Centuria Industrial REIT (ASX:CIP) Declares 4.2 Cent Distribution: Is This a Buy?

Centuria Industrial REIT’s Latest Distribution

Centuria Industrial REIT (ASX: CIP) has announced a distribution of 4.2 cents per unit for the quarter ending December 31. What caught our attention isn’t just the steady payout; it’s the context around it. The REIT has kept its distribution reinvestment plan (DRP) suspended while running an active buyback program. Management believes the units are worth more than the market price. Right now, CIP units trade at about A$3.39, while the value of its assets is around A$3.92 per unit. That means the market is valuing CIP at about 13% less than what its properties are worth. For investors who want steady income, this discount could be a chance to buy in.

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Centuria Industrial’s Strong Pricing Power Points to Growth Ahead

CIP’s latest results show impressive momentum. The big highlight: when leases came up for renewal in the first half of FY25, new agreements were signed at rents 50% higher than before. That’s a sign of strong pricing power, and it helped drive 6.4% income growth across the portfolio.

Why is this happening? The fundamentals are firmly in CIP’s favour:

96.6% occupancy across 87 high‑quality properties
7.3 years average lease term, giving investors long‑term income visibility
90% exposure to urban infill areas, where vacancy is just 1.8%

We believe this positioning gives Centuria Industrial a structural advantage. Urban infill locations near Sydney, Melbourne, and Brisbane are virtually impossible to replicate; there’s simply no land available. This scarcity should support continued rental growth as more leases roll over in the coming years.

Data Centre Exposure Could Be a Hidden Upside

Many investors may not realise that 12% of CIP’s portfolio is already in data centres, valued at about A$450 million. These sites are leased long‑term to major tenants like Telstra and Fujitsu.
The bigger story is what’s next. Management is exploring ways to convert existing industrial properties into data centres, tapping into the booming demand for AI and cloud infrastructure.

Right now, this potential isn’t reflected in CIP’s unit price. Even a small number of successful conversions could significantly boost portfolio value, since data centres typically trade at premium valuations. It’s not guaranteed, but the upside is real.
CIP’s move into data centres adds diversity and growth potential. With demand for digital infrastructure rising, its early positioning could boost value beyond what the market currently reflects.

The Investor’s Takeaway

So is CIP a buy at current levels? We think the answer is yes for income-focused investors willing to hold for two to three years. Here’s why the setup looks attractive:

• Discounted entry: Units trade at A$3.39, about 13% below asset value, giving a margin of safety.
• Attractive yield: Offers ~4.9% distribution yield (FY25 guidance), with payouts expected to rise to 16.8c in FY26.
• Cheaper than the market: P/E of 16.2x vs 21.5x for the broader ASX. Analyst target of A$3.61 implies ~7% upside.
• Management confidence: Active buyback and suspended DRP show insiders believe units are undervalued.

What could go wrong?  Rising interest rates would hurt, both through higher borrowing costs and potential pressure on property valuations. There’s also a concentration risk, with most assets in Sydney and Melbourne. If those markets weaken, CIP would feel it more than its diversified peers.

Bottom line: Centuria Industrial isn’t a quick win, but it offers steady income, trades below asset value, and has clear earnings growth ahead. For investors wanting reliable quarterly distributions backed by real property, CIP looks like one of the stronger opportunities in the A‑REIT sector today.