Centuria Retain Distributions despite COVID25 March 2020
While most REITs are withdrawing earnings guidance, Centuria Capital Limited are the first in the market to provide some actual guidance on earnings for FY20.
With the final quarter's result facing very uncertain conditions, Centuria have revised down their forecast operating earnings for FY20 of 11.5 cps (down from 12.5 cps) and re-confirms its FY20 distribution guidance of 9.7 cps.
The group manages $7.3bn in assets across its listed and unlisted platform, mostly in Office and Industrial assets. Approx 40% of FY20 income for the Group is via performance fees from 2019 with 30% via co-investment earnings and 30% via fund management fees. The certainty around the performance fees and fund management fees allow the group to provide the earnings forecast for FY20. Forecasts for 2021 will however be much harder to make.
Centuria did qualify their outlook as being based on current Covid-19 knowledge and existing statutory regulations, which we know are changing daily.
Centuria also announced that their bid for New Zealand's Augusta Capital Limited has been terminated. Centuria retains a long-term view regarding the attractiveness of the New Zealand property funds management sector and it may seek to enter this market as conditions stabilise.
Centuria has $135 million of free cash with operating gearing of just 0.4%. The groups' debt comprises two corporate bonds totaling $170 million, with the earliest repayment being $90 million in April 2021.
Joint Chief Executive John McBain said “Centuria enters FY21 strongly capitalised and with high recurring revenues. We are well prepared to weather what we anticipate will be challenging global financial markets, but our track record has proven we are also capable of taking advantage of these conditions to the benefit of our investors.”