Centuria Office Reit · ASX:COF
Centuria Office Reit — FY2023 Earnings Presentation
35 slides from Centuria Office Reit's earnings presentation, Aug 17, 2023
Slide 1: Centuria Office REIT FY23 results
17 AUGUST 2023 | ASX:COF Centuria Office REIT FY23 results 825 ANN STREET, FORTITUDE VALLEY QLD Intelligent investing for 25 years
Slide 2: Agenda
Acknowledgement of Country 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 and present. AGENDA 1. Overview 2. Financial results 3. Portfol
Slide 3: Overview
Overview Section one 101 MORAY STREET, SOUTH MELBOURNE VIC
Slide 4: Key metrics
Key metrics A high-quality, geographically diversified portfolio FINANCIAL 15.6cpu 14.1cpu FY23 FFO FY23 DPU 36.7% $2.20 Proforma gearing1 Net tangible assets per unit2 PORTFOLIO $2.2bn 97.1% Portfolio book value across 23 Portfolio occupancy3,4 assets 4.2 yrs 4.9 Portfolio WALE3,5 NABERS SPI energy
Slide 5: FY23 summary
FY23 summary Improved occupancy and liquidity Occupancy increased to 97.1%1,2 FY24 guidance (+2.4%) • FY24 FFO guidance4 of 13.8cpu • 42,686 sqm of leasing (14.1% portfolio NLA) • FY24 distribution guidance4 of 12.0cpu • 31,500+ sqm of leasing related to previously vacant space • FY24 forecast distr
Slide 6: Impacts from the evolving workspace
Impacts from the evolving workspace Change in office utilisation may not materially alter footprints WFH impact on tenant Centuria’s Office Tenant Survey1 demand overstated c.75% c.80% • Strong net absorption evident in anticipate retaining or are regularly attending the markets with low exposure to
Slide 7: FY24 strategy and priorities
FY24 strategy and priorities 1. Maintain high 2. High portfolio 3. Proactive capital occupancy quality management • Continue delivering • Assess asset allocation to • Preserve diverse lender occupancy above national improve portfolio quality pool and expiry profile average • Target leasing to enhanc
Slide 8: COF provides quality, highly connected and affordable office space
COF provides quality, highly connected and affordable COF portfolio office space strategic metrics Included in the S&P/ASX 300 Index and FTSE/EPRA NAREIT Global Developed Index 17 years Average asset age1 90% Young portfolio Accessible price point A-grade assets2 Prime assets are generating Deeper i
Slide 9: 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 COF and is included in the S&P/ASX200 Index $21.0bn GROUP AUM1 $20.2bn REAL ESTATE AUM $6.4bn $13.8bn $0.8bn LISTED REAL ESTATE UNLISTED REAL ESTATE INVESTMENT BONDS $3.9bn $2.3bn $0.2bn $8.4bn $2.6bn $2.8
Slide 10: Financial results
Financial results Section two PERTH RAILWAY STATION ADJACENT TO 235 WILLIAM STREET, NORTHBRIDGE WA
Slide 11: Funds from operations (FFO)
Funds from operations (FFO) Revenue FY23 FY22 Variance Gross property income $m 183.1 176.6 6.6 Interest income $m 0.5 0.0 0.4 Total revenue $m 183.6 176.6 7.0 Expenses Direct property expenses $m 38.4 37.5 0.9 Responsible entity fees $m 13.2 12.7 0.5 Finance costs $m 36.8 19.3 17.6 Management and o
Slide 12: Capital management
Capital management 6 Substantial undrawn debt, ample Quality lenders debt covenant headroom and no debt expiry until FY26 • Proforma gearing1,2 reduces to 36.7% following settlement of asset sales ($63m total sales) • $510m of hedging executed in FY23 $115.5m • Ample covenant headroom ICR Facility h
Slide 13: Portfolio
Portfolio Section three 57 WYATT STREET, ADELAIDE SA
Slide 14: Portfolio overview
Portfolio overview Tenant mix (income) 11% High quality portfolio underpinned by excellent 11% 26% ASX Listed 78% tenant covenants Government of income derived from Listed multinational government, ASX Portfolio snapshot FY23 FY22 17% Multinational listed and multinational National tenants 23% Numbe
Slide 15: COF is a geographically diversified portfolio
COF is a geographically diversified portfolio WA 12% total COF portfolio 99.5% occupancy 1,2 QLD 21% total COF portfolio 98.9% occupancy 1,2 4.3yrs WALE1,2 3.3yrs WALE1,2 Many COF exposed markets have 56,570sqm leased since 2020 20,692sqm leased since 2020 recorded solid six-month and 12-month net a
Slide 16: COF leasing history
COF leasing history Centuria continues to deliver a strong track record of maintaining high occupancy • 235 WILLIAM STREET, NORTHBRIDGE WA Leasing volume FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Portfolio NLA 5.1%1 11.1%1 15.5%1 9.7%1 10.0%1 10.6%1 18.1%2 13.6%2 14.1%2 leased Portfolio 96.7% 97.
