CENTURIA CAPITAL GROUP — Capital/Financing Update 2019

May 19, 2019

Centuria Capital Group

Strategic investment in the healthcare sector Formation of Centuria Heathley

ASX:CNI 20 May 2019

Chermside Medical Centre, QLD

1

C E N T U R I A C A P I T A L G R O U P A S X : C N I

OVERVIEW OF THE TRANSACTION

Formation of Centuria Heathley

• Centuria is pleased to announce a strategic investment in the healthcare sector via entry into an agreement to acquire an interest in Heathley Limited ( Heathley ) on completion of the Transaction

• Centuria will acquire a 50% voting interest and 63.06% economic interest in Heathley for a total consideration of $24.4 million

• A put and call arrangement will also exist for Centuria to acquire the remaining shares in Heathley at and from the end of year five

• The transaction represents an opportunity to add a new asset class with strong fundamentals and a specialised management team to the Centuria platform

• The total consideration of $24.4 million represents a 10x EBIT multiple[1] and will be fully funded from Centuria's cash reserves

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Westside Private Hospital, Taringa, QLD
C E N T U R I A C A P I T A L G R O U P A S X : C N I 2
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1. Based on normalised FY18 EBIT of $3.19m adjusted for NTA of $6.9 million

OVERVIEW OF THE TRANSACTION

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Summary of the key terms

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• Centuria acquires a 50% voting interest and a 63.06% economic interest[1] in Heathley Limited

• The specialist healthcare funds management vehicle will be known as "Centuria Heathley Limited“

• • Transaction is “friendly” and anticipated to proceed efficiently • $24.4 million for the 63.06% economic interest • Implied 10x normalised FY18 EBIT multiple adjusted for NTA[2] •

Proposal

Consideration

• Centuria will have a first right of refusal to acquire further Heathley shares during the first 5 years of the shareholder agreement • At the end of year 5, Centuria has a call option and Heathley management have a put option over the remaining shares in Heathley that Centuria does not own

Future option

Heathley management have an option to buy Centuria's stake (or put option over Heathley's stake) in the event of a change of control in Centuria[3]

• Heathley management have an option to buy Centuria's stake (or put option over Heathley's stake) in the event of a change of control in Centuria

• • Board of directors of Centuria Heathley Limited to comprise of 6 directors, 3 each from Centuria and Heathley management from completion

• Board • Mr. John Stuckey will remain as Chairman for first two years post completion and Mr. Andrew Hemming will remain as a director; Mr. Garry Charny,

• representation Mr. John McBain and Mr. Jason Huljich to be proposed as Centuria appointees

• • Centuria[4] will seek to raise approximately $62 million by using its unlisted distribution network to support funding requirements for two Heathley

• Funding funds, HDMF2 and HACPF1

• requirement •[[4 ]]

Mr. John Stuckey will remain as Chairman for first two years post completion and Mr. Andrew Hemming will remain as a director; Mr. Garry Charny, Mr. John McBain and Mr. Jason Huljich to be proposed as Centuria appointees

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Centuria[[4 ]] will manage and underwrite any shortfall in the fund raising to satisfy the funding requirement

Andrew Hemming to enter a 3-year employment contract with Centuria Heathley and his Heathley shares to be escrowed for 3 years Heathley staff to share office accommodation with Centuria in near term

• Andrew Hemming to enter a 3-year employment contract with Centuria Heathley and his Heathley shares to be escrowed for 3 years

• • Heathley staff to share office accommodation with Centuria in near term • The Transaction is expected to close on or before 11 October 2019 and is subject to Heathley shareholders convening a meeting and approving the Transaction

• Executive participation

Financial close

• The Transaction may close earlier pending the shareholder approval above and the completion of the purchase by a third party investor of an interest in the Heathley Joint Venture Property Fund[5]

• 1.13.06% of the shares acquired have been converted to two classes of shares, one holding voting rights, the other distribution rights 2.Based on normalised FY18 EBIT of $3.19m adjusted for NTA of $6.9 million

• 3.A change of control of Centuria will be taken to occur if a person (together with its associates) acquires 50% or more of the issued shares in Centuria, or alternatively acquires 30% or more of the issued shares in Centuria and, within 12 months of the date acquiring that 30% interest, more than 50% or the directors of Centuria as at the start of that 12 month period have ceased to be directors of Centuria by the end of that period. The call option is exercisable at 9x multiple of EBIT adjusted for NTA and the put option is exercisable at 10x multiple of EBIT adjusted for NTA 4. Via appropriately licensed entities in the Centuria group

