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Real estate finance and agriculture underpins Centuria’s FY24 performance

Investment in alternatives provide springboard for growth and increased FY25 guidance

  • Delivered on FY24 guidance: 11.7cps OEPS1, 10.0cps distribution
  • Group AUM stabilised at $21.1bn2
  • Expanded alternatives: Real estate finance $1.9bn (+46%), Agriculture $0.64bn (+21%)
  • $1.15bn raised across unlisted funds: $0.6bn institutional, $0.55bn gross inflows
  • M&A activity:
    • Centuria Bass Credit holding increased to 80%3
    • FY25 – 50% investment in ResetData (LIC edge data centres)
  • FY25 Guidance: 12.0cps OEPS (+2.5% y.o.y.), 10.4cps distribution (+4.0% y.o.y.)

Australasian real estate funds manager, Centuria Capital Group (ASX:CNI or “Centuria”), has reported its full year results for the 2024 Financial Year, which showed significant growth in alternative real estate sectors resultant from corporate acquisitions in prior periods providing a pathway for portfolio growth.

Centuria delivered on its FY24 operating earnings per security (OEPS)1 guidance of 11.7 cents per security (cps) and distribution guidance of 10.0cps.

Most significantly, the Group expanded its investment in alternative sectors with real estate finance – through Centuria Bass Capital – growing 46% to $1.9 billion and agriculture via the Centuria Agriculture fund “CAF” up 21% to $0.64 billion. More than 20% of the Group’s real estate platform is weighted to alternative real estate sectors, which have collectively increased AUM by $4.1 billion since 2019.

John McBain, Centuria Joint CEO said, “Centuria’s diversification into alternative real estate sectors not only offers investors a platform with unique points of difference but early investment into these sectors during the COVID period has enabled Centuria to maintain AUM in a tight market, stabilise earnings and confidently provide forecast growth for Group earnings and distributions into FY25.

“Centuria has commenced FY25 with a 50% investment in new-generation data server provider, Reset Data, which utilises Liquid Immersion Cooling (LIC) technology to create ‘Edge Data Centres’, which have compelling fundamentals when compared to traditional air-cooled data centres. Our early mover investment in ResetData allows us to be at the forefront of this new technology, unlocking new rental income from suitable underutilised real estate space. Our upstream investment in the ResetData business itself creates a completely new business vertical for the Group which will be a meaningful contributor to the Group’s earnings from FY26.

“The ResetData investment builds on our corporate acquisition activity in the past three years, which has significantly diversified the real estate platform and enabled Centuria to create new opportunities for investors against a backdrop of macroeconomic and market headwinds. The potential growth in the ResetData business is underpinned by the very strong growth in demand for increased data density levels and low latency in Australia arising from the explosive growth in AI inferencing.”

Centuria acquired 50pc Reset Data

During FY24, Centuria executed $1.3 billion of gross real estate activity as well as $1.0billion of divestments and real estate finance repayments while its development arm completed $300 million of projects. As at 30 June 2024, Centuria has $21.1 billion2 of Assets Under Management (AUM), including $12.3 billion of unlisted real estate, $6.0 billion of listed real estate, $1.9 billion of real estate finance and $0.9 billion of investment bonds.

The Group’s unlisted platform raised $1.15 billion of capital with $0.55 billion generated from retail and wholesale investors and $0.6 billion of new capital from institutional mandates and partnerships, including the $500 million Starwood Capital industrial mandate and a $100 million senior secured commitment from UBS for Centuria Bass.

Jason Huljich, Centuria Joint CEO, said, “Centuria continued to diversify its real estate platform across a range of sectors at different stages within their investment cycles. The Group recorded solid unlisted inflows in a difficult economic environment and focussed on carefully sourcing new unlisted investments for our direct and institutional investor networks.”

“The Group’s new NZ agriculture and real estate finance offerings were fully subscribed, as were several Centuria Bass Australian debt products and the recent Halls Head Central fund, demonstrating continued wholesale investor appetite. Our teams are eagerly seeking deep value asset acquisition opportunities to satisfy ongoing investor demand and we anticipate the relatively new Centuria Bass Credit business is targeted to grow its EBIT by 20% in FY25.”

CNI recorded statutory net profit after tax of $102.2 million4 and Group operating profit after tax (OPAT) of $94.7 million5. Net asset value (NAV) increased to $1.79 per security6,7. Centuria retains over $266 million of cash and undrawn debt8.

Through proactive capital management, the Group reduced operating gearing to 12.1%9 (FY23: 13.9%) and continued to diversify debt sources and recycled existing exposures, including $1.7 billion of refinancing across 68% of Centuria’s office vertical.

Mr McBain concluded, “Looking ahead, we are optimistic that FY25 will see an improving trend in economic fundamentals as major economies unwind prevailing official cash rates. These cash rate reductions have already commenced in New Zealand where the Group has a meaningful exposure with attendant increased levels of business confidence. “

“Initial trends within Australia, such as lowered term deposit rates, are extremely positive fundamentals for the Group with the relative return outlook having an immediate and ongoing positive impact, for example, on our unlisted property business. In essence this means that as term deposit rates continue to trend down from current levels, returns from Centuria funds become increasingly compelling on a relative basis.”

Based on prevailing market conditions remaining stable, Centuria provides FY25 OEPS guidance of 12.0 cents per security and DPS guidance of 10.4 cents per security.

  1. Operating EPS is calculated based on the Operating NPAT of the Group divided by the weighted average number of securities.
  2. AUM includes assets exchanged to be settled, cash and other assets and the impact of revaluations during the period.
  3. Initial 50% interest acquired in April 2021, additional 30% acquired in April 2024.
  4. Attributable to CNI securityholders. Includes fair value movements in derivatives and investments.
  5. Operating NPAT of the Group comprises of the results of all operating segments and excludes non-operating items such as transaction costs, mark to market movements on property and derivative financial instruments which are the results of Benefit Funds, Controlled Property Funds and share of equity accounted net profit in excess of distributions received.
  6. Number of securities on issue 30 June 2024: 823,959,585 (at 30 June 2023: 799,796,794).
  7. Increase in net asset value per security is primarily attributable to continued profitability and the unrealised fair valuation gains on the
    Group’s co-investment stakes, less borrowing, payable, option.
  8. As at 30 June 2024.
  9. Gearing ratio is calculated based on (operating borrowings less operating cash) divided by (operating total assets less operating cash).