Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — FY2023 Earnings Presentation
42 slides from Centuria Industrial Reit's earnings presentation, Aug 14, 2023
Slide 1: Centuria Industrial REIT FY23 results
14 August 2023 | ASX:CIP Centuria Industrial REIT FY23 results 12-13 AND 14-17 DANSU COURT, HALLAM VIC Intelligent investing for 25 years
Slide 2: 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 and present. AGENDA 1. Overview 2. Portfolio overview 3. Financ
Slide 3: Overview
Overview Section one 56-88 LISBON STREET, FAIRFIELD NSW
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 CIP and is included in the S&P/ASX200 Index $21.0bn GROUP AUM1 $20.2bn REAL ESTATE AUM $6.4bn $13.8bn $0.8bn LISTED REAL ESTATE UNLISTED REAL ESTATE INVESTMENT BONDS $3.9bn $2.3bn $0.2bn $8.4bn $2.6bn $2.8
Slide 5: CIP: Vision, strategy and objectives
CIP: Vision, strategy and objectives VISION Australia’s largest domestic ASX-listed pure play To be Australia’s Centuria Industrial industrial REIT. Overseen by an active management leading domestic pure REIT (CIP) team with deep real estate expertise. Strongly supported by Centuria Capital Group pl
Slide 6: Key metrics
Key metrics Australia’s largest listed domestic pure-play industrial REIT PORTFOLIO 89 $3.8bn High-quality assets Portfolio book value1 98.0% 7.7yrs Portfolio occupancy2 Portfolio WALE2 FINANCIAL 17.0cpu 16.4% FY23 FFO guidance 12-month TSR delivered delivered 8.1% S&P/ASX 200 A-REIT 16.0cpu FY23 DP
Slide 7: FY23 strategy execution and FY24 guidance
FY23 strategy execution and FY24 guidance • 180,004sqm of terms agreed over FY24 (14% of portfolio)1. High occupancy maintained at 98%, 7.7year WALE2 01 Active management • • Accelerating positive re-leasing spreads averaging 30%3 (11% in FY22) over the year; 37% re-leasing spreads achieved in 2HFY2
Slide 8: Australia’s largest listed domestic pure-play industrial REIT
Australia’s largest listed domestic pure-play industrial REIT WA 7% 100% exposure to Australian industrial property total portfolio QLD 21% total portfolio Portfolio snapshot FY231 3.2 yrs Number of assets # 89 WALE 9.8 yrs WALE Book value $m 3,839 WACR % 5.26 NSW 31% GLA sqm 1,289,129 & ACT total p
Slide 9: CIP active portfolio
CIP active portfolio1 Located in prime land constrained urban infill markets An active portfolio providing exposure to strong market rental growth and • 298ha of land with 98% freehold value-add opportunities ownership Active portfolio snapshot FY232 • Valuations substantially underpinned by an aver
Slide 10: CIP ultra-long WALE sub-portfolio
CIP ultra-long WALE sub-portfolio1 Generates stable cashflow • Iconic Australian blue chip brands, Generating long term reliable and growing rental income streams2 Telstra and Arnott’s, generating reliable rental income streams Portfolio snapshot FY23 • 100% of the sub-portfolio under triple net lea
Slide 11: Financial results
Financial results Section two 92 ROBINSON AVENUE, BELMONT WA
Slide 12: Funds From Operations (FFO)
Funds From Revenue FY23 FY22 Variance Operations (FFO)1 Gross property income ($m) 220.0 199.1 20.9 Reflects growth in portfolio and positive re-leasing spreads Other income ($m) 2.2 1.8 0.4 Share of net profit of equity accounted investments ($m) 3.2 0.0 3.2 4.4% like for like NOI growth Interest i
Slide 13: Capital management
Capital management 33.1% A diverse pool of debt funding sources Gearing5 at the lower end of target range of 30%-40% (covenant of 50%) Debt maturity profile ($m) 300 Domestic and International banks A$MTN 88% Exchangeable Note1,2 Interest rate hedged6 425 350 280 155 100 3.3 times FY24 FY25 FY26 FY2
Slide 14: Case study: Exchangeable Note issuance
Case study: Exchangeable Note issuance1 Notes issued at an attractive cost of debt with initial conversion above NTA 9-13 CARIBOU DRIVE, DIREK SA • Exchangeable Note offering in February 2023 demonstrates ongoing proactive capital management strategy • Increases diversity in CIP’s capital structure
Slide 15: Operational performance
Operational performance Section three 29 PENELOPE CRESCENT, ARNDELL PARK NSW
Slide 16: Average re-leasing spreads of 30% for FY23
Average re-leasing spreads of 30% for FY231 Over 182,000sqm of leasing (14% of portfolio) delivered in FY232 Select FY23 leasing outcomes 95-105 SOUTH GIPPSLAND HIGHWAY DANDENONG Lease expiry (%) income SOUTH VIC Development exposure • c.40,500sqm speculative development • Fully leased prior to Prac
