Full Year 2024 Centuria Office REIT Earnings Call Transcript
Key Points
- Centuria Office REIT (ASX:COF) delivered FY24 FFO of $0.138 per unit and distributions of $0.12 per unit, in line with guidance.
- The portfolio is 93% occupied with a 4.3-year weighted average lease expiry as of June 30, 2024.
- COF executed $139 million of divestments at an average 2% discount to book value, improving portfolio quality.
- The REIT has a strong tenant base, with 72% of rental income supported by ASX-listed national and multinational tenants.
- COF's portfolio is young, with an average age of 17 years, and 93% of assets meeting A-grade specifications.
- Leasing challenges persist in specific markets, notably Docklands and St Leonards, with no income assumed for full-floor vacancies in FY25.
- Finance costs have increased to $46 million over FY24 due to sustained rises in interest rates.
- The average all-in cost of debt incurred was 4.9%, with an expected increase to about 5.5% in FY25.
- Gearing is at 41%, and there are no immediate plans to significantly reduce it, despite some concerns from analysts.
- The distribution payout ratio is high, with some analysts calculating it to be 113% of AFFO, raising questions about sustainability.
Thank you, operator, and good morning, everybody. Thank you for joining Centuria Office REIT's financial year '24 results presentation. My name is Jesse Curtis, Centuria's Head of Funds Management. Presenting today is Belinda Cheung, COF Fund Manager; Grant Nichols, Head of Listed Funds. Also, present in the room is Tim Mitchell, Group Head of Investor Relations.
Starting on slide 3. I would like to commence today's presentation with an acknowledgment of country. We are joining you from the lands of the Gadigal people of the Eora Nation. Centuria manages property throughout Australia and New Zealand and pays its respects the traditional owners in each country, to their unique culture and to their elders past and present.
Despite the prevailing challenges in the office sector, the market is showing signs of improving tailwinds with return-to-office mandates coinciding with limited new office developments and population growth leading to a larger white-collar workforce. Investment in transport infrastructure, such as the Sydney
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