It was a tough session for the Centuria Office REIT (ASX: COF) share price.
The ASX 300 stock ended the day over 5% lower at $1.16.
This means that the office focused property company's shares are now trading flat over the past 12 months.
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Why did this ASX 300 stock tumble today?
The catalyst for today's decline was the release of a broker note out of Bell Potter this morning.
Its analysts note that the ASX 300 stock has been a strong performer over the past three months. However, they don't believe that this outperformance is justified given the challenging trading conditions it is facing. The broker said:
COF's share price has performed strongly over the past 3m (+8.9% q/q) which in our view is inconsistent with the prolonged challenging conditions observed across suburban office markets. We see limited near term catalysts and potential downside risk to consensus earnings, consistent with our revised estimates.
Bell Potter highlights a number of reasons why it feels that the risk is definitely to the downside for earnings expectations. It adds:
With c.9% vacancy on foot (occupancy 91.4% at 3Q25), retention proving challenging, near-record downtimes across leasing markets and 13% of the portfolio expiring in FY26, we see more downside than upside risk in the near-term.
Additionally, recent transactional evidence (both completed & on-market) is pointing to office sector cap rates wider than COF's book – which is to be expected – but implies little-to-no upside from where the market is pricing it now (implied WACR 8.66%). We increase our 12m WACR expansion estimate from +40bp to +60bp to reflect market conditions.
Downgraded to sell
In light of the above, the broker has downgraded the ASX 300 stock to a sell rating (from hold) and cut the price target on its shares to $1.10 (from $1.20).
Based on its current share price, this still implies potential downside of over 5% for investors.
Commenting on its recommendation, the broker said:
We appreciate that there is deep value in this name (-28% discount to NTA) when taking a long-term view (given white collar employment growth and limited new supply) but considering the lack of near-term catalysts and BP estimates for negative FFO growth (-14% FY25 & -1% FY26) we see better relative value elsewhere in the sector.
Bell Potter is more positive on Centuria Capital Group (ASX: CNI). This morning, it did the reverse and upgraded its shares to hold (from sell) and lifted its price target to $1.80 (from $1.70).
Its analysts "think the macro backdrop presents a more positive environment for CRE managers, and given CHC's outperformance, we believe CNI will start to screen more attractively on a sector-relative basis."
