Centuria Capital : AGM 2021 Chairman and Joint CEO's Address

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Centuria Capital Group (ASX: CNI)

Annual General Meeting

C H A I R M A N A N D J O I N T C E O ' S A D D R E S S

Friday, 26 November 2021 11:00 am

C H A I R M A N ' S A D D R E S S : G A R R Y C H A R N Y

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Good morning ladies and gentlemen. My name is Garry Charny and I am Chairman of the Centuria Capital Group. On behalf of your board of directors and senior management, I would like to formally welcome you to our Annual General Meeting.

Before we begin, I acknowledge that I am hosting this AGM from the lands of the Gadigal people of the Eora Nation. I also acknowledge the Traditional Custodians of the various lands on which you all work today and the Aboriginal and Torres Strait Islander people participating in this AGM. We pay our respects to Elders past, present and emerging. We also welcome our friends from Aotearoa.

If I may now introduce you to my other board members. My colleagues are Susan Wheeldon, Jason Huljich, John McBain, John Slater, Kristie Brown and Peter Done.

Since we last met 12 months ago, Australia and New Zealand real estate markets have been navigating a sea of COVID, COVID restrictions, border closures and much uncertainty generally across the broader community. Against this backdrop, Centuria has shown resilience born of commitment and hard work and perspicacity from an experienced leadership team with platform expansions, quality transactions within diverse asset classes from healthcare to industrial, and extension into new markets. This allowed us to outperform initial FY21 guidance and deliver strong results in the face of the pandemic.

Early in the year, there were some encouraging signs of the pandemic abating. As the year progressed, that initial optimism subsided. Nonetheless, aided by the expanded geographical diversity of the company, our team was able to progress acquisitions, maintain active asset management and be at the coalface of tenant customer relations to ensure continuity. These endeavours align to Centuria's core values and capabilities that support our approach to business and creating value for you, the securityholders.

We acted on the roadmap set out in 2020 and fine-tuned our operations from home offices, kitchen tables and the occasional hammock. The Board and Senior Management became overnight technophiles whilst interlopers, such as children and dogs, became the norm in Teams meetings. The resolve and success of the Centuria team during this extraordinarily difficult period is a testament to all concerned. On behalf of the entire Board, we thank you.

As Centuria has grown, it has continued to engage with stakeholders and taken steps to keep improving all areas of environmental impact, social considerations, governance, remuneration and transparency. This is coupled with the ongoing reporting commitments required for a listed organisation of Centuria's size and complexity.

Turning to performance for FY21, we have almost doubled the AUM across our platform whilst delivering sustainable recurring revenue streams that represent 92% of total revenues.

Centuria Capital Group increased its Assets Under Management from $8.8billion to $17.4billion through FY21. This was achieved through a combination of M&A activity and organic real estate initiatives. In particular, on the merger front, it behoves me to welcome our new partners from Primewest and its founders, David Schwartz, John Bond and Jim Litis. An unusually coherent meeting of like minds have allowed two prospering businesses to become one even better.

Pleasingly, we updated the market on 13 October 2021, noting a strong start to FY22 and AUM expansion to $18.1billion. John and Jason will elaborate further on our corporate and funds management activities and performance shortly but, it is fair to say that, Centuria is now a leading Australasian real estate funds manager. If any validation of that was necessary, I am pleased to report that Centuria was admitted to the ASX 200 on 16 July, 2021.

Long-term performance remains a core test for defining Centuria's success. This extends to delivering superior returns to our securityholders. The Group's performance remains strong on an absolute basis, providing total securityholder returns of 61.8% for FY21 and a three-year TSR of 130.1%. These returns reflect meaningful outperformance against the S&P/ASX200 Index, S&P/ASX200 A-REIT Index benchmarks and the majority of Centuria's peer set.

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The year was signposted with a number of key platform additions. As mentioned, we successfully merged with the Perth based Primewest, delisting the entity and integrating the business into the Centuria fold. Primewest broadens Centuria's diversification, with a portfolio weighting towards west coast Australia, whilst expanding into diverse asset classes including the resiliently performing Large Format Retail & Daily Needs Retail as well as agriculture.

We also welcome Giles Borten, Nick Goh and the team who have joined us through our 50% investment in the rebranded Centuria Bass Capital, giving our investors the opportunity to take advantage of, and participate in, the growth of bank alternate real estate debt fund opportunities.

