Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — FY2022 Earnings Presentation
41 slides from Centuria Industrial Reit's earnings presentation, Aug 4, 2022
Slide 1: Centuria Industrial REIT FY22 Results
4 AUGUST 2022 ASX:CIP Centuria Industrial REIT FY22 RESULTS AMAZON 8 LEXINGTON FLEX,DRIVE, 2-8 LEXINGTON BELLA VISTA, DRIVE, NSW – ARTIST BELLA VISTA IMPRESSION NSW
Slide 2: Agenda
ACKNOWLEDGEMENT OF COUNTRY 74 NEWTON ROAD, WETHERILL PARK NSW 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, present and emerging. 164 N
Slide 3: Overview
ASX:CIP TRANSPORT LOGISTICS Overview SECTION ONE 82 RODEO ROAD, GREGORY HILLS NSW
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 $20.6bn Group AUM1 $19.8bn Real estate AUM $6.8bn $13.0bn $0.8bn Listed real estate Unlisted real estate Investment bonds Centuria Life $4.1bn $2.4bn $0.3bn $8.3
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 $4.1bn 18.2cpu 17.3cpu high quality assets portfolio book value delivered upgraded delivered on FY22 FY22 FFO guidance DPU guidance 98.8% 8.3yrs 5.4% $4.24 portfolio occupancy1 portfolio WALE1 forecast FY23 net
Slide 7: FY22 summary and FY23 outlook
FY22 summary and FY23 outlook • 185,206 sqm of terms agreed over the year (14% of portfolio)1 , high portfolio occupancy of 98.8%2, WALE of 8.3 years2 Active • Re-leasing spread growth of +11%3 across 49 leasing deals in FY22 management 1 • FY22 like for like valuation uplift of $326m4, NTA growth o
Slide 8: Australia rents remain affordable in a global context
Australia rents remain affordable in a global context Australian vacancy rates are one of the lowest in the world Avg. global rents (AU$ equivalent/per square metre) and vacancy rates (%) The Australian National Industrial market vacancy rate of 0.8% is one of the lowest globally. Historically low v
Slide 9: Low vacancy and accelerating occupier demand
Low vacancy and accelerating occupier demand CIP portfolio well positioned to benefit from record low vacancy and strong market rent growth in Australia VACANCY RATE (%)2 1.4% National industrial gross take up 2010 to 2025 3,4 BRISBANE (‘000 sqm) Avg. 12 month rental growth (%) – Prime2 19% 10.4% 5,
Slide 10: Financial results
ASX:CIP TRANSPORT LOGISTICS Financial results SECTION TWO 82 RODEO ROAD, GREGORY HILLS NSW
Slide 11: Funds from operations (FFO)
Funds from operations (FFO)1 REVENUE FY22 FY21 VARIANCE Gross property income ($m) 199.1 157.0 42.1 Reflects acquisitions through FY22 3.4% like-for-like income growth Other income ($m) 1.8 0.0 1.8 Interest income ($m) 0.0 0.0 0.0 Total revenue ($m) 200.9 157.0 43.9 EXPENSES Direct property expenses
Slide 12: Capital management overview
Capital management overview Broadening capital sources to create diversified and staggered debt profile Debt maturity profile ($m) $259m • Significant covenant headroom Cash and debt headroom 425 available • Diversified lender pool of seven 300 280 350 financiers 105 100 • Only $50m of debt maturiti
Slide 13: Portfolio metrics
ASX:CIP DISTRIBUTION CENTRES Portfolio metrics SECTION THREE 243 BRADMAN STREET, ACACIA RIDGE QLD
Slide 14: 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 TOTAL PORTFOLIO ACTIVE SUB- TOTAL PORTFOLIO PORTFOLIO SNAPSHOT FY22 PORTFOLIO1 FY22 FY21 Number of assets # 88 86 62 NT Book value $m 4,101 3,241 2,945 QLD WACR % 4.19
Slide 15: Delivered strong leasing outcomes across 14% of CIP's portfolio
Delivered strong leasing outcomes across 14% of CIP’s portfolio1 Average rental growth of 11% over prior passing rents across 49 transactions2 Select FY22 leasing outcomes Weighted average lease expiry (% by income) FY22 60.0 FY21 53.9 Five deals totalling 27k sqm of the Short term leasing opportuni
Slide 16: $765 million of urban infill industrial acquisitions
$765 million of urban infill industrial acquisitions1 $45m of divestments at an average premium of 32% to prior book values 51 DEPOT ST, BANYO ($20.3m) QLD Divestments 4 assets 4.3-year 99 QUILL WAY, HENDERSON WA ($10.5m) average WALE 11% FY22 Opportunity to capture rent reversion in the short term.
