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Summary
- While the Australian REITs felt the impact of the pandemic, a few players emerged as winners, primarily due to the focus on resilient industries such as agricultural property, healthcare providers, and learning institutes.
- Centuria Office REIT reported robust performance during the second half of FY20, net profit for FY20 stood at A$23.1.
- Centuria Office REIT offers FY21 distribution guidance of 16.5 cents per unit equating current yield of c.9.0%.
- During the financial year 2020, Arena REIT’s Profit rose by 16% despite the challenging environment.
- Arena’s witnessed portfolio valuation uplift of A$36.9 million during FY20.
Real Estate Investment Trusts (or REITs) are companies that own a diversified portfolio of real estate assets. REITs provide investors with exposure to a whole property portfolio. The property portfolio includes commercial, industrial, retail, and other real estate assets that would be difficult for an investor to get access to or buy.
DO READ: Real Estate Winners Vs Losers Over the Last Three Months
Amid the current scenario, Australian REITs have struggled, just like other industries, with the global pandemic impacting business activities. However, some sectors have shown resilience and have witnessed new prospects in this unprecedented situation. REITs that are focused on such industries like healthcare facilities, learnings institutions and agricultural properties, have done better than the rest of the listed REITs.
With this backdrop, we will cast an eye on how 2-ASX REITs have performed during this reporting season- Centuria Office REIT & Arena REIT.
DO WATCH: Australian Real Estate Investment Trusts (or AREITs) & its fundamentals
Centuria Office REIT Solid Performance During 2HFY20
An ASX 300 listed pure-play office REIT, Centuria Office REIT (ASX:COF) owns a portfolio of high-quality assets in core office markets across Australia. The REIT is supervised by an active manager and offers investors the opportunity for capital growth from a portfolio of superior-quality office assets in Australia.
On 5 August 2020, Centuria Office REIT declared its financial results for FY20 (ended 30 June 2020).
Centuria remains well-placed to continue delivering decent income returns, with FY21 distribution guidance comparing to an existing distribution yield of c.9.0%.
Highlights from the financial front-
- During FY20, the funds from operations reported at ~A$85.4 million.
- The distributions per unit was 17.8 cpu, in line with the guidance provided for FY20.
- For FY20, statutory net profit was reported at A$23.1 million.
- The net tangible assets of Centuria Office REIT recorded at A$2.49 per unit.
- For the period April-June 2020 rent collections averaged to nearly 92%.
Outlook:
Centuria Office REIT offers FY21 distribution guidance of 16.5 cents per unit, which equates a current yield of c.9.0%. However, COF will not be providing any FFO guidance at this point due to COVID-19 uncertainty and its potential impact on operating conditions.
Stock Information: On 31 August 2020, COF share price stood at A$2.010 (at 02:05 PM AEST), up by 3.342%, with a market capitalisation of A$1 billion.
ALSO READ: Real Estate Space and Shares to watch – COF, CIP, MGR, GPT
Arena REIT’s FY20 Profit up 16% Despite Challenging Environment
An ASX-listed internally managed Australian REIT, Arena REIT (ASX:ARF) is into the development of social infrastructure property assets across Australia.
The Company is working to deliver an appealing and inevitable distribution to investors with profit growth anticipations for the medium to long duration. Being an active property manager, Arena intends at developing portfolio quality along with reducing risk.
To know about how Australian REITs are responding to the COVID-19 pandemic, click here.
On 13 August 2020, Arena REIT updated the market with its full-year results for FY20.
- Statutory net profit during FY20 recorded at A$76.6 million, up 29% on the prior year.
- Net operating profit (distributable income) reported at A$43.8 million, increased by 16% on the prior year.
- Earnings per security (EPS) of the Company remained at 14.55 cents, up 5% on last year.
- The Company has total assets of approximately A$1.01 billion, up 23% on 30 June 2019.
Commenting on the annual results, Managing Director of Arena Mr Rob de Vos stated-
Highlights from the operational front-
- Arena maintained 100% occupancy during the period.
- An uplift in the portfolio revaluation reported at A$36.9 million.
- The Company acquired A$11 million multi-disciplinary healthcare centre at 6.5% preliminary yield on the total cost.
- Arena acquired three ELC properties in the financial year 2020, with 6.2% weighted average initial yield on the total cost of A$15.5 million.
- During the period, the Company acquired 17 development projects taking development pipeline to 204 projects with forecast weighted average initial yield of 6.6% on the total anticipated cost of A$112 million.
Portfolio Valuation During FY20 Uplift of A$36.9 Million-
As of 30 June 2020, the portfolio of Arena comprised 211 ELC properties and 176 ELC development sites and 11 healthcare properties. During the financial year 2020, a revaluation uplift of A$36.9 million was recorded, equivalent to a rise of 4.6%.
The healthcare portfolio of Arena continues to perform well. Solid macro-economic factors remain to assist Australian healthcare accommodation.
Outlook-
ARF remains well-placed to navigate the ongoing and emerging challenges arising from COVID-19 pandemic and to consider new opportunities that are consistent with strategy.
Arena provides DPS guidance of 14.4-14.612 cents per security for the financial year 2020, reflecting growth of 3-4% over the period.
Stock Information: On 31 August 2020, ARF share price last noted at A$2.530 up by 0.397% with a market capitalisation of almost A$857.79 million.
On 31 August 2020, ARF share price stood at A$2.570 (at 02:05 PM AEST), up by 1.581%, with a market capitalisation of A$861.19 million.
ALSO READ: Arena REIT and Centuria Industrial REIT Announce Dividend Distribution
