Centuria Office Reit · ASX:COF
Centuria Office Reit — FY2024 Earnings Presentation
40 slides from Centuria Office Reit's earnings presentation, Aug 15, 2024
Slide 1: Centuria Office REIT FY24 Results
15 AUGUST 2024 | ASX:COF Centuria Office REIT FY24 Results 235 WILLIAM STREET, NORTHBRIDGE WA
Slide 2: Speakers
Speakers Jesse Curtis Belinda Cheung Grant Nichols Head of Funds Management – Fund Manager – Head of Listed Funds – Centuria Capital Group Centuria Office REIT Centuria Capital Group Centuria ASX:COF 2
Slide 3: Acknowledgement of Country and Agenda
Acknowledgement of Country Our Group manages property throughout Australia and New Zealand. Centuria pays its respects to the traditional owners of the land in each country, to their unique cultures and to their Elders past and present. AGENDA 1. Overview 2. Financial results 3. Portfolio 4. Market
Slide 4: 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 Group AUM1 $21.1bn Centuria Real estate $20.2bn Life Limited Investment Listed (30%2) $6.0bn Unlisted (70%2) $14.2bn bonds $3.9bn $2.0bn $0.2bn $8.0bn $3.2bn $3.
Slide 5: Overview
Overview SECTION ONE 101 MORAY STREET, SOUTH MELBOURNE VIC
Slide 6: COF: Vision, strategy and objectives
COF: Vision, strategy and objectives VISION A clear and simple strategy To be Australia’s Focused on generating sustainable and quality income streams and leading pure play executing initiatives to create value across a portfolio of quality Australian office assets office REIT Centuria Office Key ob
Slide 7: Overseen by a hands-on and proactive management team
Overseen by a hands-on and proactive management team Active management initiatives since 2020 LEASING TRACK RECORD • No single tenant comprises more than 5% of portfolio income 211,146sqm PROACTIVE CAPITAL MANAGEMENT • LVR and ICR covenants renegotiated with $1.8bn Leasing terms agreed1 no material
Slide 8: FY24 strategy execution
FY24 strategy execution 235 William street, northbridge WA Completed strong leasing, asset recycling and proactive debt refinancing • Delivered FY24 FFO of 13.8 cpu, FY24 DPU of 12.0 cpu, in line with guidance Active • 42,722 sqm of leasing terms agreed1 (15% of portfolio NLA) management • COF’s lar
Slide 9: COF earnings and distributions
COF earnings and distributions COF PORTFOLIO FY24 FY25 guidance3 93% Portfolio occupancy5,6 13.8 cpu 12.0cpu 11.8 cpu 10.1 cpu FY24 FFO delivered, FY24 DPU, FY25 FFO guidance FY25 DPU guidance in line with guidance in line with guidance 15% 9.7% (31.1%) 9.5% 8.1% Portfolio leased FY246 FY24 DPU Yiel
Slide 10: Occupiers prefer prime grade assets
Occupiers prefer prime grade assets Data showing positive demand for prime grade over secondary stock Bifurcation apparent with prime grade stock a clear preference Net absorption in metro markets, 2020 to 2024 250,000 Most major Australian office 150,000 markets have seen positive net absorption 50
Slide 11: COF provides quality, highly connected and affordable office space
COF provides quality, highly connected and COF portfolio affordable office space strategic metrics Included in the S&P/ASX 300 Index and FTSE/EPRA NAREIT Global Developed Index 17 years Average asset age1 Young portfolio Accessible price point 93% Prime assets are generating greater Deeper investmen
Slide 12: Return to office gaining momentum
Return to office gaining momentum Engagement, collaboration and productivity benefits driving occupier sentiment for return to office Public transport trips have increased in major east coast capital cities1 The crazy WFH experiment NSW public servants ordered Sydney total trips (LHS) is over. Water
Slide 13: Sector fundamentals support outlook for office markets
Sector fundamentals support outlook for office markets Office development feasibility curtailed, supply likely to reduce despite rising demand, creating potential office tailwinds Inflation across all development feasibility components1 Australian metropolitan office market development pipeline2 500
Slide 14: Financial results
Financial results SECTION TWO 100 BROOKES STREET, FORTITUDE VALLEY QLD
