This article is from the Australian Property Journal archive
TENANT demand across the country’s industrial real estate market have driven strong operational results for Centuria Industrial REIT (ASX:CIP) over Q1 FY23.
Over the first quarter of the financial year, CIP has secured 49,209sqm of leased terms across 10 transactions. With positive re-leasing spreads averaging 18% achieved as rental growth speeds up across the market.
“Record low national industrial vacancy, coupled with limited supply of industrial space, continues to create a divergence between supply and demand resulting in accelerated industrial market rental growth across the country,” said Jesse Curtis, fund manager at CIP and head of industrial at Centuria.
“These metrics support CIP’s strong portfolio occupancy and, with significant tenant demand, we look to leverage opportunities to further add value for our investors.”
CIP’s portfolio occupancy is now at 99.6%, with a WALE of 8.1-years.
Key deals over the period included 22,481sqm at 82 Rodeo Road, Gregory Hills NSW on a new 8.5-year term.
With strong leasing results secured at several of CIP’s value-add and development projects, including at the Southside Industrial Estate, Dandenong South VIC
The new three-year lease to Orora Group across 13,610sqm making the 40,380sqm estate fully leased ahead practical completion.
“We are also capturing strong tenant demand through our new development pipeline within supply-constrained urban infill markets. Our Southside Industrial Estate will reach Practical Completion and open in November with 100% occupancy,” added Curtis.
“Furthermore, site preparation works have commenced at our developments in Campbellfield VIC and Canning Vale WA with construction to commence in the coming months.”
CIP also acquired a fourth holding along Studley Court, Derrimut VIC as part of its land consolidation strategy.
The $12.35 million purchase of the 5,419sqm 119 Studley Court industrial facility, brings CIP’s Derrimut sub-portfolio up to 11 assets spanning 26-hectares, worth $258 million.
“CIP remains Australia’s largest listed pure-play industrial REIT and moves into Q2 FY23 in a strong position. While inflation and interest rates continue to rise, our cash rate assumptions originally adopted in setting FY23 FFO guidance remains consistent with central bank rate movements,” said Curtis.
CIP reaffirmed its FY23 FFO guidance of 17.0 cents per unit and its distribution guidance at 16.0 cents per unit, reflecting an annualised distribution yield of 5.9%.
“The industrial leasing market continues to be supported by strong fundamentals with CIP’s urban infill portfolio expected to benefit from the rapid rise in market rents,” concluded Curtis.
