Transcription of Finance News Network interview withCenturia Metropolitan REIT (ASX:CMA) Executive Director, Nicholas Blake
Carolyn Herbert: The ASX-listed Centuria Metropolitan REIT invests in office and industrial assets in metropolitan markets across Australia. The Fund’s portfolio comprises nine office and three industrial assets which are geographically diversified across Sydney, Brisbane, Canberra and Adelaide.I’m Carolyn Herbert and joining me at The CEO Sessions in Sydney is the Centuria Metropolitan REIT, Trust Manager, Nicholas Blake. Nick, welcome to FNN.
Nicholas Blake: Thank you Carolyn.
Carolyn Herbert: could you start by telling us a bit about the Centuria Metropolitan REIT?
Nicholas Blake: Sure, CMA is a back to basics listed property trust focused on delivering predictable and secure earnings income through a portfolio of office and industrial assets that are located throughout Australia.
Carolyn Herbert: And now to your results for FY2015, the first since listing, what were the highlights?
Nicholas Blake: In the seven months since listing CMA has delivered on its PDS forecast delivering 9.2 cents per stapled security and distributions for the period to 30 June 2015. For the period in FY16, CMA has advised guidance of 17.9 cents in distributable earnings for the period and 17 cents per stapled security and distributions for FY16. On yesterday’s closing price of $2.03 that equates to an 8.4 per cent distribution yield paid quarterly with a tax advantage component of approximately 60 per cent in FY15.
Carolyn Herbert: And Nick what about the Fund’s gearing and average term of debt?
Nicholas Blake: At 24 per cent, CMA’s gearing is amongst the lowest within its peer set. The Fund has two secured debt facilities from NAB with a total duration of 4.7 years and hedged at approximately 99.3 per cent through to maturity at an all in rate of 4 per cent per annum.
Carolyn Herbert: And looking at CMA’s property portfolio, what’s the split between office and industrial assets?
Nicholas Blake: At present, the portfolio is split approximately 18 per cent industrial assets and 82 per cent office assets.
Carolyn Herbert: So how are they performing?
Nicholas Blake: Excellent; at present the portfolio is approximately 97 per cent occupied with a weighted average lease expiry of 4.8 years. And importantly 92 per cent of the Fund’s income is secured by leases with annual rent reviews of 3.6 per cent per annum.
Carolyn Herbert: And can you tell us about your new acquisitions and how they complement your portfolio starting with Marcus Clarke Street in Canberra?
Nicholas Blake: The two assets in Canberra were acquired on a passing yield of 8.5 per cent with approximately 24 per cent vacancy. We see that as a great opportunity for future upside through releasing, where upon being fully let the passing yield on those assets will be in excess of 10 per cent per annum.
Carolyn Herbert: And now to Grenfell St, Adelaide and Robina Town Centre - what attracted you to these properties?
Nicholas Blake: Those two assets afford exceptionally long “wail” of four and eight years respectively with defined rental increases helping to underpin the surety of income across the Fund’s portfolio.
Carolyn Herbert: And to the financials there, what yield were the properties acquired on and how were the properties financed?
Nicholas Blake: The assets were acquired on a combined passing yield of 8.5 per cent and funded through a combination of an entitlement offer of $2.10 per stapled security raising approximately $100 million and debt of approximately $29 million.
Carolyn Herbert: And finally Nick, what’s the focus for the next 12 months and your outlook for FY2016?
Nicholas Blake: CMA will continue to prudently manage its portfolio with a focus on income and occupancy maximisation. For FY16, we have confirmed distribution guidance of 17 cents per stapled security which at yesterday’s closing price of $2.03
Per unit equates to an 8.4 cent distribution yield paid quarterly.
Carolyn Herbert: Nicholas Blake, thanks for the update on the Centuria Metropolitan REIT.
Nicholas Blake: Thank you Carolyn.