Centuria Office Reit · ASX:COF
Centuria Office Reit — HY22 Earnings Presentation
33 slides from Centuria Office Reit's earnings presentation, Feb 3, 2022
Slide 1: Centuria Office REIT HY22 Results
3 FEBRUARY 2022 ASX: ASX:COF COF Centuria Office REIT HY22 RESULTS 101 MORAY STREET, SOUTH MELBOURNE, VIC
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. Financial Results 3. Portfol
Slide 3: Centuria Capital Group
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 $20.2bn GROUP AUM1 $19.3bn REAL ESTATE AUM $6.7bn $12.6bn $0.9bn LISTED REAL ESTATE UNLISTED REAL ESTATE INVESTMENT BONDS CENTURIA LIFE $4.0bn $2.4bn $0.3bn $8.4
Slide 4: COF: Vision, strategy and objectives
COF: Vision, strategy and objectives VISION To be Australia’s leading Australia’s largest ASX-listed pure play office REIT. pure play office REIT COF Overseen by an active management team with deep real estate expertise. Strongly supported by Centuria Group. A CLEAR AND SIMPLE STRATEGY KEY OBJECTIVE
Slide 5: COF provides quality, highly connected and affordable office space
COF provides quality, highly connected and affordable office space Portfolio of young Access to assets wellbeing amenity, retail and hospitality 101 MORAY STREET, SOUTH MELBOURNE, VIC DOCKLANDS, VIC COF exposed Connectivity market rents with key average a transport nodes significant and reduced disc
Slide 6: Strategic acquisitions enhance strong COF portfolio metrics
Strategic acquisitions enhance strong COF portfolio metrics COF PORTFOLIO STRATEGIC METRICS $273m1 of quality acquisitions aligned with COF’s strategy, further improving COF portfolio metrics 16yrs AVERAGE ASSET AGE2 Average acquisition building age of 6 years reinforces COF’s young portfolio averag
Slide 7: Overview
ASX: COF A PORTFOLIO WITHOUT SINGLE MARKET CONCENTRATION Overview SECTION ONE 77 MARKET STREET, WOLLONGONG, NSW
Slide 8: Key metrics – Australia's largest ASX listed pure play office REIT
Key metrics – Australia’s largest ASX listed pure play office REIT PORTFOLI O FI NANCI AL 23 $2.3bn 18.3cpu 7.4% High quality assets Portfolio book value1 Upgraded FY22 Forecast FY22 DPU yield4 FFO Guidance3 16.6cpu FY22 DPU Guidance 94.3% 4.3yrs 33.1% $2.49 Portfolio occupancy1,2 Portfolio WALE1,2
Slide 9: HY22 Summary – improved portfolio metrics, strong capital position
HY22 Summary – improved portfolio metrics, strong capital position • Leases agreed1 for over 18,670sqm, representing 6.2% of the portfolio’s NLA 825 ANN STREET,FORTITUDE VALLEY, QLD • Executed two quality acquisitions for $273m2 Active • 94.3% occupancy3, c.80% of income derived from multinational,
Slide 10: Financial Results
ASX: COF CONNECTIVITY TO KEY TRANSPORT Financial Results SECTION TWO 555 CORONATION DRIVE, TOOWONG, QLD
Slide 11: Funds from operations (FFO)
Funds from operations (FFO) REVENUE HY22 HY21 VARIANCE Gross property income $m 90.8 94.8 (4.0) HY21 benefited Interest income $m 0.0 0.0 - from the Foxtel Total revenue $m 90.8 94.8 (4.0) surrender payment at 35 Robina Town EXPENSES Centre Drive Direct property expenses $m (18.1) (17.5) 0.6 Respons
Slide 12: Capital management overview
Capital management overview DEBT MATURITY PROFILE ($m) • Additional $100m debt facility, 305 2.3% total debt facilities now 495 ALL IN COST OF DEBT4 233 $912.5m 320 • Further diversification of lender 150 150 pool Debt expiry 100 75 $127.2m • Solid weighted average debt FY22 Swaps 3 FY23 FY24 FY25 F
