Centuria Metropolitan REIT FY16 Results Briefing Primary Healthcare, 203 Pacific Highway, St Leonards CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 1
Agenda ˃ Section 1: FY16 Results Overview ˃ Section 2: Portfolio Overview ˃ Section 3: Capital Management ˃ Section 4: Market Overview ˃ Section 5: Outlook and Strategy CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 2
Section 1 FY16 Results Overview CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 3
FY16 Financial Overview Financial snapshot Statutory profit/(loss) ($m) 44.8 Statutory profit/(loss) per security (cps) 37.5 Distributable earnings ($m) 22.0 Distributable earnings per security (cps) 18.4 Annualised distributable earnings yield 1 (%) 8.6 Distribution ($m) 20.3 Distribution per security (cps) 17.0 Annualised distribution yield 1 (%) 7.9 Balance sheet metrics Total assets ($m) 415.6 NTA per stapled security ($) 2.18 Gearing (%) 33.2 1. Based on CMA closing price of $2.14 per security as at 30 June 2016 CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 4
FY16 Financial Highlights Active management delivering predictable and growing earnings 18.4 cps ˃ Statutory net profit of $44.8m Distributable earnings ˃ Distributable earnings ~3% above guidance 17.0 cps ˃ Distribution paid in line with forecasts ˃ Disciplined capital structure maintained Distribution paid ˃ Market capitalisationincreased to $255.5m 1 33.2% ˃ NTA increased 21 cps, an 11% uplift to $2.18 per security Gearing $2.18 ps Net Tangible Assets 1.Based on CMA’s closing price of $2.14 per security as at 30 June 2016 CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 5
FY16 Operating Highlights Strong fundamentals in metropolitan office markets generating value uplift ˃ Substantial leasing success 97.2% ˃ 12,493 sqm across 35 transactions 1 (new leases and renewals) Portfolio occupancy ˃ Majority of leasing activity captured in Canberra and Chatswood assets 4.4 years ˃ Key FY17 expiries renewed Portfolio WALE 2 ˃ 3 year renewal of AECOM at 60 Marcus Clarke Street $398.7m ˃ 5 year renewal of Appen Butler Hill 3 at 9 Help Street, further improving WALE post 30 June Book valuation ˃ Acquired 203 Pacific Highway (50% interest) for $43.0m before costs in December 2015 7.86% ˃ Portfolio valuations increased by 9.3 per cent 4 Portfolio WACR ˃ Portfolio WACR firmed 57 basis points 1.Includes 2 transactions under HOA subject to lease finalisation and execution 2.By NLA at 30 June 2016 3.HOA executed 4 August 2016 4.On a like for like basis, excluding 203 Pacific Highway, St Leonards CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 6
FY16 NTA Movement Strong metropolitan office market fundamentals and valuation uplift driving NTA growth Movements in NTA $ Per Security $2.30 0.300 $2.25 $0.27 0.250 $2.20 ($0.02) ($0.02) 0.200 $2.15 $2.18 NTA $2.10 0.150 $2.05 0.100 $2.00 ($0.02) 21cps $1.95 0.050 $1.97 +11% $1.90 0.000 $1.85 $1.80 (0.050) 1 2 FY15 203 Pac Hwy Revaluation MTM Hedge Other FY16 Acquisition 1.Net transaction costs associated with the acquisition 2.Other include movements in cash, payables, receivables and revaluation of GMF stake CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 7
Section 2 Portfolio Overview CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 8
Portfolio Metrics Portfolio well positioned to ensure income and value continue to grow FY16 FY15 Portfolio snapshot 12% Number of assets (#) 13 12 Geographic 17% 44% diversification (by value) Book value ($m) 398.7 323.1 WACR (%) 7.86 8.43 27% FY16 NOI ($m) 28.1 10.3 1 NSW QLD ACT SA Occupancy 2 (%) 97.2 96.7 Weighted Average Lease Expiry 2,3 FY17 expiries (%) 8.7 13.6 50% 46.9% WALE 2 (years) 4.4 4.8 FY15 FY16 45% 40.1% 40% 35% 30% 25.7% 23.1% 25% 20% 13.6% 15% 11.4% 8.7% 7.9% 10% 4.7% 4.4% 3.3% 2.8% 5% 0% 1.Represents 6.3 months of income since listing 2.Includes 2 transactions under HOA subject to lease finalisation and execution Vacant FY17 FY18 FY19 FY20 FY21+ 3.By NLA CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 9