Slide 17: High quality tenant customers
High quality tenant customers Leveraging CIP’s scale to Secure income backed by blue generate a ‘networking effect’ to chip tenant customers grow and service customers across multiple locations Tenant industry sector diversifications1 Strong relationships providing insights and visibility on future
Slide 18: Asset repositioning projects
Asset repositioning projects Strong pipeline of value-add opportunities to capitalise on infill market fundamentals Completed Active Pipeline 9 FELLOWES COURT, TULLAMARINE VIC 616 BOUNDARY ROAD, RICHLANDS QLD 30 FULTON DRIVE, DERRIMUT VIC 8 HEXHAM PL, WETHERILL PARK NSW BEFORE • Refurbishment and le
Slide 19: Development pipeline
Development pipeline Creating modern sustainable industrial assets to attract high quality customers and income streams Completed Active (underway) 95-105 SOUTH GIPPSLAND HWY, DANDENONG SOUTH VIC 90 BOLINDA ROAD, CAMPBELLFIELD VIC 204-208 BANNISTER ROAD, CANNING VALE WA • 40,544 sqm multi-unit indus
Slide 20: Creating critical mass and scale in land constrained infill markets
Creating critical mass and scale in land constrained infill markets CIP strategic consolidation • 12 examples of site consolidation covering over 100ha of land within the CIP portfolio • Strategic consolidation achieved through targeted individual acquisitions 55 Musgrave Road • Fit for purpose asse
Slide 21: Strategic transactions deliver $215m of proceeds
Strategic transactions deliver $215m of proceeds1 Demonstrates ongoing demand and liquidity for CIP’s high quality industrial assets Established Centuria prime logistics partnership Direct market divestment 8 LEXINGTON DR, BELLA VISTA NSW 42 HOEPNER RD, BUNDAMBA QLD 30 CLAY PLACE, EASTERN CREEK NSW
Slide 22: Portfolio valuations
Portfolio valuations FY23 FY22 Valuation Valuation Valuation Movement4 FY23 FY22 Movement ($’000) ($’000) ($’000) WACR1 WACR1 WACR1 Like for like Leasing success driving portfolio/ weighted 3,658 3,812 (154) 5.26% 4.19% 1.07% increase in market rents average summary2,3 Acquisitions 12 - 12 5.50% - 5
Slide 23: Developing a flexible and relevant sustainability framework
Developing a flexible and relevant sustainability framework Conscious of climate change (environment), valued stakeholders (social) and responsible business principles (governance) Select initiatives Launched new sustainability target 45%2 female representation to have Zero Scope 2 at Centuria emiss
Slide 24: Our strategic sustainability focus
Our strategic sustainability focus CIP has continued to grow a portfolio of leading green certified assets Sustainability targets Growing Green Star portfolio c.107,924 sqm CIP is committed to developing leading CIP completed one of Australia’s first 5 green certified assets under Centuria’s Star Gr
Slide 25: Outlook and guidance
Outlook and guidance Section four 92-98 COSGROVE ROAD, ENFIELD NSW
Slide 26: Australian industrial vacancy rates are one of the lowest in the world
Australian industrial vacancy rates are one of the lowest in the world Australian rents remain affordable in a global context Avg. global rents (AU$ equivalent/per square metre) and 12-month rental growth (%) Australian National Industrial market vacancy rate of 0.6%, one of the lowest globally Vanc
Slide 27: Fundamentals support strong market rent growth in Australia
Fundamentals support strong market rent growth in Australia CIP’s pure play infill industrial portfolio is well positioned to benefit from supply-demand imbalance Industrial spaces supply-demand forecast BRISBANE VACANCY RATE (%)2 0.6% (‘000 sqm) 17% Avg. 12 month rental growth (%) – Prime2 13.2% 6,
Slide 28: FY24 priorities
FY24 priorities Leveraging strong market fundamentals • Drive leasing outcomes to capture embedded portfolio leasing spreads • Leverage tenant relationships and network effect to enhance the quality of CIP’s customer base Deliver value-add opportunities to maximise return • Unlock repositioning proj
Slide 29: FY24 guidance
FY24 guidance1 FFO per unit1 17.0c Distribution per unit1 16.0c Distribution yield2 5.1% Distributions expected to be paid in quarterly instalments 1. Guidance remains subject to unforeseen circumstances and material changes in operating conditions, and assumes the 90-118 BOLINDA ROAD, CAMPBELLFIELD
