Centuria Office REIT provided an operating update for Q1 FY23 and reaffirmed its distribution guidance of 14.1 cpu, representing a FY23 distribution yield of 9.9% based on its current trading price.
Grant Nichols COF Fund Manager and Centuria Head of Office said, “Through the first quarter of FY23, we have seen more workers return to the office and employment rates remained strong. Inflation and interest rates continued to increase, however, the recent changes made by the central bank remain in line with the cash rate assumptions originally adopted in forming FY23 FFO guidance. We remain optimistic as tenant enquiry and overall leasing activity for COF’s assets remains high.”
The REIT continues to benefit from Centuria’s inhouse property management capabilities with a team at the coalface of tenant relations, enabling assets to be repositioned to meet shifting tenant preferences, especially towards facilities and third space offering wellbeing amenity and a more flexible work-life lifestyle.
Grant Nichols said, “COF achieved strong leasing outcomes across its national portfolio during the first quarter of FY23 as the occupier flight to quality trend continued, particularly among small to medium businesses upgrading to prime assets within well located near-city, metropolitan, fringe and regional markets.
“We believe that leasing activity will continue to accelerate in coming months, with tenant demand supported by Australia’s strong employment and a desire from tenants to return to the office. During the period, Australian office markets witnessed increased physical workspace occupancy, which has been reflected in the Property Council of Australia’s monthly office occupancy surveys.”
Throughout FY23 (YTD), terms were agreed or leases completed for c.12,516 sqm across 18 separate deals, comprising 10,328 sqm of new leases (3.4% of portfolio NLA) and 2,188 sqm of renewals (0.7% of portfolio NLA). COF has agreed four leases over 1,000 sqm during the period, accounting for approximately half of the leased area. Strong leasing activity underpinned increased portfolio occupancy to 94.9%, while WALE was maintained at 4.2 years.
Key highlights include:
- High volumes of leasing in Brisbane continued into the first quarter with 4,302 sqm of leases secured in Fortitude Valley and South Brisbane, with lease terms ranging from three to seven years;
- 235 William Street, Northbridge WA: a collective 3,251sqm was secured across two tenancies, increasing occupancy to 99%;
- Solid leasing activity in Canberra across 2,265sqm which resulted in lease extensions of most FY23 expires at 54 Marcus Clarke Street to maintain 100% occupancy, and 95% occupancy achieved at 60 Marcus Clarke Street;
- The development at 57 Wyatt Street, Adelaide SA topped out during the period and pre-commitments increased to c.60%.
COF is committed to Centuria’s sustainability framework, which details Environmental, Social and Governance (ESG) initiatives. By the REIT’s nature, COF has no employees and is solely a portfolio of assets.
Centuria’s recently published 2022 Sustainability Report details initiatives undertaken by the Group, including those undertaken by COF. Highlights include:
- Launching a Tenant Engagement Network app called T.E.N by Centuria, which enables tenants to efficiently communicate with their facilities and property management teams via their smart phones. The system was piloted at 818 Bourke Street, Docklands VIC
- Targeting a Five-star Green Star rating at the 57 Wyatt Street, Adelaide office development
- Achieved a “Gold” WireScore Rating for connectivity infrastructure at 818 Bourke Street, Docklands
- An increased NABERS Sustainable Portfolio Index (SPI) energy rating of 4.8 Stars (up from 4.7 stars pcp) and NABERS water rating of 3.7 Stars (up from 3.2 stars pcp).
- 710 solar panel system installation at 8 Central Avenue, Eveleigh NSW was completed, which is estimated to avoid 355 tonnes of carbon while providing 433 MWh of energy annually
- Centuria’s gender diversity of 41% to 59%, females to males
- 94% of employees enjoy working at Centuria, 96% of tenants are satisfied with Centuria as a landlord
Trading Chart
Related Articles
