CENTURIA OFFICE REIT — Annual Report 2017

Aug 13, 2017

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Centuria Metropolitan REIT

576 SWAN STREET, RICHMOND, VIC

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Introduction

Australia’s largest ASX listed metropolitan office REIT

Market capitalisation over $500m[ 1] following post 30 June acquisitions Managed by Centuria Capital Limited (ASX:CNI), a specialist fund manager with ~~Results~~ over $4 billion in funds under management Centuria Capital Group[ 2] hold an 18% co-investment in CMA ~~Overview~~ Strong total return since inception of 49.5%[ 3] vs S&P/ASX300 A-REIT Index at 39.6%[ 3] Focus on generating long term sustainable earnings and distribution growth

• 1) Based on the closing CMA security price of $2.39 per security on 9 August 2017.

• 2) Centuria Capital Limited (CNI) and its affiliates. CPFL is a wholly owned subsidiary of CNI.

• 3) As at 2 August 2017, Source: UBS.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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1Results Overview[2] Post 30 June

[[4]] Capital Management Market Outlook[5][6] Guidance & Strategy[7] Appendices

3Portfolio Overview[[4]]

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Results
Overview
144 STIRLING STREET, PERTH, WA
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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Section 1

Results Overview

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Highlights

Delivering on strategy and building a stronger platform

Delivered on earnings

Active management driving portfolio performance Delivered top end of guidance in FY17 – Distributable earnings of 19.0 cps Positive track record of delivering on earnings and distribution forecasts

Improved trading liquidity and increased market capitalisation

Expanded into Australia’s leading ASX listed metropolitan office REIT Successfully completed $90 million equity raising with strong support from existing and new security holders Enhanced scale and liquidity, improved eligibility for inclusion into S&P/ASX300 Index

Enhanced investment property portfolio

Successfully completed the acquisition of Centuria Urban REIT and three additional assets in the direct market Higher quality, well diversified portfolio delivering stable and predictable rental income Driving investor returns through rental income and opportunities for capital growth Sold 14 Mars Road, Lane Cove, NSW at a significant premium to book value

Simplified corporate structure

Restructure streamlines financial reporting Generates ongoing cost savings and operational efficiencies Simplified structure may facilitate future acquisitions

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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History of Centuria Metropolitan REIT

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CUA unitholders approve
CMA successfully merger. Implementation on
lists on the ASX at $2.00 29 June 2017
per security
$2.60
$100 million entitlement offer to CMA and Centuria Capital Limited Announces intention to acquire a
8.76% interest in 360 Capital Office
partially fund the acquisition of 4 (CNI) acquire a 16.1% interest in
Fund (now CUA) in conjunction with
metropolitan office assets valued at GPT Metro Office Fund and
$129 million announce a proposal to acquire all CNI's acquisition of the 360 Capital
real estate management platform
outstanding units
$2.40
Acquisition of a 50% interest
in 203 Pacific Highway for
$43 million (in partnership $90 million placement and
with another Centuria entitlement offer to partially
unlisted fund) fund the acquisition of 3
metropolitan office assets
$2.20 valued at $150 million
Announces
proposal to
merge with
Centuria Urban
REIT (CUA)
$2.00
Total return since CMA IPO [ 1] Growthpoint Offer for GMF CMA and CNI accept the Sale of Mars Road, Lane Cove
– CMA: +49.5% and sell their 16.1% NSW for $26 million (representing
– ASX300 A-REIT Index +39.6% interest for a $2.1m profit a 20.9% premium to book value
and a 23.8% IRR since IPO)
$1.80
Dec14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17
EPS guidance (cps) 10.5 [ 2] 17.3 [ 2] 18.7-19.0
EPS actual (cps) 10.5 18.4 19.0
Total distribution (cps) 9.2 17.0 17.5
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• 1) As at 2 August 2017.

2) Based on restated guidance in the CMA acquisition and entitlement offer presentation – 29 April 2015.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Financial overview at 30 June

Financial snapshot		FY17	FY16
Statutory proft/(loss)	$m	37.7	44.8
Distributable earnings1	$m	22.8	22.0
Distributable earnings per security	cps	19.0	18.4
Distributable earnings yield2	%	7.6	8.6
Distribution	$m	20.9	20.3
Distribution per security	cps	17.5	17.0
Balance sheet metrics		FY17	FY16
Total assets	$m	629.0	415.6
NTA per stapled security	$	2.32	2.18
Gearing3	%	29.5	33.2

• Statutory net profit of $37.7m

• FY17 distributable earnings[ 1] of 19.0 cps

• At upper end of FY17 guidance range of 18.7-19.0 cps

• Disciplined capital structure maintained with conservative gearing

• NTA increased of 14 cps to $2.32 per security, up 6.4% from $2.18 per security at 30 June 2016

19.0 cps FY17 distributable earnings

17.5 cps FY17 distributions paid

$2.32 29.5% cps Net tangible assets Gearing

• 1) Distributable earnings is a financial measure which is not prescribed by Australian Accounting Standard (AAS) and represents the profit under AAS adjusted for specific non-cash and significant items. The Directors consider that distributable earnings reflect the core earnings of CMA.

