Centuria’s Office REIT Valuations Drop – 4.4% as cap rates expand6 July 2023
Centuria Office REIT (ASX: COF) has completed external valuations on 13 of its 23 investment properties as at 30 June 2023, representing approximately 70% of the portfolio by value.
In line with Centuria’s valuation policy, the remaining valuations (30% of portfolio value) will be undertaken as Director’s valuations with the FY23 results. Valuations and changes to Net Tangible Assets (NTA) remain subject to audit and could be revised up or down. Those assets not independently valued as at 30 June 2023 were last independently valued as at 31 December 2022, meaning the entire portfolio has been independently valued at least once in the past six months with some assets independently valued at both 31 December 2022 and 30 June 2023.
The completed valuations for 30 June 2023 reflect a like-for-like decrease of c.$102 million on prior book values, a portfolio decline of c.-4.4%. The Weighted Average Capitalisation Rate (WACR) across the total portfolio expanded by 25 basis points over the last half from 5.75% at 31 December 2022 to 6.00% at 30 June 2023.
Grant Nichols, COF Fund Manager and Centuria Head of Office, said “COF provides well positioned, affordable office accommodation, which continues to attract high-quality tenants including government, ASX-listed and multinational corporations. COF’s diversified tenant customers provide the portfolio with a staggered lease expiry profile and broad income streams, supported by strong leasing covenants. Importantly, COF maintains a high portfolio occupancy3 with a minimal 2.7% vacancy.”
COF also recently received a MSCI ESG rating4 of BBB, an improvement from its previous B rating, which is credited to the portfolio’s enhanced sustainability metrics. Additionally, the REIT achieved an increased NABERs Sustainable Portfolio Index (SPI) energy rating of 4.9 stars.