Sale premiums highlight disconnect to trading price
- $140m in divested assets avg 12% premium to book value during FY25i; $57m valuation gain in 2HFY25ii
- $60m share buy-back launched – accretive to earnings and NTAiii
- Net profit up c.176% to $133.1m
- Delivered on FFO guidance (17.5cpu)iv and distribution guidance (17.5)
- FY26 FFO guidance: 18.0-18.5cpu, up to 6% earnings growth; FY26 distribution guidance: 16.8cpuv, 3% growth
Australia’s largest listed pure-play industrial fund, Centuria Industrial REIT (ASX: CIP), has announced a $60 million share buy-back following a strong FY25 performance underpinned by significant sales premiums, valuation gains, re-leasing spreads, NOI growth and net profit increasing to $133.1 million.
During FY25, CIP divested four assets for a combined $140 million at an average 12% sales premium to prior book valuesi. The Fund Manager cited the ongoing disconnect between the REIT’s trading price and its divestment metrics as the reason for announcing an on-market buy-back, which will be conducted throughout the coming 12 months.
Grant Nichols, CIP Fund Manager and Centuria Head of Listed Funds, said, “CIP’s trading price continues to represent compelling value considering persistent, strong investment demand for Australian urban infill industrial real estate. Our recent divestment metrics highlight a significant premium to CIP’s current trading price, which backs our rationale for the on-market buy-back.”
As at 30 June 2025 CIP’s Net Tangible Assets (NTA) were $3.92 per unitvi.
Further demonstrating the health of CIP’s portfolio, valuations increased by $57million during the second half of the financial yearii. The gain is largely attributed to significant leasing activity across 150,900sqm, representing 12% of portfolio GLAvii.
The leasing activity provided an average 34% positive re-leasing spreadviii across 26 transactions.
Jesse Curtis, Centuria Head of Funds Management, said, “CIP’s portfolio construction provides exposure to Australia’s strongest performing markets with an 85% weighting to core urban infill markets and 88% exposure to the east coast. Further, CIP’s average tenancy size of c.7,600sqm aligns with the deepest pool of tenant demand, underpinning the opportunity to capture market rental growth.”
CIP’s like-for-like Net Operating Income (NOI) grew 5.8% during the period, contributing to a significant 176% increase in net profit to $133.1 million.
During FY25, CIP refinanced $455million of debt on competitive terms, indicating strong lender support. CIP maintained a strong balance sheet with low gearingix and $457million of cash and undrawn debt available as at 30 June 2025
Mr Nichols, continued, “Significant re-leasing spreads and solid NOI growth has enabled forecast FY26 earnings growth. We anticipate further earnings growth to continue beyond FY26 given the significant under-renting embedded across the CIP portfolio that is yet to unwind.”
Currently, CIP’s portfolio is estimated to be c.20% under-rented on averagex and with c.30% of leases due to expire by FY28, the manager believes there are further opportunities to capture positive rental reversion, growing rental income and earnings during the short to medium term.
During FY25, CIP delivered $110.9 million in Funds from Operations (FFO) or 17.5 cents per unit (cpu), in line with FY25 FFO guidance. FFO generally refers to a REIT’s earnings. Distributions of 16.3cpu were in line with guidance and paid in quarterly instalments.
CIP provides FY26 FFO guidance of between 18.0 – 18.5cpu, an increase of up to 6% above FY25, and distribution guidance of 16.8cpuv, 3% above FY25.
Grant Nichols, concluded, “Looking ahead, CIP is well positioned to take advantage of the positive outlook for Australian urban infill industrial real estate. Vacancy rates remain very low, while supply is challenged. Despite the strong rental growth we have seen during the past five years, market rents remain below the required economic rent for new development in virtually all markets.
“Coupled with the ongoing industry tailwinds, most notably population growth and increasing e-commerce adoption, the outlook for rental growth over the medium term is compelling.”
CIP provides a portfolio of 87 high-quality assets worth $3.9billionxi complemented by a 7.1-year WALE and a 95.1% occupancyxii,xiii.
[i] Includes divestment of 69 Rivergate Place, Murarrie QLD, which exchanged in May 2025 and 680 Boundary Road, Richlands QLD which exchanged in July 2025. Settlement expected in FY26
[ii] Reflects gross increase on a like for like basis. Excludes capital expenditure incurred
[iii] The timing and volume of units purchased under the buy-back will depend on prevailing market conditions, the market price of units and other factors. CPF2L, as Responsible Entity of CIP, reserves the right to vary, suspend or terminate the on-market buy-back program at any time
[iv] FFO is CIP’s underlying and recurring earnings from its operations. This is calculated as the statutory net profit adjusted for certain non-cash and other items
[v] Guidance remains subject to unforeseen circumstances and material changes in operating conditions
[vi] NTA per unit is calculated as net assets divided by number of units on issue
[vii] Includes Heads of Agreement (HoA)
[viii] On a net rent basis compared to prior passing rents
[ix] Gearing is defined as total interest bearing liabilities divided by total assets
[x] Based on management estimate
[xi] CIP ownership share of joint venture assets
[xii] By income
[xiii] Excludes development assets and 30 Fulton Drive, Derrimut Vic which has been withdrawn and currently undergoing significant repositioning works
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