‘The phone is ringing off the hook’: investors head to property

That gives Centuria firsthand insight into investor behaviour amid emerging signals that financial conditions are finally shifting. This month New Zealand’s central bank lowered the cash rate for the first time since 2020, and flagged more cuts to come.

As well, The Australian Financial Review revealed this week that the country’s largest banks were making significant cuts in the interest rates they pay on term deposits

“We think the tide has turned, frankly,” Mr McBain told the Financial Review after delivering the group’s 2024 financial result.

“Look at what has happened just in the last 72 hours or a week. Term deposit rates have fallen. In New Zealand, where we’ve had those cash rates reduced, the phone has run off the hook.

“People have been very comfortable with their money in the bank. I can fully understand that. If you were making 5 per cent, or in New Zealand 6 per cent, now that will be going down to 3 or 3.5 per cent. They are going to have to rethink: ‘OK, now I’ve might have to vest, so what am I going to invest in?’”

Mr McBain hopes more of those investors will head onto Centuria’s platform as the rate cycle turns, and Centuria’s own capacity to invest into real estate opportunities increases. The group has held its assets under management – a key source of earnings via management fees – at about $21 billion over the past three years.

That is an achievement in itself, given the headwinds of high rates and resultant devaluation of commercial property, according to Mr McBain.

“We’ll grow from here. It’s been a difficult period,” he said.

Through its diversification strategy, a significant chunk – now more than 20 per cent – of Centuria’s assets under management are in alternate property sectors, including agriculture, healthcare, real estate credit and more recently a stake in micro-data centre business ResetData.

Centuria’s operating earnings dropped to $94.7 million in 2024, from $115.6 million a year earlier, which translates to 11.7¢ per security, in line with guidance. Distributions were 10¢, also in line with guidance.

Its expects to deliver a 2.6 per cent lift in its 2025 financial year earnings to 12¢, which would fall below current market expectations. However, its guidance for a 4 per cent lift in distributions to 10.4¢ was an upside surprise to consensus.

“We expect Centuria will benefit from stabilising asset values and pick up in transaction volumes as rates normalise. However, we acknowledge the funds management sector is becoming more crowded and will look for evidence of ongoing strategic differentiation in the space,” Jarden analyst Lou Pirenc wrote in a client note.