Our footprint across New Zealand also expanded following the full integration of Augusta Capital, now known as Centuria New Zealand. Kiwi operation grew 35% to $2.3billion during FY21 under the leadership of Mark Francis and Bryce Barnett.

In one of our newer asset classes, Centuria Healthcare's AUM grew 50% during FY21 to $1.1billion. Investor demand for healthcare assets grew noticeably during the pandemic, although I am reluctant to draw a correlation between the two. Perhaps more relevant is the compression of yields elsewhere and the need to build these alternate asset classes to present us with more growth opportunity.

Centuria's listed real estate division continued to benefit from Centuria Office REIT and Centuria Industrial REIT being positioned as the largest ASX-listed office and industrial REITs. Our office assets across listed and unlisted funds have been resilient, underpinned by strong tenant covenants, particularly those backed by Government and blue-chip national and international tenancies. Industrial portfolio - including listed and now unlisted funds - continues to benefit from strong tailwinds across the sector and a healthy weighting towards the east coast.

Throughout the year, we have made a conscious effort to highlight our existing and new Environmental, Social and Governance initiatives. This is not lip service- it is a commitment to leave this place in a sustainable and better state for future generations. An early step on this path was the publication our first Sustainability Report, which I encourage you to read at your leisure, and the announcement of our Sustainability Framework, which John will elaborate on further.

The establishment of our Culture and ESG Board Committee complements the existing ESG management committee. This Committee is chaired by the CNI Independent Non-Executive Director, Susan Wheeldon.

This year we also announced our support of the Taskforce on Climate-Related Financial Disclosure recommendations and delivered Centuria's Modern Slavery Statement. We remain committed to driving diversity throughout the Group. We are committed to delivering sustainable developments and looking for opportunities to enhance asset outcomes under our operational control that feature high Greenstar and NABERS ratings. We take this seriously.

We continually re-examine and work to further diversify our Board and Responsible Entity Boards and we welcome Kristie Brown to the Centuria Capital Group Board, Nicole Green to the Centuria Property Funds Limited's Board and Jennifer Cook to Centuria Property Funds No.2 Limited's Board. These responsible entity Boards are now led by independent chairs, Matthew Hardy and Roger Dobson, respectively. Natalie Collins, a current CPF2L board member has also joined the Centuria Healthcare Asset Management Limited Board and the Culture and ESG Committee.

I also wish to acknowledge the important oversight and contributions made by Centuria's Conflicts Committee, which is externally and independently chaired by Professor Simon Rice AO.

Last, but not least, after eight years with Centuria, Nicholas Collishaw stepped down as a director of Centuria Capital Group and its Responsible Entities. Nick remains a welcome friend of Centuria and I thank him for his wise counsel and contribution over the years.

Before I pass over to our Joint CEOs, let me take a moment to talk about having joint CEO's: a topic I have canvassed with many of our investors. It may not be the right structure for some companies, but I want to assure all our stakeholders that, at this moment in time, it is the right one for Centuria. Rarely have I seen two people complement each other as well as John and Jason. They run the leanest of senior executive teams whilst seamlessly building a company of opportunity, success and culture.

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Your senior management team continues to pull the right levers to ensure we hit and exceed our targets.

On a personal note, let me thank my fellow board members for their ongoing commitment and support.

Finally, as I have said previously, to our Securityholders, we serve at your pleasure and we never take for granted your ongoing support. We remain committed to delivering results, protecting and growing your investments and ensuring it is done in a sustainable and ethical way.

I now invite John McBain and Jason Huljich to deliver the Joint CEOs' Address.

J O I N T C E O ' S A D D R E S S : J O H N M C B A I N

Thank you, Mr Chairman, and good morning everyone.

On behalf of my fellow and Joint CEO, Jason Huljich, we welcome you to Centuria's 2021 Annual General Meeting. We, too, acknowledge the traditional Australian and New Zealand landowners, past, present and emerging in each of the countries we operate in.

This morning, it is my pleasure to address Centuria's corporate initiatives, financial performance, and our progress towards our social objectives since our last AGM, these being my areas of prime focus. I will also comment on the domestic market outlook and corporate strategy. Jason will address Centuria's funds management and real estate activities where his teams have performed exceptionally during FY21.

Since our last meeting, we have experienced a period of oscillating lockdowns and restrictions, which began with the effects of the pandemic unwinding prior to Christmas last year, only for restrictions to be reintroduced. Now, as the vaccinations rates increase, we are optimistic for FY22 but we understand this will be on a State by State basis.

