FY17 results reflect ‘transformational’ growth for Centuria REITs

14 August 2017

Centuria Metropolitan REIT (ASX: CMA) and Centuria Industrial REIT (ASX: CIP) post annual profit results  

Centuria’s listed property trusts have today announced their FY17 profit results, with both Centuria Metropolitan REIT (ASX:CMA) and Centuria Industrial REIT (ASX: CIP), announcing positive returns for investors with net profits of $37.7 million and $50.8 million, respectively.

Nicholas Collishaw, CEO of listed property at Centuria said he’s delighted with the results, which reflect the significant support of both retail and institutional investors in Centuria’s listed funds.

“Over the past financial year, the listed property division has successfully completed two capital raisings, acquired the majority of 360 Capital’s property funds, merged the Centuria Urban and Metropolitan REITs to create a market leading metropolitan office REIT, and taken control of CIP from 360 Capital. All these movements have contributed to a very positive return for investors.”

Nicholas Blake, Trust Manager, CMA, said the results highlight the benefits for investors in choosing a specialist manager.

“CMA has delivered a strong total return of 49.5% (as at August 2, 2017) since listing in December 2014, outperforming the S&P/ASX 300 Index which returned 39.6% (as at August 2, 2017) over the same period. The trust is well-positioned to continue to deliver predictable and growing returns to security holders, and we will continue to seek opportunities to extract additional value from the portfolio through active asset-management initiatives.

“In Australia’s metropolitan office markets, superior asset selection, active asset management and close relationships with tenants are the cornerstones of success. CMA represents an opportunity for investors to gain exposure to an investment-grade portfolio managed by hands-on professional managers, specialised in generating value throughout the property cycle.”

Ross Lees, Trust Manager, CIP, said Centuria’s activity since taking over control of CIP In January demonstrates the manager’s active approach.

“We have actively pursued strategies to stablise and reposition the portfolio for long-term success following the transition of management of the industrial trust from 360 Capital to Centuria in January this year. In FY17 we achieved record leasing volumes, agreed to transact $95 million of assets and refinanced CIP’s entire debt book. During this period of heightened activity, we remained focused on our core objectives, and delivered earnings and distributions in line with the re-stated guidance provided in February. We commence FY18 in a solid position to continue growing value for unit holders.”

 

Key Highlights – CMA

Financial Highlights as at 30 June 2017:

  • Statutory net profit of $37.7 million
  • Distributable earnings[1] of $22.8 million representing 19.0 cents per security (cps)
  • Increased net tangible assets (NTA) to $2.32 per security[2], up 14 cps or 6.4%
  • Gearing reduced to 29.5% (from 33.2% since 30 June 2016)

 

Operational Highlights during FY17

  • Improved portfolio occupancy to 97.3%
  • Significant leasing success across the portfolio with 41 transactions across 20,321 sqm
  • Increase in portfolio valuations to $610.0 million, up $234.9 million since 30 June 2016 due to the merger with Centuria Urban REIT valued at $210.0 million and asset revaluations of $24.9 million
  • Portfolio WACR firmed to 7.19% (40bp improvement from 30 June 2016)
  • Portfolio weighted average lease expiry (WALE) of 3.9 years[3]
  • Exchanged contracts on the to be constructed Target Headquarters in Williams Landing, VIC

 

Significant activity post-30 June 2017

  • On strategy acquisition of two assets in Western Australia valued at $91.8 million[4]
  • Successfully completed a $90 million capital raising, increasing CMA’s market capitalisation to over $500 million[5] with improved potential for inclusion in the S&P/ASX 300 Index
  • Gearing reduced to 27.4% with significant debt headroom to fund the current acquisition pipeline and pursue further attractive acquisitions
  • Further improved portfolio occupancy to 98.2% and increased WALE to 4.5 years

 

Key Highlights – CIP

  • Statutory net profit of $50.8 million
  • Distributable earnings1 of $43.5 million, representing 20.5 cents per unit (CPU) in line with revised guidance
  • Total assets of $921.5 million, with NTA increasing by 1.3% to $2.35 per unit
  • Agreed leases over 134,000sqm; representing 17.7% of portfolio GLA[6]
  • Portfolio occupancy at 92.1%7, with a 4.4 year WALE[7]
  • Reduced FY18 lease expiry below 5.0%7
  • Refinanced entire debt book with new $450 million common terms facility
  • Conducted $35 million placement on 29 June 2017
  • Divested two dated assets for $30 million[8]; 7.9% premium to book value
  • Acquired two assets, 100% occupied, for $65 million[9]

 

A prerecorded briefing of CMA and CIP’s FY17 Annual Results and the FY17 Results Presentation and Property Compendium is available via our website.

[1] Distributable earnings are a financial measure which is not prescribed by Australian Accounting Standards (“AAS”) and represents the profit under AAS adjusted for specific non-cash and significant items. The Directors consider that distributable earnings reflect the core earnings of CMA.
[2] CMA’s pro forma NTA adjusted post 30 June acquisitions reduced to $2.29 per security.
[3] Weighted by gross income.
[4] Excluding transactions costs.
[5] Based on the closing CMA security price of $2.39 per security 9 August 2017.
[6] Portfolio GLA includes acquisitions announced on 29 June 2017adjusted for specific non-cash and significant items.  The Directors consider that distributable earnings reflect the core earnings of CIP.
[7]  By income.
[8] Includes 39-45 Wedgewood Drive, Hallam which exchanged on 5 July 2017
[9]  Settlement of 207-219 Browns Road, Noble Park occurred on 17 July 2017. Lot 14 Sudlow Road, Bibra Lake, WA is expected to settle on 29 September 2017.