5.The transaction is not conditional on third party investor’s investment occurring

C E N T U R I A C A P I T A L G R O U P A S X : C N I 3

OVERVIEW OF HEATHLEY

Heathley is a specialist healthcare real estate fund manager

• Completed 47 healthcare property transactions since 2013 with a total acquisition value of $601 million

Strong

leadership team with solid track record

• Highly experienced team from a broad range of backgrounds including investment banking, property funds management and healthcare infrastructure

• Specialist expertise across healthcare chain ‒ Healthcare AUM of $620 million[1]

Unique healthcare

• Strategic relationships with sector participants such as Healius, Montserrat Day Hospitals, Hall & Prior, GenesisCare and Nexus Hospitals

focus

• Disciplined approach to investment opportunities with a focus on healthcare tenants with sustainable business models that are reducing costs for the healthcare system

Disciplined investment approach

• Partnered investment approach with operators through providing aligned capital

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$620m
42 properties
of AUM [1]
40+
8
year
unlisted funds
history
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Source: Heathley. Slide issued by CFML AFSL No: 479873

Note:

1. Based on independent valuations as at 1 September 2018. Assumes REIT Independent Valuations are on an 'as if complete' basis and assumes completion of the REIT's Post Completion Developments

C E N T U R I A C A P I T A L G R O U P A S X : C N I 4

STRATEGIC RATIONALE

Opportunity in a new asset class with specialist management

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• Heathley is a specialist healthcare property funds manager with an experienced team and $620 million in AUM[1]

• Specialist healthcare real estate funds manager

Heathley has strong track record and established strategic relationships with healthcare operators

• Heathley has strong track record and established strategic relationships with healthcare operators

• • Centuria and Heathley each have unique and complimentary skills, e.g. sector relationships, distribution capability, balance sheet capacity • Centuria Heathley has been formed to give Centuria access to healthcare sector and to accelerate Heathley “stand alone” growth potential

Exposure to the strongly performing healthcare sector

• Strong growth in healthcare expenditure supported by favorable macroeconomic trends

• Between 2004 -2018 Healthcare property has delivered strong risk-adjusted returns relative to other asset classes

• • Total healthcare expenditure in Australia grew by 4.7% between 2006-2016 driven by favourable macroeconomic drivers • Centuria sees advantage in healthcare real estate outcomes not being directly corelated to commercial and industrial markets

• Strong growth opportunities in the sector

• Australian healthcare real estate sector is highly fragmented – limited number of securitisation and institutional real estate managers servicing this asset class

• Strong growth opportunities through ongoing healthcare sector consolidation and partnership with healthcare operators

• • Opportunity to deploy Centuria's retail network in the underlying Heathley funds at an attractive distribution yield • Heathley has one existing institutional relationship and is negotiating to secure a second at present

• Centuria and Heathley are both mature funds management platforms

Formation of

• Centuria Heathley

• Provides additional opportunities to accelerate AUM growth and recurring revenues

• Capacity to expand to $1.0 billion in near term with known potential projects

• Centuria and Heathley executive teams share similar culture and intend to work closely together

Source: Heathley. Slide issued by CFML AFSL No: 479873

1. Based on independent valuations as at 1 September 2018. Assumes REIT Independent Valuations are on an 'as if complete' basis and assumes completion of the REIT's Post Completion Developments

C E N T U R I A C A P I T A L G R O U P A S X : C N I 5

MARKET OVERVIEW

Strong healthcare sector fundamentals

Total healthcare expenditure in Australia grew by 4.7% between 2006-2016 driven by favourable macroeconomic drivers

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1 AGEING POPULATION
Australian population growth (2018 – 28 CAGR)
3.1%
1.5%
Total population 65+ years
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2 LONGER LIFE EXPECTANCY
Projected life expectancy at birth
(years)
90.5
88.1
84.8
80.6
Male Female
2015 2055
4 INCREASED FOCUS ON PREVENTATIVE CARE
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3 HIGHER CHRONIC DISEASE OCCURRENCE
Proportion of population with one or
more long-term health conditions
80.1%
77.0% 76.3%
72.7%
Male Female
FY08 FY15
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Federal Government policies aimed at placing greater emphasis on primary and secondary healthcare facilities to reduce the burden of funding on the public system Expected to increase demand for such primary and secondary healthcare services

