Centuria Metropolitan REIT Limited (ASX:CMA) Trust Manager, Nicholas Blake, talks FY17 results, portfolio metrics and metropolitan office market demand.
Kathy Skantzos: Hello Kathy Skantzos for the Finance News Network. Joining me today is Centuria Metropolitan REIT (ASX:CMA) Trust Manager, Nick Blake. Nick, welcome to FNN.
Nick Blake: Thanks Kathy.
Kathy Skantzos: First up, can you give us an introduction to the company?
Nick Blake: Centuria Metropolitan REIT, or CMA is Australia’s largest ASX listed metropolitan office investment vehicle, with a market capitalisation in excess of $500 million and a portfolio of 18 assets across the nation, valued at $760 million.
Kathy Skantzos: Now to your FY2017 results. What were a couple of highlights?
Nick Blake: FY17 was a very strong year for CMA. During the year, we merged with our sister entity Centuria Urban REIT (ASX:CUA) to deliver a larger portfolio, that’s ultimately seen us included in the S&P ASX 300 index. Financially, we delivered on our earnings and distribution guidance and we’re well positioned to deliver again in the year ahead.
Kathy Skantzos: Now to your portfolio in more detail. Can you give us an update starting with tenant profiles?
Nick Blake: We’ve got a very strong tenant profile within the CMA portfolio. 48 per cent of our income is derived from our top 10 tenants, all of whom are institutional grade of household names. But more importantly from a risk management perspective, the largest number of tenants in our portfolio, has small to medium sized enterprises occupying less than 500 square metres. And our management platform is well suited to work that space.
Kathy Skantzos: What would you say are some of your key selling points?
Nick Blake: Occupancy in the portfolio is a very healthy 98.6 per cent, with a WALE by income in excess of four years. Importantly, our FY18 earnings profile is well supported with expiries of less than 3.6 per cent.
Kathy Skantzos: A question about commercial property prices. Properties are trading for record low capitalisation rates, have we reached the top?
Nick Blake: It’s fair to say that we’ve seen some historic pricing within the CBDs, but I think this bodes well for us in the metropolitan markets. As those investors who can’t get set in the CBDs are looking for value in the markets, in which CMA operates.
Kathy Skantzos: What’s the guidance and outlook for FY2018?
Nick Blake: We see a strong year ahead for CMA and we’ve given distributable earnings guidance of 18.6 cents per security. And distributions of 18.1 cents paid quarterly to ensure predictable and growing earnings, back to our investors.
Kathy Skantzos: Nick Blake, thank you so much for the update.
Nick Blake: Thank you Kathy.