• 2) Based on CMA closing price of $2.50 per security as at 30 June 2017 and $2.14 per security at 30 June 2016.

• 3) Gearing is defined as total borrowings less cash divided by total assets less cash and goodwill.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Operating highlights at 30 June

Active management driving portfolio performance

• Ongoing leasing success across the portfolio, with 41 transactions across 20,321sqm in FY17, including:

• 22 new leases across 9,979sqm

97.3% Portfolio occupancy

3.9[years] Portfolio WALE[ 2]

• 19 renewals across 10,342sqm

• Portfolio valuations increased year on year by 4.2%[ 1] to $610.0m

• Portfolio WACR firmed year on year 40 basis points to 7.19%[ 1]

• On 29 June 2017, CMA exchanged contracts to acquire the Target Australia Headquarters at 2 Kendall Street, Williams Landing, Victoria. The asset is currently under construction by Cedar Woods Properties and due for completion in Q1 CY2019

$610.0m Book valuation

7.19% Portfolio WACR

1) Like for like valuation increase from FY16 excluding 14 Mars Road, Lane Cove, NSW and including CUA portfolio.

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2) Weighted by gross income.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Section 2

Post 30 June

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Post 30 June

Ongoing strategy to acquire quality income producing metropolitan office assets

– Acquired a further two assets in Perth, WA

• 144 Stirling Street, Perth, WA – $58.2m[ 1] , 100% occupancy, predominantly leased to the WA Government (WA Police) with a WALE of 3.9 years[ 2]

18.6 cps FY18 earnings guidance[ 4]

18.1 cps FY18 distribution guidance

• 42-46 Colin Street, West Perth, WA – $33.6m[ 1] , 100% occupancy, predominantly leased to IAG Australia with a WALE of 5.2 years[ 2,3]

– Further acquisitions

• CMA was in exclusive due diligence to acquire a 10,000sqm office asset under construction in South West Sydney, NSW

27.4%

Pro forma gearing[ 5]

• Due diligence period ended 11 August 2017 and has not culminated in a transaction at this time

• CMA continues to focus on securing quality income generating metropolitan office assets

• CMA has sufficient balance sheet capacity to fund future attractive acquisitions

• 1) Excluding transaction costs.

• 2) Weighted by gross income.

$2.29 ps Pro forma NTA[ 5]

• 3) Includes lease transactions agreed post 30 June 2017.

• 4) Distributable earnings is a financial measure which is not prescribed by Australian Accounting Standard (AAS) and represents the profit under AAS adjusted for specific non-cash and significant items. The Directors consider that distributable earnings reflect the core earnings of CMA.

• 5) 30 June 2017 pro forma adjusted for the acquisitions and capital raising that were announced on 13 July 2017.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Post 30 June

Continued focus on active management driving portfolio improvement

Key leasing transactions

• 1 Richmond Road, Keswick, SA – Executed an eight year lease to SA Power over 2,300sqm[ 1] , in addition to a new three year lease to DCNS Australia over 1,705sqm ensuring continuity of income following previous tenant expiry on 30 June 2017

• 54 Marcus Clarke Street, Canberra, ACT – New 10 year lease over 622sqm improves asset occupancy to 96% and WALE to 3.2 years[ 2]

• 203 Pacific Highway, St Leonards, NSW – Cardno exercising[ 3] five year option, commencing 1 April 2019 over 3,500sqm, increasing asset WALE to 4.9 years[ 2]

• 42-46 Colin Street, West Perth, WA – New 10 year lease over 492sqm improves asset WALE to 5.2 years

98.2% 4.5 years Occupancy[ 4] WALE[ 4]

• 1) SA Power can surrender their ground floor tenancy (650sqm) after year 5 with 12 months notice.

• 2) Weighted by gross income.

• 3) Subject to Cardno Board approval.

• 4) Updated occupancy and WALE includes post 30 June leasing activity.

54 MARCUS CLARKE ST, CANBERRA, ACT

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203 PACIFIC HWY, ST LEONARDS, NSW
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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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NTA movement

Strong market fundamentals and active management driving NTA growth

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$2.40 0.19 (0.01) (0.02) 0.01
(0.03)
0.00 (0.03)
$2.30
$2.20
$2.32 $2.29
$2.10
$2.18
$2.00
$1.90
$180
FY16 Revaluation CUA 8.8% Merger MTM hedge Other [ 1] FY17 Swap Acquisitions Post
stake revaluation with CUA termination [ 2] and equity 30 Jun 17
raising [ 3] proforma
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1) Other includes movement in cash, payables and receivables.