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Healthcare property has delivered strong returns and experienced relatively low volatility compared to traditional real estate sector

AUSTRALIAN DIRECT PROPERTY TOTAL RETURNS SINCE 2004

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CAGR
700
600 14.2%
500 12.8%
400 10.7%
10.3%
300 9.9%
200
100
-
2004 2006 2008 2010 2012 2014 2016 2018
Retail Office Industrial
Hotel Healthcare
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HEALTHCARE PROPERTY CHARACTERISTICS

• Revenue stability as revenue streams are backed by government funding, allowing tenants to commit to longer term leases

• Relatively low volatility compared to traditional real estate sectors, due to non-discretionary nature of healthcare expenditure

• Specialised buildings, often generating higher returns

Sources: ACFA – Fifth Report on the Funding and Financing of the Aged Care Sector – August 2018, Independent Hospital Pricing Authority – National Hospital Cost Data Collection Cost Report 2015-6, ABS 3222.0 – Population Projections , Department of Treasury, Treasury projections from 2015 Intergenerational Report: Australia in 2055 , ABS 4125.0 – Gender Indicators, Australia , September 2017.

C E N T U R I A C A P I T A L G R O U P A S X : C N I 6

CENTURIA CAPITAL GROUP PROFILE POST CENTURIA HEATHLEY TRANSACTION

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Centuria is an established ASX-listed specialist investment manager

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ASX:CNI Market
Capitalisation
$555m [1]
Group assets under management $6.2bn
Real estate assets under $5.4bn
management
Social/Affordable
Office Industrial Healthcare Investment Total
Housing & Debt
$3.6bn AUM $1.2bn AUM $0.6bn AUM Funds Bonds $6.2bn
35 Assets 42 Assets 42 Assets $0.8bn AUM 119 assets
<$0.1bn AUM
Listed ASX:CMA ASX:CIP
Investments $1.4bn $1.2bn $2.6bn
Australia’s largest pure Australia’s largest domestic
play office REIT pure play industrial REIT
15 Fixed term Funds
Unlisted $2.2bn 8 Fixed term Funds 4 Fixed term Funds
$0.8bn $3.6bn
Investments Centuria Diversified Property $0.6bn $0.05bn
Fund (CDPF)
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1. Based on CNI closing price of $1.445 on 18 May 2019

C E N T U R I A C A P I T A L G R O U P A S X : C N I 7

ASSETS UNDER MANAGEMENT

Transaction continues strong AUM growth across real estate platform

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Assets Under Management ($bn)

• Centuria Heathley transaction ultimately increases unlisted real estate AUM by $0.6 billion, taking Group AUM to $6.2 billion

• Follows strong AUM growth of $0.7 billion in 1H19

• Provides access to new capital sources in unlisted retail and unlisted wholesale mandates

• The Transaction adds a new asset class with strong fundamentals and a specialised management team to Centuria’s real estate platform

• Centuria's platform now aligned to three strong performing real estate sectors

• Centuria is one of the fastest growing Australian real estate funds managers in its peer group with annualised AUM growth of 50.7%[1] since FY16

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Centuria Industrial REIT
Centuria Metropolitan REIT
$6.2bn
Unlisted Wholesale
Unlisted Retail 50.7%
1.2
Investment Bonds CAGR [1] $4.9bn
Centuria Heathley
$3.8bn 1.1 1.4 AUM Contribution
0.9 1.0 0.7 $0.1bn
0.6 0.5
$1.9bn
0.4
2.1 $0.5bn
0.4
0.1 1.4
1.1
0.7
0.7 0.8 0.9 0.8
FY16 FY17 FY18 20 May 2019 post
Centuria Heathley
Transaction
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1. Past performance is not indicative of future performance

2. AUM as at 31 December 2018 with pro forma adjustments to reflect Centuria Heathley Transaction

C E N T U R I A C A P I T A L G R O U P A S X : C N I 8

Disclaimer

This presentation and the announcement to which it is attached (together, the Presentation) has been prepared by Centuria Capital Limited (ABN 22 095 454 336) (CCL) and Centuria Funds Management Limited (ABN 11 607 153 588, AFSL 479 873) (CFML) as responsible entity of Centuria Capital Fund (ARSN 613 856 358) (together, the stapled listed entity CNI) (together with its related entities, the Centuria Capital Group).

