Centuria Office (COF) H2 2024 earnings summary

Executive summary

• FY24 funds from operations (FFO) were AUD 82.2 million or 13.8 cents per unit, and distributions were 12.0 cents per unit, both in line with guidance.

• Portfolio occupancy was 92.5% with a 4.3-year WALE as of 30 June, and 93% of the portfolio is A-grade with a 5-star average NABERS energy rating.

• Four non-core assets were divested for AUD 139 million at a 2% discount to book value, with proceeds used to repay debt.

• $862 million of debt was refinanced, extending debt duration to over 4 years with no expiries before FY28.

• Statutory net loss of $168.7 million, primarily due to portfolio revaluations and challenging market conditions.

Financial highlights

• FY24 FFO totaled AUD 82.2 million (13.8 cpu), down from AUD 93.0 million (15.6 cpu) in FY23.

• Gross property income rose 3% like-for-like, but overall income was flat due to divestments.

• Distribution payout ratio was 87% of FFO.

• Net Tangible Assets (NTA) per unit declined to AUD 1.80 from AUD 2.20.

• Finance costs rose to AUD 46 million, with an average all-in debt cost of 4.9%.

Outlook and guidance

• FY25 FFO guidance is 11.8 cpu and distribution guidance is 10.1 cpu, with a forecast yield of 8.1%.

• Guidance assumes no FY25 income from full floor vacancies in Docklands, St Leonards, and Macquarie space at 85 Ann Street.

• Focus remains on maintaining high occupancy, improving portfolio quality, and proactive capital management.

• No current plans to reduce gearing below early 40% range; focus remains on debt covenant headroom.

• Medium-term outlook is optimistic due to limited new office supply and infrastructure improvements.