ASX CEO Connect ASX:COF 13 Oct 2020 Centuria Office REIT C E N T U R I A O F F I C E R E I T A S X : C O F 1 235 WILLIAM STREET, NORTHBRIDGE, WA
CENTURIA MANAGEMENT COF Key metrics – Australia’s largest ASX -listed pure play office REIT P O R T F O L I O F I N A N C I A L 8.1% 23 $2.1bn Distribution paid in Forecast FY21 equal quarterly High quality assets Portfolio value DPU yield 3 instalments $131.0m 34.5% 95.9% 4.5yrs Undrawn debt 5 Gearing 4 Portfolio occupancy 1 Portfolio WALE 2 1. By area 5. Undrawn capacity exclude a $1.5m bank guarantee held as security over the 46 Colin Street, West Perth WA ground lease 2. By gross income 3. Based on COF closing price of $2.04 per unit on 30 September 2020 All figures are as at 30 September 2020 unless stated otherwise 4. Gearing is defined as total borrowings less cash divided by total assets less cash and goodwill C E N T U R I A O F F I C E R E I T A S X : C O F 2
COF - Strategic vision and objectives To build Australia’s leading pure play office REIT V I S I O N A CLEAR Focused on generating sustainable and quality income streams and executing AND SIMPLE initiatives to c reate value across a portfolio of quality Australian office assets STRATEGY Australia’s largest Overseen by an active Prudently managing its Strongly supported by COF is domestic ASX-listed pure play management team with balance sheet to position Centuria Group office REIT deep real estate expertise for further growth Portfolio Active Capital Unlock opportunities KEY Construction Management Management to create further value OBJECTIVES A portfolio of quality Australian Primarily focused on A robust and diversified Continue to enhance office assets diversified by geography, maintaining occupancy and capital structure, with the portfolio and upgrade tenants and lease expiry extending portfolio WALE appropriate gearing asset quality C E N T U R I A O F F I C E R E I T A S X : C O F 3
ASSET QUALITY COF provides quality, highly connected and affordable office space A portfolio positioned to meet COF has no single market concentration changing tenant demand Connectivity with key transport nodes & reduced commute time Access to recreational 235 WILLIAM STREET, NORTHBRIDGE, WA amenity, essential retail & hospitality 555 CORONATION DRIVE, TOOWONG, QLD COF’s average building age is c.16 years COF exposed market rents average a significant discount to Sydney CBD 203 PACIFIC HIGHWAY, ST LEONARDS, NSW NISHI, 2 PHILLIP LAW STREET, CANBERRA, ACT 9 HELP STREET & 465 VICTORIA AVE, CHATSWOOD, NSW C E N T U R I A O F F I C E R E I T A S X : C O F 4
COF - A high-quality pure play office portfolio PORTFOLIO SNAPSHOT 1QFY21 PORTFOLIO WEIGHTING Number of assets # 23 QLD 24.0% Book value 1 $m 2,053.3 WA 14.0% WACR 1 % 5.93 86.3 3.4 NLA sqm 304,437 99.4 6.1 OCCUPANCY(%) WALE(YRS) Occupancy 2 % 95.9 OCCUPANCY(%) WALE(YRS) WALE 3 yrs 4.5 Average NABERS energy rating (by value) Stars 4.8 Average building age (by value) yrs 16.1 NT NSW 25.7% QLD WA 99.6 5.0 SA OCCUPANCY(%) WALE(YRS) NSW 1QFY20 TENANT TENANT PROFILE BY ASX Listed <500sqm ACT MIX SIZE (SQM) Government 500-1,000sqm VIC SA 2.6% Listed Multinational 1,000-2,000sqm ACT 16.4% Multinational 2% 13% >2,000sqm 10% 100 2.9 25% 96.6 5.5 7% National 5% Parking OCCUPANCY(%) WALE(YRS) VIC 17.2% OCCUPANCY(%) WALE(YRS) Other 9% 18% 99.6 3.2 OCCUPANCY(%) WALE(YRS) 26% 72% 13% 82% 72% 1. As at 30 June 2020 All figures are as at 30 September 2020 unless stated otherwise 2. By area C E N T U R I A O F F I C E R E I T A S X : C O F 5 3. By gross income
