Centuria Office Reit · ASX:COF
Centuria Office Reit — Centuria Metropolitan REIT — H1 2020 Earnings Presentation
38 slides from Centuria Office Reit's earnings presentation, Feb 5, 2020
Slide 1: HY20 Results
HY20 RESULTS A S X:CMA 5 Feb 2020 CMA HY20 WEBCAST Centuria Metropolitan REIT CENTURIA METROPOLITAN REIT ASX:CMA 1 NISHI, 2 PHILLIP LAW STREET, CANBERRA, ACT
Slide 2: Agenda
Agenda 1. Introduction 2. Financial Results 3. Portfolio Overview 4. Guidance & Strategy 5. Appendices CENTURIA METROPOLITAN REIT ASX:CMA 2 144 STIRLING ST, PERTH, WA
Slide 3: Introduction
SECTION ONE Introduction A S X:CMA CENTURIA METROPOLITAN REIT ASX:CMA 3 825 ANN STREET, FORTITUDE VALLEY, QLD
Slide 4: Centuria is an established ASX-listed specialist investment manager
CENTURIA CAPITAL GROUP Centuria is an established ASX-listed specialist investment manager $7.3bn Group AUM1 ASX:CNI – Market capitalisation of $1.1bn2 $0.6bn $6.4bn Real Estate AUM $0.9bn Investment Bonds AUM CNI Co-Investments on balance sheet Listed Real Estate AUM Unlisted Real Estate AUM Centur
Slide 5: Key metrics – a quality pure play office portfolio
CMA: AUSTRALIA’S LARGEST PURE PLAY OFFICE REIT Key metrics – a quality pure play office portfolio generating strong performance PORTFOLI O FI NANCI AL 23 $2.1bn $1.5bn 33.2% High quality assets Portfolio value Market capitalisation3 Gearing4 99.2% 5.1yrs 30.7% 11.2% Portfolio occupancy1 Portfolio WA
Slide 6: Highlights: Executing on strategy
HIGHLIGHTS Executing on strategy Australia’s largest • Balanced geographic diversification with exposure to major Australian office markets 1 pure play office REIT listed on the ASX • 23 high quality office assets with an average age of 14.9 years • Strong tenant covenants with the Commonwealth Gove
Slide 7: Centuria management – creating unitholder value since inception
CMA: AUSTRALIA’S LARGEST PURE PLAY OFFICE REIT Centuria management – creating unitholder value since inception Included Australia’s Market largest domestic in the Annual total unitholder return of 15.7% p.a. since IPO 1,2,3,4 Capitalisation S&P/ASX pure-play $1.5bn1 Office REIT 300 Index TOTAL RETUR
Slide 8: Strategic vision and objectives
STRATEGIC VISION Strategic vision and objectives VISION To build Australia’s leading pure play office REIT A CLEAR Focused on generating sustainable and quality income streams and executing AND SIMPLE initiatives to create value across a portfolio of quality Australian office assets STRATEGY Austral
Slide 9: Financial Results
SECTION TW O Financial Results A S X:CMA CENTURIA METROPOLITAN REIT ASX:CMA 9 235 WILLIAM STREET, NORTHBRIDGE, NSW
Slide 10: Delivering on FY20 guidance
FINANCIAL OVERVIEW – INCOME STATEMENT Delivering on FY20 guidance REVENUE HY20 HY19 VARIANCE Gross property income $m 67.4 46.6 20.8 Increase predominantly Interest income $m 0.1 0.3 (0.2) driven by growth in portfolio value Total revenue $m 67.5 46.9 20.7 EXPENSES Direct property expenses $m (14.7)
Slide 11: New facilities and hedging maintain solid debt profile
CAPITAL MANAGEMENT New facilities and hedging maintain solid debt profile DEBT MATURITY PROFILE ($M) • Four major lenders provides 362.5 2.3% 235.0 All in cost of debt1 diversification to high quality 171.0 150.0 financiers 130.0 • Weighted average debt maturity 100.0 50.0 remains broadly unchanged
Slide 12: Portfolio Overview
SECTION THREE Portfolio Overview A S X:CMA CENTURIA METROPOLITAN REIT ASX:CMA 12 203 PACIFIC HIGHWAY, ST LEONARDS, NSW
Slide 13: High quality office assets located in major Australian office markets
PORTFOLIO COMPOSITION High quality office assets located in major Australian office markets PORTFOLIO SNAPSHOT HY20 FY19 PORTFOLIO WEIGHTING Number of assets # 23 20 QLD 24% Book value $m 2,063.4 1,400.0 WA 14% 99.1 4.0 OCCUPANCY(%) WALE(YRS) WACR % 5.92 6.22 99.9 6.9 NLA sqm 303,855 218,080 OCCUPAN
Slide 14: Staggered lease profile to quality tenants