2) Post 30 June 2017, CMA terminated the existing swaps ($104m) and subsequently entered into a new swaps agreement ($140m).

• 3) Adjustment for the acquisitions and capital raising that were announced on 13 July 2017.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Section 3

Portfolio Overview

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Portfolio composition

Geographically well diversified portfolio

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Portfolio Snapshot Post 30 June [ 1] FY17 FY16
QLD
Number of assets # 18 15 13 35 Robina Town Centre Drive, Robina
555 Coronation Drive, Brisbane
Book value $m 760.0 610.0 398.7 NT 438-517 Kingsford Smith Drive, Hamilton154 Melbourne Street, South Brisbane
QLD
149 Kerry Road, Archerfield
WACR % 7.17 7.19 7.86 34%
WA
NLA sqm 163,411 131,011 112,653
NSW
SA 9 Help Street, Chatswood
203 Pacific Highway, St Leonards
WA NSW
12% 44 Hampden Road, Artarmon
144 Stirling St, Perth 3 Carlingford Road, Epping
42-46 Collins Street, West Perth 22% 13 Ferndell Street, Granville
6%
ACT
VIC
1 Richmond Road, Keswick SA 10%
131-139 Grenfell Street, Adelaide 16% ACT
VIC 54 Marcus Clarke Street, Canberra
60 Marcus Clarke Street, Canberra
576 Swan Street, Richmond TAS
2 Kendall St, Williams Landing
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54 Marcus Clarke Street, Canberra 60 Marcus Clarke Street, Canberra

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1) Includes post 30 June 2017 acquisitions and Williams Landing, VIC, as if complete.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Leasing overview

Focus on leasing to maximise occupancy and income

15.5%

Portfolio NLA leased in FY17[ 6]

• Secured 41 lease transactions in FY17 across 20,321sqm

• 22 new leases across 9,979sqm

• 19 renewals across 10,342sqm

• 30 lease transactions less than 500sqm highlights benefits of leveraging Centuria’s integrated property management platform

• Substantial reduction in FY18 expiries to 4.7%[1,2]

Key lease transactions	No. of transactions	sqm
154 Melbourne Street, South Brisbane, QLD	4	5,496
1 Richmond Road, Keswick, SA	2	4,043
9 Help Street, Chatswood, NSW	9	3,520
54 & 60 Marcus Clarke Street, ACT	10	2,112
555 Coronation Drive, Brisbane, QLD	2	1,812

Submarket	Occupancy 3	WALE 1
NSW4	99.7%	3.4
VIC	100.0%	7.3
QLD	97.9%	4.8
SA	94.8%	3.6
ACT5	93.6%	3.0
WA	100.0%	4.2
Total	98.2%	4.5

• 1) Weighted by gross income.

• 2) Includes post 30 June 2017 acquisitions and includes Williams Landing, VIC, as if complete.

20,321

Portfolio NLA leased in FY17

14,885 sqm

FY17 expiries and vacancy leased

4.7%

FY18 expiries[ 1,2]

• 3) By area.

• 4) Includes Cardno five year lease renewal at 203 Pacific Highway, subject to Cardno Board approval.

• 5) Post 54 Marcus Clarke Street new 10 year lease over 622sqm.

• 6) Portfolio NLA for the purpose of this calculation excludes the acquisitions.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Portfolio metrics

Portfolio positioned to drive ongoing performance

Portfolio Snapshot		Post 30 June 1	FY17	FY16
Occupancy2	%	97.8	97.3	97.2
FY18 expiries3	%	4.7	6.0	6.6
WALE3	yrs	4.3	3.9	3.9

FY17 Weighted Average Lease Expiry[ 1,3]

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50% 47.9%
40
30
3.6% 6.6%
20
16.9%
14.4% 13.9%
10
4.7%
2.2%
0
Vacant FY18 FY19 FY20 FY21 FY22+
FY16 FY17
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1) Includes post 30 June 2017 acquisitions and Williams Landing, VIC, as if complete. Exclude post 30 June leasing activity.

• 2) By area.

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3) Weighted by gross income.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Tenancy profile

Earnings growth underpinned by high quality tenants and contracted rental growth

• 48.0% of gross rental income derived from top 10 institutional grade tenants

• Rental growth supported by 94% of rental revenue subject to fixed annual reviews averaging 3.6% p.a.

• Active management platform drives performance from multi-tenant assets with <500sqm users

• 1) Includes post 30 June 2017 acquisitions and includes Williams Landing, VIC, currently under construction.

