Centuria Capital Group (ASX:CNI) FY2018 wrap

Interviews

by Jessica Amir

Centuria Capital Group Limited (ASX:CNI) CEO, John McBain talks about its busy financial year, in which Centuria Capital grew its property portfolio, added wholesale partners and increased recurring revenues.

Jessica Amir: Hello Jessica Amir here for the Finance News Network with Centuria Capital Group (ASX:CNI) Group CEO, John McBain. John hi and welcome back.

John McBain: Thank you Jessica, good to be here.

Jessica Amir: First up John, for those that don’t know, you’re a leading property fund and investment bond platform. Just tell us, where’s the business at today?

John McBain: We have a market capitalisation of just around $430 million, with funds under management of $4.7 billion. We’ve had considerable growth lately. So our assets under management since the end of ’17 financial year, has grown from $3.8 billion to $4.7 billion. Around just under $750 million of that has been acquisitions in our property fund division, with another $147 million revaluation growth across our portfolios.

Jessica Amir: Now to your FY2018 performance. Just tell us, starting with the property funds, how is that progressing?

John McBain: With our unlisted property funds management business, currently we have around $1.8 billion of assets under management, over 16 active funds. We’ve been particularly active over the last six months and have established two new unlisted property funds, one to acquire the building in Geelong, the Transport and Accident Commission building for $116 million. And another, to acquire the building at 80 Grenfell Street, which is in Adelaide, home to the Bendigo and Adelaide Bank.

In line with our strategy of growing our wholesale property funds capability, this year we’ve partnered with two family offices or institutions, on two projects. One, 201 Pacific Highway in St Leonards in Sydney and also the 80 Grenfell Street, Adelaide property. And additionally in our unlisted stable, we’ve started growing the Centuria Diversified Property Fund. This is an open-ended unlisted fund, which has proved very popular and currently has just under $40 million applications.

And dealing with our listed property platforms, so we have two listed real estate investment trusts, both of them are on the ASX 300 index. The first, Centuria Metropolitan Office (ASX:CMA) has $1 billion of assets under management and it’s the largest metropolitan office owner, in its segment. Additionally we have CIP, or the Centuria Industrial Platform (ASX:CIP), once again it too has just under $1 billion worth of assets under management. It’s the largest pure play industrial owner in Australia, whereby it doesn’t create any development, it simply is a rent collector.

So we’re very happy with the performance of those platforms, they’re consolidating well in their market and they’re continuing to grow.

Jessica Amir: Now to your investment bonds insurance business, Centuria Life. Just give us an update on that?

John McBain: It’s a business that we’re pretty excited about this year. We’ve appointed Michael Blake as its Head of Life. Michael’s worked for us for three years and he’s been growing out a distribution capacity, on the property side. We see a lot of tailwinds for this sector and the insurance, or investment bond sector. But also we see the current disruption in the financial services business is creating a lot more interest in, alternative distributing superannuation. And we can see investment bonds fitting people’s investment profilefar more, going into the future.

Jessica Amir: Why should investors consider adding CNI to their portfolio?

John McBain: I think in our market segment, we’re one of the fastest growing. We have continually year-on-year provided 20 per cent growth in assets under management, when other fund managers don’t seem to be able to do this. We’ve got a very active property team, eight out of 10 of our last acquisitions have been off market. So it’s our in-depth market experience that gives us the edge to create the stockpile of assets.So in addition to that strong growth and we’ve also got a lot of attention as a paid, within our company to distributions to shareholders.

These have been growing year-on-year and that’s a very strong focus for us. We’ve grown from $80 million 18 months ago, to $430 million of market cap. I think the market is just starting to understand what we’re all about.

Jessica Amir: Lastly John before we let you go. What can investors expect over the coming year and beyond?

John McBain: A little bit more of the same and a bit more. I think you’ll see very strong growth in assets under management. And that’s via a combination of organic acquisitions of property funds, acquiring just under $750 million so far this year is a lot. We just want to back that up and increase that next year. But also you’re seeing across the property platforms and our peer set,quite a bit of consolidation and we’ve been involved in that over the last few years. I think you’ll see us, and this is called inorganic growth, I think you’ll see us continue to play with that.

Focusing strictly on our corporate side, just very strong attention to risk and compliance that we’ve always had, very strong attention to supporting our distributions to our shareholders. And we’re also getting more focus from global investors at the moment, both from joint acquisitions with properties that we’re looking at buying, from a divestment perspective. But also from global investors looking at our shareholder base for the Centuria Capital.

Jessica Amir: John McBain, thank you so much for the update.

John McBain: Thanks a lot.


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