COF – A staggered lease profile to quality tenants 4.1% • Over 25% of income derived from government WEIGHTED AVERAGE LEASE EXPIRY (% BY INCOME) Portfolio NLA leased in 1QFY21 3 tenants with the Federal Government representing Income WALE (Jun-20) 4.7 yrs 14 % of the portfolio income Income WALE (Sep-20) 4.5 yrs 61.2% 5,985sqm 58.4% 11 new leases • High occupancy at 95.9% 1 WALE of 4.5 years 2 in 1QFY21 3 • 18.3% of leases expire through to FY22, with 60.2% 6,567sqm 7 renewals 17.7% 16.2% of lease expiries occurring at or beyond FY24 15.2% in 1QFY21 3 10.2% 8.2% 6.8% • Diversified tenant profile to high quality tenants 4.3% 1.8% 12,552sqm Portfolio NLA Vacant FY21 FY22 FY23 FY24+ leased in 1QFY21 3 TOTAL GOVERNMENT EXPOSURE 25% COMMONWEALTH WA QLD NSW SA 32,317sqm 14,288sqm 7,130sqm 11,561sqm 3,672sqm four properties two properties one property two properties 2.9% one property 1.5% 14.0% of income 4.7% of income 2.8% of income of income of income 1. By area All figures are as at 30 September 2020 unless stated otherwise 2. By gross income C E N T U R I A O F F I C E R E I T A S X : C O F 6 3. Includes leases agreed
Resilient performance and prudent management through COVID-19 100 BROOKES STREET, FORTITUDE VALLEY, QLD In house c. 94% Over 80% of 1.1% management income derived c.$1.0m c.58% facilitate greater from government, Average rent tenant engagement listed and MNC July to September Reduction in collections April through period of portfolio value 2 to September 1 uncertainty HIGH QUALITY REDUCTION IN RENT PROVIDED PORTFOLIO PROPERTY PROVIDED RENT TENANTS COLLECTIONS RENT RELIEF VALUATION & FACILITIES UNDERPIN RELIEF IMPACT MANAGEMENT Q4FY20 – Q1FY21 PORTFOLIO 1. Included within the outstanding rent is agreed and pending rent relief claims related to the National Code of Conduct on Commercial Leases 2. 30 June 2020 reduction in valuation from immediately preceding book value C E N T U R I A O F F I C E R E I T A S X : C O F 7 All figures are as at 30 September 2020 unless stated otherwise
Commercial office remains core to business operations Benefits working from the office • Maintaining professional relationships with stakeholders & colleagues • Executing workstreams that require person to person contact • Establishes work life and personal life separation 71% • Increases structured and unstructured collaboration 62% • Promotes unscheduled interactions and ideas generation White collar White collar employment in 2020 1 • Facilitates on-boarding, mentoring and culture frameworks employment in 1990 1 Challenges working from home • Social isolation & mental health impacts 4.2% 3.5% • Inequitable workplace environments People working • Potential distractions at home People working from home in from home in • Additional home office costs 2016 2 1990 2 • Diminished culture, manager and team engagement • Reduced work life and personal life separation (risk of overworking) C E N T U R I A O F F I C E R E I T A S X : C O F 8 1. Source: JLL Research All figures are as at 30 September 2020 unless stated otherwise 2. ABS
Commercial office remains core to business operations “I think this pandemic will make us all realise that no matter how much technology we have, nothing beats human interaction.” - Ruslan Kogan, CEO Kogan (source: AFR) Facebook have leased 730,000sq ft (68,000sqm) in New York - 3 Aug 2020 (source: NY Times) I don’t see any positives. Not being able to get together in person is a pure negative. - Reed Hastings, Founder and Co-CEO Netflix Inc. (source: WSJ) “The ability to connect with people, the ability of teams to work together in an ad -hoc fashion – you can do it virtually, but it isn’t spontaneous. We are looking forward to returning to the office.” - Ardine Williams, VP of Workforce Development Amazon (source: WSJ) “People are very efficient doing their work at home once they know what they are doing. The problem is when you don’t know what to do next. If you don’t have a physical co - location, I think we are all going to struggle.” - Mark Golan, COO of Real Estate Investments and Development Google (source: AFR) C E N T U R I A O F F I C E R E I T A S X : C O F 9
Summary Over 80% of income 8.1% 1 derived from government, listed and FORECAST MNC DISTRIBUTION Over 60% of YIELD portfolio leases expire at or DISTRIBUTIONS beyond FY24 PAID IN EQUAL QUARTERLY INSTALMENTS NISHI, 2 PHILLIP LAW STREET, CANBERRA, ACT 1. Based on COF closing price of $2.04 per unit on 30 September 2020 C E N T U R I A O F F I C E R E I T A S X : C O F 1 0 All figures are as at 30 September 2020 unless stated otherwise
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