Centuria industrial property fund to raise $325m for major portfolio expansion

Centuria industrial property fund to raise $325m for major portfolio expansion

A $200.2 million distribution centre in Fairfield, NSW is the crown jewel of CIP's shopping spree (Via Centuria).

Centuria Industrial REIT (ASX: CIP) has entered into agreements to acquire eight freehold assets for $351.3 million, backed by a proposed capital raise that will give investors the opportunity to buy shares at a 5.2 per cent discount.

The eight acquisitions are anchored by a $200.2 million distribution centre located in the central-western Sydney infill industrial market of Fairfield, along with seven other urban infill assets worth $151.1 million.

The seven properties are diversified across key industrial sub-sectors and include distribution centres, cold storage and transport logistics.

To partially fund the shopping spree, CIP will raise $300 million via an underwritten institutional placement with units offered at a price of $3.80 - a 5.2 per cent discount to the CIP closing price of $4.01 per unit on 22 September.

Additionally, a non-underwritten unit purchase plan will see CIP bag a further $25 million, bringing the total funds to be raised to $325 million.

CIP says the suite of properties in New South Wales, Victoria, Queensland and Western Australia are just the beginning of its acquisition frenzy, noting it has a line of sight to a number of other off-market opportunities and is in due diligence on more than $100 million of further potential acquisitions.

"The acquisitions announced today are aligned with CIP’s strategic objectives to acquire high-quality assets in urban infill locations benefiting from record low vacancy and a scarcity of development land restricting new supply,” CIP fund manager Jesse Curtis said.

“The acquisitions further demonstrate CIP’s platform capability of sourcing off-market opportunities and aggregating high-quality portfolios of industrial assets at favourable pricing and superior quality to recent portfolio transactions in the market.”

Curtis said the acquisitions were strategically located and prime the company to take advantage of changing consumer behaviours.

“We consider the acquisitions to be under rented as market rents have continued to grow at a rapid rate on the back of accelerating tenant demand, driven by e-commerce and last-mile users,” Curtis said.

“The WALE of 3.8 years provides the opportunity to leverage CIP’s strong leasing capability to achieve positive rental reversion capturing outsized rental growth being experienced within infill industrial markets.

“In addition, a number of the sites have value add potential through leasing, development or reportioning, adding to CIP’s value-add pipeline.”

Post-acquisition, CIP’s portfolio will increase to 75 industrial properties worth $3.5 billion.

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