Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — H1 2019 Earnings Presentation
37 slides from Centuria Industrial Reit's earnings presentation, Feb 6, 2019
Slide 1: Centuria Industrial REIT 1H19 Results
Centuria Industrial REIT 1H19 RESULTS | ASX:CIP | 06 FEBRUARY 2019 CENTURIA INDUSTRIAL REIT ASX:CIP 1H19 RESULTS 1
Slide 2: Contents
Contents 1. Introduction 2. Financial Results 3. Portfolio Overview 4. Guidance & Strategy 5. Appendices CENTURIA INDUSTRIAL REIT ASX:CIP 1H19 RESULTS 2
Slide 3: Introduction
SECTION ONE Introduction WOOLWORTHS WAY, WARNERVALE, NSW CENTURIA INDUSTRIAL REIT ASX:CIP 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 $0.8bn Centuria Metropolitan REIT (CMA) Centuria Industrial REIT (CIP) Propertylink Group (PLG) Property Funds Management AU
Slide 5: Centuria management – creating unitholder value
AUSTRALIA’S LARGEST INCOME FOCUSED INDUSTRIAL REIT Centuria management – creating unitholder value Total unitholder return 26.3% under Centuria’s management1,2,3 TOTAL RETURN SINCE UNDER CENTURIA’S PORTFOLIO VALUE ($BN) NTA PER UNIT6 MANAGEMENT OF CIP1,2,3 CIP became a Centuria 30.0% managed REIT 26
Slide 6: Key metrics – a quality pure play industrial platform
AUSTRALIA’S LARGEST INCOME FOCUSED INDUSTRIAL REIT Key metrics – a quality pure play industrial platform PORTFOLIO 41 $1.2bn 97.1% 4.7yrs High quality assets Portfolio value Portfolio occupancy1 Portfolio WALE1 FINANCIAL $731m 15.8% 37.0% 16.1% Market capitalisation2 12 month return on equity3 Geari
Slide 7: Delivering on FY19 priorities
HIGHLIGHTS Delivering on FY19 priorities • Occupancy improved to 97.1%1 (94.5% at FY18) 1 Maintain leasing momentum • Leases agreed for 65,902sqm (8% of the portfolio) in 1H19 • Remaining lease expiry in FY19 is 1.5% of portfolio • Over 52,000sqm leased in the half 2 Improve Victoria portfolio • Occ
Slide 8: Financial Results
SECTION TWO Financial Results ASHBURN ROAD, BUNDAMBA, QLD CENTURIA INDUSTRIAL REIT ASX:CIP 1H19 RESULTS 8
Slide 9: On track to deliver FY19 guidance and focused on maximising return on equity
FINANCIAL OVERVIEW – INCOME STATEMENT On track to deliver FY19 guidance and focused on maximising return on equity REVENUE 31 DEC 2018 31 DEC 2017 VARIANCE Gross property income ($’000) 43.2 41.7 1.5 Reflects acquisitions through CY18 Other income ($’000) 0.4 1.7 (1.3) Interest income ($’000) 0.1 0.
Slide 10: Continuing to strengthen CIP's balance sheet
CAPITAL MANAGEMENT Continuing to strengthen CIP’s balance sheet DEBT AND HEDGE MATURITY PROFILES1 Hedging maturity profile Drawn Headroom • Refinanced existing $150 million facility 40 • Additional $60 million of facilities secured 255 • Headroom of $65 million • No maturities until May 2020 290 25
Slide 11: Portfolio Overview
SECTION THREE Portfolio Overview 14-17 DANSU COURT, HALLAM VIC CENTURIA INDUSTRIAL REIT ASX:CIP 1H19 RESULTS 11
Slide 12: Portfolio Composition
PORTFOLIO COMPOSITION 100% exposure to high quality Australian industrial assets PORTFOLIO SNAPSHOT 1H19 FY181 Number of assets # 41 37 WA Book value $m 1,154.7 999.0 QLD 13% 3.9yrs WACR % 6.54 6.76 21% 6.0yrs GLA sqm 798,840 735,384 NT Average asset size sqm 19,484 19,352 QLD Occupancy by income %
Slide 13: Continued leasing momentum in FY19
PORTFOLIO OVERVIEW Continued leasing momentum in FY19 WEIGHTED AVERAGE LEASE EXPIRY (% BY INCOME) FY18 1HFY19 57.5 58.2 Significant leasing momentum continued with 65,902sqm1 leased in 1H19 Portfolio well positioned with just 18.3% expiry • Victoria sub portfolio significantly remaining from 2H19-FY
Slide 14: Active management initiatives significantly reposition Victorian portfolio
PORTFOLIO OVERVIEW Active management initiatives significantly reposition Victorian portfolio LEASE EXPIRY PROFILE LEASING TRANSACTIONS KEY VIC LEASE PORTFOLIO AS AT 31 DECEMBER 2016 PORTFOLIO AS AT 31 DECEMBER 2018 ACQUISITIONS2 | $79.0m DIVESTMENTS2 | $40.1m TRANSACTIONS CY2018 24-32 STANLEY DRIVE
