Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — HY24 Earnings Presentation
45 slides from Centuria Industrial Reit's earnings presentation, Feb 7, 2024
Slide 1: Centuria Industrial REIT HY24 results
07 February 2024 | ASX:CIP Centuria Industrial REIT HY24 results 90 BOLINDA ROAD, CAMPBELLFIELD VIC
Slide 2: Speakers
Speakers Ross Lees Jesse Curtis Michael Ching Head of Funds Management – Head of Industrial & Fund Manager – Assistant Fund Manager – Centuria Capital Limited Centuria Industrial REIT Centuria Industrial REIT Centuria ASX:CIP 2
Slide 3: Agenda
AGENDA 1. Overview 2. Financial results Acknowledgement of Country 3. Operational performance Our group manages property throughout Australia 4. Development pipeline and New Zealand. Accordingly, Centuria pays its respects to the traditional owners of the land in each 5. Outlook and guidance country
Slide 4: Overview
Overview Section one 8 LEXINGTON DRIVE, BELLA VISTA NSW
Slide 5: 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 $21.1bn GROUP AUM1 $20.3bn REAL ESTATE AUM $6.2bn $14.1bn $0.8bn LISTED REAL ESTATE UNLISTED REAL ESTATE INVESTMENT BONDS $3.9bn $2.1bn $0.2bn $8.3bn $2.7bn $3.1
Slide 6: CIP: Vision, strategy and objectives
CIP: Vision, strategy and objectives VISION Australia’s largest domestic ASX-listed pure play To be Australia’s Centuria Industrial industrial REIT. Overseen by an active management leading domestic pure REIT (CIP) team with deep real estate expertise. Strongly supported by Centuria Capital Group pl
Slide 7: Results highlights
Results highlights Upgraded FFO 51% re-leasing $1bn development guidance spreads2 pipeline4 FY24 FFO guidance Across over 108,000sqm Identified over the next to 17.2cpu1 of leasing3 five years 1. Guidance remains subject to unforeseen circumstances and material changes in operating conditions, and a
Slide 8: FY24 strategy execution
FY24 strategy execution Leveraging market fundamentals, delivering income growth and prudent capital management • FY24 earnings upgrade to 17.2cpu driven by strong 6% like for like NOI growth 01 Active management • • • Average HY24 re-leasing spreads accelerate to 51%1 (FY23: 30%) across 108,821sqm2
Slide 9: Key metrics
Key metrics Australia’s largest listed domestic pure-play industrial REIT PORTFOLIO Upgraded FY24 FFO guidance 88 $3.8bn to 17.2 cents per unit High-quality assets Portfolio book value1 97.2% 7.5yrs Portfolio occupancy2 Portfolio WALE2 FINANCIAL 17.2cpu 16.0cpu Upgraded FY24 FFO guidance FY24 distri
Slide 10: Australia's largest listed domestic pure-play industrial REIT
Australia’s largest listed domestic pure-play industrial REIT WA 8% 100% exposure to Australian industrial property total portfolio QLD 21% total portfolio Portfolio snapshot HY241 3.1 yrs Number of assets # 88 WALE 9.5 yrs WALE Book value $m 3,795 WACR % 5.64 NSW 31% GLA sqm 1,325,025 & ACT total p
Slide 11: 58% CIP total shareholder return (TSR) since HY19
58% CIP total shareholder return (TSR) since HY19 CIP units have consistently outperformed the ASX 200 A-REIT Index over the past 5-years1,2 Total shareholder return (TSR) 100% 80% CIP 60% 58% 40% ASX200 A-REIT 20% 36% 0% 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 -20% -40% 1. Sourc
Slide 12: Financial results
Financial results Section two 29 PENELOPE CRESCENT, ARNDELL PARK NSW
Slide 13: Funds From Operations (FFO)
Funds From Revenue HY24 HY23 Variance Strong re-leasing spreads Operations (FFO)1 Gross property income $m 110.9 110.5 0.4 driving 6.0% like for like NOI growth Other income $m 2.0 1.6 0.4 Share of net profit of equity accounted investments $m 3.9 0.3 3.6 Impacted by divestments over Interest income
Slide 14: Capital management
Capital management 33.7% Gearing5 at the lower end of target range of Strong balance sheet maintained with conservative gearing 30%-40% (covenant of 50%) Debt maturity profile ($m) Domestic and International banks 300 88% A$MTN Hedging as at 31 December 2023 Exchangeable Note1,2 425 155 280 350 100
Slide 15: Operational performance
Operational performance Section three 69 RIVERGATE PLACE, MURARRIE QLD
Slide 16: Average re-leasing spreads of 51% for HY24
Average re-leasing spreads of 51% for HY241 Over 108,000sqm of leasing (8% of portfolio) secured2 Select HY24 leasing outcomes CIP re-leasing spreads1 24-32 Stanley Drive, Somerton CIP RE-LEASING SPREADS 51% VIC Accelerating re-leasing • New lease secured across spreads achieved over 24,350sqm 37% t
Slide 17: High quality tenant customers
High quality tenant customers Leveraging CIP’s scale to Secure income backed by 93% generate a ‘networking effect’ blue chip tenant customers to grow and service customers across multiple locations Tenant industry sector diversifications1 Strong relationships providing insights and visibility on fut
