Centuria Industrial’s rental growth is offsetting interest rate headwinds

Rents in Australia average $129/sqm with 0.6% vacancy, compared to $313/sqm in Los Angeles with 1.4% vacancy and $181/sqm in Tokyo with 5% vacancy.

“Global rental data shows there’s a long way to go for rental growth in Australia,” Curtis said.

In the six months ended December 31, Centuria Industrial opened its 40,500 sq m multi-unit Dandenong South development in Melbourne’s Southside Industrial Estate. An early lease extension was also completed for 22,481 square meters at 82 Rodeo Road, Gregory Hills, NSW, resulting in an increase in rental income.

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

“Despite the expansion in capitalization rates, the increase in market rents has meant that Centuria’s assets have declined only slightly,” Ranasinghe said.

“However, we expect assets to come under pressure in the current high yield environment. However, given Centuria’s current low level of leverage, we believe the REIT retains ample leeway with respect to its internal targets as well as our rating tolerance limits.”

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For the half year, the fund delivered a distribution of 8 cents per share, payable on January 3, and confirmed its full year Funds from Operations guidance of 17 cents and distribution guidance of 16 cents per share.