Centuria Office Reit · ASX:COF
Centuria Office Reit — FY2019 Earnings Presentation
30 slides from Centuria Office Reit's earnings presentation, Aug 6, 2019
Slide 1: Centuria Metropolitan REIT FY19 Results
Centuria Metropolitan REIT FY19 RESULTS ASX:CMA 6 August 2019 CENTURIA METROPOLITAN REIT ASX:CMA 1 154 MELBOURNE STREET, SOUTH BRISBANE QLD
Slide 2: Agenda
Agenda 1. Introduction 2. Financial Results 3. Portfolio Overview 4. Guidance & Strategy 5. Appendices 201 PACIFIC HIGHWAY, ST LEONARDS NSW CENTURIA METROPOLITAN REIT ASX:CMA 2
Slide 3: Introduction
SECTION ONE Introduction ASX:CMA CENTURIA METROPOLITAN REIT ASX:CMA 3 201-203 PACIFIC HIGHWAY, ST LEONARDS NSW
Slide 4: Centuria is an established ASX-listed specialist investment manager
CENTURIA PLATFORM Centuria is an established ASX-listed specialist investment manager $6.2bn ASX:CNI Group AUM1 Market Capitalisation $746m2 $5.3bn $0.9bn $0.4bn Real Estate AUM Investment Bonds AUM CNI Co-Investments $2.7bn $2.6bn Centuria Life Listed Property AUM Unlisted Property AUM Centuria Lif
Slide 5: Key metrics – a quality pure play office platform
CMA: AUSTRALIA’S LARGEST PURE PLAY OFFICE REIT Key metrics – a quality pure play office platform PORTFOLIO 20 $1.4bn 98.4% 3.9yrs High quality assets Portfolio value Portfolio occupancy1 Portfolio WALE2 FINANCIAL $1.0bn 34.2% 22.4% 7.3% Market capitalisation3 Gearing4 12 month total unitholder retur
Slide 6: Executing on strategy
HIGHLIGHTS Executing on strategy • Australia’s largest pure play office REIT listed on the ASX • A geographically diversified Australian portfolio of 20 high quality office assets with an average age of 1 Repositioned CMA as a pure play office REIT 15.9 years • Acquired four quality east coast offic
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 15.8% p.a. since IPO2,3,4 Capitalisation S&P/ASX pure-play $1.0 billion1 Office REIT 300 Index TOTAL RE
Slide 8: Delivering on strategy creating an established pure play office REIT
CMA: AUSTRALIA’S LARGEST PURE PLAY OFFICE REIT Delivering on strategy creating an established pure play office REIT CMA at IPO CMA at FY19 1. Increased quality and scale Assets no. 8 20 • Greater diversification, number of assets Market capitalisation $bn 0.1 1.0 increasing from 8 to 20 AUM $bn 0.2
Slide 9: Financial Results
SECTION TWO Financial Results ASX:CMA CENTURIA METROPOLITAN REIT ASX:CMA 9 818 BOURKE STREET, DOCKLANDS VIC
Slide 10: FY19 guidance delivered, commencing FY20 in a strong position
FINANCIAL OVERVIEW – INCOME STATEMENT FY19 guidance delivered, commencing FY20 in a strong position REVENUE 30-Jun-19 30-Jun-18 VARIANCE Gross property income $m 107.9 75.5 32.4 Interest income $m 0.3 0.2 0.1 Increase predominantly Total revenue $m 108.2 75.7 32.5 driven by growth in portfolio value
Slide 11: New facilities and hedging maintain solid debt profile
CAPITAL MANAGEMENT New facilities and hedging maintain solid debt profile • All debt has been refinanced DEBT MATURITY PROFILE ($M) during the half to 30 June 2019 Drawn Headroom Swaps 3.2% All in cost of debt1 • The number of lenders has 240.0 increased from two to four (all major Australian banks)
Slide 12: Portfolio Overview
SECTION THREE Portfolio Overview ASX:CMA CENTURIA METROPOLITAN REIT ASX:CMA 12 9 HELP STREET, CHATSWOOD NSW
Slide 13: High quality office assets located in major office markets across Australia
PORTFOLIO COMPOSITION High quality office assets located in major office markets across Australia PORTFOLIO SNAPSHOT FY19 FY183 WA 6% Number of assets # 20 19 Book value $m 1,400.0 930.5 100.0 2.7 OCCUPANCY(%) WALE(YRS) QLD 35% WACR % 6.22 6.68 NLA sqm 218,080 184,339 95.7 4.3 OCCUPANCY(%) WALE(YRS)
Slide 14: Established portfolio with quality tenants
PORTFOLIO METRICS Established portfolio with quality tenants • Over 70% of portfolio income derived from WEIGHTED AVERAGE LEASE EXPIRY multinational, ASX and government tenants Income WALE (Jun-18) 4.0 yrs Income WALE (Jun-19) 3.9 yrs 62.3% • High occupancy at 98.4%1 and WALE of 3.9 years2 47.0% • O
Slide 15: Strong investment demand and rental growth driving valuation increases
PORTFOLIO VALUATIONS Strong investment demand and rental growth driving valuation increases across the portfolio BOOK VALUE CAP RATE FY19 FY181 Increase % FY19 FY181 BPS NSW 287.5 252.6 34.9 13.8% 5.97% 6.42% (45) • Overall like-for-like QLD ACT 245.0 83.3 244.3 84.4 0.8 (1.2) 0.3% -1.4% 6.70% 7.13%
