Centuria Industrial REIT has reported robust HY26 financial results, underpinned by solid leasing activity, a $75 million valuation gain, and strategic expansion into the booming data centre sector. The REIT reaffirmed its FY26 guidance, signalling confidence in continued earnings growth amid favourable industrial market conditions.
- 5.1% like-for-like Net Operating Income growth
- $57.3 million Funds From Operations, 9.1 cents per unit
- Portfolio occupancy rises to 95.7% with strong leasing spreads
- $60 million data centre acquisitions and 40MW development approval lodged
- Completed $36 million of $60 million buy-back; debt refinanced extending maturity to 4 years
Strong Financial Performance and Portfolio Growth
Centuria Industrial REIT (ASX, CIP), Australia's largest pure-play industrial REIT, has delivered a solid half-year performance for the period ended 31 December 2025. The REIT posted a 5.1% like-for-like growth in Net Operating Income (NOI), with Funds From Operations (FFO) reaching $57.3 million or 9.1 cents per unit. Distributions were declared at 8.4 cents per unit, reflecting a stable income stream for investors. Net Tangible Assets (NTA) per unit stood at $3.95, while the portfolio saw a $75 million valuation gain, marking the fourth consecutive period of positive revaluations.
Occupancy across the portfolio improved to 95.7%, supported by robust leasing activity that secured approximately 143,900 square metres of lease terms, representing 12% of the portfolio's gross lettable area. Notably, the REIT achieved an average 20% rental reversion on re-leased properties, highlighting strong tenant demand and effective asset management.
Strategic Expansion into Data Centres
Centuria is actively expanding its footprint in the high-growth data centre sector, a move that aligns with accelerating digital transformation and AI adoption across Australia. During the half, CIP acquired two strategic data centre assets for a combined $60 million, a Tier III certified operational facility in Wellcamp, Queensland, and a site in Yarraville, Victoria, offering future development potential. Additionally, the REIT has lodged a Development Application (DA) for a new 40MW data centre adjacent to its Clayton facility in Victoria, positioning it to capitalise on one of the fastest-growing segments in real estate investment.
Capital Management and Balance Sheet Strength
CIP completed $36 million of its $60 million on-market buy-back program, trading at a roughly 20% discount to its current NTA, which may present an attractive entry point for investors. The REIT refinanced $775 million of debt, including a $325 million issuance of Exchangeable Notes with a fixed coupon of 3.5%, extending its weighted average debt maturity to four years and securing lower margins by 10 to 20 basis points. Gearing remains conservative at 35.9%, well below covenant limits, and Moody’s reaffirmed CIP’s Baa2 stable credit rating, underscoring the REIT’s financial resilience.
Development Pipeline and Market Outlook
Centuria is progressing several development projects, including a 21,000 square metre multi-unit greenfield development in Direk, South Australia, expected to complete in the second half of FY26. Additional projects in Queensland and New South Wales have received planning approvals, with anticipated completions in mid-2027. The REIT’s portfolio benefits from a significant proportion of leases currently under-rented by an average of 20%, offering substantial upside through positive rental reversions as market rents continue to rise amid constrained supply and strong tenant demand.
Management remains confident in the medium-term earnings growth outlook, supported by low national vacancy rates projected to fall below 2% by 2030 and ongoing structural demand for urban infill industrial assets. Despite trading below NTA, CIP’s accretive development pipeline and expanding data centre exposure suggest potential for re-rating as these value-add opportunities materialise.
Bottom Line?
Centuria Industrial REIT’s strategic moves and strong operational results set the stage for sustained growth, but investors will watch closely how the data centre developments and rental reversions unfold.
Questions in the middle?
- How will the new 40MW data centre development impact CIP’s earnings and valuation once operational?
- What pace of rental reversion can investors realistically expect given current under-renting and market conditions?
- Will CIP’s buy-back program and trading discount to NTA narrow as market confidence grows?