Australian Securities Exchange – Company Announcements Platform
Centuria Property Funds No. 2 Limited
CENTURIA INDUSTRIAL REIT
2018 Goldman Sachs Small and Mid-Cap Conference Presentation
Sydney 18 April 2018,
Centuria Property Funds No. 2 Limited (CPF2L) as Responsible Entity of Centuria Industrial REIT
(ASX:CIP) provides a presentation that will be used at the Goldman Sachs ninth annual Small and
Mid-Cap Conference being held today in Sydney.
– Ends –
For more information or to arrange an interview, please contact: Ross Lees
Trust Manager – CIP
Centuria Property Funds No. 2 Limited
Phone: 02 8923 8923
Email: [email protected]
Tim Mitchell
Group Head of Investor Relations
Centuria Capital Group
Phone: 02 8923 8923
Email: [email protected]
About Centuria Property Funds No. 2 Limited
Centuria Property Funds No. 2 Limited (CPF2L), a wholly-owned subsidiary of Centuria Capital Group (CNI), is the
Responsible Entity for the ASX listed Centuria Industrial REIT (CIP).
CIP is Australia’s largest ASX-listed income focused industrial investment vehicle and is included in the S&P ASX300 index.
CIP owns a portfolio of 39 high quality industrial assets with a value exceeding $1 billion, the properties are located in key
metropolitan locations throughout Australia.
CPF2L, combined with Centuria Property Funds Limited (CPFL), the Responsible Entity for the ASX listed Centuria
Metropolitan REIT (CMA), has $3.7 billion of funds under management in 17 unlisted property funds, one open-ended
diversified property fund and two listed REITs.
CNI is an ASX-listed specialist investment manager with $4.6 billion in funds under management.
www.centuria.com.au
PAGE 1
CENTURIA INDUSTRIAL REIT (ASX:CIP) I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
1 ASHBURN ROAD, BUNDAMBA, QLD
Centuria Industrial REITGoldman Sachs Small and Mid-Cap Conference
1H18 Results
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
1Overview
2Portfolio Overview
3Summary
1 ASHBURN ROAD, BUNDAMBA, QLD
Section 1
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Overview
PAGE 4
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Centuria CapitalASX-listed specialist investment manager
1. Includes 31 Kendall Street, Williams Landing, VIC, as if complete2. Includes post 31 December 2017 acquisitions3. Above chart at 31 December 2017
Property fund management
Listed Property $2.0b 1 Unlisted Property $1.7b 2
$0.9bAssets Under Management
Investment Bonds
17 fixed term funds
$3.7bAssets Under Management 1,2
Assets Under Management
Industrial REIT (CIP)
$1.1bAssets Under Management 1
Office REIT (CMA)
$0.9bCenturia Diversified
Property Funds
$4.6bAssets Under Management 1,2
Centuria Capital Group
PAGE 5
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
CIP, Australia’s largest ASX listed income focused industrial REIT
Key Metrics at 31 December 2017
40.6%Gearing 3
95.9%Portfolio
occupancy 4
4.9yrsPortfolio WALE 4
39High quality assets
$1.0bPortfolio value
19.4cpuFY18 distribution
guidance
$608mMarket
capitalisation 1
7.9%FY18 forecast
distribution yield 1
1. Based on CIP closing price of $2.45 on 31 March 2018
2. Source: Moelis & Company
3. Gearing is defined as total borrowings minus cash / total assets minus cash and goodwill
4. By income
12 month total unit holder return outperforming S&P/ASX300
A-REIT Index at -0.1% 2
6.7%
2
PAGE 6
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
CIP has a simple strategy – to deliver income and capital growth to investors from a portfolio of high quality Australian industrial assets; by
– focusing on ‘fit for purpose’ assets that are relevant to our quality customer base
– anticipating and meeting the needs of our customers to ensure high retention and occupancy
– Re-positioning assets to maximise value to unit holders
24-32 Stanley Drive Somerton, VIC
Strategy
PAGE 7
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
1. Source: ASX disclosures at 31 December 2017
– Only ASX listed REIT with 100% exposure to Australian industrial real estate
– Large scale, geographically diversified industrial portfolio
– Included in S&P/ASX 300 Index
– Portfolio has grown significantly over the past five years
Australia’s largest ASX listed income focused industrial REIT
$2.0 bn
0
25
50
75
100%
1.0
