Centuria Capital Group (ASX:CNI) financial year 2020 results & outlook


by Rachael Jones

Centuria Capital Group (ASX:CNI) Joint CEO John McBain discusses full year 2020 results, acquisition of Augusta Capital, and guidance for FY21.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today is Centuria Capital Group’s (ASX:CNI) Joint CEO John McBain. John, welcome back to FNN.

John McBain: Thank you.

Rachael Jones: John, congratulations on your financial year 2020 results. Now, can you talk us through 2020’s financial highlights?

John McBain: Sure. This year, we’ve performed very strongly. Our FY20 earnings per security were 12 cents, as opposed to guidance of 11.5 cents. In addition, our distribution per security was 9.7 cents, which was as forecast. In fact, the second instalment paid a little bit early. A couple of other things that we think are important – our recurring revenues during the period grew to 86 per cent of total revenues. And finally, as at 30 June 2020, we had a particularly strong balance sheet, with just under $150 million of free cash.

Rachael Jones: You’ve had some real accelerated growth there. Can you talk me through how you achieved this?

John McBain: We've grown to about $9.4 billion in assets under management, which is just over 50 per cent over our FY19 numbers. And it's come about because of a dual strategy we have. So when you combine the effects of both the direct real estate acquisitions and a corporate expansion, it gives rise to this growth. So, for example, this year we had the Arnott's acquisition of two of their major manufacturing plants, in our industrial REIT, circa $230 million. In addition, just the other week, we completed the acquisition of the main Telstra data centre in Clayton in Victoria, for around $417 million.

Rachael Jones: Now, Centura's takeover bid for New Zealand's Augusta Capital is almost complete. Can you talk me through the progress there?

John McBain: So, currently we have just over 96 per cent of acceptances to our offer for the company. That means, because we're in excess of 90 per cent, we're permitted under the New Zealand Takeovers Code, to compulsorily acquire the outstanding 4 per cent, and we'll be moving to do that over the next few days. And our intention is to delist the head company, Augusta Capital Limited, which is currently listed on the New Zealand stock exchange. And then we'll operate Augusta as a hundred per cent subsidiary of Centuria. Augusta just launched the acquisition of a $55 million healthcare centre in Hamilton in New Zealand. That closed three weeks early, massively oversubscribed, which gives us a pretty good indication of the demand for yield by investors over there. And we think that with the type of support that we're going to give Augusta, and both in terms of capital and systems, we see our acquisition of that platform as being an important growth engine for Centuria going forward.

Rachael Jones: And how has Centuria positioned itself in the market now?

John McBain: We really are transforming into a leading Australasian property funds manager with our acquisition of Augusta Capital. It increased our assets under management to just under 25 per cent by itself. If you look across our platform, we have around $4.3 billion of listed trusts with our REITs, and by coincidence, another $4.3 billion of unlisted property funds. So I think you're seeing that transformation happening, and we're very confident about the New Zealand property market. In fact, both property markets in Australia and New Zealand, we're really invested to see through Covid-19. By way of example, industrial real estate. Industrial real estate is performing very well during Covid-19, as e-commerce is driving online shopping. We're very strong now in healthcare. That's been rebranded Centuria Healthcare, and it's just soft launched a $130 million diversified healthcare fund, and the initial indications from our Chairman's list and the institutional investors supporting it have been exceedingly strong.

Rachael Jones: And to the final question now, John. What are your expectations for financial year 2021?

John McBain: We are today issuing guidance, earnings per security guidance of 10.5 to 11.5 cents per security. And we're issuing our FY21 guidance of 8.5 cents of distributions per security. Strategically for the next 12 months, I think we'll continue this dual strategy of corporate expansion and direct asset acquisitions. So, as I've mentioned previously, the start of FY21's been very strong for us. We've completed the acquisitions of around $600 million worth of real estate. In the context of the global pandemic, I think we're about as well placed as we could be, and we're quite confident about our ability to perform with our business model in these conditions.

Rachael Jones: John McBain, congratulations once again on your results, and thanks so much for the update today.

John McBain: Thank you.


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