Value of flagship industrial fund dips

The Arnott’s factory in Virginia is now worth $256.5 million.

The value of Centuria’s flagship Industrial REIT (CIP) fell 6.4 per cent last financial year – to $3.839 billion – with the weighted average capitalisation rate lifted from 4.19pc to 5.26pc.

The Clayton data centre value fell from $560 million to $448.5m.
Dandenong South’s Southside estate, pictured mid-construction.

As such, appraisals for some of the group’s newest and biggest assets – especially those with annual fixed rent rises, not ones lined up with soaring inflation, suffered particularly, including a Telstra-backed Clayton data centre priced at $560m last July, now worth $448.5m (on a valuation still assuming a 4.5pc cap rate).

Elsewhere in Melbourne, a Derrimut warehouse – 69 Studley Court – less than halved in value, to $18.5m (from $40m).

Several Brisbane assets also suffered major value falls amongst them an Arnotts-backed manufacturing plant in Virginia, north Brisbane ($256.5m, down from $300m last year, but still up on the $211.8m it paid the occupier with a 30 year leaseback in 2019), and 1 Ashburn Road, Bundamba ($26.65m from $59.2m and pictured, top) – recently vacated by The Reject Shop.

In Townsville, 21 Jay St, Mount Saint John, was appraised at $29.6m, down from $36.7m in FY22.

CIP shape following disposals

Also falling in value for FY23, to $51.65m from $65m last June, is a Dandenong South business park, Southside, Centuria bought from Cadence on a funds through basis in 2021.

That estate, however, was one of eight properties the manager sold Morgan Stanley a 50pc stake in, for $180.9m, last December.

As well, CIP recently divested 30 Clay Place, in Sydney’s Eastern Creek, banking $34.5m.

With that deal, the fund closed FY23 wholly or jointly controlling 88 assets, down from 89.

Its weighted average lease expiry by income is now 7.7 years, down from 8.3 at end FY22.

Meanwhile, the short-term development pipeline now sits at 97,000 square metres including, in Melbourne, a 45,000 sqm facility at 90 Bolinda Road, Campbellfield, and in Brisbane and Perth (story continues below).

A 12,300 square metre Canning Vale project Centuria recently started building.

Big three years for leasing

The Centuria Industrial REIT was worth $4.1 billion last June.

Centuria said it struck 183,000 sqm of lease deals in the six months to June 30 – up 19pc on the second half of last year.

The agreements affect 14 per cent of its portfolio, by area.

About 36pc of leases will be up for renewal over the 36 months – a move manager Jesse Curtis added provides an opportunity to capture rental growth, with 83 pc of its portfolio concentrated in urban infill markets where demand is high and vacancy is low.

“Throughout FY23, CIP continued to capitalise on strong leasing momentum and accelerated re-leasing spreads,” Mr Curtis added.

“Looking ahead, Australia still holds one of the lowest industrial vacancy rates globally,” according to the executive.

“Tenant demand remains resilient and, with constrained supply of new industrial space, rental growth is expected to be prolonged,” he said.

“Within this environment, CIP is well placed to execute its strategy with a high-quality portfolio of industrial assets and a strong value-add pipeline of leasing, repositioning and development projects”.

Centuria said it expects to deliver unitholders a 5.1pc annual distribution yield.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of