Tenant Space Requirements CMA’s actively managed portfolio is well suited to attract <500sqm SME tenants, being the dominant size cohort Leasing Deals by Size Cohort ˃ Metropolitan office markets, like 100.0% 2.9% 6% 8% our CBD’s, are dominated by SME’s 12% 13% 90.0% 17.1% 14% occupying less than 500 sqm of 18% 9% 80.0% 14% 10% space – a trend CMA is well 70.0% 18% 17% positioned to benefit from 22% 60.0% 50.0% ˃ 280 of CMA’s 326 tenants, or 86% 40.0% 80.0% by number, are SME’s that occupy 71% 30.0% 60% 57% less than 500 sqm 52% 20.0% 10.0% - CMA Portfolio Sydney CBD Northshore NSW Brisbane City Canberra (FY16) Fringe < 500sqm 500 to 1,000sqm 1,000 to 2,000sqm > 2,000sqm Market data source: CBRE Research CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 10
Leasing Overview Focus on leasing ensures occupancy and income are maximised ˃ 35 lease transactions completed in FY16 across 12,493 sqm 1 11.1% ˃ 21 new leases across 6,467 sqm ˃ 14 renewals across 6,026 sqm Portfolio NLA leased ˃ Average deal size of ~357 sqm Executed 8 leases 2 across 5,207 sqm that de-risked FY17 expiries ˃ 12,493 sqm ˃ Significant leasing success achieved in Canberra and Chatswood: Portfolio NLA leased 1 No. of transactions sqm Property 54 Marcus Clarke Street, Canberra 5 1,703 5,207 sqm 60 Marcus Clarke Street, Canberra 12 5,828 9 Help Street, Chatswood 10 3,736 FY17 expiries de-risked 2 1. Includes 2 transactions under HOA subject to lease finalisation and execution 2. Includes renewal of Appen Butler Hill at 9 Help Street HOA signed 4 August 2016 CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 11
Tenancy Profile Tenant diversity and contracted rental growth delivering predictable and growing earnings ˃ Top 10 tenants account for 54% of gross rental income ˃ Approximately 76 per cent of gross rental revenue derived from ASX listed, multinational, national and government tenants ˃ 94% of rental revenue is subject to fixed annual reviews averaging 3.6% Rental Reviews Tenancy profile by Size Cohort (by no. tenant) Tenant Diversification (top 10 tenants by gross income) Austar Entertainment Pty Limited 10.3% 2.1% 5% 4.9% 1% Bluescope Steel Limited 9.1% 7.1% Minister for Infrastructure 6.2% Cochlear Ltd 5.9% Minister for Transport & Infrastructure 4.8% CSC Australia 4.8% 85.9% 94% Royal District Nursing Service 3.9% < 500sqm 500 to 1,000sqm Primary Health Care 3.2% Fixed CPI Market 1,000 to 2,000sqm > 2,000sqm Cardno 3.2% Verizon Australia Pty Ltd 2.8% CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 12
Capital Expenditure ‘Fit for purpose’ portfolio well suited to attract and retain quality tenants ˃ Well maintained property portfolio delivers services and amenity demanded by existing and prospective tenants regardless of building age ˃ FY16 base building capex less than 1% of portfolio value, including refurbishment projects ˃ During the year CMA completed two key refurbishment projects ˃ 1 Richmond Road, Keswick ˃ 54 & 60 Marcus Clarke Street, Canberra ˃ Post modernisation,these assets now offer the same level of service and amenity available in competing assets CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 13
1 Richmond Road, Keswick Before Before After After CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 14
54 & 60 Marcus Clarke Street, Canberra 54 Marcus Clarke St - Before 60 Marcus Clarke St - Before 54 Marcus Clarke St - After 60 Marcus Clarke St - After CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 15
FY16 Valuations Valuation uplift driven by active asset management and strong fundamentals in metropolitan office markets $398.7m 9.3% Book value Increased Portfolio Valuation 2 Key valuation metrics 30 Jun 30 Jun Change 2015 2016 Book value ($m) 323.1 398.7 75.6 Independent Portfolio Valuation ($m) 322.1 396.7 1 74.6 Portfolio WACR (%) 8.43 7.86 (0.57) Average Capital Value ($psm) 3,193 3,943 750 1 Richmond Rd, Keswick 1.Independent valuations as at 15 May 2016 and restated for 30 June 2016 2.On a like for like basis, excluding 203 Pacific Highway, St Leonards CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 16
Section 3 Capital Management CENTURIA METROPOLITAN REIT | CMA:ASX | FY16 RESULTS BRIEFING 9 AUGUST 2016 | PAGE 17
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