Centuria Property Funds Limited (ABN 11 086 553 639, AFSL 231 149) (CPFL) and Centuria Property Funds No. 2 Limited (ABN 38 133 363 185, AFSL 340 304) (CPF2L) are fully owned subsidiaries of CNI. CPF2L is the responsible entity for the Centuria Industrial REIT (ARSN 099 680 252) (ASX: CIP) and the Centuria Retail Fund (ARSN 601 486 668). CPFL is the responsible entity for the Centuria Metropolitan REIT (ARSN 124 364 718) (ASX: CMA), the Centuria Diversified Property Fund (ARSN 611 510 699) and the rest of Centuria's unlisted property funds. Investment in Centuria's property funds are subject to risks that are set out in the Product Disclosure Statement (PDS) for the fund. The PDS for any open fund is made available on Centuria’s website (centuria.com.au). Investors should read the PDS in full before making a decision to invest. Where the Presentation refers to a potential raising for Heathley’s funds – if such a raising is available to retail investors, a PDS will be made available by Heathley when any offer is open – and any potential investors should consider the PDS in deciding whether the acquire the relevant products.

Past performance is not a guarantee of future performance.

This Presentation is provided for general information purposes only. It is not a prospectus, product disclosure statement, pathfinder document or any other disclosure document for the purposes of the Corporations Act 2001 (Cth) and has not been, and is not required to be, lodged with the Australian Securities & Investments Commission. It should not be relied upon by the recipient in considering the merits of CNI, or the acquisition of securities in CNI, any entity within the Centuria Capital Group or any other entity. Nothing in this Presentation constitutes investment, legal, tax, accounting or other advice and it is not to be relied upon in substitution for the recipient’s own exercise of independent judgment with regard to the operations, financial condition and prospects of CNI, any Centuria Capital Group entities, nor any other entity. Information contained in this Presentation regarding Heathley Limited and its related entities has been sourced from Heathley Limited, and CNI takes no responsibility for the accuracy of that information.

The information contained in this Presentation is not intended to constitute financial product advice. To the extent that any information may constitute general advice, it is provided by CFML. Before making an

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investment decision, the recipient should consider its own financial situation, objectives and needs, and conduct its own independent investigation and assessment of the contents of this Presentation, including obtaining investment, legal, tax, accounting and such other advice as it considers necessary or appropriate.

This Presentation has been prepared without taking account of any person’s individual investment objectives, financial situation or particular needs. It is not an invitation or offer to buy or sell, or a solicitation to invest in or refrain from investing in, securities in CNI or any other investment product. To the maximum extent permitted by law, CNI and the members of the Centuria Capital Group make no representation or warranty, express or implied, as to the accuracy, completeness, timeliness or reliability of the contents of this Presentation. To the maximum extent permitted by law, CNI does not accept any liability (including, without limitation, any liability arising from fault or negligence) for any loss whatsoever arising from the use of this Presentation or its contents or otherwise arising in connection with it. This Presentation may contain forwardlooking statements, guidance, forecasts, estimates, prospects, projections or statements in relation to future matters (Forward Statements). Forward Statements can generally be identified by the use of forward looking words such as “anticipate”, “estimates”, “will”, “should”, “could”, “may”, “expects”, “plans”, “forecast”, “target” or similar expressions. Forward Statements including indications, guidance or outlook on future revenues, distributions or financial position and performance or return or growth in underlying investments are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward Statements speak only as of the date of this Presentation. No independent third party has reviewed the reasonableness of any such statements or the assumptions underpinning such statements.

Neither CNI, nor any member of Centuria Capital Group represents or warrants that such Forward Statements will be achieved or will prove to be correct or gives any warranty, express or implied, as to the accuracy, completeness, likelihood of achievement or reasonableness of any Forward Statement contained in this Presentation. Except as required by law or regulation, neither CNI, nor any Centuria Capital Group entity assumes any obligation to release updates or revisions to Forward Statements to reflect any changes. The reader should note that this Presentation may also contain pro-forma financial information. Distributable earnings is a financial measure which is not prescribed by Australian Accounting Standards (AAS) and represents the profit under AAS adjusted for specific non-cash and significant items. The Directors of CFML consider that distributable earnings reflect the core earnings of the Centuria Capital Fund. All dollar values are in Australian dollars ($ or A$) unless stated otherwise.

C E N T U R I A C A P I T A L G R O U P A S X : C N I 9

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