Centuria Office Reit · ASX:COF
Centuria Office Reit — HY21 Earnings Presentation
33 slides from Centuria Office Reit's earnings presentation, Feb 4, 2021
Slide 1: HY21 Results
HY21 RESULTS A S X:COF 4 Feb 2021 Centuria Office REIT CENTURIA OFFICE REIT ASX:COF 1 NISHI, 2 PHILLIP LAW STREET, CANBERRA, ACT
Slide 2: Agenda
A QUALITY PORTFOLIO OF HIGHLY CONNECTED AND COF: NISHI, 2 PHILIP LAW STREET, CANBERRA, ACT AFFORDABLE OFFICE SPACE WITHOUT SINGLE MARKET CONCENTRATION Agenda 1. Overview COF: 54 MARCUS CLARKE STREET, CANBERRA, ACT 2. Financial Results COF: 60 MARCUS CLARKE STREET, CANBERRA, ACT 3. Portfolio Metrics
Slide 3: Section One: Overview
A PORTFOLIO WITHOUT SINGLE MARKET CONCENTRATION SECTION ONE Overview A S X:COF CENTURIA OFFICE REIT ASX:COF 3 42-46 COLINS STREET, WEST PERTH, WA
Slide 4: CNI: ASX300-listed funds manager positioned for growth
CNI: ASX300-listed funds manager positioned for growth Market capitalisation1 of $1.6bn Included in the S&P/ASX300 Index $10.2bn GROUP AUM LISTED REAL ESTATE UNLISTED REAL ESTATE INVESTMENT BONDS $4.8bn $4.5bn $0.9bn Unlisted Centuria Life Centuria Centuria Asset Plus Ltd NZ single NZ Industrial Cen
Slide 5: COF is aligned to a highly experienced real estate funds manager
COF is aligned to a highly experienced real estate funds manager SUBSTANTIAL COMMERCIAL HANDS ON MANAGEMENT STRONG TRACK RECORD PROPERTY PLATFORM In house property and facilities $9.3bn AUM property platform Managing real estate funds management with deep leasing and provides economies of scale that
Slide 6: Key metrics – Australia's largest pure play office REIT
CENTURIA MANAGEMENT Key metrics – Australia’s largest pure play office REIT PORTFOLI O FI NANCI AL 23 $2.0bn 19.4-19.9cpu 8.5% 16.5cpu 7.4% High quality Portfolio value FY21 FFO Forecast FY21 FY21 DPU Six-month TSR4 assets guidance2 DPU yield3 guidance 91.5% 4.5yrs 96.7% 33.2% $175.7m 7.6x Portfolio
Slide 7: HY21 Summary
HY21 Summary • 23 high quality office assets with an average building age of 16.4 years • Sale of 465 Victoria Avenue, Chatswood, NSW for $44.7m1 Portfolio construction 1 • Balanced geographic diversification with exposure to Australia’s best performing office markets • Strong tenant covenants with
Slide 8: COF provides quality, highly connected and affordable office space
ASSET QUALITY COF provides quality, highly connected and affordable office space Balanced geographic Connectivity with key Access to recreational Average COF exposed market rents diversification without transport nodes & amenity, essential retail building age average a significant single market redu
Slide 9: Section Two: Financial Results
CONNECTIVITY TO KEY TRANSPORT SECTION TW O Financial Results A S X:COF CENTURIA OFFICE REIT ASX:COF 9 201 PACIFIC HIGHWAY, ST LEONARDS, NSW
Slide 10: Funds from operations (FFO)
Funds from operations (FFO) REVENUE HY21 HY20 VARIANCE Gross property income $m 94.5 67.4 27.1 Interest income $m 0.0 0.1 (0.1) Increase predominantly Total revenue $m 94.5 67.5 27.0 driven by growth in portfolio value and Foxtel EXPENSES surrender payment 16.5 Direct property expenses $m (17.5) (14
Slide 11: A strong balance sheet with significant covenant headroom
A strong balance sheet with significant covenant headroom DEBT MATURITY PROFILE ($M)4 2.3% (A$m) 1,000 Drawn debt 900 • Divestment of 465 Victoria Undrawn 800 Hedged (swap) ALL IN COST OF DEBT2,4 700 Avenue, Chatswood, NSW 600 Hedged (option) reduces gearing to 33.2%4 500 400 • Five major lenders pr
Slide 12: Section Three: Portfolio Metrics
