Centuria Industrial Reit (ASX:CIP) share price rises after six more acquisitions

Centuria Industrial Reit has revealed even mor acquisitions.

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Key points

  • The ASX’s largest domestic pure play industrial REIT has made more acquisitions
  • Centuria Industrial Reit is spending $132.4 million on six properties that come with an initial yield of 4%
  • One of the properties, in Campbellfield, is an eight-hectare site where a brand new, sustainable industrial estate of 44,000 sqm will be delivered

Centuria Industrial Reit (ASX: CIP), a leading property business, announced the acquisition of six more properties today.

This business is the largest domestic pure play industrial real estate investment trust (REIT). It owns properties across Australia, predominately in urban locations.

Centuria Industrial Reit portfolio gets bigger

The REIT has announced $132.4 million of acquisitions to buy six high-quality assets in urban, infill markets.

It includes a five-unit Campbellfield development which will have a completion value of $104 million. This is an eight-hectare site in north Melbourne which has a short-term lease. When that lease expires, a project delivery agreement will take effect and a brand new, sustainable industrial estate of 44,000 sqm will be delivered.

Three of the acquisitions adjoin existing Centuria Industrial Reit assets, consolidating larger sites in land constrained markets.

Four of the properties are in Victoria, with one in NSW and one in Queensland. These locations are in high demand from e-commerce operators seeking close proximity to densely populated areas to improve supply chain efficiencies.

The total gross lettable area being acquired is around 41,000 sqm. The average initial yield across the acquisitions is 4% with a capitalisation rate of 4.2%. All of the properties are 100% occupied and the weighted average lease expiry (WALE) is 4.7 years.

Why did the REIT buy these properties?

Centuria Industrial Reit says that one of its strategic focuses is to provide investors with exposure to urban infill industrial locations that cater to last-mile e-commerce operators.

The business says that the urban infill locations of these eastern suburban acquisitions provide a favourable leasing outlook for rental growth, underpinned by near zero vacancy, buoyant tenant demand and limited land supply. These conditions provide opportunities to extract outsized returns from the assets, according to the REIT.

The fund manager of Centuria Industrial Reit, Jesse Curtis, said:

The purchase of this portfolio marks a strong start to 2022 and continues to demonstrate Centuria Industrial Reit’s management capability to source and execute on strategic acquisitions.

The Campbellfield site provides a rare, value-add opportunity to deliver a much-needed new and sustainable multi-unit industrial estate to attract high-quality tenant customers and premium rents.

The other acquisitions’ WALE and rent review structures provide rental upside opportunities. The acquisitions adjoining existing Centuria Industrial Reit-owned assets create future development sites of scale in desirable and land constrained urban infill markets.

These acquisitions increase Centuria Industrial Reit’s total portfolio to be worth around $4 billion and will be funded by new and existing debt facilities.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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