Centuria Office REIT, Australia’s largest listed pure-play office fund, announced its Q3 FY21 update which show strong leasing activity throughout the March quarter resulting in the REIT tightening its guidance range.
Throughout Q3 FY21, COF secured 16,597 sqm of new leases and tenant renewals across 12 separate deals, representing 5.8% of portfolio Net Lettable Area (NLA) and providing an indication of businesses’ appetite to return to the office. Subsequently, portfolio occupancy increased to 92.3%.
Due to the positive leasing outcomes, COF’s Funds From Operation (FFO) guidance range4 of 19.4-19.9 cents per unit (cpu) was tightened to the range’s upper end and is now 19.7-19.9 cpu.
COF reiterated its FY21 distribution guidance of 16.5cpu, which represents a current distribution yield of 7.9%.
Grant Nichols, COF Fund Manager, said, “Across the COF portfolio, leasing activity continues to improve as more organisations return to the office. It is becoming increasingly apparent that many organisations recognise productivity that results from in-person collaboration cannot be replicated virtually, and employee isolation has a detrimental impact on an organisation’s culture and staff wellbeing.
“With Australia experiencing a strong economic recovery, labour markets could continue to surprise on the upside, which would continue to improve tenant demand for office space throughout the nation.”
Significant leasing deals include 4,937 sqm leased at 35 Robina Town Centre Drive, Robina QLD. Other significant leasing deals including 2,814 sqm at 131-139 Grenfell Street, Adelaide, SA, and 1,819 sqm at 100 Brookes Street, Fortitude Valley, QLD – creating 100% occupancy in both office buildings.
Grant Nichols commented “COF has remained focused on generating strong income streams and ongoing distributions for unitholders. The REIT is generating solid levels of leasing enquiry across its portfolio and has achieved positive leasing outcomes throughout FY21 to date”.
Reflective of the strong appetite to return to the office is the REIT’s solid rent collection, averaging 97.1%3 throughout FY21 year to date.
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