centuria office reit 818 bourke street docklands victoria
COF’s 818 Bourke Street, Docklands. Image: Supplied.
  • Industrial markets continue to see tailwinds
  • CIP reports strong quarterly performance and rental growth
  • COF leases over 35,000 sqm in office space in the financial year to date

Centuria Industrial REIT (ASX: CIP) and Centuria Office REIT (ASX: COF) have both reaffirmed their FY23 funds from operations (FFO) and distribution guidance in their respective company updates.

Strong leasing activity for CIP

The REIT has reported over 68,000 square metres of leasing during the quarter and leased 157,124 square metres, year to date; CIP said this represents five per cent of the company’s portfolio by gross lettable area.

Among other highlights:

  • CIP reported, year to date, positive re-leasing spreads, averaging 28%,
  • Portfolio occupancy of 98.5%, and
  • Portfolio weighted average lease expiry (WALE) of 7.9 years.

Another strong quarter has been recorded against the backdrop of continued strong market tailwinds, with CBRE figures, cited by Centuria, showing a 0.6% vacancy rate of Australia’s industrial market.

Jesse Curtis CIP Fund Manager
Jesse Curtis CIP Fund Manager. Image: Supplied.

“CIP has experienced another strong quarterly performance punctuated by strong rental growth,” said CIP fund manager, Jesse Curtis.

“The Australian industrial real estate market continues to benefit from high tenant demand and a low volume of new supply of industrial space, which continued to reduce vacancy and accelerate market rental growth nationally. This growth has been concentrated in urban infill markets where CIP holds critical mass.”

Centuria Industrial REIT also has some 57,300 square metres of industrial space in the pipeline, including the 204 Bannister Road development (12,300 square metres) in Western Australia’s Canning Vale, expecting practical completion in July this year, and a five-unit industrial estate providing circa 45,000 square metres in Victoria’s Campbelfield; practical completion for the Victorian property is expected in the second quarter of FY24.

M80, Campbellfield VIC_ five unit industrial estate devt
The five-unit industrial estate development in Campbellfield, Victoria. Image: Supplied.

“CIP remains in a strong position moving into the final quarter of FY23. With a fortified balanced sheet and a high-quality portfolio of urban infill industrial assets, CIP is well placed to continue to take advantage of the positive sector tailwinds driving the industrial real estate market,” said Curtis.

“We remain very confident in the underlying industrial market fundamentals and are focused on executing our strategy through active management of Australia’s largest listed pure-play industrial REIT.”

CIP reaffirms its FY23 FFO guidance of 17.0 cents per unit (cpu). Distribution guidance is also reaffirmed at 16.0 cpu, reflecting an annualised distribution yield of 5.1% to be paid in equal quarterly instalments.

COF leases over 35,000sqm

Centuria Office REIT (ASX: COF) has reported a 53% year on year increase in leasing transactions across its portfolio. Financial year to date, the company has leased 35,243 square metres of office space across 45 transactions across Australia.

Grant Nichols, COF Fund Manager and Centuria Head of Office (1)
Grant Nichols, COF Fund Manager and Centuria Head of Office. Image: Supplied.

“COF’s geographically diversified Australian office portfolio continues to benefit from the increased leasing activity evident in many domestic office markets, particularly Brisbane and Perth, which achieved strong net absorption over the last twelve months,” said said COF Fund Manager and Centuria Head of Office, Grant Nichols.

“As a result of these leasing conditions, occupancy across the COF portfolio increased to more than 97% during Q3 FY23,”

COF’s WA and QLD portfolio are now 99.8% and 97.4% occupied respectively.

COF reaffirmed its FY23 FFO guidance of 15.8 cpu and distribution guidance of 14.1 cpu, representing an FY23 distribution yield of 9.9% based on its current trading price. 

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