Slide 18: Repositioning projects
Repositioning projects Leveraging appetite for urban infill logistics to extend functional life and increase income streams Completed Active 616 Boundary Road, 30 Fulton Drive, Derrimut VIC Richlands QLD • 10,733sqm facility with surplus • Repositioning works land acquired in November completed in H
Slide 19: Creating critical mass and scale in land constrained infill markets
Creating critical mass and scale in land constrained infill markets CASE STUDY: WETHERILL PARK, NSW • 11 Hexham Place, Wetherill Park acquired in February 20241 following the acquisition of four adjoining sites in FY22 & FY23 • The acquisition further consolidates a 5.7ha site in the land constraine
Slide 20: Strategic divestments deliver $70m of proceeds in HY24
Strategic divestments deliver $70m1 of proceeds in HY24 $396m of divestments across 16 transactions since Centuria management commenced2 1 INTERNATIONAL DRIVE, WESTMEADOWS VIC 9 FELLOWES COURT, TULLAMARINE VIC Proceeds used to reduce debt and bolster CIP’s balance sheet Strategic divestments provide
Slide 21: Portfolio valuations
Portfolio valuations HY24 FY23 Valuation c.66% of the portfolio by value Valuation Valuation Movement4 HY24 FY23 Movement externally revalued in ($’000) ($’000) ($’000) WACR1 WACR1 WACR1 December 2023 Like for like portfolio/ weighted average 3,627.0 3,652.4 (25.3) 5.64% 5.24% 0.40% summary2,3 Acqui
Slide 22: Implementing a flexible and relevant sustainability framework
Implementing a flexible and relevant sustainability framework Conscious of climate change (environment), valued stakeholders (social) and responsible business principles (governance) Select initiatives Centuria is ranked in the Top 10 AFR Best Launched new sustainability target Zero Places to Work i
Slide 23: Development pipeline
Development pipeline Section four ARTIST IMPRESSION: 31-35 HALLAM SOUTH ROAD, HALLAM VIC
Slide 24: Development track record
Development track record 90 Bolinda Road, Campbellfield VIC • 45,400 sqm multi-unit industrial Delivered $285m of modern sustainable industrial assets development • Valuation uplift of 10% achieved in HY24 95-105 South Gippsland Hwy, Dandenong • Targeting 5-star Green Star South VIC rating • 40,544
Slide 25: $1 billion urban infill development pipeline
$1 billion urban infill development pipeline1 Optionality to activate substantial embedded development pipeline over 5 years Developments focused on key growth areas capitalising on long-standing industrial trends Multi-level industrial Cold storage/food logistics Data centres Distribution centres •
Slide 26: Development projects
Development projects Identified development activities to unlock embedded portfolio value FY23 completions FY24 completions Committed Future pipeline $m GLA $m GLA $m GLA $m GLA 103 40,544 147 57,722 - - c.1,031 c.197,000 Est. value on completion1 74-94 NEWTON ROAD, WETHERILL PARK NSW 2 • Boundary 3
Slide 27: Outlook and guidance
Outlook and guidance Section five 82 RODEO RD, GREGORY HILLS NSW
Slide 28: Fundamentals support strong market rent growth in Australia
Fundamentals support strong market rent growth in Australia CIP’s pure play infill industrial portfolio is well positioned to benefit from supply-demand imbalance Industrial spaces supply-demand forecast BRISBANE VACANCY RATE (%)2 1.4% (‘000 sqm) 18% Avg. 12 month rental growth (%) – Prime2 10.2% 5,
Slide 29: Growth drivers for Industrial real estate
Growth drivers for Industrial real estate c.4.5sqm of per capita requirement for industrial and logistics space1 Population growth1 Increased ecommerce adoption2 Onshoring of production and assembly • Pro-immigration policy to increase migration and • Covid-19 pandemic accelerated ecommerce adoption
Slide 30: Upgrading FY24 guidance
Upgraded FY24 FFO Upgrading FY24 guidance to 17.2cents per guidance1 unit driven by strong leasing achieved Upgrading FFO per unit to1 17.2c Distribution per unit1 16.0c Distributions expected to be paid in equal quarterly instalments 1. Guidance remains subject to unforeseen circumstances and mater
Slide 31: Appendices
Appendices Section six Appendix A: Global industrial rent comparison Appendix B: Sydney and Melbourne industrial land supply Appendix C: CIP portfolio composition Appendix D: Exposure to the major industrial sub-sectors Appendix E: Lease expiry by state Appendix F: Key vacancies and upcoming expirie
Slide 32: Australian industrial vacancy rates are one of the lowest in the world
Australian industrial vacancy rates are one of the lowest in the world Australian rents remain affordable in a global context Avg. global rents (AU$ equivalent/per square metre) and vacancy (%) Australian National Industrial market vacancy rate of 1.1%, one of the lowest globally Vancouver $251 avg.
