Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — FY2020 Earnings Presentation
51 slides from Centuria Industrial Reit's earnings presentation, Aug 5, 2020
Slide 1: FY20 Results
FY20 RESULTS A S X: CIP 5 Aug 2020 For personal use only Centuria Industrial REIT CENTURIA OFFICE REIT ASX:COF 1 23-41 GALWAY AVENUE, MARLESTON, SA Not for release to U.S. wire services or distribution in the United States
Slide 2: Agenda
A QUALITY PORTFOLIO OF FIT FOR PURPOSE INDUSTRIAL ASSETS For personal use only SITUATED IN INFILL LOCATIONS AND IN CLOSE PROXIMITY TO KEY INFRASTRUCTURE Agenda 1. Introduction 2. Financial Results 3. Portfolio Metrics 4. Acquisitions & Equity Raising 5. Strategy & Guidance 6. Appendices CENTURIA IND
Slide 3: Section One: Introduction
For personal use only SECTION ONE Introduction A S X: CIP CENTURIA INDUSTRIAL REIT ASX: CIP 3 14-17 DANSU COURT, HALLAM, VIC
Slide 4: An ASX300-listed funds manager positioned for growth
An ASX300-listed funds manager positioned for growth For personal use only Market capitalisation2 of $0.88bn, included in the S&P/ASX300 Index $9.4bn CNI: Group AUM1 $0.8bn $8.6bn Real Estate AUM Investment Bonds AUM Centuria $4.3bn LISTED $4.3bn UNLISTED Life Centuria Centuria Asset Plus Ltd Unlist
Slide 5: CIP is aligned with a highly experienced real estate funds manager
CENTURIA MANAGEMENT CIP is aligned with a highly experienced real estate funds manager Through the expertise under Centuria management, CIP has achieved critical scale to become Australia’s largest pure-play industrial REIT with a $1.6bn portfolio, For personal use only whilst significantly de-riski
Slide 6: Key metrics – Australia's largest domestic pure play industrial REIT
Key metrics – Australia’s largest domestic pure play industrial REIT For personal use only PORTFOLI O FI NANCI AL 50 $1.6bn $196m 10.0% 27.2% High quality assets Portfolio value Undrawn debt 12 month total Gearing3 unitholder return2 S&P/ASX300 A-REIT accumulation index (-20.7%) S&P/ASX200 A-REIT ac
Slide 7: FY20 Executing on strategy
FY20 Executing on strategy • Growing portfolio scale with acquisition and settlement of 7 industrial assets for >$300m 1 For personal use only • Balanced geographic diversification, 86% of portfolio weighted to eastern seaboard markets 1 Portfolio construction • 52% of portfolio income derived from
Slide 8: Portfolio resilience demonstrated through COVID-19
Portfolio resilience demonstrated through COVID-19 For personal use only In house 97% 99% 1.3% Task force established to ensure workspace management facilitate greater Average rent Tenants operating Increase in tenant engagement preparedness and collections April through COVID portfolio value in thr
Slide 9: Section Two: Financial Results
For personal use only SECTION TW O Financial Results A S X: CIP CENTURIA INDUSTRIAL REIT ASX: CIP 9 LOT 14 SUDLOW ROAD, BIBRA LAKE, WA
Slide 10: Profit and loss statement
Profit and loss statement For personal use only REVENUE FY20 FY19 VARIANCE Reflects acquisitions Gross Property Income ($m) 116.1 93.6 22.5 through FY20 Other Income ($m) - 0.6 (0.6) Interest income ($m) 0.1 0.2 (0.1) Total revenue ($m) 116.2 94.4 21.8 3.2% like-for-like income growth EXPENSES Direc
Slide 11: Strengthened balance sheet provides opportunity for growth
Strengthened balance sheet provides opportunity for growth For personal use only KEY DEBT METRICS FY20 FY19 DEBT AND HEDGE MATURITY PROFILES ($m) Hedging maturity profile Debt expiry profile 3.3yrs WEIGHTED AVERAGE DEBT MATURITY Facility Limit $m 650 520 260 Drawn amount $m 454 470 Weighted average
Slide 12: Section Three: Portfolio Metrics
For personal use only SECTION THREE Portfolio Metrics A S X: CIP CENTURIA INDUSTRIAL REIT ASX: CIP 12 457 WATERLOO ROAD, CHULLORA, NSW
Slide 13: Australia's largest domestic pure play industrial REIT
Australia’s largest domestic pure play industrial REIT For personal use only PORTFOLIO SNAPSHOT FY20 FY191 PORTFOLIO WEIGHTING 3 Number of assets # 50 43 Book value $m 1,602 1,221 WA 11% QLD 33% WACR2 % 6.05 6.46 92.1 3.2 98.7 13.5 GLA sqm 945,611 821,823 OCCUPANCY (%) WALE (YRS) OCCUPANCY (%) WALE
