Alternatives drive Centuria’s FY23 growth
Revenue and earnings supported by strong capital management
- Agriculture increased 33% to $530m, Real Estate Credit increased 59% to $1.27 billion
- $21 billion Group AUM1: Unlisted funds $13.8 billion (+6%pcp); Listed funds $6.4 billon
- Statutory net profit after tax jumped to $105.9m2 (FY22: -$37.9m); Operating EBIT up 7.5%; 10.6% gearing
- $1.4 billion gross real estate activity3; $0.6 billon unlisted capital inflows; Institutional investment up 11%
- Delivered on FY23 guidance: 14.5 cents OEPS4, 10.0 cents DPS5; 91% Recurring revenues
Australasian real estate funds manager, Centuria Capital Group (ASX: CNI), has reported solid FY23 results supported by strong funds growth across its alternative unlisted real estate sectors, which lifted Group AUM to $21 billion, and increased statutory NPAT. Operating profit after tax was in line with FY22 record profit.
During the period, Centuria’s agricultural assets increased 33% to $530 million with the acquisition of highly sustainable glasshouse assets across Australia and New Zealand. Additionally, Centuria Bass Credit (CBC), the Group’s real estate finance division, significantly increased its AUM 59% to $1.27 billion, capitalising on domestic demand for non-bank finance.
Growth across these alternative sectors helped lift Centuria’s unlisted real estate platform six per cent to $13.8 billion while listed funds accounted for $6.4 billion. As at 30 June 2023, Group AUM increased to $21 billion1 (FY22: $20.6 billion).
Throughout FY23, Centuria’s unlisted platform benefitted from $0.6 billion of capital inflow. Centuria demonstrated its ability to pivot its capital raising processes to navigate changing investment conditions through retail and wholesale funds with exposure to industrial, non-discretionary retail, value add office and alternative sectors in agriculture and credit.
Furthermore, institutional investment expanded 11% to $2.1 billion through the establishment of new strategic partnerships.
Jason Huljich, Centuria Joint CEO, said, “Centuria continued to focus on differentiating its traditional office, industrial and retail platforms, while markedly expanding across the alternatives sectors of real estate finance and agriculture. The Group’s on going commitment to hands-on asset management delivered high occupancy and healthy WALEs.”
As at 30 June 2023, Centuria managed circa 420 assets6,7 and 2,500 tenant customers8,9. Its real estate platform provides a high 97% occupancy and 6.1 year WALE. Across Australia and New Zealand, leasing terms were agreed for more than 548,000sqm, representing 542 lease transactions and 13% of platform lettable area. Rent collections remained high at 99%.
During FY23, Centuria delivered gross real estate activity of $1.4billion3, comprising of $811 million of real estate acquisitions and $542 million of real estate finance. Additionally, Centuria’s in-house property development division delivered $400 million worth of projects to its listed and unlisted funds and continues to progress a $1.6 billion pipeline.
John McBain, Centuria Joint CEO, said, “Delivering growth across our funds management business during FY23 was a function of strong recurring earnings coupled with the execution of our strategy to diversify our real estate platform. The Group maintains a healthy balance sheet, which has ample capacity to operate its normal business activities.”
Throughout the period, Centuria generated recurring revenues of 91% (FY22: 89%), providing stable income for the Group.
Centuria’s FY23 group statutory net profit after tax increased to $105.9 million2 (FY22: -$37.9 million), while operating profit after tax (OPAT) of $115.6 million was in line with prior period (FY22: $114.5 million). Total operating revenues grew to $311.7 million reflecting increased platform scale. Operating EBIT increased 7.5%, mitigating the full impact of rising interest rates.
Centuria delivered FY23 OEPS of 14.5 cents4 and DPS of 11.6 cents5, in line with guidance.
Centuria retains a strong focus on capital management with net asset value increasing to $1.77 per security10 and net operating cash inflows of $83.4 million. The balance sheet provides continued flexibility with over $329 million of cash and undrawn debt available at FY23 end. The Group realised $237 million of cash from the sale and recycling of balance sheet assets contributed to lower operating gearing11 of 10.6% (HY23: 17.3%).
Mr McBain and Mr Huljich concluded, “Market sentiment indicates that at some point during FY24 interest rates should stabilise allowing markets to begin the journey towards normalisation. Accordingly, Centuria will maintain a disciplined approach in navigating what we believe will be a challenging FY24 backdrop. We approach FY24 with a sharp focus on the industrial and alternative sectors as important revenue drivers.”
“We provide guidance at levels that reflect our best estimate of earnings based on current market conditions. This guidance anticipates lower performance fees and development profits, restrained transaction volumes and increased finance costs.”
Centuria provides FY24 operating EPS guidance between 11.5 and 12.0 cents per security and DPS guidance of 10.0 cents per security.
1. AUM includes assets exchanged to be settled, cash and other assets and the impact of revaluations during the period
2. Attributable to CNI securityholders
3. Includes $811m of acquisitions exchanged and settled in FY23 and $542m of real estate finance transactions
4. Operating EPS is calculated based on the Operating NPAT of the Group divided by the weighted average number of securities
5. Distributions per security (DPS)
6. Tenancy profile is shown aggregated across all funds managed by Centuria and is not representative of any single fund
7. Excludes land, Development assets, US syndicates, Centuria Bass Credit, assets exchanged yet to be settled
8. Tenancy profile is shown aggregated across all funds managed by Centuria and is not representative of any single fund
9. Excludes land, Development assets, US syndicates, Centuria Bass Credit, assets exchanged yet to be settled
10. Number of securities on issue 30 June 2023: 799,796,794 (at 30 June 2022: 792,787,120)
11. Gearing ratio is calculated based on (operating borrowings less cash) divided by (operating total assets less cash)
Centuria Capital Group secures a $70.6million industrial logistics facility in North Rocks, NSW, on behalf of US private investment firm, Starwood Capital’s, Last Mile Logistics Partnership (LMLP).
Centuria Capital Group has successfully exchanged conditional contracts to divest two adjoining industrial facilities located at 114 and 120 Old Pittwater Road, Brookvale NSW, which is anticipated to deliver a forecast 13.8% IRR to the assets’ closed-ended fund investors.