Tenancy profile by size cohort (by no.tenant)[ 1]

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<500sqm
12%
1,000 to 2,000sqm
7% 500 to 1,000sqm
9% 163 >2,000sqm
tenants
73%
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Rental reviews[ 1]

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Fixed
6%
CPI
Fixed
annual
reviews
averaging
3.6%
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94%
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Tenant diversification (top 10 tenants by gross income)[ 1]

Insurance Australia Limited	8.4%
Target Australia2	6.3%
Austar Entertainment Pty Limited	6.0%
Bluescope Steel Limited	5.0%
Hatch	4.1%
Minister for Works (WA Police)	4.0%
GE Capital Finance Australasia	3.7%
Domino’s Pizza Ltd	3.5%
Minister for Infrastructure	3.4%
Department Housing & Public Works (QCAA)	3.4%

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2) Upon completion, expected Jan 2019.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Portfolio valuations

Robust market fundamentals driving valuation growth

• Portfolio valuation up $24.9m[ 1] (4.2%) year on year. This includes valuation increases at:

• 9 Help Street, Chatswood, NSW increasing from $55.1m to $65.0m (18.0% increase) due to improved market rent, occupancy and a tightening of the capitalisation rate from 7.25% to 6.50%

• 1 Richmond Road, Keswick, SA increasing from $26.7m to $28.5m (6.7% increase) due to new leases across 4,043sqm

• 567 Swan Street, Richmond, VIC increasing from $56.0m to $61.0m (4.3% increase) due to a tightening of the capitalisation rate from 6.75% to 6.25%

9 HELP ST, CHATSWOOD, NSW

• 60 Marcus Clarke, Canberra, ACT increasing from $52.8m to $56.0m (6.1% increase) due to 10 recent leasing transactions and a tightening of the of the capitalisation rate from 8.25% to 7.75%

• As a result of the revaluations, the portfolio’s capitalisation rate has tightened from 7.59%[1] to 7.19% as at 30 June 2017

		Valuation			Capitalisation	Capitalisation	rate
	Jun 16	Jun 17	Increase	%	Jun 16	Jun 17	Change (bps)
Offce	$542.8m	$566.3m	$23.5m	4.3	7.59%	7.18%	(41 bps)
Industrial	$42.3m	$43.7m	$1.4m	3.3	7.61%	7.35%	(26 bps)
Total	$585.1m	$610.0m	$24.9m	4.2	7.59%	7.19%	(40 bps)

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1) Like for like portfolio, excluding 14 Mars Rd, Lane Cove, NSW and including CUA portfolio.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Section 4

Capital Management

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Capital management

Maintained a disciplined balance sheet

• Conservative gearing below 30%

• Multi-bank debt facilities provides diversity of funding sources and enhanced balance sheet capacity

27.4 %[3.9 ][%] Pro forma gearing[ 2] All in cost of debt[ 3]

• Staggered debt tranches with no single maturity exceeding 25% of total facilities

• Announced a $90.0m capital raise at $2.35 per security on 13 July 2017

• Accretive to FY18 earnings

• Well supported by existing and new securityholders

• CMA security price trading above offer price

• Intention to activate DRP from 30 September 2017

• CMA’s market capitalisation increased to over $500 million[ 1]

• Increased likelihood for CMA to enter S&P ASX 300 Index

Debt Maturity Profile

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$100
$90
75
$55
50 $45
$40
$30
25
0 $0
1H20 2H20 1H21 2H21 1H22 2H22
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Key debt metrics		FY17
Facility limit	($m)	260
Drawn amount	($m)	189.5
Undrawn capacity	($m)	70.5
Weighted average debt expiry	(years)	3.4
Proportion hedged	(%)	54.9
Weighted average hedge maturity	(years)	3.0
Cost of debt2	(%)	3.9
Interest cover ratio	(x)	5.6

• 1) Based on CMA’s closing price of $2.39 per security as at 9 August 2017.

• 2) 30 June 2017 pro forma adjusted for the acquisitions and capital raising announced on 13 July 2017.

3) Including weighted average swap rate, facility establishment fees and all-in margins (base and line fees).

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Merger with Centuria Urban REIT (CUA)

Combining two highly complementary portfolios to provide securityholders with an enhanced investment proposition

• The merger with CUA is in line with CMA’s strategy to invest in metropolitan office markets in Australia

• Investors in both CMA and CUA voted overwhelmingly in favour of the merger

• The merger was successfully implemented on 29 June 2017

• Benefits include:

• Material increase in scale with CMA’s investment property portfolio increasing 54% to over $600m

• Accretive to CMA’s FY18 distributable earnings per security

• Enhanced portfolio and tenant diversification

• Cost efficient acquisition structure minimised net tangible asset dilution compared to acquiring assets in the direct market

• Improved trading liquidity and increased market capitalisation with the potential for S&P/ASX300 index inclusion

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Capital transactions – divestment

Capital recycling where asset values have been maximised

14 Mars Road, Lane Cove, NSW

• On 31 March 2017 CMA sold 14 Mars Road, Lane Cove, to the incumbent tenant, Cochlear Limited for $26.0m[ 1]

• Property acquired for $18.5m at time of CMA’s listing (December 2014)

• Book value at 30 June 2016 of $21.5m – sale price represents a 21% premium and crystalised a 23.8% asset IRR

