Centuria Group (CNI) delivers record 1H18 AUM growth

Market leading momentum in property acquisitions

Centuria Capital Group (ASX: CNI) today announced strong half-year results for the period to 31st December 2017. Following a transformational FY17 in which the nature and scale of earnings shifted significantly, Group momentum grew into the first half of the 2018 financial year.

Financial results 1H18

Highlights for 1H18, versus prior corresponding period, are as follows:

• 19%¹ total return to investors (1H18)
• 19%² increase in AUM to $4.6 billion:
  • $770 million organic growth in property funds management (acquisitions and revaluations)
  • $54 million (7%) investment bonds growth; AUM up to $0.9 billion
• Recurring revenue growth to $32.1 million, up $18.9 million
• $25.8 million net performance fee (pre-tax) on sale of 10 Spring Street, Sydney
• 13%³ operating gearing ratio
• Successful raise of $98.6 million in equity and $25 million in corporate bonds
• Reaffirm FY18 earnings guidance of 15.8–16.2 cents per stapled security (cps) (previous FY18 guidance 10.8 cps)
• FY18 distribution guidance of 8.2 cps.
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Centuria has delivered a record 1H18 result, with the business continuing its strong growth momentum on a transformational FY17.

John McBain, Group CEO, said: “FY18 will be the first opportunity for investors and the market to see clearly the benefits of the large property fund platform we acquired in January 2017 over a 12 month period. The acquisition significantly transformed the nature and composition of our earnings, markedly increasing recurring revenues and tripling the group’s market capitalisation.”

“We are very pleased with the 1H18 outcome, which has significantly improved our operating NPAT to $30.2 million representing an operating EPS of 12.1 cents.”

Across the property platform, Centuria acquired ten A-grade properties for $655 million and saw an uplift in asset revaluations of $115 million.

Mr McBain expanded on this, saying: “The scale of property acquisitions in 1H18 was virtually unmatched in our peer set and we continue to review attractive investment opportunities.”

The Investment Bonds business also experienced above market growth of 7% over the six-month period from new business and asset growth.

Overall Group AUM grew strongly by 19% to $4.6 billion.

The Group has also been rewarded with strong annualised returns of 12.7% from co-investments in Centuria Metropolitan REIT, Centuria Industrial REIT and other investments, as well as a net performance fee of $25.8 million from the sale of 10 Spring Street, Sydney.

To account for that performance fee, the previous forecast operating EPS of 10.8 cps was significantly increased to 15.8–16.2 cps. The Group expects further embedded performance fees within the unlisted portfolio to be realised on an ongoing basis.

FY18 outlook

Mr McBain said:

“We will continue to deliver investment opportunities and further value creation through the expansion of our property fund platforms. We believe conditions remain favourable for the continued creation of property fund opportunities.”

“This includes leveraging our strong real-estate credentials to identify ‘pockets of value’ for our long-standing investor base, and improving our distribution capacity to accelerate growth in the Investment Bond business.”

“We also remain focused on improving our security holder returns, underpinned by stable recurring revenue and embedded performance fees. Moreover, we continue to actively broaden our access to capital sources and remain attentive to earnings growth within core businesses.”

^{1 Past performance is not indicative of future performance.}

^{2 Includes post 31 December 2017 acquisitions.}

^{3 Gearing ratio is calculated based on (Operating Borrowings less cash) divided by (Operating Total Assets less cash).}

^{4 Calculated based on total revenue divided by weighted average carrying value of investments for the half year ended 31 December 2017, and excludes finance costs.}