Slide 14: Extending lease expiry profile
Extending lease expiry profile For personal use only WEIGHTED AVERAGE LEASE EXPIRY (% BY INCOME) FY19 FY20 59.6 122k 7.2yrs 97.8% 41.3 SQM WALE2 OCCUPANCY2 OF TERMS AGREED IN FY201 19.6 15.4 14.0 10.7 4.2 2.2 7.3 5.4 5.5 6.7 PORTFOLIO TRANSFORMATION - ACQUISITION OF ULTRA LONG WALE ARNOTT’S ASSETS V
Slide 15: Resilient and defensive tenant composition
Resilient and defensive tenant composition For personal use only TENANT INDUSTRY SECTOR DIVERSIFICATIONS 1 TENANT COMPOSITION (by income) • 52% of portfolio income derived from tenant 37% Manufacturing 21% ASX Listed customers directly linked to the production, 22% Transport Logistics 8% Listed Mult
Slide 16: Valuation uplift driven by active leasing & strong market fundamentals
Valuation uplift driven by active leasing & strong market fundamentals For personal use only PORTFOLIO VALUATION SUMMARY1 Leasing success and market fundamentals drive STATE FY20 VALUATION FY19 VALUATION VALUATION MOVEMENT FY20 WACR2 FY19 WACR2 MOVEMENT WACR2 like for like valuation gain of $48.5m3
Slide 17: Executing value-add initiatives
Executing value-add initiatives For personal use only DEVELOPMENT DEVELOPMENT REFURBISHMENT OPPORTUNITY BEFORE AFTER 21 JAY STREET, TOWNSVILLE, QLD 46 GOSPORT STREET, HEMMANT, QLD 42 HOEPNER ROAD, BUNDAMBA, QLD • Development completed, expanding the facility by • Refurbishment work completed in Marc
Slide 18: Section Four: Acquisitions & Equity Raising
For personal use only SECTION FOUR Acquisitions & Equity Raising A S X: CIP CENTURIA INDUSTRIAL REIT ASX: CIP 18 TELSTRA DATA CENTRE COMPLEX, CLAYTON, VIC
Slide 19: Transaction overview
EXECUTIVE SUMMARY Transaction overview • Centuria Property Funds No.2 Limited (CPF2L), as Responsible Entity of Centuria Industrial REIT (CIP), has entered into agreements to acquire For personal use only three high quality assets (the Acquisitions) for $447.1m (excluding costs) • CIP has entered in
Slide 20: Investment highlights
HIGHLIGHTS Investment highlights • The Telstra Data Centre Complex is being acquired via a sale and leaseback with a new 30 year triple net lease to Telstra For personal use only Corporation, a top 20 ASX-listed entity and Australia’s largest telecommunications company 1 High quality acquisitions -
Slide 21: Acquisitions overview: Telstra Data Centre, Clayton, VIC
ACQUISITIONS OVERVIEW Telstra Data Centre, Clayton, VIC • The Telstra Data Centre will be acquired via a sale and leaseback to Telstra, an ASX20 For personal use only company and Australia’s largest telecommunications company with an A- / A2 credit rating1 • The 3.2 hectare Telstra Data Centre incor
Slide 22: Additional two high quality industrial assets
ACQUISITIONS OVERVIEW Additional two high quality industrial assets For personal use only Purchase price $16.4m Capitalisation rate 5.50% • Modern warehouse and office facility located in Sydney, in sought after core industrial and logistics markets Occupancy 100% • Strategically located close to th
Slide 23: CIP post-acquisitions portfolio metrics
CIP POST-ACQUISITIONS Portfolio metrics For personal use only GEOGRAPHIC DIVERSIFICATION PORTFOLIO PRE-ACQUISITIONS1 POST-ACQUISITIONS Post-Acquisitions Pre-Acquisitions1 SA ACT SA ACT WA 3% 1% WA 3% 1% Number of properties 50 53 NSW 11% 8% NSW 24% 29% Portfolio valuation $1,602m $2,050m 63% QLD wei
Slide 24: Structural tailwinds for the industrial sector
CENTURIA MANAGEMENT Structural tailwinds for the industrial sector For personal use only GROWTH IN ONLINE RETAIL TRADE 1 AUSTRALIAN LISTED PEERS 2 2.2 100% 3,500 45% growth in online retail sales over 2.0 the 5 months to May-2020 compared 12 3,000 1.8 to the prior corresponding period 1.6 75% 2,500
Slide 25: Equity raising overview: sources and uses
EQUITY RAISING OVERVIEW Sources and uses of proceeds Pro forma balance sheet For personal use only SOURCES OF PROCEEDS $ MILLION ACQUISITIONS & PRO FORMA $ MILLION 30 JUNE 2020 ENTITLEMENT 30 JUNE 2020 Entitlement Offer proceeds 340.8 OFFER Cash 17.1 17.1 Debt drawdown 151.1 Investment properties 1,
