Company Interview / Centuria Office REIT turns the corner as leasing surge fuels profit

Key points:

(ASX:COF) posts $61.5m first-half profit, aided by rental growth and asset sales Over 29,000m² leased, more than 10% of the portfolio Nearly 79% of loans hedged, mitigating rate volatility Focus remains on sustainability and reaffirmed FY26 FFO guidance

Centuria Office REIT’s Belinda Cheung outlines a strong first half for the group, reporting a profit of $61.5 million, a significant turnaround from last year's loss. Cheung attributes this rebound to impressive leasing activity—covering over 29,000 square metres, representing more than 10% of the total portfolio. The sale of the 9 Help Street asset in Chatswood at a 12.5% premium to book value further reinforced positive momentum, marking one of the highest premiums achieved in recent years. Portfolio valuations recorded gains for the second consecutive period, underpinned by robust rental growth despite minor outward cap rate movements.

In the current rate environment, Cheung sees limited impact from the recent Reserve Bank of Australia hike, noting that interest rate rises have already been factored into sector assumptions. With nearly 79% of total loans hedged, Centuria Office REIT ($COF) perceives reduced exposure to short-term rate volatility. Cheung highlights ongoing demand for A-grade office assets in metro and fringe locations, citing net absorption and rent growth as key indicators. Leasing flexibility and hybrid workspace options are viewed as critical for tenant retention and competitiveness.

Looking forward, Cheung signals select asset disposals only at compelling prices, as seen with the Chatswood asset. The group continues to prioritise sustainability, targeting net zero and ongoing electrification across the portfolio, and reaffirms FY26 FFO guidance of 11.1 to 11.5 cents per unit, with distributions at 10.1 cents per unit.