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Centuria’s alternative assets expand Group AUM to $21.2bn

HY23 results highlight strong capital management

  • Agriculture and real estate non-bank finance underpin robust AUM growth
  • Group total operating revenue up 14.6%1 to $159.7m, 91% recurring revenue
  • $248m cash & undrawn debt; Management fees up 13% to $73.2m2 ; $1.0bn HY23 gross real estate activity3
  • HY23 delivered operating earnings per security (OEPS)4 of 7.4cps, Distribution per security (DPS) of 5.8cps
  • Reaffirmed FY23 OEPS guidance of 14.5cps, DPS guidance of 11.6cps.

Australasian real estate fund manager, Centuria Capital Group (ASX:CNI) has delivered strong interim results for the first half of the 2023 financial year, underpinned by organic growth across its real estate platform, particularly within alternative sectors, and strong capital management.

Within the six months to 31 December 2022, Centuria expanded its agricultural assets by 20% to more than $420 million, with growth largely attributed to the unlisted Centuria Agriculture Fund (CAF). Since FY22, Centuria has become Australia’s largest single owner of major glasshouses with $247 million of glasshouses assets across 53.5 hectares.

Centuria Bass Credit (CBC), the Group’s real estate finance division, significantly increased its AUM 38% to more than $1.1 billion, highlighting the growing demand for non-bank finance as traditional lenders tighten their lending criteria. CBC launched four single asset funds worth more than $76 million and its open-ended Centuria Bass Credit Fund (CBCF) loan book grew to $50 million, encompassing 21 diversified positions during the period.

Centuria also increased its healthcare platform 3% to $1.7 billion.

Throughout HY23, Centuria’s Group Assets Under Management (AUM) increased to $21.2 billion5 comprising $20.4 billion of real estate funds with unlisted AUM increasing to $13.9 billion alongside $6.5 billion of listed AUM.

Jason Huljich, Centuria Joint CEO, said, “Throughout HY23, Centuria has delivered on its commitment to expand across alternative real estate sectors, which has contributed to our strong organic growth within the unlisted platform. This expansion was strongly supported by Centuria’s broad, direct investor network comprising individuals, advisers, private wealth managers and, most significantly, across institutional mandates and partnerships. During the period, institutional capital commitments increased 11% to $2.1 billion.”

Centuria’s gross real estate activity of $1.0 billion was secured across $616 million of real estate acquisitions and $349 million of real estate lending during HY23. Additionally, $369 million of acquisitions that were exchanged in FY22 were settled in HY23.

Record transactions executed throughout FY22 provided sustainable management fee revenue in HY23, which increased 13% to $73.2 million2. Contributing performance fees of $14.6 million were in line with expectation. Overall, operating recurring revenues reflected 91% of total revenues (HY22: 87%).

John McBain, Centuria Joint CEO, said, “Throughout the past six months we have maintained a healthy balance sheet, continued our platform expansion into alternative sectors and re-affirmed our forecast earning and distribution guidance, despite high inflation and increased interest rates normalising from pandemic emergency levels.

“Centuria has a proven track record for applying a disciplined approach during times of great volatility. We have recently entered the agriculture and credit markets, examples of alternative sectors with strong investor demand. We are also in a good position to take advantage of value-add market opportunities when they arise, delivering attractive returns to our securityholders.”

Centuria’s total operating revenue increased 15% to $159.7 million while Operating Profit After Tax (NAT) was maintained at $58.5 million6 during HY23.

Capital management initiatives resulted in available cash and undrawn debt of $248 million, an operating gearing ratio7 of 17% and operating interest cover ratio8 of 5.4 times. Credit approval was secured for a new $50 million debt facility on a five year term to replace current debt. Centuria’s balance sheet is positioned to capitalise on further growth opportunities and benefits from increased funding optionality, access to new debt instruments, along with ample headroom to debt covenants.

CNI delivered OEPS4 of 7.4 cents per security (cps) and declared a distribution of 5.8cps for the period.

Centuria reaffirms FY23 OEPS guidance of 14.5 cps and DPS guidance of 11.6cps (+5.4% from FY22).

1. Increase of 14.6% from HY22
2. Management fee revenue in HY22 was $64.7 million
3. Includes $616m of acquisitions exchanged and settled in HY23 and $349m 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. AUM includes assets exchanged to be settled, cash and other assets
6. Attributable to securityholders
7. Gearing ratio is calculated based on (operating borrowings less cash) divided by (operating total assets less cash)
8. Operating interest cover ratio is calculated based on operating finance costs divided by operating profit before tax excluding finance costs (excluding reverse mortgages borrowing costs and finance charges on puttable instruments)