Centuria Industrial REIT - FY24 Financial Results and FY25 Guidance
CIP (CIP) Share Update July 2024 Tuesday 30th
Centuria Industrial REIT Reports Strong FY24 Results Amid Rising Debt Costs
Centuria Industrial REIT (ASX:CIP), Australia's largest domestic pure-play industrial REIT, has announced its financial results for FY24, showcasing strong performance despite rising debt costs. The company also provided guidance for FY25, highlighting continued growth and strategic initiatives.
Instant Summary:
- FY24 Funds From Operations (FFO) of 17.2 cents per unit, exceeding initial guidance of 17.0 cents.
- FY25 FFO guidance set at 17.5 cents per unit.
- Achieved over 300,000 sqm of leasing, representing 22% of the portfolio.
- Completed $120 million in divestments at an average 4% premium to book values.
- Maintained a portfolio occupancy rate of 97.1% with a Weighted Average Capitalisation Rate (WACR) of 5.81%.
- Development pipeline valued at over $1 billion, providing short to medium-term value-add opportunities.
Financial Results
Centuria Industrial REIT (CIP) reported robust financial results for FY24, with Funds From Operations (FFO) reaching 17.2 cents per unit, surpassing the initial guidance of 17.0 cents. This performance was driven by a strong 6.5% like-for-like Net Operating Income (NOI) growth.
The company achieved average re-leasing spreads of 43% across 301,583 sqm, representing 22% of the portfolio's Gross Lettable Area (GLA). Excluding the AWH renewal in Perth, re-leasing spreads were even higher at 47%.
Operational Performance
CIP completed 57,300 sqm of development projects in FY24 and has a future development pipeline valued at over $1 billion. The portfolio is strategically positioned in urban infill markets, with 83% exposure to these high-demand areas.
The company also executed $120 million in strategic divestments at an average 4% premium to book values, using the proceeds to repay debt. As of FY24, CIP's portfolio occupancy rate stands at 97.1%, with a WACR of 5.81%.
Capital Management
Centuria Industrial REIT maintained a strong balance sheet with conservative gearing. The company refinanced $100 million of debt facilities in July 2024 and has no debt maturities until FY26. As of FY24, 93% of the company's debt is hedged, providing stability in a rising interest rate environment.
FY25 Guidance
Looking ahead, CIP has provided FY25 FFO guidance of 17.5 cents per unit and distribution guidance of 16.3 cents per unit, representing a 93% payout ratio. The company aims to leverage strong market fundamentals and sub-sector tailwinds to drive leasing outcomes and enhance portfolio quality.
The strong FY24 results and positive FY25 guidance are likely to bolster investor confidence in Centuria Industrial REIT. The company's ability to achieve significant re-leasing spreads and maintain high occupancy rates despite rising debt costs demonstrates effective management and strategic positioning.
The development pipeline and strategic divestments further underscore CIP's commitment to growth and value creation for unitholders. However, the rising cost of debt remains a concern and will need to be closely monitored.
Investor Reaction:
Analysts are expected to react positively to CIP's strong financial performance and strategic initiatives. The company's ability to exceed FFO guidance and maintain high occupancy rates is likely to be viewed favorably. However, the rising cost of debt may temper some of the enthusiasm, as it could impact future earnings.
Conclusion:
Centuria Industrial REIT's strong FY24 results and positive outlook for FY25 highlight the company's robust performance and strategic focus. Investors should consider the potential long-term benefits of CIP's development pipeline and strategic initiatives. Staying informed on the company's progress will be crucial for making informed investment decisions.