PORTFOLIO METRICS Staggered lease profile to quality tenants WEIGHTED AVERAGE LEASE EXPIRY • Federal Government represents the largest tenant at 13.3% of portfolio income, with over 24.5% of income now derived from all Income WALE (Jun-19) 3.9 yrs Income WALE (Dec-19) 5.1 yrs 60.3% government tenant
Slide 15: Continued leasing momentum underpins portfolio income streams
LEASING Continued leasing momentum underpins portfolio income streams UPCOMING EXPIRIES (>500 sqm) FY20 FY21 818 Bourke Street, Docklands - 10,740 100 Brookes Street, Fortitude Valley 1,793 3,491 1 Richmond Road, Keswick - 3,420 131-139 Grenfell Street, Adelaide 2,862 - 60 Marcus Clarke Street, Canb
Slide 16: Sustainability initiatives
SUSTAINABILITY INITIATIVES Solar panels 856 5 300tn 170 Assessing other opportunities to implement solar initiatives Solar Panels Buildings CO2 Emissions Equivalent cars Installed Reduced removed from roads across the portfolio 825 ANN STREET, FORTITUDE VALLEY QLD CENTURIA METROPOLITAN REIT ASX:CMA
Slide 17: Portfolio valuations
PORTFOLIO VALUATIONS Strong investment demand and rental growth driving valuation increases across the portfolio • Overall like-for-like revaluation gain of $37.9m in 1HFY201 BOOK VALUE CAP RATE • WACR reduced by NSW HY20 341.9 FY19 329.1 Increase 12.8 % 3.9% HY20 5.90% FY19 5.94% BPS (5) 30bps YoY
Slide 18: Office transactions
OFFICE TRANSACTIONS High quality acquisitions strategically located in major office markets William Square, 235 William Street, Northbridge WA 8 Central Avenue, Eveleigh NSW (50%) Nishi, 2 Phillip Law Street, Canberra ACT $636m of high quality A grade acquisitions 5.6% $189.5m $191.0m $256.0m Averag
Slide 19: Guidance & Strategy
SECTION FOUR Guidance & Strategy A S X:CMA CENTURIA METROPOLITAN REIT ASX:CMA 19 42-46 COLIN STREET, WEST PERTH WA
Slide 20: Increasing investor relevance and scale
STRATEGY & GUIDANCE Increasing investor relevance and scale • $458m equity raised in HY20 to support select CMA MARKET CAPITALISATION1 acquisitions and improve the quality of the portfolio • Pro-forma gearing remains <35.0% following Market capitalisation Market capitalisation increase 4 recent acqu
Slide 21: FY20 Guidance
STRATEGY & GUIDANCE FY20 Guidance 19.0c FFO1 PER UNIT DISTRIBUTIONS PAID IN EQUAL QUARTERLY INSTALMENTS 6.1%2 FORECAST DISTRIBUTION YIELD 17.8c DPS PER UNIT 235 WILLIAM STREET, NORTHBRIDGE, NSW 1. FFO is the Trust’s underlying and recurring earnings from its operations. This is calculated as the sta
Slide 22: Appendices
SECTION FIVE Appendices A S X : C M A A – Market Research Appendix Appendix B – Income Statement Appendix C – FFO Reconciliation Appendix D – Balance Sheet and NTA Movement Appendix E – 1H20 Acquisitions Profiles Appendix F – Investment Portfolio CENTURIA METROPOLITAN REIT ASX:CMA 22 NISHI, 2 PHILLI
Slide 23: Market indicators: limited space availability from new supply
APPENDIX A – MARKET RESEARCH Market indicators Limited space availability from new supply in CMA’s exposed office markets sqm TOTAL STOCK UNDER CONSTRUCTION 1 sqm NET ABSORPTION FORECAST (2020-2024)1 700,000 700,000 Pre-commitment rate as at 4Q19 (sqm) Space available (sqm) 600,000 600,000 500,000 5
Slide 24: Market indicators: vacancy rates below long-term average
APPENDIX A – MARKET RESEARCH Market indicators Vacancy rates remain below long-term average in most markets, with supply broadly in check (,000 sqm of NLA) NET INCREASE IN SURPLUS STOCK VS NATION VACANCY (% of NLA) (%) OFFICE MARKET VACANCY BY MARKET 600 15.0 30 500 12.5 Vacancy range (%) Ave vacanc
Slide 25: Market indicators: prime space attracts tenants
APPENDIX A – MARKET RESEARCH Market indicators Prime space continues to attract tenants & metropolitan rents remain compelling CHANGE FROM VACANCY RATES 31 DEC 191 TOTAL 31-DEC-18 PRIME RENTS 31 DEC 191 NET EFFECTIVE 31-DEC-18 Sydney CBD 5.0% 4.1% Sydney CBD $830 0.4% Chatswood 7.5% 5.5% Chatswood $
Slide 26: Market indicators: near record spread between cap rates and risk-free rate
APPENDIX A – MARKET RESEARCH Market indicators A near record spread between capitalisation rates and the risk-free rate 16% 14% 12% 10% 8% 6% The spread between cap rates and 4% Australian CBD Office Yield (%) the risk-free rate is generating 2% Australia 10Yr Govt. Bonds (%) property investor’s a n