Slide 17: Asset repositioning initiatives
Asset repositioning initiatives Leveraging Centuria’s acquisition capability and active management approach to deliver value-add projects Completed Active 160 NEWTON ROAD, WETHERILL PARK NSW 8 LEXINGTON DRIVE, BELLA VISTA NSW 1 INTERNATIONAL DRIVE, WESTMEADOWS VIC 616 BOUNDARY ROAD, RICHLANDS QLD BE
Slide 18: Development pipeline
Development pipeline Creating modern sustainable industrial assets to attract high quality customers and income streams Ability to introduce brand Developing sustainable Leveraging network effect to Deployment of Centuria’s extensive new, high quality, modern assets with future pipeline expand exist
Slide 19: Creating critical mass and scale in land constrained markets
Creating critical mass and scale in land constrained markets Consolidating scale in key markets – Case study: Wetherill Park NSW and Derrimut VIC Creating development optionality while Establishing scale and diversity in tenancy Scaled footprint in land constrained markets, maintaining income size a
Slide 20: High quality tenant customers
High quality tenant customers 56% of gross income from blue-chip top 20 tenant customers Top 20 tenant customers Tenant industry sector diversifications 1 RANK TENANT CUSTOMER % INCOME RANK TENANT CUSTOMER % INCOMEL 22% ASX-listed 1 9% 11 2% 5% Listed multinational 20% Multinational 2 7% 12 2% 39% N
Slide 21: Networking effect
Networking effect Building strong multi-location customer Leveraging CIP’s scale to generate a ‘networking relationships to drive value effect’ to grow and service customers across multiple locations • Strong relationships across 167 tenant customers providing insights and visibility on future deman
Slide 22: $326m valuation uplift driven by active leasing and strong sector tailwinds
$326m valuation uplift driven by active leasing and strong sector tailwinds1,2 Portfolio valuation summary1,2 Leasing success driving like for FY22 FY21 VALUATION FY22 FY21 MOVEMENT like valuation gain of $326m1,2 STATE VALUATION VALUATION MOVEMENT2 WACR3 WACR3 WACR3 (+11%) in FY22 Like for like por
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 membership Climate resilience Climate action Industry participation Member of the Australian Green Implementation of climate adaptation Ongoing
Slide 24: Focus on sustainability initiatives
Focus on sustainability initiatives Partnering with stakeholders to achieve sustainability outcomes CIP is committed to developing leading green certified assets under CIP is committed to reducing our greenhouse emissions. As most Centuria's in-house development capability. assets within CIP are sin
Slide 25: Outlook and guidance
ASX:CIP COLD STORE FACILITIES Outlook and guidance SECTION FOUR 60-80 SOUTHLINK STREET, PARKINSON QLD
Slide 26: FY23 guidance
FY23 guidance1 STUDLEY COURT, DERRIMUT VIC FFO per unit1 17.0c 179 STUDLEY COURT, DERRIMUT VIC 159-169 STUDLEY COURT, DERRIMUT VIC Distribution per unit1 69 STUDLEY COURT, DERRIMUT VIC 16.0c Distribution yield2 5.4% DPU paid in quarterly instalments 1. Guidance remains subject to unforeseen circumst
Slide 27: Appendices
ASX:CIP DISTRIBUTION CENTRES Appendices SECTION FIVE Appendix A: Exposure to the major industrial sub-sectors Appendix B: FY22 acquisitions Appendix C: Transformational portfolio transactions Appendix D: Market research: eCommerce tailwinds Appendix E: Lease expiry by state Appendix F: Key vacancies
Slide 28: 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 & Production Distribution centres Transport logistics Data centres Cold storage 25% portfolio value 37% portfolio value 15% portfolio value 14% portfolio value 7%
Slide 29: Appendix B: FY22 acquisitions
Appendix B: FY22 acquisitions 91% of acquisitions in tightly held eastern seaboard industrial markets $200.2m $70.0m $36.8m $33.5m $27.0m $12.2 $37.7m $37.1m $27.5m 56-88 LISBON STREET, 82 RODEO ROAD, GREGORY 164-166 NEWTON ROAD, 160 NEWTON ROAD, 29 PENELOPE CRESCENT, 8 HEXHAM PLACE, 90-118 BOLINDA
