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CIP Q3 FY21 Results Show Continued Growth Trajectory

  • Portfolio grew to more than $2.6 billion
  • $196m portfolio valuation uplift or 8.3% on a like for like basis from prior book values1
  • Four high-quality acquisitions for $90.5m2 during Q3 brings FY21 year to date transactions to $784m
  • 56,173sqm (5.3% of portfolio GLA) of lease terms agreed3 increasing occupancy to 98.8% and a 9.7-year Weighted Average Lease Expiry (WALE)4
  • Reaffirmed FY21 FFO guidance of no less than 17.6 cents per unit (cpu) and distribution guidance of 17.0 cpu5

Centuria Industrial REIT (ASX: CIP) continued its strong growth momentum throughout the March quarter, expanding its industrial property portfolio to more than $2.6 billion, which reaffirms its position as Australia’s largest listed pure-play industrial fund.

Its growth trajectory was underscored by a total of $784.2m in acquisitions since the start of FY21, of which $90.5m2 was secured in Q3, along with a $196m portfolio revaluation uplift.

Jesse Curtis, CIP Fund Manager, said “I am very pleased to report CIP’s strong quarterly results. The industrial real estate market has experienced strong tailwinds, particularly resulting from increased e-commerce and a scarcity of investment grade industrial stock, which is a benefit to CIP investors.

“While a significant weight of capital continues to chase industrial assets, CIP has demonstrated its ability to repeatedly source high-quality properties that represent relative value to prevailing market pricing.”

During the quarter, CIP secured four high-quality industrial assets.

As at 31 March 2021, it conducted external independent valuations on 58 of its 61 investment properties resulting in its portfolio Weighted Average Capitalisation Rate (WACR) firming by 47 basis points from 5.42% to 4.95%. This represented a like for like portfolio valuation increase of 8.3% from prior book values1. Pro-forma NTA increased from $2.99 to $3.33 per unit.

The REIT also capitalised on strong tenant demand, securing 56,173sqm of agreed terms or lease completions3, representing approximately 5.3% of the portfolio GLA.

Curtis continued, “CIP has acted on the robust tenant market, which extended portfolio occupancy to a very healthy 98.8% while Weighted Average Lease Expiries (WALE) was maintained at 9.7 years4. Infill markets continue to generate the highest level of tenant demand.”

A significant leasing deal CIP completed during the quarter included securing a new tenant for the entire 17,070sqm asset at 14-17 Dansu Court, Hallam VIC on an eight-year term. This infill asset received a surrender payment from the previous occupier, resulting in continuous rent revenue.

To address the dearth of investment-grade industrial stock, CIP continued to execute on a number of value-add initiatives across its portfolio.

Currently, the REIT is developing a c.10,400sqm industrial facility in Bundamba QLD, due for practical completion in Q4 FY21. It also repositioned a Hemmant QLD warehouse, and following refurbishment works and a successful leasing campaign, the asset delivered a valuation uplift of $8.7m (51%)6. CIP also intends to reposition its recent Bella Vista NSW acquisition to leverage the asset’s ‘last mile’ location.

CIP maintains a robust balance sheet with proforma gearing of 28.2%.

Curtis concluded, “Throughout the March quarter, the REIT’s portfolio metrics have strengthened while holding a healthy balance sheet that continues to provide headroom to pursue opportunistic, strategic acquisitions. CIP is well positioned to continue delivering secure income and capital growth to our investors.

CIP reaffirmed FY21 FFO guidance of no less than 17.6 cpu and distribution guidance at 17.0 cpu4.

1 Reflects gross increase, excluding capital expenditure incurred. Includes finalised valuations for 324-332 Frankston Dandenong Road, Dandenong VIC and 92 Robinson Avenue, Belmont WA which were not available at the time of the announcement on 26 March 2021
2 Includes the acquisition of 29 Penelope Crescent, Arndell Park NSW as announced 12 April 2021
3 Includes Heads of Agreement (HOA)
4 By income
5 Guidance remains subject to unforeseen circumstances and material changes in operating conditions
6 Excluding capital expenditure incurred in repositioning the asset