Centuria Industrial REIT Divests $188m at 17% Premium, Confirms FY26 Earnings Outlook

Strong Divestment Activity Highlights Portfolio Optimisation

Centuria Industrial REIT (ASX:CIP) has capitalised on robust investor appetite for Australian infill industrial assets, divesting four properties for a combined $188 million at an average 17% premium to prior book value. These transactions, set to settle by December 2026, will reduce CIP’s gearing by roughly 3%, reinforcing the REIT’s balance sheet strength amid ongoing capital management initiatives. This divestment spree extends CIP’s track record, having sold nearly $460 million of assets since FY23 at an average 12% premium, a performance that challenges current market pricing relative to net tangible assets.

The standout sale was 50-64 Mirage Road in Direk, South Australia, a recently completed development that fetched $50 million; 33% above total project costs; delivering an estimated 25% internal rate of return to unitholders. This complements other recent developments like 15-19 Caribou Drive, Direk, and 30 Fulton Drive, Derrimut, both fully leased and positioned as prime industrial facilities.

Leasing Momentum and Development Pipeline Progress

Leasing activity remains a bright spot, with approximately 14,400 square metres of lease terms agreed across four deals in Q3 FY26. The year-to-date re-leasing spread stands at an impressive 36%, underscoring the significant under-renting within CIP’s portfolio and the sustained strength of industrial markets, particularly in urban infill locations. This leasing performance aligns with CIP’s strategic focus on assets in key metropolitan hubs, as detailed in their recent HY26 portfolio report.

On the development front, CIP is advancing several projects, including a notable Gateway Determination for 92-98 Cosgrove Road, Enfield NSW, to increase warehouse height and unlock redevelopment potential. Meanwhile, construction has commenced on a 10,000sqm boutique multi-unit estate at 51 Musgrave Road, Coopers Plains QLD, targeting strong tenant demand in Brisbane’s industrial segment, with completion anticipated by mid-2027.

Data Centre Expansion and Strategic Asset Acquisitions

CIP continues to explore growth avenues in the data centre sector, having settled acquisitions including the Wellcamp QLD data centre and strategic sites in Yarraville VIC near major power infrastructure. The REIT is actively assessing development approval prospects for a 40MW data centre adjacent to its Clayton facility, expected later this year. While pursuing these opportunities, CIP remains mindful of funding constraints and is open to capital partnerships or potential structural changes to unlock value, reflecting a cautious but proactive approach to this emerging asset class within its portfolio.

These initiatives build on CIP’s recent financial momentum, with the REIT reaffirming its FY26 funds from operations guidance of 18.2-18.5 cents per unit and distribution guidance of 16.8 cents per unit, consistent with the upgraded outlook shared earlier this year. The reaffirmation follows a period of active leasing, valuation gains, and strategic capital management, including refinancing and buy-back programs, as reported in their HY26 earnings update.

Navigating Market Dynamics Amid Supply Constraints

Looking ahead, CIP anticipates the domestic infill industrial market will continue to experience supply-demand imbalances, driven by limited new warehouse construction and persistent tenant demand focused on optimising delivery logistics and reducing transport costs. Macroeconomic uncertainties; stemming from geopolitical tensions and global oil supply constraints; are expected to exert upward pressure on inflation and construction costs, further curtailing future industrial supply. In this environment, CIP expects the value of high-quality, existing infill industrial assets to appreciate as replacement costs diverge further from market pricing.