CIP finds fresh rent growth as Bundamba sale clears vacancy risk

CIP turns leasing momentum into a strong first quarter

Centuria Industrial REIT (ASX:CIP) started FY27 with a useful combination for an industrial landlord: nearly 25,000 square metres of leasing and a sharp increase in rents on the space being renewed. The trust agreed terms covering 24,929 square metres across seven deals in the quarter, producing a 31% year-to-date re-leasing spread on a net rent basis against previous passing rents.

That performance extends the momentum from FY26 leasing momentum, when CIP reported 226,200 square metres leased at a 30% average re-leasing spread. Management said the latest leasing outcomes are contributing to net operating income and funds from operations growth, although the quarterly figure includes heads of agreement rather than only completed leases.

Bundamba sale removes a large vacancy issue

CIP has exchanged contracts to sell 22 Hawkins Crescent in Bundamba, Queensland, for $34.25 million. The approximately 19,000-square-metre property was vacant, and the sale price is in line with its most recent book value. Settlement is expected in December 2026.

The buyer is an owner-occupier, meaning the transaction removes a potential extended vacancy from CIP’s FY27 leasing task while reducing exposure to a large-box asset on an urban fringe. Since FY25, 40% of CIP’s divestments by transaction count have been to owner-occupiers. That pattern matters because businesses buying facilities for their own operations can provide a different source of demand from traditional investment buyers, particularly where replacement costs sit above prevailing valuations.

Embedded rent reversion supports earnings guidance

CIP estimates its portfolio remains approximately 17% under-rented on average, with about 55% of leases expiring over the next three years currently below market or otherwise under-rented. That creates potential for further rental growth as leases roll, without requiring additional balance sheet deployment. The company has reaffirmed FY27 FFO guidance of 18.8 to 19.2 cents per unit, up to 5.5% above FY26, alongside distribution guidance of 17.3 cents per unit, 3% above FY26.

Data centre pipeline remains a longer-dated option

Alongside the immediate leasing story, CIP is continuing to assess a potential data centre pathway across its portfolio. The trust says its identified power pipeline exceeds 250MW, including opportunities at Clayton and Thomastown in Victoria, and is pursuing both existing operational data centres and possible conversions of suitable industrial assets. The strategy was previously described as focused on real estate returns rather than operating data centres themselves, but the current announcement makes clear that material opportunities are expected primarily from FY28 onward.

The renewable energy partnership between Centuria Capital Group and Energy Bay could also allow CIP to commercialise substantial roof space without capital outlay, potentially creating a future income stream and helping it target zero scope 2 emissions by 2028. CIP’s GRESB score improved from 71 in 2025 to 74.5 in 2026, though the energy and data centre initiatives remain opportunities to be developed rather than current earnings contributions.