Slide 15: NTA uplift driven by market fundamentals and leasing success
VALUATIONS AND LEASING NTA uplift driven by market fundamentals and leasing success PORTFOLIO VALUATION SUMMARY 1H19 FY18 VALUATION 1H19 FY18 MOVEMENT STATE VALUATION VALUATION MOVEMENT WACR WACR WACR NSW 444.4 418.5 25.9 6.15% 6.51% (0.36%) • 100% of portfolio revalued in VIC 252.4 239.3 13.1 6.54%
Slide 16: Capital Transactions – Acquisitions and Divestments
CAPITAL TRANSACTIONS – ACQUISITIONS AND DIVESTMENTS Active portfolio management with 87% of properties transacted off market and $112.3m acquired YTD FY18 | $152.7m 1 1HFY19 | $168.6m 1 $37.0m $30.6m 207-219 Browns Rd, Noble Park, VIC 149 Kerry Rd, Archerfield, QLD $28.0m $23.8m Lot 14 Sudlow Rd, Bi
Slide 17: Guidance & Strategy
SECTION FOUR Guidance & Strategy 6 MACDONALD ROAD, INGELBURN, NSW CENTURIA INDUSTRIAL REIT ASX:CIP 1H19 RESULTS 17
Slide 18: Strategy & Guidance
STRATEGY & GUIDANCE 1 INTERNATIONAL DR, WESTMEADOWS, VIC Continue to build Australia’s dominant income focused industrial REIT CIP has a simple Strategy – to deliver income and capital growth to investors from a portfolio of high quality Australian industrial assets; by • Focusing on ‘fit for purpos
Slide 19: Appendices
SECTION FIVE Appendices Appendix A – Leasing Expiry by State Appendix B – Market Research Appendix C – Income Statement Appendix D – Distribution Statement Appendix E – Balance Sheet and NTA Movement Appendix F – FFO Reconciliation Appendix G – Key Vacancies and Upcoming Expiries Appendix H – 1H19 A
Slide 20: A - Leasing Expiry by State
APPENDIX A - LEASING EXPIRY BY STATE NSW SUBPORTFOLIO EXPIRY PROFILE (% BY INCOME) VIC SUBPORTFOLIO EXPIRY PROFILE (% BY INCOME) 51.8 52.2 WALE OCCUPANCY GLA WALE OCCUPANCY GLA 4.6years 99.4% 266,505sqm 4.4years 96.4% 240,354sqm 39.5 26.5 8.5 7.6 5.7 3.6 0.6 2.3 1.5 Vacant FY19 FY20 FY21 FY22 FY23+
Slide 21: B – National Leasing Transactions
APPENDIX B – NATIONAL LEASING TRANSACTIONS Strong leasing activity in CIP core market segments1,2 NUMBER OF TRANSACTIONS CIP’s PRIMARY LEASING MARKET 400 2.3m sqm 350 • With an average asset size of 320 19,484sqm, CIP’s portfolio remains DEALS well positioned to benefit from strong 300 inquiry for t
Slide 22: B – Market Research: Economic Indicators
APPENDIX B – MARKET RESEARCH: ECONOMIC INDICATORS Underlying conditions remain positive for industrial occupiers AUSTRALIAN MANUFACTURING PURCHASING MANAGERS INDEX1 (3 MONTHS AVERAGE) DRIVERS TRANSFORMING DEMAND REQUIREMENTS 65.0 60.0 55.0 Manufacturing has experienced POSITIVE CLIMATE sustained pos
Slide 23: Availability reducing across all key markets
100 200 300 400 500 600 700 800 900 0 SQM Apr-11 Jul-11 Oct-11 Jan-12 PRIME Apr-12 Jul-12 SYDNEY Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 1. Source: Knight Frank Research SECONDARY Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 AVAILABLE SPACE Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-
Slide 24: Income Statement
APPENDIX C Income Statement 31 DEC 2018 31 DEC 2017 REVENUE Gross property income ($’000) 43,202 41,719 Other income ($’000) 397 1,676 Interest income ($’000) 112 82 Total revenue ($'000) 43,711 43,477 EXPENSES Direct property expenses ($’000) (8,161) (7,170) Responsible entity fees ($’000) (3,226)
Slide 25: Distribution Statement
APPENDIX D Distribution Statement 31 DEC 2018 31 DEC 2017 Statutory net profit ($’000) 46,106 49,608 Straight lining of rental income ($’000) (947) 720 Amortisation of leasing commissions and tenant incentives ($’000) 2,659 1,051 Net gain on fair value of investment properties (gain) / loss ($’000)
Slide 26: Balance Sheet and NTA Movement
