Centuria Office Reit · ASX:COF
Centuria Office Reit — H1 2019 Earnings Presentation
32 slides from Centuria Office Reit's earnings presentation, Feb 6, 2019
Slide 1: Centuria Metropolitan REIT 1H19 Results
Centuria Metropolitan REIT 1H19 RESULTS | ASX:CMA | 06 FEBRUARY 2019 CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 1
Slide 2: Contents
Contents 1. Introduction 2. Financial Results 3. Portfolio Overview 4. Guidance & Strategy 5. Appendices CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 2
Slide 3: Introduction
SECTION ONE Introduction 825 ANN STREET, FORTITUDE VALLEY, QLD CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 3
Slide 4: Centuria Profile
ASX-LISTED SPECIALIST INVESTMENT MANAGER Centuria Profile Centuria Capital Group $489m Market Capitalisation1 $5.6bn $0.5bn Assets Under Management (AUM) Co-Investments $4.8bn $0.8bn Centuria Metropolitan REIT (CMA) Centuria Industrial REIT (CIP) Propertylink Group (PLG) Property Funds Management AU
Slide 5: Centuria management – creating unitholder value since inception
AUSTRALIA’S LARGEST PURE PLAY OFFICE REIT Centuria management – creating unitholder value since inception Annual total unitholder return 13.5% since IPO1,2,3 TOTAL RETURN SINCE IPO1,2,3 PORTFOLIO VALUE ($BN) NTA ($) PER UNIT4 70 1.6 6.6% 60% 1.4 CAGR3 1.4 3 60 2.49 2.47 50 46% 1.2 2.5 2.32 55.3% 2.1
Slide 6: Key metrics – a quality, pure play office platform
AUSTRALIA’S LARGEST PURE PLAY OFFICE REIT Key metrics – a quality, pure play office platform PORTFOLIO 20 $1.4bn 98.8% 4.3yrs High quality assets 1 Portfolio value 1 Portfolio occupancy1,2 Portfolio WALE 1,3 FINANCIAL $844m 35.3% 10.9% 8.2% Market capitalisation4 12 month return on equity6 12 month
Slide 7: 1H19 summary
HIGHLIGHTS 1H19 summary 1 2 3 Actively managing Capital management Repositioned CMA as a portfolio initiatives pure play office REIT 98.8% occupancy1,2, WALE1,3 of 4.3 years predominately underpinned by 75% ICR of 5.6x and LVR of 37% ensure ample multinational, ASX and government tenants On track to
Slide 8: Financial Results
SECTION TWO Financial Results 576 SWAN STREET, RICHMOND, VIC CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 8
Slide 9: On track to deliver FY19 earnings guidance
FINANCIAL OVERVIEW INCOME STATEMENT On track to deliver FY19 earnings guidance REVENUE 31 DEC 2018 31 DEC 2017 VARIANCE Gross property income $m 46.6 34.5 12.1 Interest income $m 0.3 0.1 0.2 Increase predominantly Total revenue $m 46.9 34.6 12.3 driven by $520.9 million portfolio acquisition EXPENSE
Slide 10: New facilities and hedging maintain solid debt profile
CAPITAL MANAGEMENT New facilities and hedging maintain solid debt profile DEBT MATURITY PROFILE ($M) Drawn Headroom Swaps • - Significant covenant headroom ICR 1.5 5.6x and LVR 36.8% (covenant 50%) 63.2 0.0 200.0 • $315 million of debt re-financed or 120.0 100.0 100.0 3.7% 143.5 All in cost of debt3
Slide 11: Portfolio Overview
SECTION THREE Portfolio Overview 203 PACIFIC HIGHWAY, ST LEONARDS, NSW CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 11
Slide 12: Geographically diversified portfolio weighted to eastern seaboard markets