Slide 33: Sydney industrial land supply
Sydney industrial land supply • New land supply concentrated around the new Badgerys Creek Airport precinct, Kemps Creek and Eastern Creek • Current planning delays and increased infrastructure costs delaying new supply coming to market CIP’s portfolio is well positioned in supply constrained urban
Slide 34: Appendix C: CIP portfolio
Appendix C: CIP portfolio An active portfolio providing exposure to strong market rental growth and value-add opportunities Active portfolio1,2 Long WALE portfolio Active portfolio 86 2 • An active portfolio providing exposure to strong market assets assets rental growth and value-add opportunities
Slide 35: Appendix D: Exposure to the major industrial sub-sectors
Appendix D: Exposure to the major industrial sub-sectors1 A well-balanced portfolio across the major industrial sub-sectors Manufacturing and Distribution centres Transport logistics Data centres Cold storage production 24% portfolio 42% portfolio 15% portfolio 11% portfolio 7% portfolio value value
Slide 36: 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 VIC 5.2yrs 100.0% 391,976 sqm 9.6yrs 94.5% 450,829 sqm 65.0 59.3 16.6 10.0 12.6 7.2 9.8 5.5 6.2 6.4 1.4 Vacant FY24 FY25 FY26 FY27 FY28+ Vacant FY24 FY25 FY26 FY27 FY28+ WALE OCCU
Slide 37: Appendix F: Key vacancies and upcoming expiries
Appendix F: Key vacancies and upcoming expiries Current key vacancies GLA (SQM) % of portfolio area 90 Bolinda Road, Campbellfield VIC 23,408 1.8 204-208 Bannister Road, Canning Vale WA 8,500 0.7 310 Spearwood Avenue, Bibra Lake WA 4,706 0.4 207-219 Browns Road, Noble Park VIC 4,680 0.4 102-128 Brid
Slide 38: Appendix G: Income statement
Appendix G: Income statement HY24 HY23 Revenue Gross property income $’000 110,862 110,470 Other income $’000 2,026 1,569 Share of net profit of equity accounted investments $’000 3,894 310 Interest income $’000 646 421 Total revenue $'000 117,428 112,770 Expenses Direct property expenses $’000 (21,
Slide 39: Appendix H: Balance sheet and NTA movement
Appendix H: Balance sheet and NTA movement HY24 FY23 NTA movement2 Cash $’000 34,776 20,868 Investment properties $’000 3,722,966 3,769,050 Equity accounted investments $’000 72,995 70,101 Other assets $’000 - 538 Trade & other receivables $’000 12,908 16,366 Derivative financial instruments $’000 1
Slide 40: Appendix I: Portfolio valuation summary
Appendix I: Portfolio valuation summary1,2 HY24 valuation FY23 valuation Valuation movement3 HY24 WACR4 FY23 WACR4 Movement WACR4 State ($M) ($M) ($M) (%) (%) (%) (BPS) NSW 1,144.5 1,149.6 (5.0) (0.9%) 5.55% 5.06% 0.49% VIC 1,306.0 1,317.8 (11.8) (0.9%) 5.37% 5.07% 0.31% QLD 795.4 800.5 (5.1) (0.6%)
Slide 41: Appendix J: Investment portfolio
Appendix J: Investment portfolio Property Ownership Book value ($m) Cap rate GLA (SQM) WALE (YRS)1 Occupancy %1 Sub sector NSW 56-88 Lisbon Street, Fairfield East 100% 200.5 5.50% 60,224 1.8 100.0% Distribution Centre 2 Woolworths Way, Warnervale 100% 105.0 6.00% 54,196 7.6 100.0% Distribution Centr
Slide 42: Appendix J: Investment portfolio
Appendix J: Investment portfolio Property Ownership Book value ($m) Cap rate GLA (SQM) WALE (YRS)1 Occupancy %1 Sub sector VIC (continued) 14-17 Dansu Court, Hallam 100% 37.5 5.50% 17,070 5.8 100.0% Transport Logistics 500 Princes Highway, Noble Park 100% 34.8 6.13% 13,853 2.6 100.0% Transport Logis
Slide 43: Appendix J: Investment portfolio
Appendix J: Investment portfolio Property` Ownership Book value ($m) Cap rate GLA (SQM) WALE (YRS)1 Occupancy %1 Sub sector QLD (continued) 680 Boundary Road, Richlands 100% 31.0 5.75% 12,732 1.8 100.0% Distribution Centre 21 Jay Street, Townsville 100% 28.2 7.25% 10,291 8.4 100.0% Distribution Cent
Slide 44: 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 45: Office locations and contact details
AUSTRALIA Sydney (head office) Melbourne (02) 8923 8923 (03) 9616 6500 Level 41, Chifley Tower Level 47 2 Chifley Square 101 Collins Street Sydney NSW 2000 Melbourne VIC 3000 Brisbane Perth (07) 3905 7000 (08) 9321 7133 Level 2 Level 27 348 Edward Street 140 St Georges Terrace Brisbane QLD 4000 Pert
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