Centuria Industrial REIT (ASX, CIP) reported solid FY25 financial results with robust occupancy and earnings growth, setting the stage for higher distributions and continued development in FY26.
- 5.8% like-for-like net operating income growth in FY25
- Funds from operations (FFO) of 17.5 cents per unit, meeting guidance
- Portfolio occupancy strong at 95.1% with proforma gearing at 33.2%
- $140 million divestments at 12% premium to book value
- FY26 guidance projects FFO per unit of 18.0 to 18.5 cents and distributions of 16.8 cents
FY25 Financial Performance
Centuria Industrial REIT (CIP), Australia's largest ASX-listed pure play industrial REIT, has reported a solid financial performance for the fiscal year ended 2025. The REIT delivered funds from operations (FFO) of 17.5 cents per unit, in line with management guidance, supported by a 5.8% like-for-like growth in net operating income. Portfolio occupancy remained robust at 95.1%, underscoring strong tenant demand across its diversified industrial asset base valued at approximately $3.9 billion.
Portfolio and Operational Highlights
The portfolio's strategic focus on high-quality urban infill industrial assets continues to pay dividends. Approximately 85% of CIP's holdings are located in core urban infill markets, which benefit from constrained supply and strong rental growth potential. The REIT's average tenancy size of 7,600 square meters aligns well with market leasing activity, particularly in sectors such as e-commerce, data centres, and cold storage.
During FY25, CIP completed $140 million in divestments at an average 12% premium to book value, reflecting the underlying strength and revaluation potential of its assets. These divestments support the REIT's ongoing capital recycling strategy and provide funding for its active development pipeline, which includes projects totaling approximately 60,500 square meters of gross leasable area with an estimated end value of $245 million.
Capital Management and ESG Initiatives
Capital management remains a key strength for CIP, with a proforma gearing ratio of 33.2% and 86% of debt hedged. The REIT successfully refinanced $455 million of debt during FY25 on competitive terms, maintaining Moody’s Baa2 stable credit rating. Notably, CIP is advancing its environmental, social, and governance (ESG) agenda, targeting zero scope 2 emissions by 2028 through renewable energy initiatives and aiming for portfolio-wide Green Star Performance ratings.
Outlook and FY26 Guidance
Looking ahead, CIP projects continued earnings growth driven by leasing activity, mark-to-market rental uplifts from under-rented leases (currently around 20% of the portfolio), and development completions. The REIT has provided FY26 guidance for FFO per unit between 18.0 and 18.5 cents, representing up to 6% growth over FY25, and distribution guidance of 16.8 cents per unit, a 3% increase. Strategic priorities include progressing the development pipeline, exploring joint ventures leveraging Centuria’s industrial expertise, and conducting an on-market buy-back to enhance unitholder value.
With a diversified tenant base including blue-chip names like Telstra, Woolworths, and Arnott’s, and a portfolio well-positioned in supply-constrained markets, CIP is poised to capitalise on structural tailwinds in the Australian industrial real estate sector.
Bottom Line?
Centuria Industrial REIT’s FY25 results confirm its strong market position and growth trajectory, but investors will watch closely how it navigates lease expiries and the exchangeable note redemption option in FY26.
Questions in the middle?
- Will CIP’s under-rented leases convert to higher earnings as leases roll over?
- How will the potential redemption of the $300 million exchangeable notes in March 2026 impact capital structure?
- What progress will CIP make on its data centre developments amid rising demand for AI and cloud infrastructure?