While the 2020 financial year represented a steep learning curve for remote working and virtual meetings, during the 2021 financial year, despite a second wave of lockdowns, Centuria proved its resilience by continuously growing our platform, delivering beyond guidance, strengthening the balance sheet and outperforming for our securityholders.

With offices now in Sydney, Melbourne, Brisbane, Perth, Manila, Auckland, New Plymouth and Christchurch, Centuria has delivered business continuity and ensured the company continues to grow and serve its stakeholders - from tenants to investors to business partners.

Financial Results

Our resilience throughout the year is best illustrated with our strong FY21 Financial Results, which are summarised as follows:

• Group assets under Management increased 98% to $17.4 billion
• Total operating revenues rose to $212.7million (+40% from FY20)
• Operating Profit After Tax rose to $70.2 million (+32% from FY20).
• Maintained strong balance sheet at year end with $250 million cash on hand with an operating gearing ratio of 3.9%.
• Balance sheet flexibility increased with a new $198.7 million listed notes issuance, which extended debt duration to four years
• Net asset value increased to $1.92 per security (up from $1.44 in FY20).
• Operating profit attributable to property funds management was $45.9 million, up 40% on prior corresponding period
• Operating recurring revenue increased to 92% of total revenues (FY20: 86%).
• A 12-month Total Shareholder Return of 62%, outperforming the S&P ASX200 A-REIT Index returns of 33.2%.
• Since 30 June 2017, Centuria has delivered a Compound Annual Growth Rate in assets under management of 46%.

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It is also my pleasure to report Centuria delivered:

• Operating earnings per security of 12 cents, a 9.1% increase on our original FY21 guidance midpoint of 11.0 cents, and
• Distribution per security of 10.0 cents, a 17.6% increase over original FY21 guidance of 8.5cps
• A Total Shareholder Return of 130% for the three-year period ended June 2021

Centuria's growth during the year was also recognised with Group's inclusion in the

• S&P/ASX200 Index in July 2021,
• GICS re-classification to Diversified Real Estate in September 2020, and
• MSCI small cap index inclusion in November 2020.

At the close of FY19 Centuria Capital had a market capitalisation of less than $750 million and was outside the S&P ASX 300 index. As of this week, our market capitalisation is approximately $2.6 billion, and we are included in the S&P ASX 200 index at around 150th by market capitalisation.

This has been a remarkable journey and I would ask securityholders to reflect that Centuria's growth, both in terms of size as a fund manager and our level of shareholder returns are not a 12-month phenomenon. Centuria is one of a small number of listed discrete external real estate fund managers within the ASX 200, which has performed well over one, three and five years, exceeding the relevant ASX indices. Some of these relative returns were set out in our financial report for the benefit of securityholders.

Within this group, Centuria has performed at or near the top within our peers in a highly competitive market and we are strong believers that the balance-sheet-light funds management model will continue to provide attractive, recurring relative returns.

Maintaining this strong growth in a competitive market means that a number of essential elements must be in place.

Strong leadership and a stable best-in-class senior executive team

• A stable, effective and respectful working relationship between the multitude of boards and committees that govern the Centuria platform and the management team
• Clear and effective strategies to grow both by organic asset acquisition into funds and, where sensible, by merger or acquisition.
• A commitment by directors and staff to work whatever hours are necessary to maintain our growth and fulfill our financial and social obligations.

Centuria must attract and retain a diverse range of high-quality staff in a new marketplace where an increasing number of our competitors represent private equity or are unlisted entities, which are not compelled to operate under the same strictures as listed entities. Acknowledging that securityholders may hold differing views regarding how we go about retaining talent we will increase our efforts to engage constructively with securityholders irrespective of their views regarding this issue.

Integration of new platforms

The past year has been a defining period in Centuria's history, not just because of the strong acquisition performance of the real estate team throughout the global pandemic but due to the integration of highly successful platforms into the company's fold. These are complementary businesses that expand Centuria's reach from west coast Australia to New Zealand, bolstering our footprint across commercial real estate markets and expanding our investor networks.

In July, the West Australian based Primewest group merged its $5.6billion platform with Centuria and we have further grown its market presence across the Daily Needs Retail, Large Format Retail and Agriculture sectors which complement Centuria's pre-existing verticals across industrial, healthcare and decentralised offices. As a group, this has further diversified Centuria by asset class, fund type, geography, tenant range and investor profiles. By way of example the Primewest platform brought with it two very substantial institutional investors with mandates in place totalling $2.3 billion.