Quiet achiever makes its voice heard

20 December 2018

By Simon Holt, Centuria Capital CFO

At Centuria, the benefits of the 360 Capital acquisition are being felt across the board through our continued solid growth in all our platforms.

The purchase of the 360 Capital real estate platform, finalised in 2017, was a step change for us. Prior to the purchase, we were largely viewed as a player in the unlisted market. Our market capitalisation then was $80 million and now it is at $500 million. In FY16, assets under management (AUM) were $1.9 billion and in FY18 they had grown to $4.9 billion. This financial year, in particular following the recent acquisition of the Hines office portfolio in November, we expect AUM to grow beyond $5.5 billion.

The purchase of 360 Capital was important for a number of reasons, particularly because it gave us access to its listed funds. We had the Centuria Metropolitan REIT (ASX: CMA) at the time, which was worth around $600 million, but the acquisition gave us Centuria Industrial REIT (ASX: CIP) – then a $900 million industrial fund – and Centuria Urban REIT (CUA), now a part of CMA. Both REITs are now worth $1.5 billion and $1.1 billion respectively.

Assets under management growth FY16-FY18

Centuria Capital Group AUM, showing growth from FY16 to projected FY19. As you can see, the purchase of 360 Capital in 2017 made a significant difference to our business.

What does this mean for investors?

Everything we do is focused on creating shareholder wealth across the businesses Centuria offers. What the growth has given our investors is a far stronger recurring revenue stream, as opposed to the sometimes lumpy returns from the unlisted business prior to the acquisition.

If you unravel what Centuria has provided since the purchase of 360 Capital you can see that there’s been consistent growth, a huge jump in assets under management, a massive change in business, many more securities to pay a distribution on, a significant increase in earnings per share and a constantly growing distribution.

Our aim is to create more recurring revenue and greater certainty over Centuria’s distribution.

Centuria continues to evolve

For more than 20 years, Centuria has been helping investors invest with the aim of growing their wealth through property funds – both listed and unlisted – and investment bonds.. Above them sits Centuria Capital as the headstock, which attracts its own set of investors. In all, we have four unique platforms each with a different bent. . The advantage of this diversification is that if one market sector shuts down for any reason, then another is likely to remain open.

For example, in the second half of FY18, we were raising money for CIP and CMA, but the A-REITs could not raise capital at an appropriate price to enable acquisitions for six months and therefore it was difficult to buy anything as a result. However, with our unlisted business, we ended up acquiring close to $300 million worth of assets.

The 360 Capital transaction has enhanced our level of diversification and allows us to buy property for different parts of our platform throughout the year rather than be vulnerable to one particular platform.

One of our key differentiators and a reason for our success, is that we provide an asset lifecycle offering. We manage everything from sourcing and buying the asset, raising the capital, undertaking the property and facilities management, and ultimately selling it. We don’t abdicate our responsibilities after acquiring an asset as we believe because our investors put their money with us, it is our responsibility to manage our assets to create the most optimal value for them.

Integrated property platform

Investment bond offering expands

Centuria Life, our investment bonds business, is another important part of our platform and poised for growth as high-net-worth investors consider alternatives to superannuation. We are currently refreshing our offer, including the introduction of 19 new high-quality investment options taking the number on offer to 23, with profiles ranging across the risk return curve. Our unique selling point here is that they are all high-quality funds, as selected by our Investment Committee.

Our success over the past 20 years means our investors stay with us for the long term. We’ve shown that significant growth, such as what we achieved following our purchase of 360 Capital, leads to more opportunities. All our metrics are pointing in the right direction and we’re well positioned across all the layers of our business to continue to work toward achieving our aim of creating growth for our shareholders.