Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — HY22 Earnings Presentation
42 slides from Centuria Industrial Reit's earnings presentation, Feb 1, 2022
Slide 1: Centuria Industrial REIT HY22 Results
1 FEBRUARY 2022 ASX: CIP Centuria Industrial REIT HY22 RESULTS 56-88 LISBON STREET, FARIFIELD, NSW
Slide 2: Agenda
AGENDA 74 NEWTON ROAD, WETHERILL PARK, NSW 1. Group Overview 2. Financial Results 164 NEWTON ROAD, WETHERILL PARK, NSW 3. Portfolio Metrics 160 NEWTON ROAD, WETHERILL PARK, NSW 8 HEXHAM PLACE, WETHERILL PARK, NSW 4. Outlook & Guidance 5. Appendices ACKNOWLEDGEMENT OF COUNTRY Our group manages proper
Slide 3: Group Overview
ASX: CIP DISTRIBUTION CENTRES Group Overview SECTION ONE 8 LEXINGTON DRIVE, BELLA VISTA, 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 $20.2bn 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 5: Generating unitholder value through years of active management
Generating unitholder value through 5 years of active management Significant transformation since Centuria Capital assumed management of CIP in January 2017 Balance sheet Increased scale and Unitholder value created Active asset management and leasing strengthened through investor relevance through
Slide 6: Transformational portfolio transactions
Transformational portfolio transactions Originating and executing targeted acquisitions to deliver unitholder value $490m valuation uplift from strategic acquisitions under Centuria management $236m $340m 44% Purchase price Current value Value uplift ARNOTT”S PORTFOLIO 88% of deals sourced off marke
Slide 7: CIP: Vision, strategy and objectives
CIP: Vision, strategy and objectives VISION To be Australia’s leading Australia’s largest domestic ASX-listed pure play industrial REIT. Overseen by an active management domestic pure play CIP team with deep real estate expertise. industrial REIT Strongly supported by Centuria Group. A CLEAR AND SIM
Slide 8: Exposure to the major Industrial sub-sectors
Exposure to the major Industrial sub-sectors1 A well-balanced portfolio across the major industrial sub-sectors MANUFACTURING DISTRIBUTION CENTRES TRANSPORT LOGISTICS DATA CENTRES COLD STORAGE 25% PORTFOLIO VALUE 36% PORTFOLIO VALUE 16% PORTFOLIO VALUE 14% PORTFOLIO VALUE 7% PORTFOLIO VALUE VIRGINIA
Slide 9: Executing strategy in HY22
Executing strategy in HY22 • 109,188 sqm of terms agreed over the half year (8.5% of portfolio) 3 , high portfolio Active occupancy of 99.2%4, WALE of 8.9 years4 management 1 • HY22 like for like valuation uplift of $281m 5, NTA growth of 10% to $4.21 per unit6 • 100% of HY22 acquisitions sourced of
Slide 10: Key metrics
Key metrics Australia’s largest domestic pure play industrial REIT PORTFOLI O FI NANCI AL No less than 80 $3.9bn 18.2cpu 17.3cpu High quality assets Portfolio value Upgraded FY22 FY22 DPU FFO Guidance2 Guidance2 99.2% 8.9yrs 4.6% $4.21 Portfolio occupancy1 Portfolio WALE1 Forecast FY22 Net Tangible
Slide 11: Financial Results
ASX: CIP TRANSPORT LOGISTICS Financial Results SECTION TWO 82 RODEO ROAD, GREGORY HILLS, NSW
Slide 12: Funds from operations (FFO)