0.5
1.5
Value of owned Industrial Portfolio (ex Business Parks) 1
0.0
CIPPeer 8
Represents Australian Industrial Property (ex Business Parks) as a % of assets
Peer 7 Peer 6 Peer 5 Peer 4 Peer 3 Peer 2 Peer 1
$0.3 bn
$0.6 bn
$0.8 bn
$1.0 bn$1.1 bn
$1.3 bn $1.4 bn$1.5 bn
$1.8 bn
NA
$1,200 m
1,000
400
200
800
600
CIP Portfolio Value
0
Jun 14 Jun 15 Jun 16 Jun 17 Dec 17
CAGR 34%
PAGE 8
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Note: Investment sales greater than and equal to $5 million included; yields reflect reversionary yields
Source: RCA / Colliers Edge
Note: Yields reflect average prime industrial assets, as at December 2017
Source: Colliers International
Competition for assets drives transaction volumes
$9 AUD Billions
6
7
8
4
5
0
2
1
3
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
10%
9.0
8.5
9.5
8.0
7.5
6.0
7.0
6.5
Ave
rag
e C
ap R
ate
Tran
sact
ion
Volu
me
Transaction Volumes and Average Cap Rate
NSW VIC QLD WA SA ACT Other Average Prime Yield Average Secondary Yield 6 7 84 50 21 3
Yield (%)
Average Industrial Yield by City (2017)
Houston
Melbourne
Shanghai
Los Angeles
Sydney
Tokyo
Chicago
Frankfurt
Munich
Vancouver
London
Hong Kong
Singapore
Total average 5.1%
PAGE 9
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
6.0
5.0
2.0
1.0
3.0
4.0
Australian GDP and CPI
0.0
CPIGDP
Dec-
2006
Mar
-200
7Ju
n-20
07Se
p-20
07De
c-20
07M
ar-2
008
Jun-
2008
Sep-
2008
Dec-
2008
Mar
-200
9Ju
n-20
09Se
p-20
09De
c-20
09M
ar-2
010
Jun-
2010
Sep-
2010
Dec-
2010
Mar
-201
1Ju
n-20
11Se
p-20
11De
c-20
11M
ar-2
012
Jun-
2012
Sep-
2012
Dec-
2012
Mar
-201
3Ju
n-20
13Se
p-20
13De
c-20
13M
ar-2
014
Jun-
2014
Sep-
2014
Dec-
2014
Mar
-201
5Ju
n-20
15Se
p-20
15De
c-20
15M
ar-2
016
Jun-
2016
Sep-
2016
Dec-
2016
Mar
-201
7Ju
n-20
17Se
p-20
17De
c-20
17
Underlying conditions remain positive for industrial occupiers
65
60
55
40
45
35
50
Australian Manufacturing Purchasing Managers Index (3 months average)
May 09 May 10 May 11 May 12 May 13 May 14 May 15 May 16 May 17
Projected Average Population Growth (2018-2022)
3.0 %
0.3%0.0%
-0.4%
0.5% 0.6% 0.6% 0.6% 0.8% 0.8% 0.9% 1.0% 1.0% 1.0% 1.2% 1.3% 1.3% 1.3% 1.6% 2.7%
Maj
or A
dvan
ced
Ger
man
y
Japa
n
Fran
ce
Peop
le’s
Rep
ublic
of C
hina
Uni
ted
Stat
es
Uni
ted
King
dom
Hon
g Ko
ng S
AR
Sing
apor
e
Mex
ico
Asia
& P
acifi
c
Emer
ging
& d
evel
opin
g
Can
ada
Wor
ld
Indo
nesi
a
Emer
ging
mar
ket
Indi
a Aust
ralia
Nig
eria
2.0
0.0
1.0
-1.0
Source: ABS
Source: RBA, Property Insights
2013/14 2014/15 2015/16 2016/17eC
om
mer
ce S
hare
(%)
Sal
es (A
UD
Mill
ions
)
Online Retail and eCommerce
Average monthly online Retail Sales Share of eCommerce Sales
$1,000
$600
$400
$800
0
$200
38.5
39.5
37.5
35.5
35.0
36.0
37.0
38.0
39.0
36.5
Source: Source: ABS / Colliers Research Note: ‘eCommerce’ defined as ‘pure-online sales’
Source: IMF
PAGE 10
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
1) Source: Knight Frank Research
Availability reducing across all key marketsMarket supply 1
Available Space – Sydney
1,000
800
600
400
200
0
Apr
11
Aug
11
Dec
11
Apr
12
Aug
12
Dec
12
Apr
13
Aug
13
Dec
13
Apr
14
Aug
14
Dec
14
Apr
15
Aug
15
Dec
15
Apr
16
Aug
16
Dec
16
Apr
17
Aug
17
Dec
17
Prime Secondary
1,200
1,200
800
1,000
600
400
200
0
Available Space – Melbourne
Prime Secondary
Apr
11
Aug
11
Dec
11
Apr
12
Aug
12
Dec
12
Apr
13
Aug
13
Dec
13
Apr
14
Aug
14
Dec
14
Apr
15
Aug
15
Dec
15
Apr
16
Aug
16
Dec
16
Apr
17
Aug
17
Dec
17
800
600
400
200
0
Available Space – Brisbane
Prime Secondary
Apr
11
Aug
11
Dec
11
Apr
12
Aug
12
Dec
12
Apr
13
Aug
13
Dec
13
Apr
14
Aug
14
Dec
14
Apr
15
Aug
15
Dec
15
Apr
16
Aug
16
Dec
16
Apr
17
Aug
17
Dec
17
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Section 3
Portfolio overview
PAGE 12
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
High quality assets accomodating quality tenantsPortfolio composition
1. Includes acquisition of Lot 14 Sudlow Road, Bibra Lake, WA and 207-219 Browns Road, Noble Park, VIC, exchanged on 29 June 2017
Portfolio Snapshot 1H18 FY17 1 1H17
Number of assets 39 38 37
Book value $m 1,005.2 961.2 911.9
WACR % 7.02 7.33 7.42
GLA sqm 766,539 757,944 693,620
Average asset size sqm 19,655 19,945 18,746
Occupancy by income % 95.9 92.1 96.1
WALE by income Years 4.9 4.4 4.4
AWH Woolworths
Green's General FoodsVisy Board
