Centuria Property Funds No. 2 Limited, an entity of Centuria Industrial REIT (ASX: CIP), has published the financial report of the Trust and its subsidiaries for the half year ended 31 December 2018.
The principal continuing activity of the Trust was the investment in industrial properties within Australia. The Trust’s profit from continuing operations for the half year ended 31 December 2018 was 46,106,000 (31 December 2017: $49,608,000 profit).
As at 31 December 2018, the Trust’s Net Tangible Assets have increased 10.0 cents per unit, or 3.9%, to $2.66 per unit since 30 June 2018. The total value of the Trust’s portfolio as at 31 December 2018 was $1,154.7 million representing an increase of 4.3% from 30 June 2018 on a like for like basis, excluding new acquisitions. The weighted average capitalisation rate for the portfolio has firmed 22 basis points to 6.54% at 31 December 2018 (30 June 2018: 6.76%).
The Trust secured 65,902 square metres of leases across 16 transactions for the half year ended 31 December 2018. This represented 8.2% of the portfolio’s gross lettable area. At 31 December 2018, the Trust’s portfolio was 97.1% occupied with a weighted average lease expiry of 4.7 years. For the year ending 30 June 2019, lease expiries represent less than 1.5% of portfolio income.
As at 31 December 2018, the Trust had drawn borrowings of $454.8 million with a weighted average expiry of 3.3 years. The drawn debt was 74.8% hedged reducing the interest at the exposure of the Trust. The Trust’s gearing at 31 December 2018 was 37.0% (30 June 2018: 38.4%).
The Responsible Entity confirmed that the distributable earnings guidance for the year ending 30 June 2019 is anticipated to be in the range of 18.5 – 19.0 cpu. The distributable earnings for the half year ended 31 December 2018 were $23.3 million. This was a 3.9% decrease to the prior period.
CIP’s statutory profit of $46.1m was recorded for 1H19. Distributable Earnings of $23.3 million generated EPU of 9.3 cpu, with total distributions paid of 9.2 cpu, in line with guidance. Revaluations in 1H19 contributed to a 3.9% increase in CIP’s NTA since 30 June 2018 to $2.66 per unit. The positive revaluation results were largely driven by gains in the NSW and VIC sub-portfolios, where CIP has its highest concentration of assets. The portfolio’s Weighted Average Capitalization rate (WACR) reduced by 22 bps to 6.54% following a combination of leasing success and continued market demand for industrial assets. The increase in NTA has underpinned CIP’s strong 12- month ROE1 of 15.8%. Gearing has continued to reduce to 37.0% through a combination of asset sales, equity funded acquisitions and revaluations. CIP entered into new financing arrangements for $210 million of debt during the half, including increased facilities of $60 million.
There was a 100% exposure to high quality Australian industrial assets. A $1.2 billion portfolio provides scalability and diversification in core markets. An increased occupancy was driven by leasing success, Strong WALE of 4.7 years. The highest weighting to NSW and VIC markets was at 64%. The high concentration of NSW and VIC sub-portfolios was in infill locations or close to key infrastructure.
The significant leasing momentum continued with the 65,902 sqm leased in 1H19. The Victoria sub-portfolio significantly was repositioned at 52,693 sqm (80%) of total leasing delivered in 1H19, and the occupancy increased to 96.4%. The remaining FY19 expiry is less than 2%, and the focus is on de-risking the FY20 expiry. There was high quality, diversified tenant base and no top 10 tenant expiries would happen until FY22.
The shares of the CIP are trading at A$2.780 (as at 2:57 pm AEST, 6 February 2019) up by 0.18% or 0.005 points.
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