APPENDIX E Balance Sheet and NTA Movement 31 DEC 2018 30 JUN 2018 NTA GROWTH3 Cash ($’000) 25,468 21,177 Investment properties ($’000) 1,154,650 1,009,000 Trade & other receivables ($’000) 6,509 3,606 $2.70 0.14 Other assets ($’000) - 52,564 1 0.12 2.66 $2.65 0.12 Goodwill ($’000) 10,501 10,501 $2.6
Slide 27: FFO Reconciliation
APPENDIX F FFO Reconciliation DISTRIBUTABLE EARNINGS FUNDS FROM OPERATIONS VARIANCE Statutory net profit ($’000) 46,106 46,106 - Straight lining of rental income ($’000) (947) (947) - Amortisation of leasing commissions and tenant incentives ($’000) 2,659 3,732 1,073 Net gain on fair value of invest
Slide 28: Key vacancies and upcoming expiries
APPENDIX G Key vacancies and upcoming expiries CURRENT KEY VACANCIES PROPERTY GLA (SQM) % OF PORTFOLIO AREA VACANT SINCE STATUS 49 Temple Drive, Thomastown VIC 8,045 1.0 20-Jun-16 5,400sqm leased to in 1H19. Strong interest 99 Quill Way, Henderson WA 16,419 2.1 28-Feb-18 Being marketed suited to use
Slide 29: 149 Kerry Road, Archerfield, QLD
APPENDIX H – 1H19 ACQUISITION PROFILES 149 Kerry Road, Archerfield, QLD Key characteristics Stable asset with high quality tenant in Bluescope Steel Limited with a long term lease commitment • Strategic location with access to infrastructure connections including the Acacia Ridge Rail Terminal • Low
Slide 30: 155 Lakes Road & 103 Stirling Crescent, Hazelmere, WA
APPENDIX H – 1H19 ACQUISITION PROFILES 155 Lakes Road & 103 Stirling Crescent, Hazelmere, WA Key characteristics High quality Perth metropolitan asset occupying a site area of 6.0 hectares across 2 freehold titles • Both assets are occupied by subsidiaries of ASX listed entities (CIMIC and NRW Holdi
Slide 31: 1 International Drive, Westmeadows VIC
APPENDIX H – 1H19 ACQUISITION PROFILES 1 International Drive, Westmeadows VIC Key characteristics Cargo park is a high quality industrial unit estate with an overall GLA of 25,866sqm on a prime 5.6ha site The property is located on the first exit ramp on the Tullamarine Freeway from Melbourne Airpor
Slide 32: 616 Boundary Road, Richlands QLD
APPENDIX H – 1H19 ACQUISITION PROFILES 616 Boundary Road, Richlands QLD Key characteristics CIP to The 13,763sqm warehouse facility on a 3.1 hectare site has dual street frontages is located in the prime Richlands market with surrounding occupiers including Coca-Cola and Target. update The property
Slide 33: Investment Portfolio
APPENDIX I Investment Portfolio PROPERTY STATE BOOK VALUE $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 2 Woolworths Warnervale NSW 81.2 1,489 7.00% 54,533 2.6 100.0% 10 Williamson Road, Ingleburn NSW 48.9 1,794 5.75% 27,260 3.7 100.0% 29 Glendenning Road, Glendenning NSW 45.7 2,143 5.50% 21,298
Slide 34: Investment Portfolio
APPENDIX I Investment Portfolio PROPERTY STATE BOOK VALUE $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 24-32 Stanley Drive, Somerton VIC 28.5 1,170 6.50% 24,350 4.7 100.0% 2 Keon Parade, Keon Park VIC 25.1 1,285 5.75% 19,527 11.6 100.0% 69 Studley Court, Derrimut VIC 21.5 1,493 6.50% 14,365 1.1
Slide 35: Investment Portfolio
APPENDIX I Investment Portfolio PROPERTY STATE BOOK VALUE $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 616 Boundary Road, Richlands QLD 16.4 1,188 7.25% 13,763 2.6 100.0% 21 Jay Street, Townsville QLD 11.0 2,317 7.50% 4,726 6.5 100.0% 310 Spearwood Avenue, Bibra Lake WA 54.6 917 7.50% 59,508 5.
Slide 36: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds No. 2 Limited (ABN 38 133 363 185, AFSL 340 304) This presentation may contain forward-looking statements, guidance, forecasts, estimates , prospects, projections or (‘CPF2L’) as responsible entity of the Centuria Industrial R
Slide 37: Thank you
Thank you CENTURIA INDUSTRIAL REIT ASX:CIP 1H19 RESULTS 37
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