Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — HY23 Earnings Presentation
40 slides from Centuria Industrial Reit's earnings presentation, Jan 31, 2023
Slide 1: Centuria Industrial REIT HY23 Results
31 JANUARY 2023 ASX:CIP Centuria Industrial REIT HY23 RESULTS 95-105 SOUTH GIPPSLAND HWY, DANDENONG SOUTH VIC
Slide 2: Agenda
AGENDA Acknowledgement of Country Our group manages property throughout 1. Overview Australia and New Zealand. Accordingly, Centuria pays its respects to the traditional 2. Portfolio overview owners of the land in each country, to their 3. Financial results unique cultures and to their elders past,
Slide 3: Overview
ASX:CIP DISTRIBUTION CENTRES Overview SECTION ONE 42 HOEPNER ROAD BUNDAMBA QLD
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 $21.2bn 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 5: CIP: Vision, strategy and objectives
CIP: Vision, strategy and objectives VISION To be Australia’s Australia’s largest domestic ASX-listed pure play industrial REIT. leading domestic pure CIP Overseen by an active management team with deep real estate expertise. Strongly supported by Centuria Group. play industrial REIT A clear and sim
Slide 6: Key metrics
Key metrics Australia’s largest domestic pure play industrial REIT Portfolio Financial 88 $3.9bn 17.0cpu 31.6% High-quality assets Portfolio book value1 FY23 FFO guidance Gearing3 16.0cpu FY23 DPU guidance 98.7% 8.1yrs 4.8% $4.08 Portfolio occupancy2 Portfolio WALE2 Forecast FY23 Net tangible assets
Slide 7: Strategy execution and FY23 outlook
Strategy execution and FY23 outlook • Accelerating re-leasing spread, growth of +19%1 across 19 leasing deals in HY23 Active • 88,517 sqm of terms agreed over the half year (7% of portfolio)2 , high portfolio occupancy of 98.7%3, WALE of 8.1 years3 management 1 • Dandenong South development c.40,500
Slide 8: Portfolio Overview
ASX:CIP TRANSPORT LOGISTICS Portfolio Overview SECTION TWO 5/243 BRADMAN STREET, ACACIA RIDGE QLD
Slide 9: Australia's largest domestic pure play industrial REIT
Australia’s largest domestic pure play industrial REIT A high-quality portfolio of industrial assets located in urban infill markets PORTFOLIO SNAPSHOT HY231 Number of assets # 88 Book value $m 3,865 NT WACR % 4.66 QLD GLA sqm 1,290,796 WA Average asset size sqm 15,185 SA Occupancy by income % 98.7
Slide 10: CIP active sub-portfolio
CIP active sub-portfolio1,2 An active portfolio providing exposure to strong market rental growth and value add opportunities ACTIVE PORTFOLIO SNAPSHOT HY23 Provides access to strong market rent growth Number of assets # 86 • Active portfolio: Short 4.4-year WALE with 36% of the portfolio Book value
Slide 11: CIP ultra long WALE sub-portfolio
CIP ultra long WALE sub-portfolio1 Generating long term reliable and growing rental income streams2 PORTFOLIO SNAPSHOT HY23 Generates stable cashflow Book value $m 790 • Iconic Australian blue chip brands, Telstra and Arnott’s, generating reliable rental income streams WACR % 4.1 • 100% of the sub-p
Slide 12: Financial results
ASX:CIP TRANSPORT LOGISTICS Financial results SECTION THREE 82 RODEO ROAD, GREGORY HILLS NSW
Slide 13: Funds from operations (FFO)
Funds from operations (FFO)1 Reflects growth in portfolio REVENUE HY23 HY22 VARIANCE and positive re-leasing Gross property income ($m) 110.5 95.7 14.8 spreads Other income ($m) 1.6 0.0 1.6 Share of net profit of equity ($m) 0.3 0.0 0.3 Coupon income generated accounted investments on the fund throu
Slide 14: Capital management
Capital management Proactive capital management strengthening the balance sheet Debt maturity profile ($m) $401m • Capital management initiatives 425 Cash and debt headroom reducing gearing to 31.6% 1 at 350 available 300 280 the lower end of the target range 105 100 50 • $215m of proceeds from new
Slide 15: Operational Performance
