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Key points:
Centuria Industrial REIT (ASX:CIP) delivered strong half-year leasing with 20% releasing spreadsDemand grows across industrial sector, with supply constraints aiding rent increasesData centre development within existing land portfolio could multiply land valuesPortfolio concentrates on urban infill locations and units below 10,000m² for strong tenant demandRecent asset disposals achieved a 10% premium to book value despite the stock’s NTA discount
Centuria Industrial REIT (ASX:CIP) reports a robust first half, completing 144,000m² of leasing activity, representing roughly 10% of its portfolio, Centuria Industrial REIT fund manager, Grant Nichols, says this has yielded an average releasing spread of 20%, translating to about 5% income growth. The upgraded full-year funds from operations guidance has been reaffirmed, as distribution sit at 16.8 cents per unit paid quarterly. Nichols indicates the FY25 earnings outlook has now lifted to a projected 6% growth, highlighting ongoing strength across leasing and demand.
Nichols observes improved demand in the industrial sector over the past four to five months, with the national vacancy rate now below 4%. He points to constrained supply, as most new industrial developments are not currently feasible, requiring rents above prevailing market levels. This supply constraint is expected to support further rent growth, benefiting the sector. Data centres are identified as a high-growth segment, though Nichols points to barriers such as power, planning, and water availability limiting new developments. He sees future potential within Centuria's industrial land holdings for data centre conversion, which could deliver significant uplifts in underlying land value.
Nichols details a portfolio strategy focused on urban infill locations and mid-size unit assets, where demand remains high and supply is tightly held. Asset sales have generated an average 10% premium to book value, contrasting with a 20% discount to NTA at current equity market prices. Upgraded guidance ranges from 18.2 to 18.5 cents per unit for FY26, with ongoing rental growth a key driver.