Slide 15: Funds from operations (FFO)
Funds from Revenue FY24 FY23 Variance +3% like for like rent growth. operations (FFO) Gross property income $m 183.2 183.1 0.1 Divestments have impacted Interest income $m 0.8 0.5 0.3 gross property income and interest expense. Total revenue $m 184.0 183.6 0.4 Expenses Direct property expenses $m (4
Slide 16: Capital management
Capital management Pro forma debt maturity profile ($m) LVR 60% 335.0 295.0 282.5 ICR 1.75x Renegotiated debt covenants, no material $862m $50m change to margin Debt refinanced Debt facilities cancelled No debt expiry before FY28 $85.5m $139m $180m FY25 FY26 FY27 FY28 FY29 FY30 Pro forma facility FY
Slide 17: Portfolio
Portfolio SECTION THREE 584 SWAN STREET, RICHMOND VIC
Slide 18: Portfolio overview
Portfolio overview Tenant mix (income) 14% High quality portfolio underpinned by excellent 19% ASX Listed Government 72% tenant covenants 14% of income derived from Listed multinational government, ASX Portfolio snapshot FY24 FY23 Multinational listed and multinational 25% National tenants 18% Numbe
Slide 19: Staggered lease expiry
Staggered lease expiry: c.72% of leases expire at or beyond FY27 No single tenant expiry is >3% of portfolio income Weighted average lease expiry1,2 50% 46.8% Current vacancy (>1,500 sqm) NLA (sqm) 45% 818 Bourke Street, Docklands4 10,282 40% 201 Pacific Highway, St Leonards (50% ownership) 4 5,638
Slide 20: COF has proven capability in active management and asset repositioning
COF has proven capability in active management and asset repositioning Value creation driven by tenant focused approach 825 Ann St, Fortitude Valley Qld 154 Melbourne St, South Brisbane Qld Additional amenity Outcomes achieved Additional amenity Outcomes achieved • Training and townhall 100% 2.7 yea
Slide 21: Delivering one of Australia's first enterprise AI inferencing and liquid cooled data centre
Delivering one of Australia’s first enterprise AI Inferencing and ultra- high density liquid cooled data centre 818 Bourke St, Docklands VIC1,2 • ResetData has entered a conditional 10-year lease for a data centre of up to 1.5 megawatts at 818 Bourke Street, Docklands VIC • Repurposing existing infr
Slide 22: Strategic FY24 transactions
Strategic FY24 transactions COF continued to optimise portfolio construction through divestments near prevailing book values COF’s portfolio average Proceeds used to repay debt, asset age reduced to strengthening 17 years balance sheet Direct market 54 Marcus Clarke Street, 35 Robina Town Centre Dri
Slide 23: Valuation summary
Valuation summary COF portfolio valuation summary FY24 FY23 Valuation 14 of 19 valuation ($’000) valuation ($’000) Movement3,4 ($’000) FY24 WACR5 FY23 WACR5 Movement WACR5 assets externally revalued in June 2024, all assets externally revalued in the last Like for like portfolio/ weighted 12 months
Slide 24: FY24 ESG highlights: COF
FY24 ESG highlights: COF 8 CENTRAL AVENUE, EVELEIGH NSW Our memberships and industry participation Responsible business Member of the Diversity Conscious of climate change Valued stakeholders Council of Australia6 practices Market leading performance: 452 hours volunteered in Australia and Over 9,00
Slide 25: Market overview and guidance
Market overview and guidance SECTION FOUR 203 PACIFIC HIGHWAY, ST LEONARDS NSW
Slide 26: Growth drivers for Australian office real estate
Growth drivers for Australian office real estate Key themes contributing to potential sector tailwinds Current development feasibilities Work from office gaining Continued bifurcation of Prime and will restrict future supply momentum Secondary markets • It is costing more and taking longer to comple
Slide 27: New metro network precincts
New metro network precincts Bordering suburbs Metro-line suburbs Densification 10-year capital value growth O D 01 St Marys 48% 49% 27% 44% Orchard ills Macquarie Par orth yde Chats ood estmead Parramatt a Coffee and Population hospitality growth Cro s est St eonards ictoria Cross 36% uddenham Sydne
Slide 28: FY25 strategy and priorities