Slide 27: Income statement
APENDIX B Income statement $'000 HY20 HY19 Gross property income 67,429 46,611 Interest income 86 253 Total revenue 67,515 46,864 Direct property expenses (14,665) (10,471) Responsible entity fees (4,142) (2,986) Finance costs (8,733) (6,354) Management and other administrative expenses (953) (542)
Slide 28: FFO Reconciliation
APPENDIX C FFO Reconciliation $'000 HY20 HY19 Statutory net profit 24,697 14,655 Net (gain) on fair value of investment properties 11,695 8,406 One off refinancing costs 448 2,561 Straight-lining of rental income and amortisation of leasing commissions and tenant incentives 1,962 570 Business combin
Slide 29: Balance sheet and NTA movement
APPENDIX D Balance sheet and NTA movement $'000 31-DEC-19 30-JUN-19 NTA MOVEMENT ($/unit) Cash 36,692 17,546 Investment properties1 2,095,977 1,399,975 Goodwill 6,356 6,356 0.02 $2.57/unit Trade and other receivables 2,641 4,080 0.02 0.00 Other assets 2,633 1,464 0.04 Total assets 2,144,299 1,429,42
Slide 30: 8 Central Avenue, Eveleigh NSW
APPENDIX E – HY20 ACQUISITION PROFILES 8 Central Avenue, Eveleigh NSW KEY CHARACTERISTICS • A-grade office building completed in 2010 • The asset comprises 10 upper office levels including multiple television broadcasting / recording studios; a ground level lobby, café and retail suite; and basement
Slide 31: 8 Central Avenue, Eveleigh NSW (cont'd)
APPENDIX E – HY20 ACQUISITION PROFILES 8 Central Avenue, Eveleigh NSW (cont'd) LOCATION • Located within the ‘South Eveleigh Precinct’, 4km south of the Sydney CBD • Situated 900 metres from Redfern station, Sydney's 6th busiest train station with over 30,000 entries and exits per day • Features a l
Slide 32: William Square, 235 William Street, Northbridge WA
APPENDIX E – HY20 ACQUISITION PROFILES William Square, 235 William Street, Northbridge WA KEY CHARACTERISTICS • A-grade office building completed in 1992 with approximately $25 million spent in a recent refurbishment, including all building services • The asset comprises five upper office levels wit
Slide 33: William Square, Northbridge WA (cont'd)
APPENDIX E – HY20 ACQUISITION PROFILES William Square, 235 William Street, Northbridge WA (cont'd) LOCATION • Centrally located just north of Perth’s CBD, approximately 350 metres from Perth bus and train interchange • The asset features a substantial corner site, surrounded by the significant ameni
Slide 34: NewActon Nishi Building, 2 Phillip Law Street, Canberra ACT
APPENDIX E – HY20 ACQUISITION PROFILES NewActon Nishi Building, 2 Phillip Law Street, Canberra ACT KEY CHARACTERISTICS • Comprises 27,411sqm of NLA comprising 10 levels of A-Grade office, two podium levels occupied by an award-winning 85 room hotel, a ground level cinema and retail suite, and baseme
Slide 35: NewActon Nishi Building, Canberra ACT (cont'd)
APPENDIX E – HY20 ACQUISITION PROFILES NewActon Nishi Building, 2 Phillip Law Street, Canberra ACT (cont'd) LOCATION • ACT has the second strongest rate of growth in Australia with State Final Demand growing by 2.7% over the 2018-2019 Financial year1 • The Canberra office market has a stable demand
Slide 36: Investment portfolio
APPENDIX F Investment portfolio 1 2 PROPERTY STATE OWNERSHIP (%) BOOK VALUE ($M) CAPITALISATION RATE (%) AREA (SQM) AREA ($/SQM) WALE (YRS) OCCUPANCY (%) 8 Central Avenue, Eveleigh NSW 50% $191.0m 5.38% 36,570 10,446 8.3 100.0% 201 Pacific Highway, St Leonards NSW 50% $107.5m 5.63% 16,489 13,039 4.1
Slide 37: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited Limited (ABN 11 086 553 639, To the maximum extent permitted by law, CPFL and its related bodies corporate make no representation AFSL 231 149) (CPFL) as responsible entity of Centuria Metropolitan REIT (‘CMA’ or the ‘
Slide 38: Centuria Metropolitan REIT ASX:CMA
CENTURIA METROPOLITAN REIT ASX:CMA 38
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