Australasian real estate fund manager, Centuria Capital Group, has credited the diversification of its platform to delivering strong FY22 full year results, meeting operating earnings per security (OEPS) guidance of 14.5cps (+20.8% pcp) and distribution per security (DPS) guidance of 11.0cps (+10% pcp).
During previous reporting seasons, Centuria announced several mergers and acquisitions and in FY22 it has demonstrated how these entities provided a gateway into alternative asset classes such as healthcare, agriculture and real estate credit, as well as expand into traditional asset classes to include daily needs retail and large format retail.
This diversification helped the Group achieve considerable scale, growing Assets Under Management (AUM) to $20.6billion, an increase of 18% on FY21. Its real estate funds management platform expanded to $19.8billion with $13.billion across unlisted funds (+18%pcp) and $6.8billion across listed funds (+24%pcp).
John McBain, Centuria Joint CEO, said, “The Group delivered record operating earnings and distributions throughout the period, following upgraded guidance during the year. Centuria demonstrated how its corporate acquisitions in previous periods have significantly increased the size of the platform with correspondingly high increases in both management fee revenues and transaction fee revenues as is evident in the FY22 result.
“These acquisitions allowed the Group to diversify across several additional asset classes as well as the West Australian and New Zealand geographies, delivering strong growth. This has occurred despite the backdrop of rising inflation, COVID lockdowns and geopolitical events.”
Organic growth during FY22 is attributed to a gross transaction fee income of $3.1billion (+162%pcp), valuation uplift of $900million and a strong $2.1billion development pipeline and development completions worth $100million.
Centuria managed 419 assets across Australia and New Zealand throughout the period, which were leased to approximately 2,480 tenants customer. The year was also punctuated by significant leasing success with more than half a million square metres (503,638sqm) leased across 469 deals, which accounts for 12.6% of the Group’s total Net Lettable Area (NLA).
Jason Huljich, Centuria Joint CEO, said, “The Group continued to expand its scale throughout FY22 with a record number of transactions, totalling $3.1billion. This growth is attributed to our diversification by geography, asset class, fund types and capital sources, which continue to generate new opportunities for sustainable and long-term expansion. Centuria’s development pipeline also significantly contributed to recurring revenues while providing high quality assets for our listed and unlisted funds in Australia and New Zealand.
“Centuria’s rental income streams continue to be underpinned by high quality tenant covenants. Among our top tenant customers are household names such as Woolworths, Telstra, Coles, Wesfarmers, Arnott’s and Visy, many of whom lease space across multiple asset classes including retail, industrial and office.”
Organic growth initiatives resulted in a high proportion of operating recurring revenues (89%).
Centuria retains a strong focus on capital management with net operating cash inflows of $182million during FY22. During the period, the Group entered into two revolving loan facilities totalling $150million. These undrawn facilities together with the Group cash balance of $185million made a total of $339million available at FY22 year-end. The Group structured this balance sheet strength to ensure maximum flexibility together with the capacity to take opportunities it believes will become available in the near term while maintaining strong financial covenant ratios.
Mr McBain and Mr Huljich concluded, “Centuria remains focussed on the Australasian real estate sector. The Group intends to grow its platform strongly in the alternative healthcare, agriculture and non-bank lending sectors which are receiving strong investor demand.
“In addition, we will continue to leverage our strong distribution network and our institutional relationships to take advantage of both core and value-add real estate opportunities across our traditional asset classes.”
Centuria’s FY23 OEPS guidance is in line with FY22 at 14.5 cps and FY23 DPS increases to 11.6cps, (+5.4% from FY22).
Strategy
Centuria’s seven real estate verticals all contributed to a record period of growth during FY22, providing a truly diversified investment platform across de-centralised office, industrial, healthcare, agriculture, daily needs and large format retail, and real estate finance. These seven verticals are supported across listed and unlisted capital sources, appealing to a broad range of investor profiles within the retail, wholesale and institutional sectors.
Throughout FY22, unlisted single asset fund AUM grew 5% to $8.3 billion and multi asset closed end and open- ended funds increased 52% to $4.7 billion.
In addition to ongoing strong support from Centuria’s direct unlisted investors, advisers and domestic bank private wealth divisions for unlisted funds, unlisted institutional mandates and partnerships increased AUM to $1.9 billion, up 12% on FY21.
Centuria’s healthcare platform expanded to $1.7 billion of AUM (+55% from FY21). The agriculture platform increased to seven assets and $0.4billion of AUM, with the recent launch of the $0.2 billion Centuria Agriculture Fund, an open-ended direct property fund with potential to increase further in size. Centuria Bass Credit, the Group’s real estate finance division, increased its AUM to $0.8 billion, illustrating strong market demand for alternative real estate finance.
Centuria’s listed real estate investment trusts (REITs) continued to perform well, driven by significant leasing activity, strong valuation gains and value-add development and repositioning opportunities. Centuria Office REIT and Centuria Industrial REIT are positioned as the largest pure-play ASX-listed office and industrial REITs.
OUTLOOK
Mr McBain and Mr Huljich commented, “Centuria remains firmly focussed on the Australasian real estate sector. The Group intends to grow its platform strongly in the alternative healthcare, agriculture and non-bank lending sectors which are receiving strong investor demand.
“In addition we will continue to leverage our strong distribution network and our institutional relationships to take advantage of both core and value-add real estate opportunities across our traditional asset classes.”
Centuria’s FY23 OEPS guidance is in line with FY22 at 14.5 cps and FY23 DPS increases to 11.6cps, (+5.4% from FY22).
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