Centuria Industrial REIT (CIP)

FY23 Results: Winning The Race Between Rent and Finance Costs

Centuria Industrial REIT (ASX: CIP): FY23 Results
  • CIP reported FY23 FFO of 17.0 cpu in line with original guidance.
  • Achieved strong 30% releasing spreads during the year, rising to 37% in the second half.
  • Improved debt hedging and issue of exchangeable notes has locked in lower interest rates for longer.
  • FY24 EPU and DPU guidance of 17.0cpu and 16.0 cpu respectively – flat on FY23.
  • Outlook and FY24 Guidance: Management guided to flat earnings and distribution for FY24. This is despite the strong rental growth being achieved within CIP’s last mile logistics portfolio which is offset by the unprecedented sharp rise in finance costs over the last 12 months.
  • At current price levels CIP is trading at a 23.0% discount to its FY23 NTA of $3.96 per unit, with a forecast distribution yield of 5.2% for FY24. Core Property has a valuation for CIP of $3.34 per unit based on our forecast FY25 NTA.
  • Any weakness because of broader market volatility presents investors with a good opportunity to get set in CIP. The broader thematic of strong demand for industrial property from offshore investors also supports our view of the industrial property sector outperforming the office and retail sectors.
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