FY20 results were ahead of Credit Suisse estimates mainly because of the broker’s overly conservative rent relief assumptions. The business remains well within debt covenants.
FY21 estimates are raised by 1.8% and FY22 reduced by -2.5%. The distribution of 16.5c for FY21 is in line with guidance.
Credit Suisse suggests Centuria Office is likely to be suffering from negative investor sentiment because of its office exposure, and possibly the relatively higher gearing.
However, a short-term breach of debt covenants is considered unlikely. Outperform retained. Target is reduced to $2.14 from $2.16.
Sector: Real Estate.
Target price is $2.14.Current Price is $1.95. Difference: $0.19 – (brackets indicate current price is over target). If COF meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).