Diversification strengthens Centuria’s FY22 results
Seven real estate verticals help deliver on FY22 earnings and distribution forecasts
- Delivered on FY22 guidance: operating earnings 14.5cps1(+20.8% pcp), distributions 11.0cps (+10% pcp)
- $20.6bn2 AUM (+18%pcp); Real estate platform: $13bn unlisted and $6.8bn listed funds
- $3.1bn3 FY22 gross real estate activity; $1.0bn valuation increase; $2.1bn development pipeline4
- Seven real estate verticals all contributed to record growth across listed and unlisted funds in AU and NZ
- FY23 Guidance: operating earnings in line with FY22 at 14.5 cps, distribution increases to 11.6cps.
Australasian real estate fund manager, Centuria Capital Group (ASX:CNI), has credited the diversification of its platform to delivering strong FY22 full year results, meeting operating earnings per security (OEPS) guidance of 14.5cps1 (+20.8% pcp) and distribution per security (DPS) guidance of 11.0cps (+10% pcp).
During previous reporting seasons, Centuria announced several mergers and acquisitions and in FY22 it has demonstrated how these entities provided a gateway into alternative asset classes such as healthcare, agriculture and real estate credit, as well as expand into traditional asset classes to include daily needs retail and large format retail.
This diversification helped the Group achieve considerable scale, growing Assets Under Management (AUM) to $20.6 billion2, an increase of 18% on FY21. Its real estate funds management platform expanded to $19.8 billion with $13 billion across unlisted funds (+18%pcp) and $6.8 billion across listed funds (+24%pcp).
John McBain, Centuria Joint CEO, said, “The Group delivered record operating earnings and distributions throughout the period, following upgraded guidance during the year. Centuria demonstrated how its corporate acquisitions in previous periods have significantly increased the size of the platform with correspondingly high increases in both management fee revenues and transaction fee revenues as is evident in the FY22 result.
“These acquisitions allowed the Group to diversify across several additional asset classes as well as the West Australian and New Zealand geographies, delivering strong growth. This has occurred despite the backdrop of rising inflation, COVID lockdowns and geopolitical events.”
Organic growth during FY22 is attributed to a gross transaction fee income of $3.1 billion3 (+162%pcp), valuation uplift of $900 million and a strong $2.1 billion development pipeline4 and development completions worth $100 million.
Centuria managed 419 assets5 across Australia and New Zealand throughout the period, which were leased to approximately 2,480 tenants customer5. The year was also punctuated by significant leasing success with more than half a million square metres (503,638sqm) leased across 469 deals, which accounts for 12.6% of the Group’s total Net Lettable Area (NLA).
Jason Huljich, Centuria Joint CEO, said, “The Group continued to expand its scale throughout FY22 with a record number of transactions, totalling $3.1 billion3. This growth is attributed to our diversification by geography, asset class, fund types and capital sources, which continue to generate new opportunities for sustainable and long-term expansion. Centuria’s development pipeline also significantly contributed to recurring revenues while providing high quality assets for our listed and unlisted funds in Australia and New Zealand.
“Centuria’s rental income streams continue to be underpinned by high quality tenant covenants. Among our top tenant customers are household names such as Woolworths, Telstra, Coles, Wesfarmers, Arnott’s and Visy, many of whom lease space across multiple asset classes including retail, industrial and office.”
Organic growth initiatives resulted in a high proportion of operating recurring revenues (89%).
Centuria retains a strong focus on capital management with net operating cash inflows of $182 million during FY22. During the period, the Group entered into two revolving loan facilities totalling $150 million. These undrawn facilities together with the Group cash balance of $185 million made a total of $339 million available at FY22 year-end. The Group structured this balance sheet strength to ensure maximum flexibility together with the capacity to take opportunities it believes will become available in the near term while maintaining strong financial covenant ratios.
Mr McBain and Mr Huljich concluded, “Centuria remains focussed on the Australasian real estate sector. The Group intends to grow its platform strongly in the alternative healthcare, agriculture and non-bank lending sectors which are receiving strong investor demand.
“In addition, we will continue to leverage our strong distribution network and our institutional relationships to take advantage of both core and value-add real estate opportunities across our traditional asset classes.”
Centuria’s FY23 OEPS guidance is in line with FY22 at 14.5 cps and FY23 DPS increases to 11.6cps, (+5.4% from FY22).
Strong organic growth across all real estate sectors
$19.8bn real estate platform6,7
Note: All figures above are Australian dollars (currency exchange ratio of AU$1.000:NZ$1.088 as at 30 June 2022). Numbers presented may not add up precisely to the totals provided due to rounding
1. Operating EPS is calculated based on the Operating NPAT of the Group divided by the weighted average number of securities. Weighted average number of securities at 30 June 2022: 791,188,235 (at 30 June 2021: 548,215,946).
2. Assets under management (AUM) as at 30 June 2022. All figures above are in Australian dollars (currency exchange ratio of AU$1.000:NZ$1.1088 as at 30 June 2022). Numbers presented may not add up precisely to the totals provided due to rounding. AUM includes assets exchanged and yet to be settled, cash and other assets.
3. Includes $2,175m of acquisitions exchanged and settled in FY22, $403m of acquisitions exchanged in FY22 yet to be settled and $516m of real estate finance transactions.
4. Development projects and development capex pipeline, including fund throughs. Committed development pipeline $1.3bn, future pipeline $0.8bn.
5. Tenancy profile is shown aggregated across all funds managed by Centuria and is not representative of any single fund. Excludes land, Development assets, US syndicates, Centuria Bass Credit, assets exchanged yet to be settled.
6. AUM includes asset exchanged to be settled, cash and other assets.
7. Platform total of $19.8bn includes Other AUM of $0.2bn across tourism, shopping centres and land syndicates in the US, NZ and WA.
Centuria Capital Group secures a $70.6 million 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.