIT (ARSN 124 364 718) (‘COF’ or the ‘Trust’). This presentation contains selected in summary information and does not purport to be a
Slide 33: Office contact details
AUSTRALIA Sydney Head Office Melbourne Office (02) 8923 8923 (03) 9616 6500 Level 41, Chifley Tower Level 47 2 Chifley Square 101 Collins Street Sydney NSW 2000 Melbourne VIC 3000 Brisbane Office Perth Office (07) 3905 7000 (08) 9321 7133 Level 2 Level 27 348 Edward Street 140 St Georges Terrace Bri