ASX:CIP DISTRIBUTION CENTRES Operational Performance SECTION FOUR 29 PENELOPE CRESCENT, ARNDELL PARK NSW
Slide 16: Strategic transactions deliver $215 million of proceeds
Strategic transactions deliver $215 million of proceeds1 Demonstrates ongoing demand and liquidity for CIP’s high quality industrial assets Established Centuria Prime Logistics Partnership Direct market divestment • Divestment of up to 50% interest in a portfolio of eight • Opportunistic divestment
Slide 17: Average rental growth of 19% over prior passing
Average rental growth of 19% over prior passing1 Delivered strong leasing on 7% of CIP’s portfolio across 19 transactions2 Select HY23 leasing outcomes Weighted average lease expiry (% by income) 70.0 62.8 60.0 Development 60.0 HY23 FY22 Exposure 50.0 40.0 95-105 SOUTH GIPPSLAND HWY, DANDENONG SOUTH
Slide 18: High quality tenant customers
High quality tenant customers Secure income backed by blue chip tenant customers Top 10 tenant customers Leveraging CIP’s scale to generate a Tenant industry sector diversifications1 TENANT CUSTOMER INCOME ‘networking effect’ to grow and service Telstra 9% customers across multiple locations Arnott’
Slide 19: Asset repositioning projects
Asset repositioning projects Leveraging Centuria’s acquisition and active management capability to deliver value-add projects Completed Active 92-98 COSGROVE RD, ENFIELD NSW 616 BOUNDARY ROAD, RICHLANDS QLD 30 FULTON DRIVE, DERRIMUT Asset refurbishment to extend useful life and attract quality tenan
Slide 20: 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 ARTIST IMPRESSION ARTIST IMPR
Slide 21: Creating critical mass and scale in land constrained infill markets
Creating critical mass and scale in land constrained infill markets Consolidating scale in key markets – Case study: Derrimut VIC Scaled footprint in land constrained Creating development optionality while Establishing scale and diversity markets, servicing last mile and maintaining income in tenanc
Slide 22: Portfolio valuations
Portfolio valuations Market rental growth offsetting capitalisation rate expansion in HY231,2 Portfolio valuation summary1,2 Leasing success HY23 FY22 VALUATION HY23 FY22 MOVEMENT STATE VALUATION VALUATION MOVEMENT3 WACR4 WACR4 WACR4 driving increase in market rents Like for like portfolio / 3,740.0
Slide 23: 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 Climate Resilience Climate Action Industry participation Membership development pipeline Implementation of climate Ongoing sol
Slide 24: Focus on sustainability initiatives
Focus on sustainability initiatives Partnering with stakeholders to achieve sustainability outcomes CIP is committed to developing CIP is committed to reducing our greenhouse emissions. As most assets leading green certified assets within the portfolio are single tenant, CIP seeks to partner with ou
Slide 25: Outlook and guidance
ASX:CIP DISTRIBUTION CENTRES Outlook and guidance SECTION FIVE 56-88 LISBON ST, FAIRFIELD NSW
Slide 26: Australian industrial vacancy rates are the lowest in the world
Australian industrial vacancy rates are the lowest in the world Australian rents remain affordable in a global context Avg. global rents (AU$ equivalent/per square metre) and vacancy rates (%) London Los Angeles New York $548 3 Tokyo $543 2 3.7% 3 $313 1 2.1% 2 $181 4 1 1.4% 5.0% 4 SYDNEY5 $162 0.2%
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 VACANCY RATE (%)2 0.8% Industrial spaces supply-demand forecast BRISBANE (‘000 sqm) Avg. 12 month rental growth (%) 14.0% 4 5 Historical
Slide 28: FY23 guidance
FY23 guidance1 8 LEXINGTON DRIVE, BELLA VISTA, NSW – ARTIST IMPRESSION FFO per unit1 17.0c Distribution per unit1 16.0c Distribution yield2 4.8% DPU paid in quarterly instalments 1. Guidance remains subject to unforeseen circumstances and material changes in operating conditions 2. Annualised yield
