Centuria Industrial (ASX:CIP) share price climbs amid upgraded guidance

The REIT's half-year results appear to be well received by investors.

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Key points

  • The Centuria share price is more than 3% higher on Tuesday
  • The company's 1H FY22 net profit is up 209% compared with the first half of FY21
  • It has expanded its portfolio to 80 industrial assets worth $3.9 billion

The Centuria Industrial REIT (ASX: CIP) share price is in the green today amid increased profit and improved guidance outlined in its first half-year results for FY22.

Shares in the real estate investment trust are currently swapping hands at $3.92, up 3.16%. In contrast, the S&P/ASX 200 Index (ASX: XJO) is up 0.49% at the time of writing.

Let's take a look at what the company reported to the market today.

Centuria share price lifts amid half yearly results

Here are the highlights of Centuria's report:

  • $308.1 million statutory net profit, up 209% from $99.6 million in the first half of FY2021
  • Upgraded FY22 guidance of at least 18.2 cents per unit (CPU), up from 18.1 CPU
  • Total value of trusts portfolio increased 31.7% on the previous half to $3,878.9 million
  • Net Tangible Assets (NTA) of $4.21 per unit, up 9.9% from $3.83 in the previous half
  • 46.5% twelve month return on equity

What else happened in the half?

Centuria expanded its portfolio to include 80 industrial assets worth $3.9 billion. Of these assets, 90% are on the east coast. The company also bought 21 urban infill industrial assets valued at $680 million. This included asset properties in Fairfield and Wetherill Park in NSW.

Centuria noted east coast markets have low vacancy rates and high tenant demands, improving returns.

The company achieved 99.2% lease occupancy for the first half of FY22. Rental growth increased by 10% due to higher demand, especially from the e-commerce sector.

This led to a $281 million like-for-like valuation upgrade. Also in the half, the trust refinanced a secured multi-bank loan facility to an unsecured debt platform in November.

The company said it is continuing to work on sustainability projects, including climate risk assessments of its assets.

Management comment

Centuria fund manager and head of industrial Jesse Curtis said:

CIP delivered a strong performance throughout the first half of FY22 with significant leasing activity supported by exceptional, double-digit rental growth and strategic acquisitions.

HY22 marks five years since Centuria assumed management of the REIT. Under Centuria's active management approach, the quality of CIP's portfolio has transformed.

What's next for Centuria

The company stated it is starting the second half of FY22 in a strong position due to the upgraded guidance and improved portfolio of 84 industrial assets worth $4 billion.

The strategy and focus will remain on portfolio leasing to ensure the highest possible occupancy and income from assets. Management is also intent on continuing to acquire quality assets to expand income streams.

As well, Centuria is targeting a five-star green rating on its development in Dandenong, Victoria.

Commenting on the future outlook, Curtis added:

With demand for industrial space expected to remain elevated, thanks to customer shifts to e-commerce plus onshoring to maintain supply chain resilience, and with limited supply within urban infill markets, we expect to see industrial rents continue to rise.

Coupled with sustained global investment for quality Australian industrial assets, upward pressure continues to be applied on asset values.

Centuria share price recap

The Centuria share price has posted a healthy 27% gain in the past year but is down more than 7% year to date.

For perspective, the benchmark ASX 200 has returned 4.82% over the past year.

The company has a market capitalisation of about $2.4 billion based on today's share price.

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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