This ASX property fund is forecasting a dividend return of almost 10%

Centuria Office REIT (ASX: COF) is forecasting a dividend return for the current year of almost 10% after reporting its full year results.

Strong results underpin dividend forecast

The ASX property company, which bills itself as Australia's largest pure-play office real estate investment trust, said it generated $66.9 million in funds from operations (FFO), and paid out 10.1 cents per unit in distributions, in line with guidance.

It said it expects to pay out 9 cents per unit in FY27, which at the current share price of 90.5 cents translates to a yield of 9.9%.

The trust does not attach franking credits to its dividends.

Fund Manager Belinda Cheung said regarding the result:

Conditions across the Australian domestic office markets continued to stabilise during the year, reflected in an improvement in COF's portfolio valuations, the successful divestment of 9 Help St, Chatswood at a premium to book value and strong portfolio leasing volumes generating positive re-leasing spreads. With limited new office supply across the medium-term due to a rising disparity between replacement costs and prevailing asset values, COF anticipates continued benefit from stabilising market conditions. COF continues to adopt a proactive capital management strategy aligned to selective disposals and robust debt management while curating a portfolio of high-quality, well-located modern office buildings. We are pleased to confirm COF delivered on its FY26 FFO and distribution guidance with the REIT continuing to execute against many of its long-term objectives.

At the end of FY26 the trust had $189.3 million in cash and undrawn debt, and its gearing sat at 43.7%.

The trust said it achieved "near record" leasing transactions during FY26.

Another solid year ahead

On the outlook Ms Cheung said:

COF delivered positive results during the year, against a backdrop of changing macroeconomic factors that impacted national productivity, inflation and interest rates. Looking ahead, COF remains conscious of capital management and focused on maintaining high portfolio occupancy, improving portfolio weighted average lease expiry by addressing near-to medium-term expiries while curating a quality portfolio of modern, sustainable office assets.

During FY26 Centuria refinanced $1 billion in debt, which resulted in a circa 30 basis point reduction in debt margin and which extended the weighted average debt expiry to 4.3 years from 2.6 years.

The company said:

COF has no debt expiries until FY29 and maintains sufficient debt covenant headroom with a 2.0 times Interest Coverage Ratio and a 44.8% Loan-to-Value Ratio, both providing substantial headroom to covenants.

Centuria Office REIT is valued at $545.6 million.

The post This ASX property fund is forecasting a dividend return of almost 10% appeared first on The Motley Fool Australia.

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