PORTFOLIO COMPOSITION Geographically diversified portfolio weighted to eastern seaboard markets PORTFOLIO SNAPSHOT 1H191 FY183 WA 7% QLD 34% Number of assets # 20 19 Book value $m 1,376.4 930.5 100.0 3.1 96.9 4.4 OCCUPANCY(%) WALE(YRS) OCCUPANCY(%) WALE(YRS) WACR % 6.32 6.68 NLA sqm 218,203 184,339
Slide 13: Established portfolio with quality tenants
PORTFOLIO METRICS Established portfolio with quality tenants WEIGHTED AVERAGE LEASE EXPIRY1,3 • 75% of portfolio income derived 70% from multinational, ASX and 60% Income WALE (Jun-18) 4 yrs 59.7% government tenants, up from 72% 6.7% Income WALE (Dec-18) 4.3 yrs at FY18 Portfolio NLA leased 50% 47.0
Slide 14: Valuation growth underpinned by market drivers
PORTFOLIO VALUATIONS Valuation growth underpinned by market drivers and active management initiatives BOOK VALUE ($m) CAP RATE (%) DEC-18 JUN-18 INCREASE % DEC-18 JUN-18 BPS NSW 269.8 252.6 17.2 6.8% 6.22% 6.42% (19) • Overall like-for-like revaluation QLD 240.2 244.3 (4.0) (1.7%) 6.79% 6.77% 2 gain
Slide 15: Capital transactions – acquisitions and divestments
CAPITAL TRANSACTIONS – ACQUISITIONS AND DIVESTMENTS Execution of transaction initiatives improves portfolio quality FY18 | $257.2m 1HFY19 | $575.7m $85.8m $223.3m 201 Pacific Highway, St Leonards NSW 818 Bourke Street, Docklands VIC $33.3m $169.5m ACQUIRED1 77 Market Street, Wollongong NSW 825 Ann S
Slide 16: Guidance & Strategy
SECTION FOUR Guidance & Strategy 154 MELBOURNE STREET, SOUTH BRISBANE, QLD CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 16
Slide 17: Delivering on FY19 priorities
FY19 PRIORITIES Delivering on FY19 priorities 1 Completion of core strategy to reposition CMA as a pure play office REIT with quality income streams Settlement of 2 Kendall Street, Williams Landing, VIC – $6.0m valuation uplift since acquisition, 1a 10 year lease to Target Australia Divestment of al
Slide 18: Continue to build Australia's leading metropolitan office REIT
STRATEGY & GUIDANCE Continue to build Australia’s leading metropolitan office REIT CMA remains focused on generating predictable and quality income streams and executing initiatives to create value • Deliver secure income streams through a national portfolio and STRATEGY diversified tenant base with
Slide 19: Appendices
SECTION FIVE Appendices Appendix A – Market Research Appendix B – Income Statement Appendix C – FFO Reconciliation Appendix D – Balance Sheet and NTA Movement Appendix E – Key Vacancies and Upcoming Expiries Appendix F – 1H19 Acquisitions Profiles Appendix G – Investment Portfolio 201-203 PACIFIC HI
Slide 20: Market indicators
APPENDIX A – MARKET RESEARCH Market indicators Limited space availability from new supply in metropolitan markets TOTAL STOCK EXPECTED TO COMPLETE 4Q CY18-20221 POTENTIAL WITHDRAWALS 4Q CY18-20221 sqm sqm 800,000 800,000 700,000 700,000 600,000 600,000 500,000 500,000 400,000 400,000 300,000 300,000
Slide 21: Market indicators
APPENDIX A – MARKET RESEARCH Market indicators Prime space continues to attract tenants & metro rents remain attractive VACANCY RATES 4Q CY181 PRIME RENTS 4Q CY181 $/sqm 25% 1,400 20% 1,200 1,000 15% 800 10% 600 400 5% 200 0% 0 Prime vacancy Total vacancy Prime face Prime net effective 1. Source: JL
Slide 22: Income Statement
