This article is from the Australian Property Journal archive
THE Centuria Office REIT (ASX: COF) has continued resilient levels of leasing enquiries across its portfolio over Q3 FY24, whilst the value of its divestments held up relatively well.
The 13 leasing transactions totalling 7,577sqm included 5,917sqm of renewals with the balance comprising new leases, with COF leasing 36,235sqm over the year to date, representing 12.5% of portfolio NLA.
As at 31 March 2024, COF’s portfolio occupancy is at 94.3% and has maintained a WALE of 4.4-years.
“COF continued to progress its FY24 priorities during the period, attracting resilient levels of leasing enquiries across its portfolio. Throughout the remainder of FY24, we expect COF’s high-quality, young, efficient and affordable office portfolio to continue attracting and retaining high-quality tenant customers,” said Belinda Cheung, fund manager at COF.
Over the period, COF also settled the $38.3 million divestment of 1 Richmond Road, Keswick SA, reflecting a circa 4% discount on its 31 December 2023 book value.
COF acquired the Keswick asset in 2014, with the property delivering an IRR of c.11% during the period of ownership, with the sale proceeds used to repay debt.
Over FY24, COF settled three divestments worth $101.3 million, with the sales completed at an average circa 4.5% discount to book values.
“Divestments settled year to date are part of a strategic focus on improving COF’s balance sheet and illustrate continued demand for metropolitan and near city office assets that provide comparative liquidity due to their smaller scale,” added Cheung.
COF has reaffirmed its FY24 FFO guidance of 13.8cpu and distribution guidance of 12.0cpu, to be paid in equal quarterly instalments, reflecting an annualised distribution yield of 10.3%.
We remain optimistic towards the medium-term outlook for Australian office markets given the nation’s ongoing population growth and the likelihood of significantly diminishing supply. However, leasing momentum remains fragmented with Perth and Brisbane continuing to outperform while Sydney and Melbourne CBDs remaining tepid,” concluded Cheung.
“While increased interest rates remain elevated compared to recent past periods, they remain in-line with assumptions adopted in forming FY24 earnings forecasts. We continually monitor economic conditions to identify opportunities to undertake positive capital management initiatives, reinforcing COF’s balance sheet, while acting on leasing interest to improve portfolio quality.”