The Reject ShopAPI
OroraVIP Petfoods
K & S FreightersBradnam's Windows and Doors
12345678910
Tenant % of total incomeRank
8.1%8.1%
6.4%5.3%
4.3%4.2%
3.9%3.5%
3.4%3.4%
18%QLD
SA
WA
NT
NSW
ACT
VIC
39%
27%
2%
1%
13%
Geographic Diversification (by value)
PAGE 13
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
1. FY19 will further reduce to 10.2% following settlement of 39-45 Wedgewood Road, Hallam, VIC
– Record leasing in 1H FY18, 20.1% of portfolio leased over a six month period
– 100% tenant retention in 1H FY18 driven by leasing transactions with major occupiers
– Executed one of Australia’s largest leases, 83,781sqm to AWH
– High occupancy of 95.9%, portfolio WALE of 4.9 years
– Significant reduction in portfolio vacancy and near term forward lease expiry
Operational highlights
Active management generates record leasing volume
Weighted Average Lease Expiry (by income)
70 (%)
60
50
40
30
20
10
0
1H18 FY17
FY18
3.5%
5.0%
FY20
14.2%
24.8%
47.3%
FY19 1
11.2%
11.8%
FY21
3.2%
4.9%
Vacant
7.9%
4.1%
FY22+
62.1%
WALE4.9 years
Occupancy95.9%
47.3%
PAGE 14
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Transactional highlights
Acquisitions Divestment
207-219 Browns RoadNoble Park, VIC
– $37.0 million acquisition, 7.0% initial yield 2
– 8.8 year WALE 3
– Adjoins existing CIP four hectare asset at 500 Princes Highway, Noble Park
Lot 14 Sudlow RoadBibra Lake, WA
– $28.0 million acquisition, 8.8% initial yield 2
– 7.8 year WALE 3
– Re-leased 100% of the property ahead of settlement
– Adjoins existing CIP asset at 310 Spearwood Avenue, Bibra Lake
92 Robinson AvenueBelmont, WA
– $11.2 million acquisition, 11.0% initial yield 2
– 100% leased to Toll Transport until 2021
– High quality, fit-for-purpose asset in infill location situated between Perth CBD and Perth airport
39-45 Wedgewood DriveHallam, VIC
– $10.0 million divestment, 7.5% premium to book value
– Settlement to occur in June 2018, ahead of FY19 lease expiry
Over $130m1 transacted to improve portfolio quality
1. Includes CIP’s 7.7% interest in Propertylink Group and 43-45 Mica Street, Carole Park, QLD
2. Acquisition prices and initial yields before transaction costs
3. WALE by area
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Section 5
Summary
PAGE 16
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
– CIP is Australia’s largest ASX focused income industrial REIT with 100% exposure to industrial assets
– Managed by Centuria Capital (ASX:CNI), a specialist fund manager with $121m 1 co-investment
– CIP’s portfolio is nationally diversified with highest weightings towards NSW and VIC markets
– The portfolio has undergone significant active management
> Near term lease expiries have been significantly reduced over the last 12 months, increasing WALE to 4.9 years
> Continued execution of complementary acquisition and disposal initiatives
Summary
– Australia’s industrial market continues to experience strong demand from domestic and international investors
– Tenant demand improving
> Adaptation towards emerging technological trends
> Uplift from traditional manufacturing sectors
– Forecast FY18 distributable earnings of 19.5-20.0 cents per unit
– Forecast FY18 distribution of 19.4 cents per unit
1. Based on CIP closing price of $2.45 as at 31 March 2018, and CNI disclosure of 21 Nov 2017
PAGE 17
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
CIP, Australia’s largest ASX listed income focused industrial REIT
Key Metrics at 31 December 2017
40.6%Gearing 3
95.9%Portfolio
occupancy 4
4.9yrsPortfolio WALE 4
39High quality assets
$1.0bPortfolio value
19.4cpuFY18 distribution
guidance
$608mMarket
capitalisation 1
7.9%FY18 forecast
distribution yield 1
1. Based on CIP closing price of $2.45 on 31 March 2018
2. Source: Moelis & Company
3. Gearing is defined as total borrowings minus cash / total assets minus cash and goodwill
4. By income
12 month total unit holder return outperforming S&P/ASX300
A-REIT Index at -0.1% 2
6.7%
2
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
PAGE 18CA-CIP-17/04/18–00777
This presentation has been prepared by Centuria Property Funds No. 2 Limited (ABN 38 133 363 185, AFSL 340 304) (‘CPF2L’) as responsible entity of the Centuria Industrial REIT (ARSN 099 680 252 (‘CIP’ or the ‘Trust’).
