Centuria Office REIT Announces Strong HY22 Results

3 February 2022

Australia’s largest ASX-listed pure-play office fund, Centuria Office REIT, has leveraged positive tailwinds in Australia’s metropolitan and near-city office markets to deliver strong interim results for the first half of the 2022 Financial Year.

During the period, COF increased its portfolio to 23 high-quality office assets worth $2.3billion. Importantly, its portfolio occupancy increased to 94.3% (from 93.1% in June 2021) and its Weighted Average Lease Expiry (WALE) was maintained at a healthy 4.3 years.

COF’s portfolio expansion is credited to the acquisition of two modern, sustainable office assets worth $273million, including 100% ownership of 101 Moray Street, South Melbourne VIC and the remaining 50% interest in 203 Pacific Highway, St Leonards, NSW.

COF benefited from a $28.5million valuation uplift, which increased Net Tangible Assets (NTA) to $2.49 per unit. This uplift was driven by strong leasing activity with 18,670 sqm leased during the half, representing 6.2% of portfolio Net Lettable Area (NLA).

Grant Nichols, COF Fund Manager and Centuria’s Head of Office, said, “In recent months, Australia has benefited from an uptick in white collar employment with the national unemployment rate at its lowest level in 13 years. This improvement in employment levels has translated into stronger tenant demand for office accommodation across Australia.

“Increasingly, tenant demand is gravitating towards new-generation buildings that provide better COVID-safe work environments, efficient floorplates, improved amenity and competitively-priced accommodation. There is also increased demand to be located in areas that provide short commutes to improve employee satisfaction and attract the best talent.”

COF benefits from a young portfolio with an average building age of 16 years. Younger buildings are generally more efficient than older generation buildings and are attracting stronger tenant demand. Approximately 90% of COF’s portfolio comprises A-Grade assets.

During the period, COF reported a $63.6million statutory net profit for HY22, up from $21.5million in HY21. Its Funds from Operations (FFO) were $54.7 million or 9.8 cpu, and distributions of 8.3 cpu were in line with FY22 guidance provided.

COF’s FY22 FFO guidance was upgraded from 18.0cpu to 18.3cpuv during the period due to its leasing success.

The REIT maintains a robust balance sheet with $201 million of equity raised during HY22 and an additional $100 million added to its debt facilities, providing a weighted debt maturity of 3.9 years with no debt facility expiring until June 2024.

Further Information

HY22 Financial Results

Earnings HY22HY21
Statutory profit / (loss)$m63.6 21.5
Funds from Operations$m54.7 57.7
Funds from Operations per unitcpu9.78 11.21
Distribution per unitcpu8.30 8.25
Return on equity%8.7 2.0

Balance sheetPro forma HY22HY22FY21
Total Assets$m2,394.92,398.72,068.9
NTA per unit$2.492.502.48

Property Portfolio

Portfolio SnapshotHY22FY21
Number of assets2322
Book value$m2,322.02,014.3
Occupancy by area%94.393.1
WALE by gross incomeyears4.34.3
Leases agreed by areasqm18,67052,077
Average NABERS energy rating (by value)stars4.94.7
Average NABERS water rating (by value)stars4.13.2
Average building age (by value)years16.116.8

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