centuria-industrial-reit-asx-code-cip-feature
Image: Canva, The Property Tribune.
  • The REIT delivered 30% re-leasing spreads for FY23.
  • Funds from operations of $108.1 million (17.0 cpu).
  • Portfolio occupancy of 98%, WALE 7.7 years, 89 assets worth $3.8 billion.

Centuria Industrial REIT (ASX: CIP) has released its FY23 results, with the company noting the year was driven by strong leasing activity.

An average of 30% re-leasing spreads was achieved for FY23, following increased re-leasing spreads in the second half of the financial year (37% 2HY23; 19% 1HY23). This is a significant increase from the FY22 re-leasing spreads of 11%.

According to CIP, the second-half uptick was due to a focus on urban infill industrial markets. The REIT’s portfolio has an 83% weighting to these markets, where demand is concentrated and vacancy is lowest.

The company leased out 182,004 square metres (sqm) of space across 30 transactions, representing 14% of CIP’s portfolio GLA.

Occupancy for the portfolio stands at 98%, and WALE is 7.7 years across 89 assets, worth $3.8 billion. Approximately 36% of the CIP portfolio is set to expire over the next three years.

“Throughout FY23, CIP continued to capitalise on strong leasing momentum and accelerated re-leasing spreads,” said CIP fund manager and Centuria head of industrial, Jesse Curtis.

“Having a portfolio heavily weighted to urban infill markets on Australia’s east coast, CIP demonstrated outsized re-leasing spreads. The high leasing volume achieved is owed to CIP’s strong tenant customer relationships and value-add project track record.

“In particular, CIP successfully, fully leased the recently completed Southside Industrial Estate and is progressing two further developments within Campbellfield VIC and Canning Vale WA.”

Centuria Industrial REIT FY23 financial results

FY23 FY22
Earnings
FFO ($ million) 108.1 111.7
FFO per unit (CPU) 17 18.2
Distribution per unit (CPU) 16 17.3
Statutory profit / (loss) ($ million) (76.6) 367.5
Balance Sheet
Total assets ($ million) 3,907 4,148
NTA per unit $3.96 $4.24
Gearing (%) 33.1 33.2

Source: CIP.

During FY23, CIP expanded its funding sources with a $300 million exchangeable note offering at a fixed rate coupon of 3.95% and an initial conversion price of 2% above NTA.

CIP also made $215 million in strategic divestments, to maintain low gearing at 33.1%. The divestments were transacted at an average 2% premium to prior book values.

Among the divestments was the circa 50% sale of eight assets for $180.9 million, resulting in the Centuria Prime Logistics Partnership (CPLP), and the $34.5 million divestment of 30 Clay Place, Eastern Creek NSW.

“Pleasingly, portfolio leasing and value-add projects, together with balance sheet initiatives, resulted in CIP delivering guidance. Twelve-month shareholder return was 16.4%, which was double the S&P/ASX 200 A-REIT index performance (8.1%),” said Curtis.

CIP’s portfolio Weighted Average Capitalisation Rate (WACR) expanded 107 bps in FY23 to 5.26%, with leasing success and market rental growth substantially offsetting the capitalisation rate expansion.

“Looking ahead, Australia still holds one of the lowest industrial vacancy rates globally. Tenant demand remains resilient and, with constrained supply of new industrial space, rental growth is expected to be prolonged. Within this environment, CIP is well placed to execute its strategy with a high-quality portfolio of industrial assets and a strong value-add pipeline of leasing, repositioning and development projects,” concluded Curtis.



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