Centuria Industrial (ASX:CIP) share price falls despite lease extension

The Centuria Industrial (ASX: CIP) share price is edging lower in morning trade despite doubling a leasing agreement with Woolworths.

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Centuria Industrial REIT (ASX: CIP) shares are edging lower in morning trade. At the time of writing, the Centuria Industrial share price is trading 0.43% lower to $3.495. This comes despite the company providing a positive update on one of its lease agreements.

Centuria Industrial is an S&P/ASX 200 Index (ASX: XJO) listed Australian pure-play industrial real estate investment trust (REIT), with a portfolio of industrial assets across the nation.

In total, Centuria Industrial owns 61 investment properties worth more than $2.6 billion. The average occupancy rate of its industrial assets stands at 98.8% with an overall weighted average lease expiry (WALE) of 9.7 years, as at 31 March.

Below we take a look at Centuria's latest leasing announcement.

What was announced?

The Centuria Industrial share price is edging lower in morning trade despite the company reporting that Woolworths Group Ltd (ASX: WOW) has doubled its leasing agreement at 2 Woolworths Way, Warnervale New South Wales.

The new agreement brings the weighted average lease expiry (WALE) with Woolworths at the distribution centre to 10.2 years.

Commenting on the lease extension, CIP Fund Manager Jesse Curtis said:

We see growing market demand for leasing of food logistics assets reflecting increasing consumer demand for fresh food and rise of food-related e-commerce. This is a structural trend we identified when we took over management of CIP in 2017 and have since focused on leveraging in this area, by adding strategic food-related assets to our portfolio and securing long-term leases with blue chip tenants.

Our Warnervale lease extension is a testament to this strategy. It builds on CIP's acquisition of $214 million worth of cold storage assets and $236 million of food manufacturing facilities since FY19 – all of which are delivering significant value and attractive returns for CIP unitholders.

The company reported that the WALE of its New South Wales portfolio has increased from 3.7 years in July 2020 to 5.9 years in April 2021. Of Centuria Industrial's assets, 26% are located in NSW, worth $686 million.

Centuria Industrial share price snapshot

Over the past 12 months, the Centuria Industrial share price is up by around 32%. That just edges out the 31% gain posted by the ASX 200.

Year to date, Centuria Industrial shares have more than doubled the returns from the ASX 200 and are up 13% so far in 2021.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. 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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