Centuria Industrial rent growth offsets interest rate headwinds

Australian rents are on average $129 per square metre with 0.6 per cent vacancy, which compares to $313 per square metre in Los Angeles with 1.4 per cent vacancy and Tokyo’s $181 per square metre with 5 per cent vacancy.

“Global rental data demonstrates there is a long runway for rental growth in Australia,” Curtis said.

During the half year to December 31, Centuria Industrial opened its multi-unit 40,500 square metre Dandenong South development, Southside Industrial Estate in Melbourne. It also completed an early lease renewal across 22,481square metes at 82 Rodeo Road, Gregory Hills NSW bringing forward an uplift in rental income.

The vice president of Moody’s Investors Service, Saranga Ranasinghe, said Centuria Industrial REIT’s solid results for the six months are credit positive.

“Despite capitalisation rates widening, the increase in market rents has resulted in Centuria’s asset values reducing only slightly,” Ranasinghe said.

“However, we expect asset values to be under pressure in the current high-interest rate environment. Still, given Centuria’s current low gearing level, we expect the REIT to maintain sufficient headroom against its internal targets as well as our tolerance levels for the rating.”

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For the half-year, the fund delivered an 8¢ per unit distribution payable on January 3 and reaffirmed its full-year funds from operations guidance of 17¢ per cent and distribution guidance of 16¢ per unit.