Slide 30: Appendix C: Transformational portfolio transactions
Appendix C: Transformational portfolio transactions Originating and executing targeted acquisitions to deliver unitholder value $523m valuation uplift from strategic acquisitions under Centuria $236m $340m 41% management1. Purchase price Current value Value uplift1 ARNOTT’S PORTFOLIO 90% of deals so
Slide 31: Appendix D: Increasing eCommerce adoption
Appendix D: Increasing eCommerce adoption Australian online retail forecast1 Relative online penetration rates2 90 25.0% 35% 2016 2022 20.0% 80 30% 79 70 20.0% 70 25% 60 14.6% 63 14.3% 15.0% 20% 50 12.6% 56 53 40 9.3% 44 15% 8.9% 10.0% 8.4% 7.9% 30 7.4% 6.7% 6.9% 6.2% 31 29 10% 20 24 26 22 5.0% 18 1
Slide 32: Appendix E: Leasing expiry by state
Appendix E: Leasing expiry by state Sub portfolio expiry profile (% by income) NSW WALE OCCUPANCY GLA VIC WALE OCCUPANCY GLA 5.6yrs 100.0% 417,256 sqm 10.6yrs 99.3% 429,384 sqm 64.9 61.2 16.2 13.2 11.5 9.7 8.7 9.7 3.7 0.5 0.7 Vacant FY23 FY24 FY25 FY26 FY27+ Vacant FY23 FY24 FY25 FY26 FY27+ QLD WALE
Slide 33: Appendix F: Key vacancies and upcoming expiries
Appendix F: Key vacancies and upcoming expiries CURRENT KEY VACANCIES % OF PROPERTY GLA (SQM) PORTFOLIO AREA 616 Boundary Road, Richlands 13,763 1.0 1 International Drive, Westmeadows 2,155 0.2 Total/average 15,918 1.2 % OF UPCOMING: EXIPIRES (FY23) GLA PORTFOLIO PROPERTY (SQM) AREA 69 Rivergate Pla
Slide 34: Appendix G: Income statement
Appendix G: Income statement FY22 FY21 REVENUE Gross property income ($’000) 199,075 157,036 Other income ($’000) 1,809 0 Interest income ($’000) 26 13 Total revenue ($'000) 200,911 157,049 EXPENSES Direct property expenses ($’000) (39,550) (28,056) Responsible entity fees ($’000) (22,472) (14,118)
Slide 35: Appendix H: Balance sheet and NTA growth
Appendix H: Balance sheet and NTA growth FY22 FY21 NTA growth2 Cash ($’000) 26,604 105,543 Investment properties ($’000) 4,100,926 2,945,057 Other assets ($’000) 640 37,923 Trade & other receivables ($’000) 14,830 6,835 Derivative financial instruments ($’000) 5,032 – Goodwill ($’000) - 10,501 Total
Slide 36: Appendix I: Portfolio valuation summary
Appendix I: Portfolio valuation summary1 STATE FY22 VALUATION ($m) FY21 VALUATION ($m) VALUATION MOVEMENT2 ($m) FY22 WACR3 FY21 WACR3 MOVEMENT WACR3 NSW 856.0 760.6 95.4 4.10% 4.47% (0.38%) VIC 1,252.0 1,118.1 133.9 3.85% 4.17% (0.33%) QLD 817.1 769.2 48.0 4.39% 4.60% (0.21%) WA 218.5 184.3 34.2 5.5
Slide 37: Appendix J: Investment portfolio
Appendix J: Investment portfolio PROPERTY BOOK VALUE ($m) $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 SUB SECTOR NSW 56-88 Lisbon Street, Fairfield East 200.2 3,324 3.88% 60,224 3.4 100.0% Distribution centre 2 Woolworths Way, Warnervale 120.0 2,214 4.75% 54,196 9.1 100.0% Distribution centre
Slide 38: Appendix J: Investment portfolio
Appendix J: Investment portfolio PROPERTY BOOK VALUE ($m) $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 SUB SECTOR VIC (continued) 90-118 Bolinda Road, Campbellfield 37.7 4,586 4.50% 8,210 0.2 100.0% Manufacturing 14-17 Dansu Court, Hallam 37.5 2,197 4.00% 17,070 7.3 100.0% Transport logistics 5
Slide 39: Appendix J: Investment portfolio
Appendix J: Investment portfolio PROPERTY BOOK VALUE ($m) $/SQM CAP RATE GLA (SQM) WALE (YRS)1 OCCUPANCY %1 SUB SECTOR QLD (continued) 46 Gosport Street, Hemmant 32.2 2,560 5.00% 12,578 3.3 100.0% Manufacturing 680 Boundary Road, Richlands 29.6 2,325 5.00% 12,732 2.6 100.0% Distribution centre 5/243
Slide 40: 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 41: Australia and New Zealand offices
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
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