Company Interview / Centuria office REIT sees green shoots after profit surge

Key points:

Strong leasing activity, valuation gains and premium Chatswood asset sale support FY26 result -Limited new office supply and strong Brisbane demand underpin positive leasing spreads Strategy focuses on higher-quality, sustainable assets and disciplined capital management

Belinda Cheung from Centuria Office REIT states that FY26 delivers strong operational outcomes, with profit rising to $55 million and funds from operations at 11.2 cents per unit. Cheung highlights portfolio initiatives including around 40,000m² of leasing, representing just under 15% of net lettable area, and positive leasing spreads of about 5%. She points to a 2.5% June-quarter distribution and notes the sale of 9 Help Street, Chatswood at a 12.5% premium to book value, supporting valuation gains and capital management priorities.

Cheung sees the Australian commercial office market as diverging from residential, with very limited new supply over the next five years. In her view, this is prompting tenants to lock in space, particularly in Brisbane fringe and metro markets such as Fortitude Valley, South Brisbane and Hamilton, where some leasing spreads exceed 10%, with one deal near 18%. She argues these dynamics contribute to stabilising office values and stronger valuations, especially in Brisbane, with momentum gradually extending to other markets.

On strategy, Cheung emphasises curating a younger, well-located, higher-sustainability portfolio, ongoing selective disposals, debt repayment and supportive bank relationships, with no debt expiring until FY28. She views tightening supply, high replacement costs and office obsolescence as potential catalysts for re-rating.