• Disposal is in line with CMA’s investment strategy to recycle capital where asset values have been maximised

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1) Before transaction costs.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Capital transactions – acquisitions

Acquired quality income generating metropolitan office assets

• CMA has acquired three direct metropolitan office assets that are highly complementary to the portfolio

• On 29 June 2017 CMA exchanged contracts to acquire the Target Australia headquarters in Williams Landing, VIC, currently under construction

• On 1 August 2017 CMA acquired two assets in WA, being 144 Stirling Street, Perth and 42-46 Colin Street, West Perth

• All three assets enhance the portfolio’s income security with quality, institutional grade tenants occupying each asset

		Independent
Summary of the acquisitions	State	Valuation ($m)	Initial yield	Cap rate	NLA (sqm)	WALE (years) 1	Occupancy 2
2 Kendall Street, Williams Landing, VIC3	VIC	58.2	6.5%	6.5%	12,919	10.0	100%
144 Stirling Street, Perth, WA	WA	58.2	9.2%	7.5%	11,042	3.9	100%
42-46 Colin Street, Perth, WA	NSW	33.6	8.7%	7.5%	8,439	5.24	100%
Total		150.0	8.0%	7.1%	32,400	6.0	100%

• 1) Weighted by gross income.

• 2) By area.

• 3) On completion.

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4) Post a new 10 year lease of 492sqm.

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Market Outlook

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Market outlook

Robust supply and demand fundamentals in metropolitan office markets

• Supply side constraints

• Displacement of metropolitan office tenants due to residential development and medium term infrastructure projects

• No new meaningful supply in metropolitan markets in the near term

• Demand side growth

• Infrastructure investments leading to increasing market accessibility

• Relocation of CBD tenants to metropolitan markets due to significant rental savings

• Strong activity for sub 1,000sqm occupiers in metropolitan markets

• This fits well with CMA’s tenancy composition, with 82% of our tenants occupying less than 1,000sqm

• Strong effective rental growth in CBD is having a ripple effect and is flowing to metropolitan office markets

• Incentives have started to contract in metropolitan markets

• Metropolitan office markets vacancy rates are generally tighter relative to the CBD due to these reasons

Australian office vacancy rates

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25% Source: Savills / PCA Office Market Report 2Q 2017
22.5%
21.1%
20
16.1%
15.7%
15
11.4%
Australian office vacancy
10
8.2%
6.5%
5.9%
5
0
East MelbourneSouthbankParramattaSydney CBDNorth SydneyMelbourne CBDChatswoodSunshine CoastHobart CBDMacquarie ParkChermsideNewcastleAdelaide FringeWollongongSt Kilda RoadUpper Mt Gravatt & MacgregorGold CoastCrows Nest/St LeonardsCanberra Brisbane FringeWest PerthBrisbane CBDAdelaide CBDPerth CBDDarwin CBD
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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Market outlook

Capital inflows to metropolitan office generating investment demand

• The sustained low global interest rate environment and relative attractiveness of Australian real estate will continue to attract domestic and international investors

• Over the last 15 months, approximately 49% of national office market transactional sales volume were derived from metropolitan office transactions

• The yield spread between metropolitan and CBD markets will underpin capital growth in metropolitan markets

• Approximately 50-60% of investment in the metropolitan markets continues to come from offshore investors

• Potential arbitrage opportunities are available for metropolitan owners who can mitigate tenancy risk in conjunction with repositioning strategies

Yield spread – A-grade metro vs CBD A-grade

10 year bond – A-grade metro vs CBD A-grade

10% 2.00% 5 1.00% 0 0.00 CBD A-Grade yield Yield spread A-Grade metro

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10% 2.00%
5 1.00%
0 0.00
10 Year bond rate A-Grade CBD A-Grade metro
Sep 05Mar 06Sep 06Mar 07Sep 07Mar 08Sep 08Mar 09Sep 09Mar 10Sep 10Mar 11Sep 11Mar 12Sep 12Mar 13Sep 13Mar 14Sep 14Mar 15Sep 15Mar 16Sep 16Mar 17
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Section 5

Guidance & Strategy

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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FY18 guidance

• Distributable earnings guidance of 18.6 cps

• Distribution guidance of 18.1 cps

• Paid in equal installments of 4.525 cps per quarter

• Strong forecast distribution yield of 7.5%[ 1]

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9 HELP STREET, CHATSWOOD, NSW
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1) Based on the CMA closing price of $2.39 per security on 9 August 2017.

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Strategy

CMA’s strategy and focus remains unchanged

Fund strategy

• Acquire quality ‘fit for purpose’ metropolitan real estate assets delivering stable and secure income streams

• Maintain a disciplined capital structure with gearing below 35%

• Acquisition decisions driven by bottom up market research

In Australia’s metropolitan office markets, superior assets selection, active asset management and close relationships with tenants are the cornerstone of success.