Slide 13: Portfolio Metrics
ASX: COF A YOUNG PORTFOLIO OF QUALITY ASSETS Portfolio Metrics SECTION THREE 100 BROOKES STREET, FORTITUDE VALLEY, QLD
Slide 14: A high-quality geographically diversified portfolio
A high-quality geographically diversified portfolio PORTFOLIO SNAPSHOT HY221,2 HY21 Number of assets # ASX Listed TENANT MIX <500sqm TENANT PROFILE 23 23 (Income)2 BY SIZE (Area)2 Book value $m 2,322.0 2,032.4 Government 500-1,000sqm WACR % 5.65 5.90 Listed Multinational 1,000-2,000sqm NLA sqm 302,7
Slide 15: Staggered lease expiry with 71% of leases expiring at or beyond FY25
Staggered lease expiry with 71% of leases expiring at or beyond FY25 Portfolio occupancy1 increased from 93.1% to 94.3% during HY22 CURRENT VACANCY (>1,500 SQM) NLA (SQM) VAC WEIGHTED AVERAGE LEASE EXPIRY 818 Bourke Street, Docklands 10,190 576 Swan Street, Richmond 3,512 Income WALE (Jun-21) 4.3 yr
Slide 16: Valuation summary
Valuation summary HY22 like for like valuation uplift of $28.5m1 Leasing success and market PORTFOLIO VALUATION SUMMARY1 fundamentals drive like for like STATE HY22 FY21 VALUATION HY22 FY21 MOVEMENT VALUATION ($m)3 VALUATION MOVEMENT4 WACR (%)2,3 WACR2 WACR (BPS) valuation gain of $28.5m1 in HY22 PO
Slide 17: Sustainability at Centuria Capital
Sustainability at Centuria Capital Developing a flexible and relevant sustainability framework CONSCIOUS OF CLIMATE CHANGE ENVIRONMENT Centuria Capital Climate Resilience published its first Climate Action Ongoing high level physical COF 4.72 Star NABERS Ongoing solar installation on climate risk as
Slide 18: Sustainability – Centuria Office REIT
Sustainability – Centuria Office REIT Conscious of Climate Change Valued Stakeholders Centuria is seeking opportunities to further reduce greenhouse Centuria seeks to engage with our tenants to protect gases across our portfolio, while also assessing the potential their health and wellbeing whilst u
Slide 19: Market Outlook & Guidance
ASX: COF CLOSE PROXIMITY TO KEY AMENITY Market Outlook & Guidance SECTION FOUR 818 BOURKE STREET, DOCKLANDS, VIC
Slide 20: Key themes for Australian office tenant demand in 2022
ASSET QUALITY Key themes for Australian office tenant demand in 2022 Flight Working Increased Increased Improving to quality near home leasing activity construction costs economic and employment outlook • Tenants expected to • Work from home has • COVID lockdowns have • Increased fit out costs • Opt
Slide 21: Strong investment demand for metropolitan office assets
Strong investment demand for metropolitan office assets Transaction evidence underpins COF NTA PRICE CAP RATE RATE OCCUPANCY WALE PROPERTY STATE DATE ($M) (%) ($PSQM) (%) (yrs) 101 Miller Street, North Sydney1 NSW Jan-22 330.0 5.16% 17,613 100.0% 3.6 510 Church Street, Cremorne VIC Dec-21 130.0 4.54
Slide 22: FY22 Guidance
FY22 Guidance 16.6c DISTRIBUTION 7.4% FORECAST FY22 1,2 PER UNIT1 825 ANNE STREET, FORTITUDE VALLEY, QLD DISTRIBUTION YIELD 2 PHLILIP LAW STREET, NISHI, ACT DISTRIBUTIONS PAID IN EQUAL QUARTERLY INSTALMENTS 18.3c FFO PER UNIT1 1. Guidance remains subject to unforeseen circumstances and material chan
Slide 23: Appendices
