Australia’s largest ASX-listed pure-play industrial fund, Centuria Industrial REIT, announced its end of financial year results, revealing a record year in terms of portfolio expansion and significant leasing activity resulting from strong industrial sector tailwinds, delivering significant value to its unitholders.
During FY21, CIP transacted 18 high-quality acquisitions worth $966million – including $631million worth of assets across two new high conviction industrial sub-sectors, data centres and cold storage, as well as $335million worth of urban infill logistics acquisitions.
Already in FY22, the REIT has further increased its portfolio from 629 to 6710 industrial properties, increasing its portfolio value from $2.9billion to $3.1billion. Within 13 months, CIP has almost doubled its portfolio value from $1.6billion as at 30 June 2020 to FY22 YTD.
The quality of CIP’s portfolio is illustrative with more than a half-billion-dollar valuation uplift ($587million) during the last financial year, with the portfolio’s Weighted Average Capitalisation Rate compressed 151bps from 6.05 per cent to 4.54 per cent during FY21.
The strong valuation gain underpinned Net Tangible Assets of $3.83 per unit9,11, a 36 per cent increase during FY21. This, combined with distributions of 17.0cpu, delivered a Return on Equity of 41.8 per cent to unitholders throughout the financial year.
CIP fund manager Jesse Curtis, said the last finical year was an extremely successful year for the REIT, driven by transformative acquisitions and major portfolio leasing with income continuing to be supported by blue chip industrial tenant customers.
“Increased tenant demand and record low national vacancy rates, propelled by the continued rise of e-commerce, positively impacted the industrial property market,” he said.
“During FY21, Centuria delivered scale for CIP, boosting the portfolio with nearly $1 billion of high-quality industrial acquisitions. We made a high conviction call to enter two new industrial sub-sectors, with $633million of investment in data centre’s and cold storage, sectors that will continue to benefit from significant growth.
“This was complemented with $335million worth of urban infill logistics assets located with markets characterised by constrained supply.
“The strength of CIP’s performance is highlighted in its return on equity exceeding 40 per cent during FY21. This strong performance is in partly credited to Centuria doubling CIP’s portfolio value in just over a year and major leasing achievements, which translates to high returns for our unitholders.”
FY21 was punctuated with by strong leasing transactions for CIP with nearly 240,000sqm of lease terms agreed – a substantial 33 leasing transactions were completed, which accounted for more than a fifth of the portfolio’s gross lettable area. Major long term leasing transactions were undertaken with the likes of Woolworths and Visy.
As at 30 June 2021, occupancy was maintained at 96.6 per cent and CIP’s Weighted Average Lease Expiry increased to 9.6 years4 from 7.2 years during the previous period.
The fund also continued to deliver on its value-add projects with the completion of a brand new, prime-grade industrial development at 42 Hoepner Road, Bundamba QLD achieving Five-Star Green Star Design and As-Built status.
“CIP has delivered exceptional leasing and value-add projects during FY21 through an active management approach and dedicated industrial team. We partnered with major tenants, such as Woolworths and Visy, to achieve these results, which create great outcomes for our tenant customers and unitholders, alike,” he said.
“The domestic industrial market has continued to strengthen with strong tailwinds from increased adoption of e-commerce as well as increased demand from tenants onshoring operations. Record low vacancy rates have been recorded across all major markets and Australia’s industrial real estate sector remains a highly sought-after market attracting investment demand and creating robust competition for quality industrial and logistics assets.
“With rising e-commerce, there’s a shift in consumer expectations for rapid delivery times and we believe that this global shift from shops to shed will continue. This creates strong demand from occupiers for urban infill logistics assets to help manufacture, fulfil or distribute orders quickly, and these markets are a focus for CIP where we see a greater propensity for rental growth.
“CIP’s focus centres on building critical mass in key urban infill markets and, through acquisitions, leasing and value-add projects, the REIT aims to deliver long-term sustainable income streams and capital growth to unitholders.”
CIP provides FY22 FFO guidance8 of no less than 18.1 cents per unit and distribution guidance8 of 17.3 cents per unit with distributions paid in equal quarterly instalments.