One of Australia’s biggest office Real Estate Investment Funds (REITs), Centuria Office REIT [ASX:COF] has provided results for the first half of financial year 2023, reporting a total of $48.6 million in operating funds.
COF took an overall loss of $17.4 million off the back of inflation-rocked sentiment that hoped to improve later in the year alongside returning office workers.
COF rose 6% this morning, upping its worth to $1.73. In the past full year, COF has fallen 23% — down 15% in its sector average and 29% below the wider market benchmark.
Source: tradingview.com
Centuria’s financials down half-on-half
Reporting from Sydney earlier on Thursday morning, Australia’s biggest office REIT, Centuria, gave its financial and operational results for the six months ending 31 December 2022.
Centuria reported a total of $48.6 million in Funds From Operations (FFO) activity, with $8.1 earned per unit (cpu) — this was down on the half year 2022, which was then $54.7 million (at $9.8 cpu).
The company also noted that its half-year distribution per unit (DPU) came to $7.05 cpu, which lines up with guidance, but was also down on HY22’s $8.30.
The company took an overall loss of $17.4 million in HY23 despite the $63.6 million profit made the same time the year before.
While the company reported a 5.75% weighted average capitalisation rate (WACR), it also said that it saw a 97% average in rent collection accumulate throughout the course of the term.
Centuria reported 35.6% debt gearing, $101.5 million in its loan facility and plenty of time to access its supporting funds.
There have been 24 new leases gained in the half year, and 11 renewed, with 96.4% of Centuria’s portfolio occupied, slightly more than the previous year.
Grant Nichols, of Centuria Head of Office, said:
‘COF delivered significant leasing outcomes during the first half of FY23, continuing the REIT’s considerable leasing momentum executed since the start of the pandemic, which has resulted in new and renewed terms across more than 50% of its portfolio. During the first half of FY23, COF leased over 24,000sqm of vacant space, which increased portfolio occupancy to 96.4%.
‘With positive industry data revealing an increasing number of workers returning to the office across all capital cities and tenants generally seeking to accommodate peak office occupancy rather than average occupancy, we are confident tenant demand will continue in the near term.’
Guidance remains in readiness for change
COF said it now has 30,420 square metres in total leasing activity, spread across 35 existing deals and comprises 23 high-quality assets with a value of more than $2.3 billion.
The office-focused REIT reaffirmed its FY23 FFO guidance, which was based at 15.8 cpu, as well as its FY23 guidance of 14.1 cpu — translating to a distribution yield of 8.8%.
Despite the loss taken in the half year, Mr Nichols remained positive things will improve.
He commented:
‘Rising interest rates throughout HY23 have impacted asset and debt pricing and there has been a noticeable reduction in transaction volumes.
‘It is expected that transaction volumes will increase once interest rates stabilise and investor conviction improves.’
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