Slide 17: Repositioning 154 Melbourne Street, South Brisbane
CASE STUDY Repositioning 154 Melbourne Street, South Brisbane Driving tenant demand through a focused approach Refurbished foyer and upgraded end of trip facilities Improved work amenity. cirque by Centuria provides a flexible work solution with a strong focus on meeting spaces and technology Increa
Slide 18: FY23 was a strong leasing period increasing occupancy to 97.1%
Staggered lease expiry: c.90% of leases expiring at or beyond FY25 FY23 was a strong leasing period increasing occupancy to 97.1%1,3 Current vacancy (>800 SQM) NLA (SQM) Weighted average lease expiry 201 Pacific Highway, St Leonards (50% ownership) 5,620 818 Bourke Street, Docklands 2,464 60 Marcus
Slide 19: Valuation summary
Valuation summary FY23 FY22 Valuation Valuation Movement valuation valuation movement 2,3 movement2,3 FY23 FY22 WACR4 Reduced transaction volumes ($m) ($m) ($m) (%) WACR4 WACR4 (bps) demonstrate investor bifurcation based on quality and leasing risk Portfolio valuation 2,237.4 2,335.3 (97.9) (4.2) 6
Slide 20: Developing a flexible and relevant sustainability framework
Developing a flexible and relevant sustainability framework Conscious of climate change (environment), valued stakeholders (social) and responsible business principles (governance) Select initiatives New sustainability targets: 1. Zero Scope 2 emissions1 by 2028; 45%3 female representation and at Ce
Slide 21: Our strategic sustainability focus
Our strategic sustainability focus Our memberships and COF is committed to continually improve its environmental performance industry participation COF is committed to developing leading green certified assets under Centuria’s in-house development capability, and this year announces targets to be Me
Slide 22: Market overview and guidance
Market overview and guidance Section four 154 MELBOURNE STREET, SOUTH BRISBANE QLD
Slide 23: Market overview
Market overview Strong net absorption evident in COF exposed markets Australian office market 12-month net absorption1 (sqm) COF exposed markets Increased economic rents likely to Potential change in vacancy Clear bifurcation trend materially reduce future supply Majority of markets equilibrium demo
Slide 24: FY24 guidance
FY24 guidance1 FFO per unit1 13.8c Distribution per unit1 12.0c Forecast FY24 distribution yield1,2 8.4% Distributions expected to be paid in equal quarterly instalments 42-46 COLIN STREET, WEST PERTH WA 1. Guidance remains subject to unforeseen circumstances and material changes in operating condit
Slide 25: Appendices
Appendices Section five Appendix A: COF: Vision, strategy and objectives Appendix B: Australian office market metrics Appendix C: Income statement Appendix D: FFO reconciliation Appendix E: Balance sheet Appendix F: Portfolio valuation summary Appendix G: Investment property portfolio Appendix H: En
Slide 26: Appendix A: COF: Vision, strategy and objectives
Appendix A: COF: Vision, strategy and objectives VISION Australia’s largest ASX-listed pure play office To be Australia’s leading Centuria Office REIT. Overseen by an active management team REIT (COF) with deep real estate expertise. Strongly pure play office REIT supported by Centuria Capital Group
Slide 27: Appendix B: Australian office market metrics
Appendix B: Australian office market metrics Proportion of 12 month net 12 month face Rental discount market under Vacancy absorption rental growth to Sydney CBD construction Market (%) (SQM) (%) (%) (%) Adelaide 16.0 12,967 5.9 63.7 10.5 Melbourne CBD 16.2 8,557 3.8 41.6 5.4 Melbourne fringe 15.2 4
Slide 28: Appendix C: Income statement
Appendix C: Income statement $’000 FY23 FY22 Revenue Gross property income 183,128 176,575 Interest income 459 14 Total revenue 183,587 176,589 Expenses Direct property expenses (38,429) (37,523) Responsible entity fees (13,189) (12,668) Finance costs (36,828) (19,277) Management and other administr
Slide 29: Appendix D: FFO reconciliation
Appendix D: FFO reconciliation $'000 FY23 FY22 Statutory net profit (91,931) 115,019 (Gain)/loss on fair value of investment properties 162,157 (14,697) (Gain)/loss on fair value of derivatives (2,769) (14,144) Straight-lining of rental income and amortisation of leasing 25,620 18,796 commissions an
Slide 30: Appendix E: Balance sheet
Appendix E: Balance sheet $'000 FY23 FY22 Cash 17,287 26,558 Investment properties1 2,268,554 2,366,770 Trade and other receivables 9,000 7,450 (Gain)/loss on fair value of derivatives (2,769) (14,144) Derivative financial instruments 13,336 7,133 Other assets 2,840 9,995 Total assets 2,311,017 2,41
Slide 31: Appendix F: Portfolio valuation summary
Appendix F: Portfolio valuation summary FY23 FY22 Movement valuation1 valuation1 Valuation movement2,4 FY23 WACR1,3 FY22 WACR1,3 WACR3 State ($M) ($M) ($M) (%) (%) (%) (BPS) NSW 556.2 589.6 (33.4) (5.7) 5.81 5.37 44 QLD 479.8 501.6 (21.8) (4.3) 6.43 5.96 47 VIC 532.5 562.2 (29.7) (5.3) 5.53 5.11 42
Slide 32: Appendix G: Investment property portfolio
Appendix G: Investment property portfolio Capitalisation rate Property State Ownership (%) Book value ($M) (%) Area (SQM) Area ($/SQM) WALE (years)1 Occupancy (%)1 8 Central Avenue, Eveleigh NSW 50% 201.0 5.38% 36,619 10,978 7.9 100.0% 203 Pacific Highway, St Leonards NSW 100% 129.0 6.13% 11,735 10,
Slide 33: Appendix H: Environmental data
Appendix H: Environmental data Unit of measure FY22 FY21 Net lettable area sqm 295,128 304,589 • Environmental Data reported is for financial years 2021 and 2022. Financial year 2023 data will be reported in the Centuria 2023 Sustainability Report Total energy MWh 27,671 21,280 which will be availab
Slide 34: Disclaimer
Disclaimer This presentation has been prepared by Centuria Property Funds Limited (ABN 11 086 553 639, AFSL 231 149) (CPFL) as responsible entity of Centuria Office REIT (ARSN 124 364 718) (‘COF’ or the ‘Trust’). This presentation contains selected in summary information and does not purport to be a
Slide 35: Office 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