APPENDIX B Income Statement $'000 – REVENUE 31 DECEMBER 18 31 DECEMBER 17 Gross property income 46,611 34,486 Interest income 253 96 Total revenue 46,864 34,582 Direct property expenses (10,470) (7,243) Responsible entity fees (2,986) (1,959) Finance costs (6,355) (4,020) Management and other admini
Slide 23: FFO Reconciliation
APPENDIX C FFO Reconciliation $'000 31 DECEMBER 2018 31 DECEMBER 2017 Statutory net profit 14,655 39,174 Net (gain) on fair value of investment properties 8,406 (18,600) Loss/(gain) on fair value of derivative financial instruments 2,561 653 Straight-lining of rental income and amortisation of leasi
Slide 24: Balance Sheet and NTA Movement
APPENDIX D Balance Sheet and NTA Movement $'000 31 DECEMBER 2018 30 JUNE 2018 NTA MOVEMENT Cash 19,192 18,978 ($/unit) ($/unit) Investment properties 1,400,570 872,300 2.55 2.55 Goodwill 6,356 6,356 Trade and other receivables 3,902 1,325 $2.49/unit 2.50 2.50 $2.49/unit (0.04) $2.47/unit $2.47/unit
Slide 25: Key vacancies and upcoming expiries
APPENDIX E Key vacancies and upcoming expiries VACANT NLA PORTFOLIO PROPERTY COMMENTS UPCOMING EXPIRIES ACROSS VARIOUS TENANCIES 2019 2020 SINCE (SQM) AREA % 154 Melbourne St, South Brisbane, QLD Oct-17 1,086 0.5 Spec-fitout recently installed 154 Melbourne Street, South Brisbane 4,282 129 131-139 G
Slide 26: 818 Bourke Street, Docklands, VIC
APPENDIX F – 1H19 ACQUISITION PROFILES 818 Bourke Street, Docklands, VIC Key characteristics • Well located high quality office asset built by Lendlease in 2007 • Large efficient floor plates averaging 3,575sqm • Asset’s office space is currently fully leased • Positioned in the Docklands precinct,
Slide 27: 825 Ann Street, Fortitude Valley, QLD
APPENDIX F - 1H19 ACQUISITION PROFILES 825 Ann Street, Fortitude Valley, QLD Key characteristics • Fully leased, high quality, A-grade building, well located within Fortitude Valley near public transport links and retail amenity • 6.0% prime vacancy rate in Fortitude Valley3 • Macquarie Group recent
Slide 28: 100 Brookes Street, Fortitude Valley, QLD
APPENDIX F - 1H19 ACQUISITION PROFILES 100 Brookes Street, Fortitude Valley, QLD Key characteristics • Well presented high-quality A-grade building with large efficient floor plates averaging 1,700sqm • Capital expenditure program completed • Large site area of approx. 2,100sqm • High quality tenant
Slide 29: 465 Victoria Avenue, Chatswood, NSW
APPENDIX F - 1H19 ACQUISITION PROFILES 465 Victoria Avenue, Chatswood, NSW Key characteristics • One of only five prime investment grade assets in Chatswood, NSW. The asset is currently fully leased2 and well located with direct access to the Chatswood Transport Interchange • High quality asset with
Slide 30: Investment Portfolio
APPENDIX G Investment Portfolio 2 3 PROPERTY PORTFOLIO STATE OWNERSHIP (%) BOOK VALUE ($M) CAP RATE (%) NLA (SQM) $/SQM WALE (YRS) OCCUPANCY (% OF NLA) 201 Pacific Highway, St Leonards NSW 50 95.0 6.00 16,489 5,761 4.2 100.0 9 Help Street, Chatswood NSW 100 76.5 6.00 9,395 8,143 3.0 100.0 203 Pacifi
Slide 31: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited Limited (ABN 11 086 553 639, AFSL 231 149) This presentation may contain forward-looking statements, guidance, forecasts, estimates, prospects, projections or (CPFL) as responsible entity of Centuria Metropolitan REIT
Slide 32: Thank you
Thank you CENTURIA METROPOLITAN REIT ASX:CMA 1H19 RESULTS 32