Centuria Office Reit · ASX:COF
Centuria Office Reit — FY2020 Earnings Presentation
34 slides from Centuria Office Reit's earnings presentation, Aug 5, 2020
Slide 1: FY20 Results
FY20 RESULTS A S X:COF 5 Aug 2020 Centuria Office REIT CENTURIA OFFICE REIT ASX:COF 1 201-203 PACIFIC HIGHWAY, ST LEONARDS, NSW
Slide 2: Agenda
A quality portfolio of highly connected and affordable office space without single market concentration Agenda 1. Overview 2. Financial Results 3. Portfolio Metrics 4. Strategy & Guidance 5. Appendices CENTURIA OFFICE REIT ASX:COF 2 555 CORONATION DRIVE, TOOWONG, QLD
Slide 3: Overview
SECTION ONE Overview A S X:COF CENTURIA OFFICE REIT ASX:COF 3 100 BROOKES STREET, FORTITUDE VALLEY, QLD
Slide 4: An ASX300-listed funds manager positioned for growth
An ASX300-listed funds manager positioned for growth Market capitalisation1 of $0.88bn, included in the S&P/ASX300 Index $9.4bn CNI: Group AUM2 $0.8bn $8.6bn Real Estate AUM Investment Bonds AUM Centuria $4.3bn LISTED $4.3bn UNLISTED Life Centuria Centuria Asset Plus Ltd Unlisted NZ Industrial Centu
Slide 5: COF is aligned to a highly experienced real estate funds manager
COF is aligned to a highly experienced real estate funds manager SUBSTANTIAL COMMERCIAL HANDS ON MANAGEMENT STRONG TRACK RECORD PROPERTY PLATFORM In house property and facilities $9.4bn AUM property platform Managing real estate funds management with deep leasing and provides economies of scale that
Slide 6: Key metrics – Australia's largest pure play office REIT
CENTURIA MANAGEMENT Key metrics – Australia’s largest pure play office REIT PORTFOLI O FI NANCI AL 23 $2.1bn 9.0% 34.5% High quality assets Portfolio value Forecast FY21 Gearing4 DPU yield3 98.1% 4.7yrs $131.0m 6.3x Portfolio occupancy1 Portfolio WALE2 Undrawn debt5 Interest Cover Ratio 1. By area 2
Slide 7: FY20 Executing on strategy
FY20 Executing on strategy • 23 high quality office assets with an average age of 15.9 years • Three high quality assets acquired during FY20 for $636m Portfolio construction 1 • Balanced geographic diversification with exposure to most major Australian office markets • Strong tenant covenants with
Slide 8: Resilient performance and prudent management through COVID-19
Resilient performance and prudent management through COVID-19 235 WILLIAM STREET, NORTHBRIDGE, WA Task force In house established to ensure workspace c.92% c.$2.4m No change in NTA 1.1% management facilitate greater Average rent year on year preparedness and tenant engagement collections April April
Slide 9: COF provides quality, highly connected and affordable office space
ASSET QUALITY COF provides quality, highly connected and affordable office space A portfolio positioned to meet COF has no single market concentration changing tenant demand Connectivity with key transport nodes & reduced commute time Access to recreational 235 WILLIAM STREET, NORTHBRIDGE, WA amenit
Slide 10: Financial Results
SECTION TW O Financial Results A S X:COF CENTURIA OFFICE REIT ASX:COF 10 77 MARKET STREET, WOOLLONGONG, NSW
Slide 11: Profit and loss statement
Profit and loss statement REVENUE FY20 FY19 VARIANCE Gross property income $m 149.2 107.9 41.4 Interest income $m 0.1 0.3 (0.2) Increase predominantly Total revenue $m 149.3 108.2 41.2 driven by growth in portfolio EXPENSES value Direct property expenses $m 31.6 23.5 8.0 Responsible entity fees $m 1
Slide 12: A robust balance sheet with strong covenant headroom
