Highlights

• FY26 FFO of 11.2 cents/unit and distribution of 10.1 cents/unit, both in line with guidance

• Strong leasing activity: approximately 40,000 sqm across 47 transactions (14.5% of portfolio NLA)

• Portfolio NTA increased to $1.66/unit; sold 9 Help Street, Chatswood for $90m at 12.5% premium to book

• FY27 guidance of 11.3c FFO and 9.0c distribution/unit; refinanced ~$1bn of Debt with improved margins

Centuria Office REIT (ASX:COF) is Australia's largest listed pure-play office property Investment trust, managing a diversified portfolio of metropolitan and CBD office buildings across major Australian cities including Sydney, Melbourne, Brisbane, Adelaide and Perth. The trust provides investors with direct exposure to Australian office property through a managed REIT structure, targeting stable distribution income and potential Capital growth through active portfolio management. COF has been one of the most closely watched office REITs on the ASX during the post-pandemic period of uncertainty around hybrid working, return-to-office trends and office property valuations.

Latest Developments

Centuria Office REIT's FY26 result suggests the office-property cycle may be stabilising. COF delivered FFO of 11.2 cents/unit and a 10.1 cents/unit distribution, both in line with guidance. Leasing was particularly strong: around 40,000 sqm across 47 transactions, representing 14.5% of portfolio NLA, while average re-leasing spreads were about 5%. Portfolio valuations increased, NTA finished at $1.66/unit, and the trust sold 9 Help Street, Chatswood for $90m, a 12.5% premium to book value. COF also refinanced about $1bn of debt, reduced margins by roughly 30bp and extended debt expiry. FY27 guidance is 11.3c FFO and 9.0c distribution per unit.

Industry Context

Australia's office property market has been one of the most debated asset classes since the Pandemic fundamentally disrupted traditional office occupancy patterns through the normalisation of hybrid working. The sector has faced twin headwinds of elevated vacancy rates in some markets and rising debt costs that have pressured REIT Earnings and valuations. However, 2025 and 2026 have begun showing signs of stabilisation as tenants make longer-term decisions about their space requirements and the Supply pipeline for new office construction has contracted. Premium and A-grade office Assets in metro-adjacent locations — where many of COF's properties sit — have been more resilient than CBD towers.

Key Risks

• Hybrid working normalisation may permanently reduce per-employee office space requirements, capping occupancy recovery

• Office property valuations remain sensitive to Interest Rate movements and investor risk appetite for unlisted/listed real assets

• The FY27 distribution guidance of 9.0c (below FFO of 11.3c) implies a conservative Payout Ratio — understanding the capital retention rationale is important

• Tenant concentration risk in specific properties could create vacancy events if major tenants downsize or relocate

• Debt refinancing completed at improved margins, but overall debt levels still require discipline in a higher-for-longer rate environment

Key Catalysts to Watch

• Continued strong leasing activity demonstrating that the 14.5% NLA leased in FY26 is sustainable in FY27

• Further portfolio valuation increases driven by a combination of income growth and cap rate compression

• Interest rate cuts reducing the REIT's cost of debt and improving distributable earnings relative to FFO

• Asset recycling opportunities — selling properties at premiums to NTA (like the $90m Chatswood sale) and redeploying into higher-yielding assets

• Return-to-office trends in major Australian cities strengthening metropolitan office market fundamentals

Conclusion

Centuria Office REIT (ASX:COF) has delivered a solid FY26 result that provides genuine evidence the office market may be past its worst. Strong leasing volumes, rising NTA, a premium asset sale and improved debt terms all paint a better picture than many office REIT bears expected. FY27 guidance of 11.3c FFO is modest but positive. For income-focused REIT investors who have been patient through the office property cycle downturn, COF's current positioning and improving fundamentals make it one of the more compelling recovery stories in the listed property sector.