Centuria Industrial REIT (ASX:CIP) talks 1H18 results & outlook


by Jessica Amir

Centuria Industrial REIT (ASX:CIP) Trust Manager, Ross Lees talks 1H18 results, portfolio metrics and trends.

Hi, I'm Jessica, I'm here with the Finance News Network. Joining me now from Centuria Industrial REIT is its fund manager Ross Lees. Hi, Ross, welcome back.

Ross Lees: Thanks for having me, Jessica.

Jessica: Thanks for coming. First up, just give us an introduction to the fund and tell us about your strategy.

Ross Lees: CIP is Australia's largest ASX listed industrial investment vehicle. We're focused on earning high quality assets in great locations near motorway networks. Our portfolio of 39 assets comprises a billion dollars of portfolio value, and our strategy is to provide predictable income to our investors with the opportunity for capital growth.

Jessica: And some stellar first half results. Ross, just walk us through some highlights.

Ross Lees: We had a great first half, we're off to a good start this financial year. We're really underpinned by leasing in the half. So last financial year we generated record leasing across our portfolio, and in the six months to 31 December, we've already eclipsed that result, delivering 159 thousand meters of new leasing across the portfolio. What's really pleasing for me and for our team is the fact that we retained 100% of tenants in the half.

Jessica: And Ross, who are your customers or your tenants?

Ross Lees: Our portfolio really accommodates some of Australia's best known household names. We've got a mixture of private public companies, and to name a few of our majors include Woolworth's, Australian Wool Handlers, Vizi, Green's General Foods, or even Aurora.

Jessica: And just walk us through the types of properties, where they're located and just a little bit about them.
Ross Lees: So we own warehouse properties around the country. We're very well geographically diversified between New South Wales, Victoria, Queensland, and Western Australia, with some smaller holdings in South Australia and the ACT. Our assets have an average size of about 20 thousand square meters, and they're really accommodating to those high quality tenants we just spoke about. We've invested 122 million dollars during the half year. We bought three properties that adjoin existing sites that we already own, to give them better scale and future optionality. And we bought another asset that we considered opportunistic in Western Australia during the half as well for 11.2 million dollars.
Jessica: And Ross, just tell us about the key metrics of the fund.

Ross Lees: So our occupancy is 95.9%, and our weighted average lease expiry is 4.9 years. We reduced our gearing over the half to 40.6%, and our interest cover ratio remains strong 4.1 times.

Jessica: Now, walk us through trends you're seeing in the industry, and how that's flowing through to the fund.

Ross Lees: I think the key things we're seeing in the industry at the moment is the change in technology driving our tenants' behavior, and demand for main consumers of goods to have record delivery times. So what's important for us is the location of our assets and making sure they can respond to those consumer's needs for end products to be delivered to them very quickly. So we're looking for assets that are located on key road networks and key points of infrastructure. We believe our portfolio's really well suited to meet those trends.

Jessica: And Ross, just lastly before we wrap up. What's your guidance for the second half of this financial year?
Ross Lees: So today we've reiterated our guidance of 19.5 to 20 cents per unit of earnings for the FYA team. And we're expecting to distribute 19.4 cents per unit. That translates to a distribution yield forecast at 7.6% for unit holders.

Jessica: Well, exciting times. Ross Lees, thanks so much for the update.

Ross Lees: Thanks again.


Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.