A robust balance sheet with strong covenant headroom DEBT MATURITY PROFILE ($M) 2.2% (A$m) 1,000 Drawn debt 900 Undrawn 800 ALL IN COST OF DEBT2 • Five new tranches established 700 Hedged (swap) Hedged (option) 600 75% through FY20 including a new 69% 500 7-year facility with Crédit Agricole 400 58%
Slide 13: Portfolio Metrics
SECTION THREE Portfolio Metrics A S X:COF CENTURIA OFFICE REIT ASX:COF 13 201 PACIFIC HIGHWAY, ST LEONARDS, NSW
Slide 14: A high-quality pure play office portfolio
A high-quality pure play office portfolio PORTFOLIO SNAPSHOT FY20 FY19 PORTFOLIO WEIGHTING Number of assets # 23 20 Book value $m 2,053.3 1,400.00 QLD 24.0% WACR % 5.93 6.22 WA 14% NLA sqm 304,586 218,080 95.8 3.4 99.4 6.4 OCCUPANCY(%) WALE(YRS) Occupancy1 % 98.1 98.4 OCCUPANCY(%) WALE(YRS) WALE2 yr
Slide 15: Staggered lease profile to quality tenants
Staggered lease profile to quality tenants 10.6% • Over 25.4% of income derived from government WEIGHTED AVERAGE LEASE EXPIRY (% BY INCOME) Portfolio NLA leased in FY203 tenants with the Federal Government representing Income WALE (Jun-19) 3.9 yrs Income WALE (Jun-20) 4.7 yrs 13.6% of the portfolio
Slide 16: Strong leasing track record & focus on maintaining high occupancy
Strong leasing track record & focus on maintaining high occupancy FY21 9 HELP STREET & 465 VICTORIA AVE, CHATSWOOD, NSW UPCOMING EXPIRIES (>500 sqm) FY21 818 Bourke Street, Docklands 10,740 35 Robina Town Centre Drive, Robina 7,220 100 Brookes Street, Fortitude Valley 3,491 1 Richmond Road, Keswick
Slide 17: Portfolio valuation summary
Portfolio valuation summary • Overall like-for-like revaluation gain of $23.3m in FY201 BOOK VALUE CAP RATE • WACR decreased 29 bps to 5.93%, with the compression FY20 FY19 Increase % FY20 FY19 BPS attributable to 1HFY20 QLD 493.5 488.5 5.0 1.0 6.28 6.48 (20) • Independent valuation of Robina accoun
Slide 18: Strategy & Guidance
SECTION FOUR Strategy & Guidance A S X:COF CENTURIA OFFICE REIT ASX:COF 18 60 MARCUS CLARKE STREET, CANBERRA, ACT
Slide 19: COF provides quality, highly connected and affordable office space
COF provides quality, highly connected and affordable office space COF has been positioned to meet changing tenant demand COF at IPO (Dec-14) COF at FY20 Assets no. 8 23 Market capitalisation $bn 0.1 0.9 1. INCREASED QUALITY AND SCALE AUM $bn 0.2 2.1 • Greater diversification, number of assets NLA S
Slide 20: Strategic vision and objectives
Strategic vision and objectives VISION To build Australia’s leading pure play office REIT A CLEAR Focused on generating sustainable and quality income streams and executing AND SIMPLE initiatives to create value across a portfolio of quality Australian office assets STRATEGY Australia’s largest Over
Slide 21: FY21 Guidance
FY21 Guidance 9.0%1 16.5c DISTRIBUTION PER UNIT FORECAST DISTRIBUTION YIELD Due to uncertainty arising from COVID-19 and the potential impact on business operating DISTRIBUTIONS conditions, COF will not PAID IN EQUAL be providing FY21 FFO QUARTERLY guidance at this point INSTALMENTS NISHI, 2 PHILLIP
Slide 22: Appendices
SECTION FIVE Appendices A S X : C O F A – Sustainability initiatives Appendix Appendix B – Market research Appendix C – Office Transactions Appendix D – Income statement Appendix E – FFO reconciliation Appendix F – Balance sheet CENTURIA OFFICE REIT ASX:COF 22 42-46 COLIN STREET, WEST PERTH, WA
Slide 23: Appendix A – Sustainability initiatives
Appendix A – Sustainability initiatives 856 5 300tn 170 Assessing other opportunities to implement solar initiatives Solar Panels Buildings CO2 Emissions Equivalent cars Installed Reduced removed from roads across the portfolio 825 ANN STREET, FORTITUDE VALLEY QLD CENTURIA OFFICE REIT ASX:COF 23
