This article is from the Australian Property Journal archive
THE Centuria Industrial REIT (ASX: CIP) has benefitted from strong tailwinds in last mile industrial markets over FY24, delivering results in line with its FFO and distribution guidance, bolstered by strong rental growth, ecommerce adoption, onshoring of production and assembly and massive demand for data centre assets.
CIP delivered on its upgraded FFO guidance of 17.2 cpu with its distribution of 16 cpu also in line with guidance.
Over the financial year, CIP achieved average re-leasing spreads of 43% across 301,582sqm of leasing, with 39 leasing transactions up 30% on FY23 and 11% on FY22.
This increase in transactions was attributed to ongoing low vacancy levels and tenant demand for high-quality urban infill industrial assets, with CIP’s assets seeing an average downtime between leases of just 43-days.
CIP’s portfolio is now 84% weighted towards Australian infill industrial markets.
“With a portfolio focused on urban infill industrial markets, CIP continued to capitalise on strong market tailwinds to deliver exceptional re-leasing spreads,” said Grant Nichols, CIP funds manager and head of listed funds at Centuria.
“With around 39% of portfolio leases expiring by FY28, CIP is well placed to continue benefiting from the rental growth that has occurred across Australia’s urban infill industrial markets and the unrealised positive rental reversion imbedded within its portfolio.”
Over the year, CIP carried out $120 million in non-core divestments at an average 4% premium to book value.
Earlier this month, CIP offloaded a non-core regional asset for $28.1 million at a 21% premium to its book value, in 54 Sawmill Circuit in Hume.
With the REIT also spending CIP spending $39 million on a Perth data centre asset at the start of the month,
CIP’s net tangible assets were at $3.87 per unit, with its portfolio of 89 industrial assets worth $3.8 billion.
The portfolio boasts occupancy of 97.1%, with a 7.6-year WALE and a WACR at 5.81% at 30 June 2024. And a circa $5 million valuation gain, up 0.1% from December 2023.
CIP also maintains a strong balance street with 93% of its debt hedged, pro forma gearing at 34% and no debt due to expire until FY26.
“The domestic industrial real estate market continues to exhibit strong tailwinds driven by rising ecommerce adoption, a growing population, and a trend towards onshoring supply chains in the wake of global supply chain uncertainty,” said Jesse Curtis, head of funds management at Centuria.
“CIP has established a portfolio that capitalises on these trends to the benefit of its unitholders.”
CIP has provided a FY25 FFO guidance of 17.5 cpu and a distribution guidance odf 16.3 cpu to be paid in quarterly instalments.
“Looking ahead, strong sector tailwinds such as ecommerce adoption, onshoring of production and assembly, data centre growth and increased demand for cold storage will continue to benefit Australian industrial markets, particularly infill industrial markets where there is the greatest tenant demand,” added Nichols.
“For a portfolio with existing critical mass in Australian urban infill industrial markets, CIP is positioned to benefit from these tailwinds given the limited potential for additional supply within these markets.”