Slide 26: Equity raising details
EQUITY RAISING OVERVIEW Equity raising details For personal use only • A fully underwritten 1 for 3.7 Entitlement Offer of approximately 108.2 million units at an issue price of $3.15 per new unit to raise approximately $340.8 million Equity raising - Entitlement Offer will consist of an accelerated
Slide 27: Equity raising indicative timetable
EQUITY RAISING OVERVIEW Equity raising indicative timetable For personal use only KEY EVENT DATE1 Trading halt and announcement of the Entitlement Offer Wednesday, 5 August 2020 Institutional entitlement offer opens and closes Wednesday, 5 August 2020 Trading resumes on an ex-Entitlement Offer basis
Slide 28: Section Five: Strategy & Guidance
For personal use only SECTION FIVE Strategy & Guidance A S X: CIP CENTURIA INDUSTRIAL REIT ASX: CIP 28 49 TEMPLE DRIVE, THOMASTOWN & 2 KEON PARADE, KEON PARK, VIC
Slide 29: CIP: Strategic vision and objectives
CIP: Strategic vision and objectives For personal use only VISION To build Australia’s leading domestic pure play industrial REIT A CLEAR AND SIMPLE Deliver income and capital growth to investors from a portfolio of high quality Australian industrial assets STRATEGY Overseen by an active Prudently m
Slide 30: FY21 guidance
FY21 guidance For personal use only 149 KERRY ROAD, ARCHERFIELD, QLD 17.4c 17.0c 5.4% FFO per unit1 DPU paid in quarterly Distribution yield2 instalments1 1. Includes impact of the Acquisitions and Entitlement Offer. With the uncertainty surrounding COVID-19 a provision has been allowed for rent rel
Slide 31: Section Six: Appendices
For personal use only SECTION SIX Appendices Appendix A – Leasing Expiry by State A S X: CIP Appendix B – Market Research Appendix C – Income Statement Appendix D – Balance Sheet Appendix E – Key Vacancies and Upcoming Expiries Appendix F – FY20 Transactions Appendix G – Investment Portfolio Appendi
Slide 32: Appendix A – Leasing Expiry by State
Appendix A – Leasing Expiry by State SUBPORTFOLIO EXPIRY PROFILE (% BY INCOME) 74.1 For personal use only SUBPORTFOLIO EXPIRY PROFILE (% BY INCOME) NSW WALE OCCUPANCY GLA VIC WALE OCCUPANCY GLA 3.7 years 100% 274,184 sqm 14.9 years 98.3% 297,532 sqm 38.5 38.4 22.1 5.1 7.0 7.9 1.7 4.2 1.0 Vacant FY21
Slide 33: Appendix B – Market Research: Availability across all key markets
For personal use only 0 100 200 400 500 600 700 800 900 300 Apr-11 Sep-11 SQM (‘000) Feb-12 PRIME Jul-12 Dec-12 May-13 SYDNEY Oct-13 1. Source: Knight Frank Research Mar-14 Aug-14 SECONDARY Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17 May-18 Oct-18 Mar-19 Aug-19 Jan-20 AVAILABLE SPACE Jun
Slide 34: Appendix C – Income Statement
Appendix C – Income Statement For personal use only FY20 FY19 ($’000) ($’000) REVENUE Gross property income 116,086 93,554 Other income - 602 Interest income 70 195 Total revenue 116,156 94,351 EXPENSES Direct property expenses (23,431) (18,108) Rental waiver provisions (1,023) - Responsible entity
Slide 35: Appendix D – Balance Sheet and NTA Movement
Appendix D – Balance Sheet and NTA Movement For personal use only FY20 FY19 NTA GROWTH2 ($’000) ($’000) Cash 17,078 9,348 Investment properties 1,602,400 1,221,250 Trade & other receivables 5,805 9,144 Goodwill 10,501 10,501 Total assets 1,635,784 1,250,243 Interest bearing liabilities1 452,401 468,
Slide 36: Appendix E – Key vacancies and Upcoming Expiries
Appendix E – Key vacancies and Upcoming Expiries For personal use only CURRENT KEY VACANCIES PROPERTY GLA (SQM) % OF PORTFOLIO AREA VACANT SINCE STATUS 99 Quill Way, Henderson WA 16,419 1.7 28-Feb-18 Being marketed as suitable for users in oil and gas industry 1 International Drive, Westmeadows VIC
Slide 37: Appendix F – FY20 Transactions
Appendix F – FY20 Transactions For personal use only Acquisitions 84% of acquisitions secured Majority of acquisitions strengthen portfolio under triple net lease structures, transacted off market WALE by 2.9yrs1 reducing future capex obligations PORTFOLIO VALUE ($BN) 1.6 1.2 $19.5m (July 2019) $22.
