Centuria Capital Group FY18 results: Greater scale drives 29% AUM, 191% NPAT growth

From

John McBain

Centuria Capital Group (Centuria, ASX: CNI) has announced full-year financial results to 30 June 2018, demonstrating continued positive momentum for the growing property funds manager.

FY18 highlights include:

  • Assets under management up 29% to a new peak of $4.9 billion
  • Operating earnings per share rose 58% to 16.3 cents[1], above the revised guidance of 15.8–16.2 cents per stapled security
  • Distributions per stapled security grew to 8.2 cents in FY18, a 9.3% increase on FY17
  • Net operating profit after tax was $45.1 million, up 191%
  • Investors benefitted from a total securityholder return (TSR) of 23.3%[2] [3] for FY1

John McBain, Centuria Group Chief Executive Officer said: “After a transformational 2017, I am pleased to report this momentum has continued with strong FY18 results. We achieved an operating net profit after tax of $45.1 million and total securityholder returns of 23.3% – the second consecutive year this has exceeded 20%.

“With our funds management platform now significantly larger following last year’s corporate activity, we have been able to utilise our benefits of scale to drive strong AUM growth of 29% to $4.9 billion. This includes $1.1 billion in organic property acquisitions and revaluations and 12.5% growth in our investment bonds business to $900 million.”

“Significant performance fees of $25.8 million (pre-tax) from our unlisted business, along with a 77% year-on-year growth in recurring revenues to $67 million, were also key contributors to our FY18 results.”

Divisional overview

The property platform, comprising a range of listed and unlisted property funds, acquired 11 investment grade properties for $0.8 billion and together with revaluations of $0.3 billion enabled property assets under management to grow to $4 billion at year end.

The business established three new unlisted funds and four debt funds which were met with very strong investor demand through broadened distribution channels. The open-ended Centuria Diversified Property Fund also grew to over $37m AUM.

The two listed entities, Centuria Metropolitan REIT (CMA) and Centuria Industrial REIT (CIP) grew to $2.1 billion AUM, with CMA also joining its partner fund, CIP, on the ASX 300 index during the period.

Mr McBain explained: “While some of the growth in the value of our property portfolio can be attributed to market fundamentals, the strong result was also driven by our in-house management team focusing on solutions that meet the needs of our broad tenant base – both today and into the future.”

“With over 20 years’ experience in the market, we also have extensive knowledge and solid industry relationships that enable us to make off-market purchases on very attractive terms. In fact, eight of the past 10 acquisitions were off-market or followed failed sale campaigns.”

“This is good for our investors: the better we are at buying and managing quality assets, the better the portfolio performance and return to investors,” said Mr McBain.

Centuria Life, the company’s investment bond business, also saw solid growth of 12.5% to $0.9 billion AUM. The business is the fourth largest in its sector, which represents an 11% share of a $7.6 billion market.

Mr McBain said: “We are investing heavily in our investment bonds business – both in product development and through strengthening our distribution capabilities.”

“We’re finding advisers and investors turning to investment bonds as an attractive alternative to superannuation, given recent regulatory changes and headwinds in the sector.”

“With the benefit of 35 years’ experience in this sector, we are well positioned to take advantage of growing investor interest in this alternate asset class.”

Outlook

In conclusion, Mr McBain said his intention was to continue to expand Centuria’s property fund and investment bond platforms.

“We believe investors remain hungry for quality, well-yielding investment opportunities. We’re positioned to meet this need through our listed and unlisted property platforms, and to offer sustainable growth for investors.”

“To do this, our focus remains on growing organically through active management of our existing portfolios, and via mergers and acquisitions which complement our strategy and which we believe will contribute positively to returns for our investors,” Mr McBain said.

 

[1] Operating EPS is calculated based on Operating NPAT of the Group divided by the weighted average number of securities.
[2] Past performance is not indicative of future performance.
[3] Source: Moelis & Company.
[4] Operating NPAT of the Group comprises of the results of all operating segments and excludes non-operating items such as transaction costs, mark to market movements on property and derivative financial instruments, the results of Benefit Funds and Controlled Property Funds.
[5] Operating EPS is calculated based on Operating NPAT of the Group divided by the weighted average number of securities.
[6] Attributable to securityholders.

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