Centuria Industrial REIT (ASX:CIP) 1H21 results & outlook


by Rachael Jones

Centuria Industrial REIT (ASX:CIP) Fund Manager, Jesse Curtis talks 1H21 highlights, acquisitions, leasing activity and second half guidance.

Rachael Jones:
Hello, I'm Rachael Jones for the Finance News Network. Joining me today from Centuria Industrial REIT is fund manager Jesse Curtis. Jesse, good to see you again.

Jesse Curtis: Good to see you again, Rachael.

Rachael Jones: Now, CIP have had some very impressive results from their first half. What can you tell me about the highlights?

Jesse Curtis: Sure. It's been a transformational half for CIP, continuing to position us as Australia's leading pure-play industrial REIT. During the half we completed over 140,000 square meters of leasing, representing about 13% of the portfolio's income. Most notably of that leasing success was the renewal of Woolworths at their regional distribution center at Warnervale, and also the renewal of VISY at their Warwick Farm manufacturing facility.
In addition, we also did over $700 million of high quality industrial transactions. This included the acquisition of the Telstra data center for $416.7 million, and also the acquisition of four cold storage facilities for $215 million. This grew the portfolio to a total value of more than 2.4 billion.

Rachael Jones: Now, some of these acquisitions have enabled CIP to branch into sub-markets. What can you tell me about that?

Jesse Curtis: That's correct. These acquisitions have allowed us to expand into the tightly held sub-sectors of data centers and cold storage. For data centers, what we're seeing is significant increases in demand for data storage as a result of more people going to cloud-based storage of data. On the cold storage front, we're seeing a significant increase in the amount of consumer spending around fresh food, and that's driving an increase in the requirement for more cold storage facilities in the market. Both these sub-sectors compliment the existing sub-sectors that CIP offers investors, which is across manufacturing, distribution centers, and transport and logistics.

Rachael Jones: And Jesse, what impact has leasing had on the portfolio?

Jesse Curtis: It's been a transformational half of leasing for CIP, where the portfolio metrics have continued to be improved. Occupancy now sits at 97.7%, and the portfolio's weighted average lease expiry is 9.8 years. Impressively during the half, we achieved tenant retention of 81%, meaning we kept 81% of our customers.

Rachael Jones: And to the last question now, Jesse, what's in store for the second half, and also, what's the guidance for financial year 2021?

Jesse Curtis: We've started the second half of FY21 very positively. We've recently announced the acquisition of two additional assets, two additional high quality industrial assets, for $37.25 million. In addition, as a result of the success of this half, we've been able to upgrade guidance to 17.6 cents per unit. That's an increase from 17.4 cents per unit at the FY20 results. Distribution guidance is reaffirmed at 17 cents per unit.

Rachael Jones: Jesse Curtis, thanks for the update today, and I'll look forward to talking to you for the full year results.

Jesse Curtis: Thanks for having me, Rachael.


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