Funds from operations (FFO)1 REVENUE HY22 HY21 VARIANCE Reflects acquisitions Gross property income ($m) 95.7 73.2 22.5 through CY2021 Other income ($m) - 0.0 (0.0) Interest income ($m) 0.0 - 0.0 Total revenue ($m) 95.7 73.2 22.5 2.9% like-for-like income growth EXPENSES Direct property expenses ($m
Slide 13: Strengthened balance sheet provides opportunities for growth
Strengthened balance sheet provides opportunities for growth Broadening capital sources to create diversified and staggered debt profile DEBT AND HEDGE MATURITY PROFILES ($m)1 800 CASH AND DEBT HY22 CAPITAL MANAGEMENT INITIATIVES • Obtained Baa2 Stable Moody’s Credit 700 600 $290m HEADROOM AVAILABLE
Slide 14: Portfolio Metrics
ASX: CIP DATA CENTRES Portfolio Metrics SECTION THREE TELSTRA DATA CENTRE, COMPLEX CLAYTON VIC
Slide 15: 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 Active Total portfolio sub-portfolio1 AUSTRALIAN LISTED PEERS 2 PORTFOLIO SNAPSHOT FY21 HY22 HY22 Number of assets # 62 80 78 4.2 PORTFOLIO VALUE – EXCL. BUSINESS PARK
Slide 16: Delivered strong leasing outcomes across 8.5% of CIP's portfolio
Delivered strong leasing outcomes across 8.5% of CIP’s portfolio Average rental growth of 10% over prior passing rents SELECT HY22 LEASING OUTCOMES WEIGHTED AVERAGE LEASE EXPIRY (% BY INCOME) 68.2 64.3 13k sqm new lease to Mine Tech Engineering on a Short term leasing opportunities 10-year term 32-5
Slide 17: Asset repositioning initiatives
Asset repositioning initiatives Leveraging Centuria’s acquisition capability and active management approach to deliver outsized asset returns COMPLETED ACTIVE Asset refurbishment to extend useful life and attract quality tenants 160 Newton Road, Wetherill Park NSW - BEFORE Opportunities to increase
Slide 18: Selective developments to unlock embedded value
Selective developments to unlock embedded value Creating modern sustainable industrial assets to attract high quality tenants supporting long term income streams Prudent management of Deployment of Centuria’s Ability to introduce brand Developing sustainable, development risk. CIP extensive developm
Slide 19: $680 million of urban infill industrial acquisitions
$680 million of urban infill industrial acquisitions1 95% of acquisitions in tightly held eastern seaboard industrial markets ASSETS NOT SHOWN $27.5 - 590 Heatherton Road, Clayton South VIC 56% OF HY22 $27.0m - 29 Penelope Crescent, Arndell Park NSW ACQUISITIONS SECURED IN TIGHTLY $200.2m $70.0m $37
Slide 20: Consolidating land holdings of scale in urban infill markets
Consolidating land holdings of scale in urban infill markets Concentrated scale in key markets – Case study: Wetherill Park, NSW and Derrimut, VIC Scaled footprint in land Creating development optionality Establishing scale and diversity constrained markets, servicing while maintaining income in ten
Slide 21: High quality tenant customers
High quality tenant customers Reliable growing cashflow with 43% of gross income from top 10 tenant customers TENANT INDUSTRY SECTOR DIVERSIFICATIONS 1 23% ASX Listed 5% Listed Multinational 79% 97% 22% OF LEASES WITH OF LEASES ARE NET OR OF INCOME FROM 22% Multinational FIXED RENT REVIEWS TRIPLE NE
Slide 22: $281m valuation uplift driven by active leasing and strong sector tailwinds