ASX: COF A PORTFOLIO PROVIDING AFFORDABLE ACCOMODATION SOLUTIONS Appendices SECTION FIVE Appendix A – Australian office market metrics Appendix B – Income statement Appendix C – FFO reconciliation Appendix D – Balance sheet Appendix E – Leasing track record Appendix F – Portfolio valuation summary A
Slide 24: Appendix A – Australian office market metrics
Appendix A – Australian office market metrics 3 MTH NET 12 MTHS NET RENTAL UPCOMING VACANCY COF EXPOSURE Strongest net absorption generally MARKET1 (%) ABSORPTION ABSORPTION DISCOUNT TO SUPPLY (%) (SQM) (SQM) SYDNEY CBD (%) (SQM) evident in 3-months to Dec-21 SYDNEY CBD 12.5 10,808 29,735 n.a 318,47
Slide 25: Appendix B – Income statement
Appendix B – Income statement $'000 HY22 HY21 Gross property income 90,777 94,806 Interest income 1 6 Total revenue 90,778 94,812 Direct property expenses (18,118) (17,546) Responsible entity fees (6,092) (5,860) Finance costs (9,433) (9,237) Management and other administrative expenses (1,123) (2,9
Slide 26: Appendix C – FFO reconciliation
Appendix C – FFO reconciliation $'000 HY22 HY21 Statutory net profit 63,630 21,542 Loss/(gain) on fair value of investment properties (11,677) 30,192 Realised/unrealised loss on fair value of derivatives (5,427) 37 Straight-lining of rental income and amortisation of leasing commissions and tenant i
Slide 27: Appendix D – Balance sheet
Appendix D – Balance sheet $'000 PRO-FORMA 31-Dec-21 30-Jun-21 Cash 28,240 96,648 15,644 Investment properties1 2,353,719 2,285,719 2,046,221 Trade and other receivables 9,198 9,198 5,369 Other assets 3,754 7,154 1,625 Total assets 2,394,911 2,398,719 2,068,859 2 Interest bearing liabilities 808,405
Slide 28: Appendix E – Leasing Track Record
Appendix E – Leasing Track Record Leveraging Centuria’s leasing capability as part of COF’s active management approach 483-517 KINGSFORD SMITH DRIVE, HAMILTON, QLD FY15 FY16 FY17 FY18 FY19 FY20 FY21 HY22 LEASING EXECUTED LEASING EXECUTED LEASING EXECUTED LEASING EXECUTED LEASING EXECUTED LEASING EXE
Slide 29: Appendix F – Portfolio valuation summary
Appendix F – Portfolio valuation summary BOOK VALUE ($M) CAP RATE (%) STATE HY22 BOOK VALUE1 FY21 VAR % HY221,2 FY21 BPS NSW 517.5 503.5 14.0 2.8 5.38 5.48 (10) PORTFOLIO QLD 494.0 475.5 18.5 3.9 5.99 6.23 (24) VALUATION VIC 358.0 354.5 3.5 1.0 5.27 5.32 (5) SUMMARY1 ACT 338.0 335.8 2.2 0.7 5.42 5.4
Slide 30: Appendix G – Environmental Data
Appendix G – Environmental Data UNIT OF FY20 FY21 MEASURE Environmental Data reported is for financial years NLA (annual weighted average) sqm 275,309 304,589 2020 and 2021. Financial year 2022 data will be reported in the Centuria 2022 Sustainability Report. RESOURCE CONSUMPTION (OPERATIONALLY CONT
Slide 31: Appendix H – Investment portfolio
Appendix H – Investment portfolio CAPITALISATION AREA AREA WALE PROPERTY STATE OWNERSHIP (%) BOOK VALUE ($M) OCCUPANCY (%)1 RATE (%) (SQM) ($/SQM) (YRS)1 8 Central Avenue, Eveleigh NSW 50% 210.0 5.00% 36,619 11,470 8.7 95.5% 201 Pacific Highway, St Leonards NSW 50% 107.5 5.50% 16,498 13,032 2.6 94.5
Slide 32: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited (ABN 11 086 553 639, AFSL The information in this presentation has been obtained from and based on sources believed by CPFL 231 149) (CPFL) as responsible entity of Centuria Office REIT (ARSN 124 364 718) (‘COF’ or the
Slide 33: Australia
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 1 348 Edward Street 307 Murray Street Brisbane