Centuria (ASX:CIP) share price rises as a new development announced

The Centuria Industrial REIT (ASX: CIP) share price is gaining after the REIT announced it has bought a property and will build an industrial estate.

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Centuria Industrial REIT (ASX: CIP) shares are gaining today on the back of a new property purchase. At the time of writing, the Centuria share price is $3.49, up 0.87% on yesterday’s close.

Let’s take a closer look at the news released by the industrial real estate investment trust this morning.

New industrial estate

Centuria has acquired an 8-hectare parcel of land in Dandenong South, near Melbourne, on which it plans to build a six-asset industrial estate.

The land has cost Centuria $26.3 million and the company will be spending another $62.5 million to build on it. Centuria estimates the end value of the estate will be $88.8 million. The project is expected to be practically completed by 2022 and will be funded through the company’s existing debt facilities.  

The finished product will be made up of units with areas from around 3,400 square meters to around 13,600 square metres. They will cater to a range of industrial tenants. The development’s total gross lettable area will be around 40,400 square metres.

Centuria hopes that, on completion, the development will achieve a ‘Design & As Built’ five-star green rating from the Green Building Council of Australia. It will incorporate sustainable features such as solar panels, recycled water, sustainable and recycled building materials and native vegetation.

According to Centuria, vacancy levels in the industrial market of the Melbourne suburb are around 1%.  

The estate will be built in partnership with commercial and industrial property developer Cadence Property Group. It will be constructed by Texco Construction.

The new property adds to the company’s 7 existing assets in southeast Melbourne. The purchase has increased Centuria’s portfolio to 63 assets which, when combined, will be valued at $2.7 billion on completion.

Commentary from management

Centuria’s fund manager Jesse Curtis commented that the acquisition is an opportunity to secure an asset in a market where industrial properties are rare: 

The asset builds [Centuria’s] value-add pipeline and delivers brand new industrial product to the portfolio creating further value for unitholders…

The site is set to benefit from the newly announced Dandenong South Inland Port, enabling direct containerised freight from the port of Melbourne which is expected aid in leasing demand.

Centuria share price snapshot

The Centuria Industrial REIT share price is having a good run on the ASX as of late.

Currently, it’s up 12% year to date. It’s also up 32% over the last 12 months.

The company has a market capitalisation of around $1.9 billion, with approximately 551 million shares outstanding.

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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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