Centuria Capital Group (ASX:CNI) 1H21 results & outlook


by Rachael Jones

Centuria Capital Group Limited (ASX:CNI) Joint CEO, John McBain talks 1H21 results & outlook, transactions and financial highlights.

Rachael Jones:
Hello, I'm Rachael Jones for the Finance News Network. Joining me from Centuria Capital Group is joint CEO, John McBain, who today reported a strong half results for financial year 2021. John, welcome back to the network.

John McBain: Thank you.

Rachael Jones: Now, Centuria has reported record transactions for the half. What can you tell me about this?

John McBain: Yeah, We recorded $1.5 billion worth of acquisitions across 24 assets. And that is a record for our group, for a 12 month period, let alone a six month period.

Rachael Jones: And John, how do these transactions fit into the group's corporate strategy?

John McBain: Well, for some time we've had this dual strategy where we have organic acquisitions of assets, real estate assets we put into funds, but also corporate acquisitions where we buy other real estate funds managers. So in this company, and I'm involved in the M&A side of the business. So if it were a corporate acquisition, I'd be heavily involved in that. Whereas my co-CEO, Jason Huljich, is responsible for the funds management and properties management side of the business, which is a huge part of the business, which he and his staff undertake very capably. So when we talk about the $1.5 billion of assets that Jason's divisions acquired this year, $700 million of them were industrial assets. Now that's a sector that only came in with the acquisition of the 360 Capital platform three and a half years ago / four years ago. So the industrial platform, the healthcare platform and New Zealand platform, even in this half, have had double digit growth and sometimes much more explosive than that too, which we detailed in our report.

Rachael Jones: And what impact have these transactions had on 2021 guidance?

John McBain: Quite a lot. This year we've increased our profit guidance twice and our distribution guidance three times as of today. One of the big things that's underpinned our ability to do this, is that dual strategy. And so we've had strong organic acquisitions of property as I've mentioned, but on top of that, we've had corporate acquisitions. So things like the acquisition of the New Zealand platform, the Augusta Capital platform. It in itself, in its own right, bought a $180 million property in one transaction, that's being undertaken right now. And it's a profitable transaction. Those profits flow up to the headstock and allow us to distribute more profits and distributions themselves to our securityholders.

Rachael Jones: And John, can you walk us through some other highlights from the half.

John McBain: I think the highlights are some of the larger transactions we've done, the $417 million Telstra data centre. That's in CIP, our industrial REIT. The $190 million acquisition of the Visy Glass manufacturing plant in Auckland. But also a lot of very hard work during the COVID period by a fantastic staff in bedding these acquisitions down, whether they're real estate acquisitions or corporate acquisitions. And I think as a group, we've got very good at doing both those things. And I must mention healthcare. That's another sector that we're delighted to be in. And the healthcare group has grown quite a lot over the two year period that we've been involved in it. The sector itself has grown, but also our prominence in the sector and the types and scale of transactions that we've been able to do in the sector.

Rachael Jones: And Centuria also reported a strong development pipeline. Can you tell us more about this division?

John McBain: Yes. So, we've reported a development pipeline of $1.6 billion. So this division services all the asset sectors that we are involved in, and by way of example, healthcare and industrial are two really good examples of sectors where we can't just buy completed investments. Sometimes we have to create them. Healthcare, where we have such deep relationships with the operators, and as they require further premises, we can construct buildings for them, which would be subject to lease because we only own the real estate. And industrial is another one, where we have such a high quality portfolio of tenants now, international, global tenants, ASX-listed tenants. As they require more space, they expect us to be able to assist them, to accommodate them.

Rachael Jones: And to the last question, now, John, looking forward to the second half of financial year 2021, what's in store for Centuria Capital Group?

John McBain: Well, more of the same, I think. Getting back to our dual strategy. If we look back over the past few years, I think over the last four and a half / five years, our annual compound growth rate of assets under management has been over 30%. So we'll keep acquiring quality assets where we can, to our maximum capacity, but we also will look to the market to see if there are any platforms that we think are sympathetic to ours. 360 Capital, Heathley Limited, Augusta Capital, are all good examples, and you could expect to see more of that in the future. So our aspirations for growth are pretty high.

Rachael Jones: John McBain, congratulations on your half results, and thanks for the update today.

John McBain: Thank you.


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