A YOUNG PORTFOLIO OF QUALITY ASSETS SECTION THREE Portfolio Metrics A S X:COF CENTURIA OFFICE REIT ASX:COF 12 825 ANN STREET, FORTITUDE VALLEY, QLD
Slide 13: A high-quality geographically diversified portfolio
A high-quality geographically diversified portfolio With solid leasing outcomes achieved during HY21 PORTFOLIO SNAPSHOT HY21 HY20 WEIGHTED AVERAGE LEASE EXPIRY Number of assets # 23 23 Book value1 $m 2,032.4 2,063.4 WACR1 % 5.90 5.92 56.9% NLA sqm 304,413 303,855 Income WALE (Jun-20) 4.7 yrs 51.1% O
Slide 14: Portfolio income underpinned by diverse, quality tenants
Portfolio income underpinned by diverse, quality tenants ASX Listed HY21 TENANT <500sqm TENANT PROFILE ACT GEOGRAPHIC MIX (Income) BY SIZE (Area) DIVERSIFICATION Government 500-1,000sqm QLD Listed Multinational 1,000-2,000sqm VIC (Value) • COF has no single market Multinational >2,000sqm 10% ACT 3%
Slide 15: Portfolio valuation summary
Portfolio valuation summary Recent market transactions demonstrate robust BOOK VALUE CAP RATE demand for quality Australian office property STATE HY21 FY20 VAR % HY21 FY20 BPS NSW 532.7 528.4 4.3 0.8 5.65 5.71 (6) QLD 471.8 493.5 (21.7) (4.4) 6.27 6.28 (1) NTA per unit WACR2 reduced VIC 351.0 354.0
Slide 16: Resilient performance and prudent management through COVID-19
Resilient performance and prudent management through COVID-19 235 WILLIAM STREET, NORTHBRIDGE, WA In house Over 80% of management facilitate greater income derived from government, c.96.7% c.$2.6m c.52% tenant engagement listed and MNC through period of uncertainty HIGH QUALITY REDUCTION IN PROPERTY
Slide 17: Section Four: Market Overview & Guidance
CLOSE PROXIMITY TO KEY AMENITY SECTION FOUR Market Overview & Guidance A S X:COF CENTURIA OFFICE REIT ASX:COF 17 42-46 COLINS STREET, WEST PERTH, WA
Slide 18: Fiscal stimulus to support office market recovery
Fiscal stimulus to support office market recovery 6.6% OVER $72bn December 2020 Australian $172bn 15 Fast-tracked infrastructure unemployment FY20-24 projects rate2 Stimulus1 Unemployment rate Immediate and traditional Public and private reduction for most states Federal Government infrastructure po
Slide 19: Benefits of a geographically diversified portfolio
Benefits of a geographically diversified portfolio 3 MTH NET 12 MTHS NET RENTAL COF VACANCY UPCOMING MARKET ABSORPTION ABSORPTION DISCOUNT TO EXPOSURE (%) SUPPLY (SQM) (SQM) (SQM) SYDNEY CBD (%) (%)2 SYDNEY CBD 11.9 (57,329) (278,118) 0 273,331 0% • Positive 12-month net absorption evident in a SYDN
Slide 20: Attractive yield spread underpins investment demand
Attractive yield spread underpins investment demand Yield spread between office sector discount rates and AU 10-year government bond rates OFFICE SECTOR DISCOUNT RATE BOND YIELDS 1. Source: JLL Research, MSCI, Deloitte Access Economics CENTURIA OFFICE REIT ASX:COF 20
Slide 21: Recent comparable transactions support COF's NTA
Recent comparable transactions support COF’s NTA PROPERTY STATE DATE PRICE ($m) CAP RATE RATE ($psqm) OCCUPANCY WALE Pinnacle, 4 Drake Street, Macquarie Park1 NSW Sep-20 306.0 ~5.25% 8,777 96.4% 4.6 2 Banfield Road, Macquarie Park1 NSW Aug-20 144.3 ~5.00% 9,900 74.9% 7.0 • A basket of comparable pro
Slide 22: FY21 Guidance
FY21 Guidance 16.5c DISTRIBUTION PER 8.5% UNIT 1 FORECAST DISTRIBUTION 19.4-19.9c DISTRIBUTIONS FFO PER UNIT2 YIELD PAID IN EQUAL QUARTERLY INSTALMENTS 203 PACIFIC HIGHWAY, ST LEONARDS, NSW 1. Based on COF closing price of $1.95 per unit on 3 February 2021 CENTURIA OFFICE REIT ASX:COF 22 2. Guidance
