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Why the Centuria (ASX:CIP) share price is gaining today

three building blocks with smiley faces, indicating a rise in the ASX share price
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The Centuria Industrial Reit (ASX: CIP) share price has lifted in morning trade, up 1.14% to $3.10 at the time of writing.

This follows the release of the real estate investment trust’s (REIT) first half of the 2021 financial year results.

What did Centuria report?

In the first half of FY2021, Centuria acquired 9 industrial properties worth $694 million. The REIT now holds 59 industrial properties across key capital cities in Australia.

The 9 properties all were acquired with 100% occupancy with a weighted average lease expiry (WALE) of 19 years. This helped bring Centuria’s total portfolio WALE up to 9.8 years and total occupancy at 97.7%.

The acquisitions, alongside $104 million in revaluation gains, saw Centuria’s portfolio value reach $2.4 billion, an increase of almost 50% during the half year.

Statutory net profit for the half year came in at $99.6 million, with funds from operations (FFO) of $42.8 million. With 29.6% gearing, the trust has $146 million of undrawn debt available.

Centuria became part of the S&P/ASX 200 Index (ASX: XJO) on 22 June.

What did management say?

Commenting on the first half results, Centuria fund manager Jesse Curtis said:

During this first half of FY21 we strategically targeted acquisitions within tightly held industrial sub-sectors with favourable supply demand dynamics to create a diversified pure-play industrial portfolio. In particular, we expanded into the data centre and cold storage sectors…

During the COVID period we observed a rapid increase in demand for data warehousing with a shift to cloud based data storage coupled with an increase in online shopping, particularly for non-discretionary items such as groceries and pharmaceuticals. We believe these trends are here to stay and investing in the undersupplied industrial sub-sectors of data centre and cold storage is a sound strategy.

Many of the REIT’s 117 tenants, spread across its 59 properties, are involved in producing, packaging and distributing consumer staples, pharmaceuticals and telecommunications.

And Curtis sees further growth in this sector, notably for online retailing space:

Industrial tenant demand remains robust, particularly for e-commerce and online retailing occupiers. While having grown quickly during the pandemic period, online retail penetration in Australia still lags the global average, providing the potential for significant take up of industrial space.

Centuria share price snapshot

This morning’s gain sees the Centuria share price squeak back into the green for 2021, up just 0.32%.

While shares are up 39% from the 2020 March lows, the share price remains down 12.8% over the past 12 months.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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