Slide 38: Appendix G – Investment Portfolio
Appendix G – Investment Portfolio For personal use only PROPERTY BOOK VALUE ($ MILLION) $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 2 Woolworths Way, Warnervale 74.0 1,365 7.00% 54,196 1.1 100.0% 10 Williamson Road, Ingleburn 53.4 1,959 5.50% 27,260 3.1 100.0% 29 Glendenning Road, Glendenning
Slide 39: Appendix G – Investment Portfolio (cont'd)
Appendix G – Investment Portfolio (cont’d) PROPERTY BOOK VALUE ($ MILLION) $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 46 Robinson Road East, Virginia 211.8 4,729 5.00% 44,785 29.5 100.0% 22 Hawkins Crescent, Bundamba 47.4 2,501 6.25% 18,956 4.4 100.0% For personal use only 1 Ashburn Road, Bun
Slide 40: Appendix H – Key Risks
Appendix H – Key Risks CIP property investments and management operations are by their nature exposed to specific market risks and those of a general nature. Each of these risks may have some kind of impact on the financial performance of CIP and consequently the value For personal use only of inves
Slide 41: Appendix H – Key Risks (cont'd)
Appendix H – Key Risks (cont’d) Underwriting risk For personal use only CPF2L as responsible entity of CIP has entered into an underwriting agreement with the Underwriters for the Entitlement Offer (Underwriting Agreement). The Underwriters’ obligation to underwrite the Entitlement Offer is subject
Slide 42: Appendix H – Key Risks (cont'd)
Appendix H – Key Risks (cont’d) Inflation For personal use only Higher than expected inflation rates generally or specific to the property sector could be expected to increase operating costs and development costs. Litigation and disputes Disputes or litigation may arise from time to time in the cou
Slide 43: Appendix H – Key Risks (cont'd)
Appendix H – Key Risks (cont’d) Asset values For personal use only Asset values are affected by many factors including prevailing market conditions, risk appetite, volume of sales, the ability to procure tenants, contracted rental returns, operating, maintenance and refurbishment expenses and the fu
Slide 44: Appendix I – International Offer Restrictions
Appendix I – International Offer Restrictions This document does not constitute an offer of new units ("Units") of CIP in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the Units may not be offered or sold, in any country outsid
Slide 45: Appendix I – International Offer Restrictions (cont'd)
Appendix I – International Offer Restrictions (cont’d) Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for rescission, 180 days after the date of the transaction that gave rise to the cause of acti
Slide 46: Appendix I – International Offer Restrictions (cont'd)
Appendix I – International Offer Restrictions (cont’d) Singapore For personal use only This document has not been registered as a prospectus with the Monetary Authority of Singapore ("MAS") and, accordingly, statutory liability under the Securities and Futures Act, Chapter 289 (the "SFA") in relatio
Slide 47: Appendix J – Summary of Underwriting Agreement
Appendix J – Summary of Underwriting Agreement Centuries Property Funds No.2 Limited (CPF2L) as responsible entity for the Centuria Industrial REIT (CIP) has entered into an underwriting agreement with J.P. Morgan Securities Australia Limited and UBS AG, Australia Branch as underwriters (together, F
Slide 48: Appendix J – Summary of Underwriting Agreement (cont'd)
Appendix J – Summary of Underwriting Agreement (cont’d) 22) there is introduced or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any State or Territory of Australia a new law or regulatory directive (either in Australia or in any jurisdiction to which
Slide 49: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Centuria Property Funds No. 2 Limited (ABN 38 133 363 185, AFSL 340 304) presentation. To the maximum extent permitted by law, none of the CPF2L Parties nor the Underwriting Group accept any (‘CPF2L’ or 'Responsible Entity') as
Slide 50: Disclaimer (cont'd)
Disclaimer (cont’d) For personal use only The distribution of this presentation to persons or in jurisdictions outside Australia may be restricted by law and any person into whose possession this document comes should seek advice on and observe those restrictions. Any failure to comply with such res
Slide 51: For personal use only
For personal use only CENTURIA INDUSTRIAL REIT ASX: CIP 51
Centuria Industrial REIT — FY2020 Earnings Presentation on 6ix