Slide 30: Appendices
Appendices Section five Appendix A: Sydney and Melbourne industrial land supply Appendix B: Exposure to the major industrial sub-sectors Appendix C: Lease expiry by state Appendix D: Key vacancies and upcoming expiries Appendix E: Income statement Appendix F: Balance sheet and NTA movement Appendix
Slide 31: Sydney industrial land supply
Sydney industrial land supply • New land supply concentrated around the new Badgerys Creek Airport precinct, Kemps Creek and Eastern Creek • Current planning delays and increased infrastructure costs delaying new supply coming to market CIP’s portfolio is well positioned in supply constrained urban
Slide 32: Appendix B: Exposure to the major industrial sub-sectors
Appendix B: Exposure to the major industrial sub-sectors1 A well-balanced portfolio across the major industrial sub-sectors Manufacturing and Distribution centres Transport logistics Data centres Cold storage Production 24% portfolio 38% portfolio 16% portfolio 12% portfolio 7% portfolio value value
Slide 33: Appendix C: Leasing expiry by state
Appendix C: Leasing expiry by state Sub portfolio expiry profile (% by income) WALE OCCUPANCY GLA WALE OCCUPANCY GLA NSW VIC 5.3yrs 100.0% 407,503 sqm 9.9yrs 97.6% 420,152 sqm 49.3 60.4 13.2 12.2 13.1 13.5 15.4 9.8 9.3 2.4 1.4 Vacant FY24 FY25 FY26 FY27 FY28+ Vacant FY24 FY25 FY26 FY27 FY28+ WALE OC
Slide 34: Appendix D: Key vacancies and upcoming expiries
Appendix D: Key vacancies and upcoming expiries Current key vacancies property GLA (SQM) % of portfolio area 616 Boundary Road, Richlands 12,549 1.0 119 Studley Court, Derrimut 5,497 0.4 102-128 Bridge Road, Keysborough 3,461 0.3 48-54 Kewdale Road, Welshpool 3,311 0.3 1 International Drive, Westmea
Slide 35: Appendix E: Income statement
Appendix E: Income statement FY23 FY22 Revenue Gross property income ($’000) 219,976 199,075 Other income ($’000) 2,217 1,809 Share of net profit of equity accounted investments ($’000) 3,179 0 Interest income ($’000) 1,139 26 Total revenue ($'000) 226,511 200,911 Expenses Direct property expenses (
Slide 36: Appendix F: Balance sheet and NTA movement
Appendix F: Balance sheet and NTA movement FY23 FY22 NTA movement2 Cash ($’000) 20,868 26,604 Investment properties ($’000) 3,769,050 4,100,926 Equity accounted investments ($’000) 70,101 - Other assets ($’000) 538 640 Trade & other receivables ($’000) 16,366 14,830 Derivative financial instruments
Slide 37: Appendix G: Portfolio valuation summary
Appendix G: Portfolio valuation summary1,2 FY23 valuation FY22 valuation Valuation movement3 FY23 WACR4 FY22 WACR4 Movement WACR4 State ($M) ($M) ($M) (%) (%) (%) (BPS) NSW 1,149.6 1,144.3 5.2 0.9% 5.06% 4.06% 1.00% VIC 1,323.7 1,420.7 (97.0) (6.3%) 5.12% 3.89% 1.23% QLD 800.5 864.9 (64.4) (6.8%) 5.
Slide 38: Appendix H: Investment portfolio
Appendix H: Investment portfolio Property Ownership Book value ($m) Cap rate GLA (SQM) WALE (YRS)1 Occupancy %1 Sub sector NSW 56-88 Lisbon Street, Fairfield East 100% 200.5 4.75% 60,224 2.3 100.0% Distribution Centre 2 Woolworths Way, Warnervale 100% 120.0 5.75% 54,196 8.1 100.0% Distribution Centr
Slide 39: Appendix H: Investment portfolio
Appendix H: Investment portfolio Property Ownership Book value ($m) Cap rate GLA (SQM) WALE (YRS)1 Occupancy %1 Sub sector VIC (continued) 14-17 Dansu Court, Hallam 100% 37.5 5.25% 17,070 6.3 100.0% Transport Logistics 500 Princes Highway, Noble Park 100% 36.5 5.75% 13,853 4.0 100.0% Transport Logis
Slide 40: Appendix H: Investment portfolio
Appendix H: Investment portfolio Property` Ownership Book value ($m) Cap rate GLA (SQM) WALE (YRS)1 Occupancy %1 Sub sector QLD (continued) 680 Boundary Road, Richlands 100% 31.0 5.50% 12,732 1.7 100.0% Distribution Centre 21 Jay Street, Townsville 100% 29.6 6.75% 10,291 8.9 100.0% Distribution Cent
Slide 41: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds No.2 Limited (ABN 38 133 363 185, AFSL 340304) (CPF2L) as responsible entity of Centuria Industrial REIT (‘CIP’ or the ‘Trust’). This presentation contains selected summary information and does not purport to be all-inclusive
Slide 42: Office contact details
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
Centuria Industrial REIT — FY2023 Earnings Presentation on 6ix