Slide 23: Section Five: Appendices
A PORTFOLIO EXPOSED TO AFFORDABLE MARKETS SECTION FIVE Appendices A S X : C O F A – Income statement Appendix Appendix B – FFO reconciliation Appendix C – Balance sheet Appendix D – Leasing and expiry profile Appendix E – Investment portfolio Appendix F – Strategic vision and objectives Appendix G –
Slide 24: Appendix A – Income statement
Appendix A – Income statement $'000 HY21 HY20 Gross property income 94,467 67,429 Interest income 6 86 Total revenue 94,473 67,515 Direct property expenses (17,547) (14,665) Responsible entity fees (5,860) (4,142) Finance costs (9,237) (8,733) Management and other administrative expenses (2,972) (95
Slide 25: Appendix B – FFO reconciliation
Appendix B – FFO reconciliation $'000 HY21 HY20 Statutory net profit 21,542 24,697 Loss/(gain) on fair value of investment properties 30,192 11,897 Realised/unrealised loss on fair value of derivatives 37 448 Straight-lining of rental income, amortisation of leasing commissions and tenant incentives
Slide 26: Appendix C – Balance sheet
Appendix C – Balance sheet $'000 PRO-FORMA 31-Dec-20 30-Jun-20 Cash 32,274 32,274 28,809 Investment properties held for sale 0 44,700 0 1 Investment properties 2,019,671 2,019,671 2,085,650 Trade and other receivables 4,234 4,234 3,263 Other assets 2,592 2,592 1,536 Total assets 2,058,771 2,103,471
Slide 27: Appendix D – Strong leasing track record
Appendix D – Strong leasing track record 818 BOURKE STREET, DOCKLANDS, VIC CURRENT VACANCY (>1,000 SQM) NLA (SQM) 818 Bourke Street, Docklands 10,915 35 Robina Town Centre Drive, Robina 6,477 VAC 60 Marcus Clarke Street, Canberra 2,444 576 Swan Street, Richmond 2,280 100 Brookes Street, Fortitude Va
Slide 28: Appendix E – Investment portfolio
Appendix E – Investment portfolio PROPERTY STATE OWNERSHIP (%) BOOK VALUE ($M) CAPITALISATION RATE (%) AREA (SQM) AREA ($/SQM) WALE (YRS)1 OCCUPANCY (%)1 8 Central Avenue, Eveleigh 50% $190.0m 5.38% 37,274 10,195 9.0 96.0% 201 Pacific Highway, St Leonards 50% $106.5m 5.63% 16,498 12,911 3.3 100.0% 9
Slide 29: Appendix F – Strategic vision and objectives
Appendix F – Strategic vision and objectives VISION To build Australia’s leading pure play office REIT A CLEAR Focused on generating sustainable and quality income streams and executing AND SIMPLE initiatives to create value across a portfolio of quality Australian office assets STRATEGY Australia’s
Slide 30: Appendix G – Commercial office remains core to business operations
Appendix G – Commercial office remains core to business operations 71% 4.2% White collar People working employment in from home in 20201 20162 62% 3.5% People working White collar from home in employment in 19902 19901 77 MARKET STREET, WOLLONGONG, NSW BENEFITS WORKING FROM THE OFFICE CHALLENGES WOR
Slide 31: Appendix G – Commercial office remains core to business operations
Appendix G – Commercial office remains core to business operations “I think this pandemic will make Facebook have leased us all realise that no matter how “People are very efficient doing their 730,000sq ft (68,000sqm) much technology we have, work at home once they know what nothing beats human int
Slide 32: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited (ABN 11 086 553 639, AFSL 231 The information in this presentation has been obtained from and based on sources believed by CPFL 149) (CPFL) as responsible entity of Centuria Office REIT (ARSN 124 364 718) (‘COF’ or the
Slide 33: Centuria Office REIT ASX:COF
CENTURIA OFFICE REIT ASX:COF 33