Centuria Industrial Reit reaping rewards from sector focus
Centuria today announced the Centuria Industrial REITs full year financial results for the period ended 30 June 2019. The REIT is one of the few pure industrial REITs on the ASX and the strong capital flows to the sector have assisted CIP in producing a 13.8%, return on equity over the period. The REIT is trading ahead of the ASX200 AREIT Index with a total gain over the last 12 months of 20% compared to just 14% for the sector.
Statutory profit of $88.8 million
Distributable earnings of $48.7 million
Distributable earnings per unit (EPU) of 18.8 cents per unit (cpu), above the midpoint of previous guidance
Distributions per unit (DPU) of 18.4 cents per unit delivered in line with guidance
12 month Return on Equity (ROE) of 13.8%
Balance sheet gearing of 37.4%, pro forma balance sheet gearing reduced to 33.3%
Leases agreed for more than 113,000sqm, representing 14% of the portfolio
Occupancy increased to 95.9% with a WALE of 4.3 years
Portfolio value increased to $1.2 billion
Total transactions of $203.7m improve portfolio quality
Occupancy increased to 95.9% but was impacted by the vacant possession acquisition of 46 Gosport Street, Hemmant, QLD, which was acquired at the conclusion of FY19. Excluding this property, occupancy was 97.5%. CIP’s high occupancy has been driven by another year of strong leasing results with over 113,000sqm leased. Importantly, all tenancies that expired within FY19 were either renewed or re-leased prior to the conclusion of FY19.
CIP settled the divestment of 39-45 Wedgewood Drive, Hallam VIC for $10.0 million. CIP also divested a 7.7% strategic stake in Propertylink Group for $46.3 million, achieving a 13.3% IRR over an 11 month holding period1
Total assets increased to $1,250.2m as a result of the acquisition of 6 assets for $147.4 million as well as revaluation gains of $72 million. Revaluation gains contributed to the 6.6% increase in CIP’s Net Tangible Assets (NTA) per unit to $2.73. The revaluation gains continued to be driven by CIP’s NSW & VIC portfolios, which account for the main concentration of CIP’s portfolio at 63%. The portfolio’s Weighted Average Capitalisation Rate (WACR) has reduced by 30bps over FY19 to 6.46%.
The increase in NTA, combined with the distribution of 18.4cpu for the year has generated a strong Return on Equity (ROE) of 13.8%.
During the period, CIP strengthened its balance sheet, refinancing $310m of short term facilities and securing an additional $60m of facilities. Along with introducing a new lender to a diversified lender pool, CIP now has no debt maturities until FY22. Gearing continued to reduce to 37.4% in FY19 from a combination of equity funded acquisitions and revaluations.
Following the recent acquisition of three quality industrial assets, associated $70m Placement and Unit Purchase Plan of $21.054m, CIP’s pro forma gearing further reduced to 33.3%. CIP’s balance sheet is now well positioned to capitalise on future growth opportunities.
CIP Trading Chart vs ASX200 AREIT Blue - CIP, Purple ASX200 AREIT Last 12 months