Centuria Office records profit jump

Centuria Office Real Estate Investment Trust (REIT) ended the recent financial year with a statutory net profit of $115 million, a 50 per cent jump from the previous reporting period.

The ASX-listed office fund released its full 21/22 Financial Year results today, showing its funds from operations improved 2.7 per cent to $104.9 million from the previous financial year.

Centuria Office REIT's (COF) portfolio of 23 assets is worth about $2.3 billion.

According to the FY22 results, COF had a 13.5 per cent increase in the net lettable area to more than 41,200 square metres and a $37.9 million valuation increase.

The results show in general, there had been a 94.7 per cent occupancy, a 4.2-year weighted average lease expiry (WALE), $313.7 million of acquisitions and $20.9 million divestment.

COF has three office buildings based in Perth being William Square in Northbridge, 144 Stirling Street in Perth and 42-46 Colin Street in West Perth.

A company spokesperson said these assets comprised 12.2 per cent of COF's overall portfolio, with the WA assets collectively having a 97.2 per cent occupancy and a 4.7-year WALE.

COF Fund Manager and Centuria Head of Office Grant Nichols said there was a significant amount of leasing executed during FY22.

“In fact, since the outbreak of COVID-19, COF has leased 120,000sqm, equivalent to c.40 per cent of its net lettable area,” he said. 

“While our leasing activity contributed to a healthy valuation uplift, valuation gains were supported by recent sales transactions across metropolitan and near city office markets.

“In fact, across the Australian office sales market, 71 per cent of the office buildings transacted during the second half of FY22 were outside core CBD office markets.

“We continued to witness a shift in tenant preferences towards better quality accommodation that is close to key transport nodes, providing better commutability and subsequently improved work-life flexibility.

Mr Nichols said more workers returned to the office in the recent financial year as the impact of COVID was retreating.

“Looking ahead, we expect COF to have like-for-like net operating income growth through FY23,” he said.

“We recognise that a rising interest rate environment creates some future uncertainty, but we remain optimistic for Australian office markets.

“Tenant enquiry levels, backed by strong employment growth, continue to improve and some of the strongest demand is within metropolitan office markets. This bodes well for medium term rent growth.

“In making FY23 guidance, we have adopted an interest rate forecast with suitable buffers to manage potential further interest rate volatility."