Portfolio strategy

• Focus on portfolio leasing to ensure occupancy, WALE and income continue to be maximised

• Execute initiatives to generate income and value uplift through active asset management, risk mitigation and repositioning strategies

• Divest assets and recycle capital where appropriate

CMA represents an opportunity to gain exposure to investment grade portfolio managed by hands on professional managers specialising in generating value throughout the property cycle

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Section 6

Appendices

Appendix A – Income Statement Appendix B – Distribution Statement Appendix C – Balance Sheet Appendix D – FFO Reconciliation Appendix E – 30 June 2017 pro forma Appendix F – Investment portfolio Appendix G – Acquisitions (property details)

CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Appendix A – Income Statement

Appendix A – Income Statement
$’000	30 June 2017
Revenue
Gross property income	40,019
Other Income	14
Interest income	115
Total revenue	40,148
Expenses
Direct property expenses	(8,945)
Responsible entity fees	(2,385)
Finance costs	(5,501)
Management and other administrative expenses	(1,066)
Total expenses	(17,896)
Sub-total	22,252
Straight lining of rental income1	1,366
Amortisation of leasing fees	(356)
Gain / (loss) on fair value of investment properties	17,180
Gain / (loss) on fair value of investments	884
Gain / (loss) on fair value of derivatives fnancial instrument	1,420
Amortisation of borrowing costs	(367)
Corporate simplifcation costs	(428)
Business combination transaction costs	(4,263)
Statutory net proft	37,689

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1) Net of amortisation of tenant incentives.

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Appendix B – Distribution Statement

Appendix B – Distribution Statement
$’000	30 June 2017
Statutory net proft	37,689
Straight lining of rental income1	(1,366)
Amortisation of Leasing fees	356
Gain / (loss) on fair value of investment properties	(17,180)
Gain / (loss) on fair value of investments	(884)
Gain (loss) on fair value of derivatives fnancial instrument	(1,420)
Amortisation of borrowing costs	367
Corporate simplifcation costs	428
Business combination transaction costs	4,263
Lease incentives funded by vendor on property acquisitions	538
Distributable earnings	22,791
Distribution	20,897
Distributable Earnings per stapled security (cents)	19.0
Distribution per stapled security (cents)	17.5
Annualised Distributable Earnings yield 2	7.6%
Annualised Distribution Yield 2	7.0%

1) Net of amortisation of tenant incentives.

2) Based on CMA closing price of $2.50 per security as at 30 Jun 2017.

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Appendix C – Balance Sheet

Appendix C – Balance Sheet
$’000	30 June 2017
Cash	8,187
Investment properties	609,950
Goodwill	6,356
Other assets	4,528
Total assets	629,022
Interest bearing liabilities1	187,742
Derivative fnancial instruments	1,988
Other liabilities2	18,753
Total liabilities	208,483
Net assets	420,539
Stapled securities on issue (millions)	178,241
Net tangible assets per stapled security ($)	2.32
Gearing (%)3	29.5%

• 1) Drawn debt net of borrowing costs.

2) Includes $5.2m distributions payable and $4.3m transaction costs payable.

3) Gearing is defined as interest bearing liabilities less cash divided by total assets less cash and goodwill.

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Appendix D – FFO Reconciliation

Appendix D – FFO Reconciliation
	CMA
	Distributable	PCA FFO	Difference
Property	Earnings ($’000)	($’000)	($’000)
Statutory Net Proft	37,689	37,689	0
Straight lining of rental income1	(1,366)	(1,366)	0
Amortisation of leasing fees	356	356	0
Gain / (loss) on fair value of investment properties	(17,180)	(17,180)	0
Gain (loss) on fair value of derivatives fnancial instrument	(1,420)	(1,420)	0
Gain / (loss) on fair value of investments	(884)	(884)	0
amortisation of borrowing costs	367	364	0
Corporate simplifcation costs	428	428	0
Business combination transaction costs	4,263	4,263	0
Lease Incentives funded by Vendors on property acquisitions	538	0	(538)
Funds from Operations	22,791	22,252	(538)
FFO per share	19.0	18.6	(0.4)
Distribution per share	17.5	17.5	0.0
Weighted average number of securities (’000)	119,730	119,730

1) Net of amortisation of tenant incentives.

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Appendix E – 30 June 2017 pro forma

		Swaps	Acquisitions and
$’000	30 Jun 17	Termination	equity raising	30 June 17 pro forma
Cash	8,187			8,187
Investmentproperties	609,950		91,770	701,720
Goodwill	6,356			6,356
Other assets	4,528			4,528
Total assets	629,022			720,791
Interest bearingliabilities1	187,742	2,205	10,237	200,184
Derivative fnancial instruments	1,988	(1,988)		—
Other liabilities2	18,753			18,753
Total liabilities	208,483			218,938
Net assets	420,539			501,853
Stapled securities on issue(millions)	178,283		38,489	216,771
Net tangible assetsper stapled security ($)	2.32			2.29
Gearing (%)3	29.5%			27.4%

• 1) Drawn debt net of borrowing costs.