$281m valuation uplift driven by active leasing and strong sector tailwinds1,2 AUSTRALIA REMAINS ATTRACTIVE COMPARED TO GLOBAL PRIME PORTFOLIO VALUATION SUMMARY 1,2 INDUSTRIAL YIELDS3 3.25% HY22 FY21 VALUATION HY22 FY21 MOVEMENT LONDON 3.4% STATE VALUATION VALUATION MOVEMENT2 WACR4 WACR4 WACR4 HONG
Slide 23: 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 Industry Participation Ongoing solar installation on climate risk
Slide 24: Centuria Industrial REIT – Environmental initiatives
Centuria Industrial REIT – Environmental initiatives CONCIOUS OF CLIMATE CASE STUDIES CHANGE – Centuria is continuing to take steps to reduce Valued Stakeholders BEFORE AFTER greenhouse emissions where – Centuria seeks to practical and in collaboration engage with our with our tenants. tenants to cr
Slide 25: Outlook & Guidance
ASX: CIP COLD STORE FACILITIES Outlook & Guidance SECTION FOUR 51 DEPOT STREET, BANYO, QLD
Slide 26: Commencing 2H22 in a strong position
Commencing 2H22 in a strong position Portfolio growth to 84 high quality industrial assets worth $4.0bn PRO-FORMA PORTFOLIO METRICS 90-118 BOLINDA RD, CAMPBELLFIELD, VIC • Fund through development opportunity for a c.44,000sqm multi-unit industrial estate 159-169 STUDLEY COURT, DERRIMUT, VIC • Adjoi
Slide 27: Providing upgraded FY22 guidance
Providing upgraded FY22 guidance1 No less than 18.2c FFO per unit1 17.3c Distribution per unit1 DPU PAID IN QUARTERLY INSTALMENTS 4.6% DISTRIBUTION YIELD2 870 LORIMER STREET, PORT MELBOURNE, VIC 5/243 BRADMAN STREET, ACACIA RIDGE, QLD 1. Guidance remains subject to unforeseen circumstances and mater
Slide 28: Appendices
ASX: CIP Appendices SECTION FIVE Appendix A – Market research: E-Commerce tailwinds Appendix B – Market research: Increased occupier demand Appendix C – eCommerce on Sydney industrial market Appendix D – Case Study: Lisbon Street, Fairfield NSW Appendix E – Lease expiry by state Appendix F – Key vac
Slide 29: Appendix A - Increasing E-commerce adoption
Appendix A - Increasing E-commerce adoption1 Australian online retail forecast Relative online penetration rates 35.0% $90 25% $80 30.0% $70 20% 25.0% $60 15% $50 20.0% $40 10% 15.0% $30 $20 10.0% 5% $10 5.0% $0 0% 2014 2014 2014 2015 2015 2015 2016 2016 2016 2017 2017 2017 2018 2018 2018 2019 2019
Slide 30: Appendix B - Low vacancy and accelerating occupier demand
Appendix B - Low vacancy and accelerating occupier demand 89% of CIP active portfolio with exposure to east coast markets with average vacancy of less than 2%2 19% of CIP active portfolio 1 NATIONAL INDUSTRIAL GROSS TAKE UP 2010 to 20254 (‘000 sqm) Vacancy rate (%)2 2.3% 5,000 Avg. 12 month rental g
Slide 31: Appendix C- Case Study: eCommerce on Sydney industrial market
Appendix C- Case Study: eCommerce on Sydney industrial market1 Sydney industrial and logistics gross take-up from the retail trade sector and online retail sales (12 months rolling) NSW online retail Floor space (Sqm) sales (AUD billions) NSW e-commerce penetration rate is currently 500,000 14 14% a
Slide 32: Appendix D - Case study: Lisbon Street, Fairfield, NSW
Appendix D - Case study: Lisbon Street, Fairfield, NSW KEY LANDMARKS Lisbon Street, Fairfield is the geographic and population centre of Sydney, with 4.4m Parramatta CBD people located within a Penrith CBD M4 60-minute drive M7 Sydney CBD M5 Port Sydney International Botany Airport A1 M31 SNAPSHOT L