Slide 16: Guidance & Strategy
SECTION FOUR Guidance & Strategy ASX:CMA CENTURIA METROPOLITAN REIT ASX:CMA 16 42-46 COLIN STREET, WEST PERTH WA
Slide 17: Increasing investor relevance and scale
STRATEGY & GUIDANCE Increasing investor relevance and scale CMA MARKET CAPITALISATION1 • $276m equity raised in FY19 to support select acquisitions $2.80 30 Jun 19 and improve the quality of the portfolio ✓ Pro-forma gearing reduced to <35.0% upon the sale of CMA’s remaining industrial assets 14.6%
Slide 18: Delivered on FY19 priorities
STRATEGY & GUIDANCE Delivered on FY19 priorities 1 CMA is now positioned as Australia’s largest pure play office REIT Market capitalisation3 1a A $1.4bn portfolio of high quality office assets situated in major office markets across Australia $1.0bn 1b Well located office assets, average building si
Slide 19: Strategic vision and objectives
STRATEGY & GUIDANCE Strategic vision and objectives Vision Continuing to build Australia’s leading pure play office REIT A clear Focused on generating sustainable and quality income streams and executing initiatives and simple to create value across a portfolio of quality Australian office assets st
Slide 20: FY20 Guidance
STRATEGY & GUIDANCE FY20 Guidance Commencing FY20 in a strong position • FY20 funds from operations1 guidance of 19.0 cents per unit (cpu) • FY20 distribution guidance of 17.8cpu GUIDANCE • Budgeted divestment of 483-517 Kingsford Smith Drive, Hamilton, QLD subject to favourable market conditions •
Slide 21: Appendices
SECTION FIVE Appendices Appendix A – Market Research Appendix B – Income Statement Appendix C – FFO Reconciliation ASX:CMA Appendix D – Balance Sheet and NTA Movement Appendix E – Key Vacancies and Upcoming Expiries Appendix F – 1H19 Acquisitions Profiles Appendix G – Investment Portfolio CENTURIA M
Slide 22: Market indicators
APPENDIX A – MARKET RESEARCH Market indicators Limited space availability from new supply in metropolitan markets TOTAL STOCK EXPECTED TO COMPLETE CY19-20221 NET ABSORPTION 2014-20181 sqm sqm 700,000 700,000 600,000 600,000 500,000 500,000 400,000 400,000 300,000 300,000 200,000 200,000 100,000 100,
Slide 23: Market indicators
APPENDIX A – MARKET RESEARCH Market indicators Prime space continues to attract tenants & metropolitan rents remain compelling VACANCY RATES 30 JUNE 191 TOTAL 30 JUNE 18 Change from PRIME RENTS 30 JUNE 191 NET EFFECTIVE 30 JUNE 18 Sydney CBD 4.1% 4.5% Sydney CBD $835 3.4% Chatswood 5.6% 9.6% Chatswo
Slide 24: Income statement
APENDIX B Income statement $'000 30-Jun-19 30-Jun-18 Gross property income 107,850 75,465 Interest income 334 195 Total revenue 108,184 75,660 Direct property expenses (23,543) (17,007) Responsible entity fees (6,867) (4,192) Finance costs (15,428) (9,010) Management and other administrative expense
Slide 25: FFO Reconciliation
APPENDIX C FFO Reconciliation $'000 30-Jun-19 30-Jun-18 Statutory net profit 53,572 85,082 Net (gain) on fair value of investment properties (7,143) (41,957) Loss/(gain) on fair value of derivative financial instruments 6,752 646 Straight-lining of rental income and amortisation of leasing commissio
Slide 26: Balance sheet and NTA movement
APPENDIX D Balance sheet and NTA movement $'000 30-Jun-19 30-Jun-18 NTA MOVEMENT ($/unit) Cash 17,546 18,978 Investment properties 1,399,975 872,300 Goodwill 6,356 6,356 0.13 (0.04) (0.01) Trade and other receivables 4,080 1,325 (0.08) Other assets 1,464 3,852 Total assets 1,429,421 902,811 1 $2.49/
Slide 27: Key vacancies and upcoming expiries
APPENDIX E Key vacancies and upcoming expiries NLA PORTFOLIO UPCOMING EXPIRIES ACROSS VARIOUS PROPERTIES FY2020 PROPERTY COMMENTS (SQM) AREA % 131-139 Grenfell Street, Adelaide SA 4,052 555 Coronation Drive, First floor (1,963 sqm), plus an 203 Pacific Highway, St Leonards NSW 3,528 2,190 1.00% addi
Slide 28: Investment portfolio
APPENDIX G Investment portfolio OWNERSHIP STATE BOOK VALUE CAPITALISATION RATE AREA WALE OCCUPANCY 1 2 PROPERTY (%) $M (%) SQM $/SQM (BY INCOME) (% OF NLA) 201 Pacific Highway, St Leonards NSW 50 $101.5m 5.75% 16,489 6,156 4.0 99.5% 9 Help Street, Chatswood NSW 100 $84.0m 5.75% 9,395 8,941 2.6 100.0
Slide 29: 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 30: CENTURIA METROPOLITAN REIT ASX:CMA
CENTURIA METROPOLITAN REIT ASX:CMA 30