Slide 24: Appendix B – Market research: limited new supply
Appendix B – Market research Limited new supply in COF’s exposed office markets sqm TOTAL STOCK UNDER CONSTRUCTION 1 sqm NET ABSORPTION FORECAST (2020-2024)1 700,000 700,000 Pre-commitment rate as at 2Q20 (sqm) Space available (sqm) 600,000 600,000 500,000 500,000 400,000 400,000 300,000 300,000 200
Slide 25: Appendix B – Future absorption forecast to exceed future supply
Appendix B – Market research Future absorption forecast to exceed future supply NET INCREASE IN SURPLUS STOCK VS NATION VACANCY OFFICE MARKET VACANCY BY MARKET (2010-2020) (%) (,000 sqm of NLA) (% of NLA) 600 15.0 30 Vacancy range (%) Ave vacancy (%) Current vacancy (%) 500 12.5 25 400 10.0 300 7.5
Slide 26: Appendix B – Prime space continues to attract tenants
Appendix B – Market research Prime space continues to attract tenants & COF exposed markets remain affordable CHANGE FROM VACANCY RATES 30 Jun 201 TOTAL 30-Jun-19 PRIME RENTS 30 JUN 201 NET EFFECTIVE 30-JUN-20 Sydney CBD 7.5% 4.1% Sydney CBD $814 -2.5% Chatswood 13.9% 5.6% Chatswood $433 2.8% St Leo
Slide 27: Appendix B – Spread between discount rates and bond rates
Appendix B – Market research An attractive spread between office sector discount rates and AU 10 year government bond rates 15.00% 530 bps 12.00% 335 bps 630 bps 185 bps 9.00% 565 bps 6.00% 3.00% 0.00% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Office Sector Discount
Slide 28: Appendix C – Office transactions
Appendix C – Office transactions High quality acquisitions strategically located in major office markets WILLIAM SQUARE, 235 WILLIAM ST, NORTHBRIDGE WA 8 CENTRAL AVENUE, SOUTH EVELEIGH NSW (50%) NISHI, 2 PHILLIP LAW STREET, CANBERRA ACT $636m of high quality A grade acquisitions 5.6% Average yield $
Slide 29: Appendix D – Income statement
Appendix D – Income statement $'000 FY20 FY19 Gross property income 149,240 107,850 Interest income 106 334 Total revenue 149,346 108,184 Direct property expenses 31,573 23,543 Responsible entity fees 10,421 6,867 Finance costs 16,777 15,428 Management and other administrative expenses 1,975 1,142 E
Slide 30: Appendix E – FFO reconciliation
Appendix E – FFO reconciliation $'000 FY20 FY19 Statutory net profit 23,053 53,572 Loss/(gain) on fair value of investment properties 37,698 (7,143) Straight-lining of rental income and amortisation of leasing commissions and tenant incentives 7,048 938 Goodwill impairment 6,356 0 One off refinancin
Slide 31: Appendix F – Balance sheet
Appendix F – Balance sheet $'000 30-Jun-20 30-Jun-19 Cash 28,809 17,546 1 Investment properties 2,085,650 1,399,975 Goodwill 0 6,356 Trade and other receivables 3,263 4,080 Other assets 1,536 1,464 Total assets 2,119,258 1,429,421 2 Interest bearing liabilities 746,372 497,222 3 Trade and other liab
Slide 32: Appendix G – Investment portfolio
Appendix G – Investment portfolio 1 2 PROPERTY STATE OWNERSHIP (%) BOOK VALUE ($M) CAPITALISATION RATE (%) AREA (SQM) AREA ($/SQM) WALE (YRS) OCCUPANCY (%) 8 Central Avenue, Eveleigh NSW 50% $189.0m 5.38% 37,274 10,141 8.2 100.0% 201 Pacific Highway, St Leonards NSW 50% $106.5m 5.63% 16,498 12,911 3
Slide 33: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited Limited (ABN 11 086 553 639, The information in this presentation has been obtained from and based on sources believed by CPFL AFSL 231 149) (CPFL) as responsible entity of Centuria Office REIT (‘COF’ or the ‘Trust’).
Slide 34: Centuria Office REIT ASX:COF
CENTURIA OFFICE REIT ASX:COF 34