• 2) Includes $5.2m distributions payable and $4.3m transaction costs payable.

• 3) Gearing is defined as interest bearing liabilities less cash divided by total assets less cash and goodwill.

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Appendix F – Investment Portfolio

Property	Ownership	Type	Valuation ($m)	Cap rate	NLA (sqm)	WALE 1,2	Occupancy 2
9 Help Street, Chatswood, NSW	100%	Offce	65.0	6.50%	9,394	3.0	100.0%
203 Pacifc Highway St Leonards, NSW	50%	Offce	47.5	7.00%	11,734	3.4	100.0%
3 Carlingford Road, Epping, NSW	100%	Offce	27.0	6.25%	4,702	2.7	100.0%
44 Hampden Road, Artarmon, NSW	100%	Offce	9.0	8.00%	2,306	2.0	93.5%
576 Swan Street, Richmond, VIC	100%	Offce	61.0	6.25%	8,331	4.7	100.0%
154 Melbourne Street, South Brisbane, QLD	100%	Offce	77.5	7.00%	11,300	1.8	98.4%
483 Kingsford Smith Drive, Brisbane, QLD	100%	Offce	74.5	7.00%	9,322	7.4	98.5%
35 Robina Town, Centre Drive, Robina, QLD	100%	Offce	51.0	7.25%	9,814	6.3	100.0%
555 Coronation Drive, Brisbane, QLD	100%	Offce	31.5	8.00%	5,591	3.3	87.1%
1 Richmond Road, Keswick, SA	100%	Offce	28.5	8.50%	8,100	4.4	92.1%
131-139 Grenfell Street, Adelaide, SA	100%	Offce	19.5	8.50%	4,052	2.4	100.0%
60 Marcus Clarke, Canberra, ACT	100%	Offce	56.0	7.75%	12,120	3.0	92.7%
54 Marcus Clarke, Canberra, ACT	100%	Offce	18.3	8.75%	5,169	2.1	83.6%
13 Ferndell Street, Granville, NSW	100%	Industrial	18.2	7.50%	15,302	2.8	100.0%
149 Kerry Road, Archerfeld, QLD	100%	Industrial	25.5	7.25%	13,774	7.5	100.0%
Total (excluding Acquisitions)			610.0	7.19%	131,011	3.9	97.3%
Hatch Building, Perth, WA	100%	Offce	58.2	7.50%	11,042	3.7	100.0%
Colin Street, West Perth, WA	100%	Offce	33.6	7.50%	8,439	4.8	100.0%
Total (excluding Target Head Offce)			701.7	7.23%	150,492	3.9	97.6%
Target Head Offce, VIC completion value	100%	Offce	58.2	6.50%	12,919	10.0	100.0%
Total			760.0	7.17%	163,411	4.3	97.8%

• 1 Weighted by gross income.

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2) Excludes post 30 June leasing.

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Appendix G – Acquisitions (property details): 2 Kendall St, Williams Landing, VIC

• Multi-level, A-Grade suburban office building with net lettable area of 12,919sqm

• The land has been acquired for an initial payment of $2.9 million with a $55.3 million final payment on completion of construction, expected Q1CY19

• Located in the new residential suburb of Williams Landing opposite the railway station, approximately 20 kilometres south west of the Melbourne CBD

• Target Australia, a wholly owned subsidiary of Wesfarmers (WES: ASX) will occupy 100% of the building on a 10 year lease (from completion of construction)

• High quality building with an anticipated 4.0 star NABERS energy rating, 384 car spaces, a ground floor cafe and modern end of trip facilities

Property details[ 1]

Property details 1
Property type	Offce
Purchase price	$58.2m
Capitalisation rate	6.5%
Initial yield	6.5%
Occupancy	100%
WALE (by income)	10.0 years2
Site area (sqm)	4,401
Net Lettable Area (sqm)	12,919

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Summary of major tenants
Tenant Rent review (p.a.) NLA (sqm) Expiry Net income Option
Target Fixed annual reviews 12,919 Dec 29 $3.8m 2 X 5 years
Lease expiry profile (by income)
100% 100%
50
0
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 2 KENDALL STREET, WILLIAMS LANDING, VIC
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1) As at completion, anticipated Q1CY19.

2) At any time after the commencement of the sixth year of the lease, Target may provide notice that it is surrendering a single level (either Level 4 or Level 7). Target must give notice 15 months in advance.

