Centuria Diversified Property Fund investor centre

To accommodate approaching liquidity needs of the Fund, Management has recently conducted proactive sales programs for two office assets held by the Fund – being 10 Moore Street, Canberra ACT and 8 Market Lane, Maroochydore Qld.

We are pleased to confirm both properties have been successfully sold in line with the most recent independent valuations. This is a good result given the prevailing commercial property market conditions.

The sale proceeds are being deployed to reduce the Fund’s gearing to a conservative level of approximately 28% (post settlement). The sales improve the Fund’s exposure to industrial and social infrastructure sectors and the WALE of the Fund.

Approximately 99% of the Fund’s drawn debt is hedged at a blended rate of 1.88% p.a. until the end of June 2024 (in addition to the blended bank margin). The existing hedge profile has assisted in mitigating interest rate volatility during FY24. With the expiry of hedges approaching in June 2024, the Fund’s cost of debt is anticipated to increase in line with prevailing market interest rates. The successful sale programmes have reduced the Fund’s gearing and exposure to elevated interest rate environment.

A sale of the assets will change the income profile of the Fund. Similarly, a changed cost of debt will impact the expenses of the Fund. These factors are forecast to reduce future distributions of the Fund.

The Fund is now in a stronger position to facilitate the approaching liquidity event in December 2025, and also has the capacity to look for new accretive investment opportunities to improve Fund performance.

The Funds Management Team is considering various strategies to protect and improve future distributions. These include:

1. entering into further hedge arrangements to reduce the cost of debt to the Fund, which may result in a cost to the Fund;
2. seek new investment opportunities to add to the Fund’s portfolio and drive performance;
3. a potential sale of the Mulgrave asset, with a sales campaign scheduled to commence in the coming month; and
4. should the Mulgrave asset be held, increasing occupancy to generate additional income.

Should these outcomes be achieved, the Fund should be in a better position to review distributions throughout FY25.

To accommodate continued liquidity needs of the Fund, Management has recently conducted on market sales programs for two office assets held by the Fund – being 10 Moore Street, Canberra ACT and 8 Market Lane, Maroochydore Qld.

We are pleased to report that 10 Moore Street, Canberra has now unconditionally exchanged contracts for sale with settlement scheduled for 1 July 2024. The sale price of $26.5m (net) is in line with the most recent independent valuation of the property.

The Maroochydore asset remains in ‘due diligence’ with a purchaser. A due diligence period is a non-binding timeframe whereby purchaser completes a detailed analysis of the property(s). Following the completion of the due diligence period, which is expected to occur in the coming weeks, binding exchange of contracts may occur. A further continuous disclosure update will be provided as matters progress.

Approximately 99% of the Fund’s drawn debt is hedged at a blended rate of 1.88% p.a. until the end of June 2024 (in addition to the blended bank margin). The existing hedge profile has assisted in mitigating interest rate volatility during FY24. With the expiry of hedges approaching in June 2024, the Fund’s cost of debt is anticipated to increase in line with prevailing market interest rates. The Fund is considering various strategies to protect future distributions including entering into further hedge arrangements which may result in a cost to the Fund.

A sale of the assets will change the income profile of the Fund. Similarly, a changed cost of debt will impact the expenses of the Fund. These factors will have implications on the future distributions of the Fund.

Effective 25 March 2024, additional units in the Fund will no longer be offered to investors in Singapore.

The Manager has determined it is in the best interest of investors to withdraw the Fund’s Singaporean offering for the time being. The offering is not providing the intended benefit to the Fund due to low inflows and annual compliance costs. The Manager will continue to assess the viability of offering the Fund in Singapore and may reactivate the offer in the future if it considers it is in the best interests of investors to do so.

As part of the withdrawal, existing Singaporean investors can remain in the Fund, however, will not be able to participate in the Fund’s Distribution Reinvestment Plan or acquire additional units.

The PDS dated 30 September 2022 is to be read in conjunction with this information and all references in the PDS to the Offer being available to investors in Singapore do not apply on and from 25 March 2024.

The CDPF quarterly property valuation cycle may have a positive or negative impact on the unit price. To act in the best interests of all investors the Fund will be moving to a new process each quarter end while the valuations are reviewed and confirmed.

Further to the disclosure in the Product Disclosure Statement, the Fund will postpone the processing of applications 10 business days prior to the end of a quarter (excluding any regular DRP applications from the prior period). Investor applications lodged during this period will be accepted but not processed until the completion of the valuation cycle. Applications will be allotted at the unit price which incorporates the updated valuations at quarter end. No additional action is required by investors once the application has been submitted. Investors may withdraw their application at any time prior to allotment.

The CDPF is attaining an updated valuation for an asset within the Fund’s portfolio which may have a positive or negative impact on the unit price.

To act in the best interests of all investors the Fund, and further to the disclosure in the Product Disclosure Statement, the Fund will postpone the processing of applications for the remainder of the month (excluding any regular DRP applications from the prior period). Investor applications lodged during this period will be accepted but not processed until the completion of the valuation cycle. Applications will be allotted at the unit price which incorporates the updated valuations at quarter end. No additional action is required by investors once the application has been submitted. Investors may withdraw their application at any time prior to allotment.

Management is currently exploring mechanisms to provide short term rental relief in exchange for a short term lease extension. This proposition provides the tenant time to recover revenue streams, continue operation at the property, and maintains occupancy of the Property. Management will keep investors updated as matters progress.

The CDPF quarterly property valuation cycle may have a positive or negative impact on the unit price. To act in the best interests of all investors the Fund will be moving to a new process each quarter end while the valuations are reviewed and confirmed.

Further to the disclosure in the Product Disclosure Statement, the Fund will postpone the processing of applications 10 business days prior to the end of a quarter (excluding any regular DRP applications from the prior period). Investor applications lodged during this period will be accepted but not processed until the completion of the valuation cycle. Applications will be allotted at the unit price which incorporates the updated valuations at quarter end. No additional action is required by investors once the application has been submitted. Investors may withdraw their application at any time prior to allotment.

As outlined in the Fund’s PDS, where the Fund invests in a development, the Manager’s establishment and placement fee can be charged on the acquisition of the land and thereafter the remaining fee can be charged upon completion of the development; and the Manager is able to charge the fee on amounts expended for the purposes of the development. The Manager confirms that it intends to charge the remainder of the 2.0% establishment and placement fee upon completion of development of 36 Caribou Drive, Direk SA (based on the total amount agreed with the vendor to be paid).

The merged fund has now reopened to applications and withdrawals. The fund has also recently updated the PDS to reflect the merger.