Data Centre value-add activities indicate further value growth
- Reaffirmed upgraded FY26 FFO guidance of 18.2-18.5cpu1; Reaffirmed distribution guidance of 16.8cpu
- Data Centre exposure increased with $60m of acquisitions, DA submitted for a new 40MW data centre
- c.143,900sqm lease terms agreed2, 5.1% NOI growth
- $75m portfolio valuation gain3 for fourth consecutive period
Australia’s largest listed pure-play industrial real estate fund, Centuria Industrial REIT (ASX: CIP), has reported strong interim results for the 2026 financial year, delivering earnings growth underpinned by strong leasing activity, valuation uplift and proactive capital management while indicating further growth potential through data centre acquisitions and development.
During the period, CIP transacted 143,904sqm of leasing across 18 transactions2 representing 11% of portfolio GLA, resulting in average re-leasing spread of 20% and an increased portfolio occupancy of 95.7%4. Re-leasing spreads are the difference between an asset’s previous rental income and its new rent. Excluding cold storage facilities and assets with capped rental increases, re-leasing spreads averaged 44% across the portfolio, contributing to a like-for-like 5.1% Net Operating Income (NOI) increase.
Significantly, passing rents within CIP’s portfolio are, on average, 20% below valuation market rents providing opportunities for positive rent reversions and earnings growth, with the REIT anticipating an average 5.0% NOI increase per annum across the medium term.
For the fourth consecutive period, CIP also delivered a like-for-like valuation gain of $75million3, which contributed to a small 4bps compression to its weighted average capitalisation rate (WACR) of 5.81%. WACR is comparable to a portfolio yield.
Grant Nichols, CIP Fund Manager and Head of Listed Funds, said, “During the period, CIP reinforced its earnings growth profile through prudent capital management and significant leasing activity, capturing robust rental reversion. The REIT benefits from continued tenant demand for urban infill assets with CIP’s portfolio 85% weighted to these markets.”
Significant progress has also been made in assessing the data centre potential across CIP’s existing portfolio, highlighted by a DA submission for a new c.40MW data centre adjacent to the existing Clayton Data Centre in Victoria. Taking advantage of an underutilised section of the site area, CIP can create an additional, significant data centre development at the highly connected data centre site without purchasing additional land or materially impacting Telstra’s existing data centre.
Jesse Curtis, Centuria Head of Funds Management, said, “Australia’s industrial sector continues to demonstrate strong structural demand momentum, supported by resilient population growth, sustained public infrastructure investment and a rebound in tenant activity driving increased occupancy across CIP’s portfolio.
“CIP continues to leverage its exposure to the data centre sector. Australia’s data centre market is experiencing substantial growth, with demand now outpacing supply amid accelerated digital transformation and AI adoption. Our recent acquisitions and development initiatives in this space positions CIP to capture outsized benefits from one of the fastest‑growing segments in real asset investment.”
Also during the period, CIP increased its exposure to data centres with the acquisition of two sites worth $60.2million. These included a $30million data centre in Wellcamp Qld5 on a 15-year lease and a current capacity of up to 2.5MW in addition to value-add potential with the onsite substation and surrounding land enabling optionality for further scale. A $30.2million industrial facility in Yarraville Vic was also acquired, which is in proximity to major power infrastructure and a significant adjacent data centre development, providing future data centre development optionality.
The REIT’s proactive capital management included the refinancing of $450million of debt on competitive terms, with margins secured c.10-20bps lower than previous terms, extending its Weighted Average Debt Expiry to 4.0 years. As at 31 December 2025, CIP maintained gearing at 35.9% and 77% of its debt was hedged.
As at 31 December 2025, CIP’s portfolio included 85 assets worth $3.9billion6 with a 7.1-year Weighted Average Lease Expiry (WALE)7.
Mr Nichols, concluded, “CIP maintains significant earnings upside due to its strong, anticipated medium-term income growth resulting from material under-renting across the portfolio, expected improved portfolio occupancy, prudent completed capital management and the expected market rental growth stemming from Australia’s favourable industrial market conditions. Improving tenant demand and constrained supply is expected to drive the national vacancy to less than 2.0% by 20308, providing a pathway to continued strong market rental growth.”
During HY26, CIP delivered FFO of $57.3million or 9.1cpu and declared Distributions of 8.4cpu.
The REIT reaffirmed its upgraded FY26 FFO guidance1 of 18.2-18.5 cents per unit (cpu) while its distribution guidance1 was also reaffirmed at 16.8cpu.
1 Guidance remains subject to unforeseen circumstances and material changes in operating conditions
2 Includes heads of agreement (HOA)
3 On a like-for-like basis. Reflects gross increase. Excludes capital expenditure incurred
4 By income, excludes 74-94 Newton Road, Wetherill Park NSW which has been withdrawn for redevelopment
5 Contracts exchanged in HY26. Settlement in 2HFY26
6 At CIP ownership share of joint venture assets
7 By income
8 Source: Cushman & Wakefield Research: Australian Market Overview – Logistics and Industrial
Related Articles