Slide 29: Appendices
ASX:CIP DISTRIBUTION CENTRES Appendices SECTION SIX Appendix A: Exposure to the major industrial sub-sectors Appendix B: Lease expiry by state Appendix C: Key vacancies and upcoming expiries Appendix D: Income statement Appendix E: Balance sheet Appendix F: Portfolio valuation summary Appendix G: In
Slide 30: Appendix A: Exposure to the major industrial sub-sectors
Appendix A: Exposure to the major industrial sub-sectors1 A well-balanced portfolio across the major industrial sub-sectors Manufacturing & Distribution Transport logistics Data centres Cold storage Production centres 24% 38% 16% 13% 7% portfolio portfolio portfolio portfolio portfolio value value v
Slide 31: Appendix B: Leasing expiry by state
Appendix B: Leasing expiry by state Sub portfolio expiry profile (% by income) WALE OCCUPANCY GLA WALE OCCUPANCY GLA NSW VIC 5.5yrs 100.0% 407,340 sqm 10.5yrs 99.5% 419,751 sqm 71.1 63.5 17.0 13.6 11.6 10.0 9.1 0.5 1.4 0.5 1.8 Vacant FY23 FY24 FY25 FY26 FY27+ Vacant FY23 FY24 FY25 FY26 FY27+ WALE OC
Slide 32: Appendix C: Key vacancies and upcoming expiries
Appendix C: Key vacancies and upcoming expiries 69 RIVERGATE PLACE, MURRARIE QLD CURRENT KEY VACANCIES % OF PROPERTY GLA (SQM) PORTFOLIO AREA 616 Boundary Road, Richlands QLD 12,549 1.0 48-54 Kewdale Road, Welshpool WA 3,693 0.3 1 International Drive, Westmeadows VIC 1,188 0.1 102-128 Bridge Road, K
Slide 33: Appendix D: Income statement
Appendix D: Income statement TELSTRA DATA CENTRE, CLAYTON VIC HY23 HY22 REVENUE Gross property income ($’000) 110,470 95,737 Other income ($’000) 1,569 0 Share of net profit of equity accounted investments ($’000) 310 0 Interest income ($’000) 421 2 Total revenue ($'000) 112,770 95,740 EXPENSES Dire
Slide 34: Appendix E: Balance sheet and NTA growth
Appendix E: Balance sheet and NTA growth HY23 FY22 NTA movement2 Cash ($’000) 25,514 26,604 Investment properties ($’000) 3,797,131 4,100,926 Equity accounted investments ($’000) 68,453 - Other assets ($’000) 88 640 Trade & other receivables ($’000) 12,914 14,830 Derivative financial instruments ($’
Slide 35: Appendix F: Portfolio valuation summary
Appendix F: Portfolio valuation summary1,2 STATE HY23 FY22 MOVEMENT HY23 VALUATION FY22 VALUATION VALUATION MOVEMENT3 WACR4 WACR4 WACR4 ($M) ($M) ($M) (%) (%) (%) (BPS) NSW 1,145.9 1,144.3 1.6 0.3% 4.51% 4.06% 0.46% VIC 1,362.1 1,420.7 (58.6) (3.9%) 4.51% 3.89% 0.62% QLD 847.6 864.9 (17.3) (2.0%) 4.
Slide 36: Appendix G: Investment portfolio
Appendix G: Investment portfolio BOOK VALUE OCCUPANCY PROPERTY OWNERSHIP CAP RATE GLA (SQM) WALE (YRS)1 SUB SECTOR ($m) %1 NSW 56-88 Lisbon Street, Fairfield East 100% 200.5 4.13% 60,224 2.8 100.0% Distribution Centre 2 Woolworths Way, Warnervale 100% 120.0 5.25% 54,196 8.6 100.0% Distribution Centr
Slide 37: Appendix G: Investment portfolio
Appendix G: Investment portfolio BOOK VALUE OCCUPANCY PROPERTY OWNERSHIP CAP RATE GLA (SQM) WALE (YRS)1 SUB SECTOR ($m) %1 VIC (continued) 14-17 Dansu Court, Hallam 100% 37.5 4.50% 17,070 6.8 100.0% Transport Logistics 500 Princes Highway, Noble Park 100% 36.5 5.25% 14,133 3.5 100.0% Transport Logis
Slide 38: Appendix G: Investment portfolio
Appendix G: Investment portfolio BOOK VALUE OCCUPANCY PROPERTY OWNERSHIP CAP RATE GLA (SQM) WALE (YRS)1 SUB SECTOR ($m) %1 QLD (continued) 46 Gosport Street, Hemmant 100% 32.2 5.25% 12,578 2.7 100.0% Manufacturing 680 Boundary Road, Richlands 100% 31.0 5.25% 12,732 2.3 100.0% Distribution Centre 1 A
Slide 39: 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 40: Office contact details
AUSTRALIA Sydney Head Office Melbourne Office (02) 8923 8923 (03) 9616 6500 Level 41, Chifley Tower Level 32 2 Chifley Square 120 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
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