The Centuria Industrial REIT (ASX: CIP) share price is marginally lower at lunchtime trading. At the time of writing, the share price has fallen 0.3% to $3.30 a piece. Over the year, the share price is up 6.8%.
The REIT, which owns a portfolio of industrial properties in Australian cities, announced its FY25 results on Wednesday.
The company reported like-for-like net operating income growth of 5.8% for the 2025 financial year, benefiting from the strong demand for industrial properties in well-located areas, increased e-commerce adoption, and other tailwinds.
Its funds from operations (FFO) were up 2% to $110.9 million.
The ASX dividend share reported it had net tangible assets (NTA) of $3.92 at June 2025. This suggests it's trading at a discount of more than 15% to its underlying value.
In FY26, the business expects its FFO to increase another 6% to 18 cents to 18.5 cents per security. The company has distribution guidance of 16.8 cents per security (3% above FY25).
In a note to investors released following the result, Macquarie Group Ltd (ASX: MQG) revealed what it thinks about the stock.
Macquarie's take on Centuria Industrial REIT
The broker confirmed its neutral rating on the stock and raised the share price to $3.29, up from $3.22 previously. At the time of writing, this represents a potential downside of 0.3% for investors over the next 12 months.
"Retain Neutral. CIP FFOps growth is attractive as under-renting is captured and WACD headwinds wane. However, valuation upside is limited based upon our SoTP which applies the long-run average WACR spread to real bond yield," Macquarie said in its note.
The broker said its marginal valuation increase was due to a roll-forward asset value assumption from December 2024 to June 2025.
Centuria reported FY25 FFO per security of 17.5 cents, in line with consensus and MRE estimates. For FY26, the business forecasts guidance of 18.0 to 18.5 cents. This is above MRE and Visible Alpha consensus expectations and a wider range than normal.
"The range in FFOps guidance reflects uncertainty regarding the potential redemption of exchangeable notes in Mar-26 (3.95% coupon vs. 5.00% spot cost of debt), leaseup of vacant space and renewal of leases expiring. Our FY26 forecast FFOps of 18.2 cents assumes the exchangeable notes are redeemed and occupancy improves to 96.5% by 30 June 2026," Macquarie said.
It also noted that tenant retention and re-leasing are the keys to improved growth in FY26 and beyond.
"CIP estimate the FY26 impact from lost income from downtime at 1.8cps. Management expect 5% NOI growth over the medium term driven by c. 3.5% rent escalations on occupied space, re-leasing vacant space and 20% re-leasing spreads on under-rented space (with c. 65% of leases expiring of the next three years under-rented)."