FY25 strategy and priorities 1. Maintain high 2. High portfolio 3. Proactive capital occupancy quality management • Continue delivering • Assess asset allocation to • Preserve diverse lender occupancy above national improve portfolio quality pool and expiry profile average • Lease to enhance tenant
Slide 29: FY25 guidance
FY25 guidance1 FFO per unit1 11.8c Distribution per unit1 10.1c Forecast FY25 distribution yield1,2 8.1% Distributions expected to be paid in quarterly instalments 1. Guidance remains subject to unforeseen circumstances and material 825 ANN STREET, FORTITUDE VALLEY QLD changes in operating condition
Slide 30: Appendices
Appendices SECTION FIVE Appendix A: Income statement Appendix B: FFO reconciliation Appendix C: Balance sheet Appendix D: Australian office market metrics Appendix E: COF leasing history Appendix F: Geographic breakdown Appendix G: Like for like portfolio valuation summary Appendix H: Investment pro
Slide 31: Appendix A: Income statement
Appendix A: Income statement $’000 FY24 FY23 Revenue Gross property income 183,206 183,128 Interest Income 779 459 Total revenue 183,985 183,587 Expenses Direct property expenses (42,282) (38,429) Responsible entity fees (12,031) (13,189) Finance costs (45,811) (36,828) Management and other administ
Slide 32: Appendix B: FFO reconciliation
Appendix B: FFO reconciliation $'000 FY24 FY23 Statutory net profit (168,745) (91,931) (Gain)/loss on fair value of investment properties 211,282 162,157 (Gain)/loss on fair value of derivatives 9,047 (2,769) Straight-lining of rental income and amortisation of leasing 30,659 25,620 commissions and
Slide 33: Appendix C: Balance sheet
Appendix C: Balance sheet $'000 FY24 FY23 Cash 17,495 17,287 Investment properties1 1,945,584 2,268,554 Trade and other receivables 7,302 9,000 Derivative financial instruments 4,288 13,336 Other assets 3,177 2,840 Total assets 1,977,846 2,311,017 Interest bearing liabilities2 824,551 893,576 Trade
Slide 34: Appendix D: Australian office market metrics
Appendix D: Australian office market metrics Proportion of 12 month net 12 month face Rental discount market under Vacancy absorption rental growth to Sydney CBD construction Market (%) (SQM) (%) (%) (%) Adelaide 16.0 54,798 5.7 (63.1) 3.4 Melbourne CBD 16.2 (96,548) 3.2 (48.2) 3.8 Melbourne fringe
Slide 35: Appendix E: COF leasing history
Appendix E: COF leasing history Centuria continued to deliver a strong track record of leasing Leasing volume 5,116sqm 0,000sqm 12,493sqm 0,000sqm 20,321sqm 0,000sqm 17,970sqm 0,000sqm 21,758sqm 0,000sqm 32,378sqm 0,000sqm 52,077sqm 0,000sqm 41,283sqm 0,000sqm 42,686sqm 0,000sqm 42,722sqm 0,000sqm F
Slide 36: Appendix F: Geographic breakdown
Appendix F: Geographic breakdown WA 13% total COF portfolio 99.2% occupancy 1,2 QLD 20% total COF portfolio 99.2% occupancy 1,2 6.9yr WALE1,2 3.2yr WALE1,2 34,696sqm leased since 2020 66,014sqm leased since 2020 COF’s national portfolio 93% occupancy1,2 NSW 26% total COF portfolio 90.1% occupancy 1,
Slide 37: Appendix G: Like for like portfolio valuation summary
Appendix G: Like for like portfolio valuation summary 1,2 Movement FY24 valuation FY23 valuation Valuation movement3 FY24 WACR4 FY23 WACR4 WACR4 State ($M) ($M) ($M) (%) (%) (%) (BPS) NSW 502.0 556.2 (54.2) (9.74) 6.52 5.81 0.71 QLD 384.5 398.8 (14.3) (3.59) 7.00 6.30 0.70 VIC 472.0 532.5 (60.5) (11
Slide 38: Appendix H: Investment property portfolio
Appendix H: Investment property portfolio Property State Ownership (%) Book value ($M) Capitalisation rate (%) Area (SQM) Area ($/SQM) WALE (years)1 Occupancy (%)1 8 Central Avenue, Eveleigh NSW 50% 186.5 6.00% 36,570 10,200 6.8 100.0% 203 Pacific Highway, St Leonards NSW 100% 117.0 6.75% 11,727 9,9
Slide 39: 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 IT (A S 124 364 718) (‘COF’ or the ‘Trust’). This presentation contains selected in summary information and does not purport to be all-
Slide 40: Australia
AUSTRALIA Sydney (head office) Melbourne (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 Perth (07) 3905 7000 (08) 9321 7133 Level 2 Level 27 348 Edward Street 140 St Georges Terrace Brisbane QLD 4000 Pert