Centuria Metropolitan REIT (ASX:CMA) Fund Manager, Grant Nichols talks 1H19 results, portfolio metrics and trends.
Jessica Amir: Hello, I'm Jessica Amir for the Finance News Network. Joining me today from Centuria Metropolitan REIT is Fund Manager Grant Nichols. Hi, Grant and welcome to the network.
Grant Nichols: Thanks for having me.
Jessica Amir: So first of, for those who aren't familiar with Centuria Metropolitan REIT, just give us a quick introduction as you're the newly appointed Fund Manager.
Grant Nichols: Centuria Metropolitan REIT is an ASX Listed real estate investment trust, trading under the ticker CMA. The fund is now the largest pure play office REIT on the ASX, with a portfolio of 20 quality office buildings evaluated at approximately $1.4 billion dollars. The objective of CMA is to deliver predictable quality income streams while creating opportunities to deliver value to unit holders. I joined the fund in January of this year, following 15 years of Australian office management experience. Most recently, as the Fund Manager of the ASX listed Australian Unity Office Fund (ASX:AOF). It's an exciting time for CMA, following a transformational period and I'm very excited to be here.
Jessica Amir: Thanks, Grant and well done in your first half 2019 results. Just tell us the highlights.
Grant Nichols: It's been a very active first half of the year for CMA, with a number of transactions combining to transform CMA from a diversified property fund to the largest listed pure play office REIT on the ASX. The most significant of these transactions was the acquisition of four high quality office buildings. This transaction was underpinned by $276 million dollar equity rising.
Jessica Amir: Thanks, Grant. Now to the fund in a little more detail. Can you tell us about the tenant profile?
Grant Nichols: There are about 240 tenants across the national CMA portfolio, with 75 per cent of the income derived from having government, ASX listed or multinational tenants. The quality and diversification of the CMA tenant profile assists CMA in delivering its objective of providing quality, predictable income streams.
Jessica Amir: And what can you tell us about the key metrics?
Grant Nichols: Following the transactions, CMA has sustained very high occupancy of almost 99 per cent whilst extending the weighted average lease expiry to 4.3 years. The portfolio is now about 90 per cent based in the Eastern seaboard markets. Markets where we're seeing the strongest underlying property fundamentals.
Jessica Amir: And can you give us an update on the capital profile?
Grant Nichols: CMA has a solid capital position. We're gearing at around 35 per cent, which provides ample debt covenant headroom and undrawn debt. There's no debt facility expiry for about another 18 months, which should provide insulation against any short term credit volatility.
Jessica Amir: And just a general question, what can you tell us about trends that you're seeing in Australian office markets?
Grant Nichols: The underlying fundamentals for Australian office markets look really positive. We've increased in tenant activity and fall in vacancy rates evident in most of Australia's major office markets. With supply relatively in check, this should underpin future rental growth and continued investment demand, which has been strong. As Australia's largest listed pure play office REIT, CMA is well positioned to take advantage of these strong underlying office fundamentals.
Jessica Amir: And just lastly, Grant, what's your guidance and outlook for the second half of the financial year?
Grant Nichols: Our focus for the remainder of FY19 and beyond is to continue to build Australia's leading Metropolitan office REIT, positioning CMA to take advantage of those favourable office conditions. To that end, our guidance for FY19 remains unchanged with full-year distribution guidance of 17.6 cents per unit, payable in equally quarterly instalments.
Jessica Amir: Wonderful, Grant Nichols, nice to see you, thanks for the update.
Grant Nichols: Thanks, Jessica.