Centuria Industrial REIT’s results reflect valuation drop

Oksana Patron

15 August 2023

Centuria Industrial REIT (CIP) has reported that its portfolio weighted average capitalisation rate (WACR) expanded 107bps in FY23 to 5.26%, resulting in a like-for-like portfolio valuation decline of $153.6 million.

It said in the announcement to the ASX that the decline was concentrated around CIP’s long WALE portfolio, which collectively declined 18% over the year while the remainder of the active 87-asset sub-portfolio increased in value by $1.4 million on a like-for-like basis.

CIP has also confirmed 16 cents distribution, which was in line with its FY23 guidance, and provided FY24 FFO (funds from operations) guidance of 17.0 cpu and distribution guidance of 16.0 cpu, representing a 5.1% distribution yield.

Announcing the FY23 financial results, CIP also posted a $76.6 million statutory loss compared to $367.5 million statutory profit for FY22.

Commenting on the results, CIP fund manager and Centuria head of industrial, Jesse Curtis, said that throughout FY23, the trust capitalised on strong leasing momentum, accelerated re-leasing spreads and maintained a robust balance sheet.

At the same time, gearing was reduced throughout the period with $215 million of divestments, which were largely driven by a new strategic partnership and direct market transactions and divestment proceeds stood at an average 2% premium to prior book value.

“Looking ahead, Australia still holds one of the lowest industrial vacancy rates globally,” Curtis said.

“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 strong balance sheet, a high-quality portfolio of industrial assets and a meaningful value-add pipeline of leasing, repositioning and development projects.”