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Appendix G – Acquisitions (property details): 144 Stirling St, Perth, WA

• Multi-level, A-Grade Perth city fringe office building with a net lettable area of 11,042sqm and 240 carparks

• 100% leased to two institutional quality tenants, WA Government (WA Police) (54%) and Hatch & Associates (45%), a global engineering and management consultancy

• WA Police currently sublease an additional 22% of NLA from Hatch & Associates

• WA Police has recently installed a specialised operational fit out

• Annexed warehouse allows secure drop off and parking for WA Police service vehicles

• WA Police are a potential full building user

Property details

Property details
Property type	Offce
Purchase price	$58.2m
Capitalisation rate	7.5%
Initial yield	9.2%
Occupancy	100%
WALE (by income)	3.9 years
Site area (sqm)	5,057
Net Lettable Area (sqm)	11,042

• 1) Excludes an additional $0.7 million related to parking, café and other.

• 2) Currently sublet from Hatch & Associates.

Summary of major tenants

	Tenant	Rent	review (p.a.)	NLA	(sqm)	Expiry	Net income 1	Net income 1		Option
	WA Government		3.50%		5,936	Dec 20		$2.2m		N.A.
	WA Government2		3.75%		2,435	Aug 21		$1.2m		N.A.
	Hatch & Associates		3.75%		2,503	Aug 21		$1.2m	2 x	5 years
	Lease expiry profile (by		income)
	100%
	50		46% 51%3
	0 1%							2%
	FY18 FY19	FY20	FY21 FY22 FY23		FY24	FY25 FY26	FY27	FY28	FY29	FY30

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144 STIRLING ST, PERTH, WA
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• 3) This does not include the 22% of NLA sublet by Hatch to WA Police.

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Appendix G – Acquisitions (property details): 42-46 Colins Street, West Perth, WA

• Modern, A-Grade commercial office building close to the WA parliamentary precinct

• 8,439sqm of NLA over four levels with major tenant Insurance Australia Group (IAG:ASX), an S&P/ASX20 company occupying three levels on recently reset market lease terms – Leasehold title with 83.1 years remaining

• Level 4 subject to a 12 month rental guarantee from the Vendor with 50% of vacancy leased post acquisition for 10 years

• IAG has been in occupancy since the building was constructed with 100% tenant power backup to support IAG’s national call centre

• Substantial end of trip facilities and amenities nearing completion

• Area well serviced by free public transport

Summary of major tenants

Property details

Property details
Property type	Offce
Purchase price	$33.6m
Capitalisation rate	7.5%
Initial yield	8.7%1
Occupancy	100%
WALE (by income)	5.2 years2
Site area (sqm)	5,147
Net Lettable Area (sqm)	8,439

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Tenant Rent review (p.a.) NLA (sqm) Expiry Net income Option
IAG Group 3.5% 6,967 Jan 23 $3.3m 1 x 3 years
IAG Group [ 1] N.A. 1,472 Oct 18 $0.8m N.A.
Lease expiry profile (by income)
100%
76%
50
24% [ 3]
0
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30
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1) Based on forecast net income for the first twelve months of ownership and does not include a 10 year lease GeerSullivan.

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42-46 COLINS STREET, WEST PERTH, WA
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• 2) Includes post acquisition leasing transactions.

• 2) Remaining lease term plus a twelve month rental guarantee from Dexus (the Vendor).

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Disclaimer

This presentation has been prepared by Centuria Property Funds Limited Limited (ABN 11 086 553 639, AFSL 231 149) (CPFL) as responsible entity of Centuria Metropolitan REIT (‘CMA’ or the ‘Trust’).

All information and statistics in this presentation are current as at 30 June 2017 unless otherwise specified. It contains selected summary information and does not purport to be all-inclusive or to contain all of the information that may be relevant, or which a prospective investor may require in evaluations for a possible investment CMA. It should be read in conjunction with CMA’s periodic and continuous disclosure announcements which are available at www.centuria.com.au. The recipient acknowledges that circumstances may change and that this presentation may become outdated as a result. This presentation and the information in it are subject to change without notice and CPFL is not obliged to update this presentation.

This presentation is provided for general information purposes only. It is not a product disclosure statement, pathfinder document or any other disclosure document for the purposes of the Corporations Act 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 CMA or the acquisition of securities in CMA . 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 CMA.

The information contained in this presentation does not constitute financial product advice. Before making an 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 CMA or any other investment product.

The information in this presentation has been obtained from and based on sources believed by CPFL to be reliable.

To the maximum extent permitted by law, CPFL and its related bodies corporate 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, CPFL 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 forward-looking 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. No independent third party has reviewed the reasonableness of any such statements or assumptions. No member of CPFL 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, CPFL assumes no 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 consider that distributable earnings reflect the core earnings of the Trust.

All dollar values are in Australian dollars ($ or A$) unless stated otherwise.

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CENTURIA METROPOLITAN REIT I FY17 ANNUAL RESULTS I CMA:ASX I 14 AUGUST 2017

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Thank you

Further Information: Nicholas Blake Trust Manager – CMA +61 2 8923 8923 nicholas.blake@centuria.com.au Hengky Widjaja Senior Analyst, Listed Property +61 2 8923 8923 hengky.widjaja@centuria.com.au