This article is from the Australian Property Journal archive
AFTER a strong period of acquisitions amounting to $3.1 billion, Centuria Capital Group (ASX: CNI) brought in record operating earnings and distributions in FY22, but analysts noted assets under management growth has slowed.
CNI’s total operating revenue for FY22 was up 38% on FY21 at $292.6 million, with management fee revenue up 77% to $146.8 million on the previous year and transaction fee revenue up 162% to $39.3 million, with $33 million of performance fees recognised.
Operating earnings met CNI’s upgraded guidance of 14.5 cents per security, up 20.8% from 12.0 cps in the pcp and distributions were declared at 11.0 cps, up 10%.
“The group delivered record operating earnings and distributions throughout the period, following upgraded guidance during the year,” said John McBain, joint CEO of Centuria.
“Centuria demonstrated how its corporate acquisitions in previous periods have significantly increased the size of the platform with correspondingly high increases in both management fee revenues and transaction fee revenues as is evident in the FY22 result.”
On the other hand, Statutory NPAT took a dive from the previous year, at a $37.9 million loss, on FY21’s $143.5 million gain.
Likewise statutory EPS was at a negative 4.8 cps, compared to a positive 24.6 cps in FY21.
With the group stating it is continuing to focus on capital management, Centuria had net operating cash inflows of $182 million throughout FY22 and entered into two revolving loan facilities at a combined $150 million, leaving $339 million of cash available at the close of the period.
Centuria’s real estate funds management platform was up 20% to $19.8 billion, with unlisted AUM up 18% to $13.0 billion and listed AUM up 24% to $6.8 million.
“The group continued to scale throughout FY22 with a record number of transactions, totalling $3.1 billion3 . This growth is attributed to our diversification by geography, asset class, fund types and capital sources, which continue to generate new opportunities for sustainable and long-term expansion,” said Jason Huljich, joint CEO of Centuria.
The $3.1 billion in gross real estate activity was represented by $2.6 billion in real estate acquisitions and $0.5 billion of real estate lending.
The group’s platform also saw a valuation uplift for FY22 of $1.0 billion.
“These acquisitions allowed the Group to diversify across several additional asset classes as well as the West Australian and New Zealand geographies, delivering strong growth,” said McBain.
In light of the results, UBS maintained its Neutral rating.
UBS analyst Tom Bodor said the result was in line with guidance and slightly above UBS’ expectations but 4% below consensus. He noted that AUM growth has slowed materially in 2H22.
“CNI has guided to flat operating earnings per security (OEPS) growth in FY23 as AUM growth has slowed.
“Our valuation and price target (NAV/DCF based) is $2.00.” Bodor said.
The group managed 419 assets, leasing to around 2,480 tenants. With leasing deals spanning 503,638sqm across 469 deals, or 12.6% of group NLA. While rent collections averaged 98.2%
For the period development totalled $2.1 billion, with completions at $0.1 billion.
“This has occurred despite the backdrop of rising inflation, COVID lockdowns and geopolitical events. This diversification has provided new revenues streams in alternative asset classes such as Healthcare and Agriculture as well as expanding our traditional asset classes to include daily needs retail and large format retail,” added McBain.
The group’s healthcare platform grew by 55% over the year to $1.7 billion of AUM, while the agriculture platform grew to $0.4 billion and the real estate finance division to $0.8 billion of AUM.
“Centuria remains firmly focussed on the Australasian real estate sector. The Group intends to grow its platform strongly in the alternative healthcare, agriculture and non-bank lending sectors which are receiving strong investor demand,” said McBain and Huljich.
Centuria also confirmed its operating guidance of 14.5 cents per unit and its DPS guidance of 11.6 cents per security, up 5.4% on FY22.
“In addition we will continue to leverage our strong distribution network and our institutional relationships to take advantage of both core and value-add real estate opportunities across our traditional asset classes,” concluded McBain and Huljich.