Slide 33: Appendix E – Leasing expiry by state
Appendix E – Leasing expiry by state Sub portfolio expiry profile (% by income) WALE OCCUPANCY GLA WALE OCCUPANCY GLA NSW 6.0yrs 100.0% 413,718sqm VIC 11.8yrs 99.4% 408,262sqm 72.4 68.0 15.6 9.6 13.2 10.7 2.4 5.5 0.6 1.9 Vacant FY22 FY23 FY24 FY25 FY26+ Vacant FY22 FY23 FY24 FY25 FY26+ WALE OCCUPANC
Slide 34: Appendix F - Key vacancies and upcoming expiries
Appendix F - Key vacancies and upcoming expiries % OF CURRENT KEY VACANCIES VACANT GLA (SQM) PORTFOLIO STATUS PROPERTY SINCE AREA 42 Hopener Road, Bundamba 10,244 0.8 Jun-21 Practical completion in June-21. Heads of agreement on 5,000sqm in January 22 Vacancy over a combination of office and warehou
Slide 35: Appendix G – Income statement
Appendix G – Income statement HY22 HY21 REVENUE Gross property income ($’000) 95,737 73,176 Other income ($’000) 0 6 Interest income ($’000) 2 0 Total revenue ($'000) 95,740 73,182 EXPENSES Direct property expenses ($’000) (20,625) (13,600) Responsible entity fees ($’000) (10,121) (6,133) Finance co
Slide 36: Appendix H – Balance sheet and NTA growth
Appendix H – Balance sheet and NTA growth HY22 FY21 NTA GROWTH2 Cash ($’000) 26,719 105,543 Investment properties ($’000) 3,878,930 2,945,057 Other assets ($’000) 5,286 37,923 Trade & other receivables ($’000) 11,784 6,835 Derivative financial instruments ($’000) 3,399 - Goodwill ($’000) 10,501 10,5
Slide 37: Appendix I – Portfolio valuation summary
Appendix I – Portfolio valuation summary1 HY22 VALUATION FY21 VALUATION VALUATION MOVEMENT2 STATE HY22 WACR3 FY21 WACR3 MOVEMENT WACR3 ($m) ($m) ($m) NSW 837.4 760.6 76.9 4.14% 4.47% (0.33%) VIC 1,239.5 1,118.1 121.4 3.84% 4.18% (0.33%) QLD 809.0 769.2 39.8 4.38% 4.60% (0.22%) WA 214.3 184.3 30.1 5.
Slide 38: Appendix J – Investment portfolio
Appendix J – Investment portfolio BOOK VALUE CAP GLA WALE OCCUPANCY SUB PROPERTY STATE $/SQM ($ MILLION) RATE (SQM) (YRS)1 %1 SECTOR 56-88 Lisbon Street, Fairfield 200.2 3,324 3.88% 60,224 3.9 100.0% Distribution Centre 2 Woolworths Way, Warnervale 120.0 2,214 4.75% 54,196 9.6 100.0% Distribution Ce
Slide 39: Appendix J – Investment portfolio
Appendix J – Investment portfolio BOOK VALUE CAP GLA WALE OCCUPANCY SUB PROPERTY STATE $/SQM ($ MILLION) RATE (SQM) (YRS)1 %1 SECTOR 14-17 Dansu Court, Hallam 35.0 2,050 4.00% 17,070 7.8 100.0% Transport Logistics 590 Heatherton Road, Clayton South 27.5 2,873 4.00% 9,575 9.7 100.0% Distribution Cent
Slide 40: Appendix J – Investment portfolio
Appendix J – Investment portfolio BOOK VALUE CAP GLA WALE OCCUPANCY SUB PROPERTY STATE $/SQM ($ MILLION) RATE (SQM) (YRS)1 %1 SECTOR 310 Spearwood Avenue, Bibra Lake 75.0 1,259 5.75% 59,555 4.2 100.0% Distribution Centre Lot 14 Sudlow Road, Bibra Lake 45.0 1,140 5.75% 39,485 3.6 100.0% Distribution
Slide 41: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds No.2 Limited (ABN 38 133 363 185, The information in this presentation has been obtained from and based on sources believed by CPF2L AFSL 340304) (CPF2L) as responsible entity of Centuria Industrial REIT (‘CIP’ or the ‘Trust’)
Slide 42: 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
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