All information and statistics in this presentation are current as at 18 April 2018 unless otherwise specified. It contains selected summary information and does not purport to be all-inclusive or to contain all of the information that may be relevant, or which a prospective investor may require in evaluations for a possible investment in CIP. It should be read in conjunction with CIP’s periodic and continuous disclosure announcements which are available at www.centuria.com.au. The recipient acknowledges that circumstances may change and that this presentation may become outdated as a result. This presentation and the information in it are subject to change without notice and CPF2L is not obliged to update this presentation.
This presentation is provided for general information purposes only. It is not a product disclosure statement, pathfinder document or any other disclosure document for the purposes of the Corporations Act and has not been, and is not required to be, lodged with the Australian Securities & Investments Commission. It should not be relied upon by the recipient in considering the merits of CIP or the acquisition of securities in CIP . Nothing in this presentation constitutes investment, legal, tax, accounting or other advice and it is not to be relied upon in substitution for the recipient’s own exercise of independent judgment with regard to the operations, financial condition and prospects of CIP.
The information contained in this presentation does not constitute financial product advice. Before making an investment decision, the recipient should consider its own financial situation, objectives and needs, and conduct its own independent investigation and assessment of the contents of this presentation, including obtaining investment, legal, tax, accounting and such other advice as it considers necessary or appropriate. This presentation has been prepared without taking account of any person’s individual investment objectives, financial situation or particular needs. It is not an invitation or offer to buy or sell, or a solicitation to invest in or refrain from investing in, securities in CIP or any other investment product.
The information in this presentation has been obtained from and based on sources believed by CPF2L to be reliable.
To the maximum extent permitted by law, CPF2L and its related bodies corporate make no representation or warranty, express or implied, as to the accuracy, completeness, timeliness or reliability of the contents of this presentation. To the maximum extent permitted by law, CPF2L does not accept any liability (including, without limitation, any liability arising from fault or negligence) for any loss whatsoever arising from the use of this presentation or its contents or otherwise arising in connection with it.
This presentation contains information as to the past performance of CIP. Such information is given for illustrative purposes only, and is not – and should not be relied upon – as an indication of the future performance of CIP.
This presentation may contain forward-looking statements, guidance, forecasts, estimates , prospects, projections or statements in relation to future matters (‘Forward Statements’). Forward Statements can generally be identified by the use of forward looking words such as “anticipate”, “estimates”, “will”, “should”, “could”, “may”, “expects”, “plans”, “forecast”, “target” or similar expressions. Forward Statements including indications, guidance or outlook on future revenues, distributions or financial position and performance or return or growth in underlying investments are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. No independent third party has reviewed the reasonableness of any such statements or assumptions. No member of CPF2L represents or warrants that such Forward Statements will be achieved or will prove to be correct or gives any warranty, express or implied, as to the accuracy, completeness, likelihood of achievement or reasonableness of any Forward Statement contained in this presentation. Except as required by law or regulation, CPF2L assumes no obligation to release updates or revisions to Forward Statements to reflect any changes. The reader should note that this presentation may also contain pro forma financial information.
Distributable earnings is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents the profit under AAS adjusted for specific non-cash and significant items. The Directors consider that distributable earnings reflect the core earnings of the Trust.
All dollar values are in Australian dollars ($ or A$) unless stated otherwise.
Disclaimer
CENTURIA INDUSTRIAL REIT I GOLDMAN SACHS SMALL AND MID-CAP CONFERENCE I 18 APRIL 2018
Thank you