What Centuria Industrial REIT (ASX:CIP) Is Doing With Data Centre Conversions and Asset Sales

Sonal Goyal

11 November 2026 06:45 PM AEDT

What Centuria Industrial REIT (ASX:CIP) Is Doing With Data Centre Conversions and Asset Sales

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Key Highlights

Funds from operations rose to A$114.1 million, or 18.2 cents per unit, from 17.5 cents.
The distribution was 16.8 cents per unit, up from 16.3 cents.
Occupancy was 95.2%, with a weighted average Lease expiry of 7.0 years.
FY27 FFO growth of up to 5.5% is guided, with gearing at 34.9%.

What is Centuria Industrial REIT (ASX:CIP) doing to lift Earnings when its occupancy is already around 95%? Its FY26 result, announced on 11 August 2026, points to three levers: capturing higher rents on expiring leases, recycling Capital by selling Assets above book value, and exploring conversion of some sites to data centres.

The FY26 result

For the year ended 30 June 2026, CIP reported Funds From Operations (FFO) of A$114.1 million, up from A$110.9 million, or 18.2 cents per unit against 17.5 cents. The distribution was 16.8 cents per unit, up from 16.3 cents.

NTA per unit was A$4.01, up from A$3.92. Gearing rose to 34.9% from 33.2%, and Interest Cover was 2.4 times.

Portfolio and leasing

CIP owns industrial and logistics property across Australia's major markets. At 30 June 2026 it had 83 assets (down from 87) with a Book Value of A$3,934 million, occupancy of 95.2%, a weighted average lease expiry (WALE) of 7.0 years and a weighted average Capitalisation rate of 5.8%.

Leasing was active. About 226,200 square metres were leased across 30 transactions, around 18% of portfolio gross lettable area, including heads of agreement, at re-leasing spreads averaging 30% on a net rent basis. Management estimates the portfolio is under-rented by about 17% on average, meaning in-place rents are below its estimate of market rents. That estimate is the company's own, and its realisation depends on lease expiries and market rent trends.

Capital recycling

The company sold five assets for a combined A$200 million at an average premium of 17% to book value, and a further asset at 680 Boundary Road, Richlands for A$38 million, settled in May 2026. One sale, 67-69 Mandoon Road, Girraween, for A$98 million, had been exchanged but not settled at the announcement date.

The data centre angle

CIP says it has identified conversion opportunities across the portfolio that could exceed 250 megawatts. A development approval for a new Facility of about 40 megawatts at Clayton in Victoria is expected in the first half of FY27. Projects under way include construction at Coopers Plains in Queensland and a Wetherill Park site in New South Wales seeking pre-commitments.

But these are opportunities rather than contracted income. Approvals, power availability, construction and pre-leasing all need to be achieved, so they should not be assumed in any earnings forecast.

Debt and funding

CIP refinanced A$450 million of Debt at margins 10 to 20 basis points lower and issued A$325 million of exchangeable notes with a 3.50% fixed coupon, with a Put Option in September 2028. Hedging at 54% leaves some earnings exposure to Interest Rate moves, and interest cover of 2.4 times is a figure worth monitoring.

FY27 guidance

Management guided to FFO of 18.8 to 19.2 cents per unit, up to 5.5% above FY26, and a distribution of 17.3 cents, 3% higher, paid quarterly.

Sector context

CIP competes with Goodman Group, Charter Hall's industrial funds and Dexus, as well as unlisted vehicles. Industrial and logistics property has benefited in recent years from e-commerce, Supply chain restructuring and tight vacancy. Rents have grown encouragingly in many markets, but rising supply and weaker tenant Demand can slow growth, and capitalisation rates respond to interest rates. CIP's smaller scale relative to Goodman means it relies on specialist leasing and asset management rather than scale advantages.

Risks to monitor

Five consecutive periods of gains could reverse if capitalisation rates rise.

Gearing and interest cover. Gearing at 34.9% and interest cover at 2.4 times leave limited room if earnings or values fall.

Settlement risk. The Girraween sale was not settled at the time of announcement.

Data centre execution. Approvals, power and pre-commitments are not yet secured.

Lease expiry. Capturing under-renting relies on tenants accepting higher rents.

Exchangeable notes. The September 2028 put option is a refinancing point.

FAQs

Q: How did Centuria Industrial REIT (ASX:CIP) perform in FY26?

A: FFO rose to A$114.1 million, statutory profit rose to A$160.4 million, and like-for-like net operating income grew 5.2%.

Q: What levers is the REIT using to lift earnings?

A: It is capturing higher rents on expiring leases, recycling capital by selling assets above book value, and exploring conversion of some sites to data centres.

Q: What does the portfolio look like?

A: At 30 June 2026 the REIT held 83 assets with a book value of A$3,934 million, occupancy of 95.2% and a weighted average capitalisation rate of 5.8%.

Q: Why is gearing a concern?

A: Gearing rose to 34.9% from 33.2%, and interest cover was 2.4 times, which matters for how the market views the trust.

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