Good morning. I am Jesse Curtis, Centuria Industrial REIT's Fund Manager.

I'm delighted to present CIP's first half financial year '21 results presentation today. It's been a busy start to the year with record transactions and significant leasing, building on our portfolio quality and delivering strong results.

Earlier today, we published various documents on the ASX, including these results presentation, which I will now step you through. Today, I'll provide an overview of CIP's half year portfolio activities and an FY '21 outlook, along with earnings guidance.

Let's begin on Slide 4. CIP is a REIT that's part of the largest Centuria Capital Group family, an established ASX 300 investment manager, listed on the ASX as CNI.

With $10.2 billion of assets under management, Centuria Capital Group provides its investors with exposure to quality real estate and investment bond sectors. CIP accounts for around 24% of Centuria Capital's total assets under management.

This strong alignment provides CIP with various opportunities to utilize a highly experienced and extensive in-house real estate team to create asset and unitholder value. Moving to Slide 5.

Under Centuria's management, CIP has achieved critical scale and is positioned as Australia's largest domestic pure-play industrial REIT. Centuria Capital is a strong supporter of CIP and remains the trust's largest unitholder.

Through acquisitions and active management, the property portfolio expanded to $2.4 billion, with a market capitalization of $1.7 billion. As portfolio metrics significantly improved and investor relevance increased, CIP was included in the S&P/ASX 200 Index in July 2020.

CIP's strategy remains unchanged: deliver investors' income and capital growth from a high-quality portfolio of Australian industrial assets to position ourselves as Australia's leading domestic pure-play industrial REIT. This strategy extends to exposure across the subsectors within the Australian industrial market.

These subsectors include cold storage, manufacturing, data centers, transport and logistics, and distribution centers. This diversification is achieved through portfolio construction and acquisitions.

This provides a framework for a further portfolio diversification through asset usages as well as existing geographical and tenant income stream diversification. Slide 8 outlines CIP's strategy execution.

CIP delivered a strong half year performance as the team continued to execute the REIT strategy. Nine landmark acquisitions were secured for $694 million with high-quality assets growing CIP's portfolio to $2.4 billion.

These acquisitions transformed the portfolio scale and quality, and provided increased exposure to the tightly held industrial subsectors, including cold storage and data centers. Our team's active portfolio management continued to drive leasing success with terms agreed for more than 140,000 square meters during the half, including resolving major near-term lease expiries.

This resulted in tenant retention of 81% and continued high occupancy at 97.7%. This further demonstrates the resilience of the industrial market and strength of our team's leasing capabilities despite the ongoing COVID-19 pandemic.

With the REIT's gearing at 29.6%, it continued to trend at the lower end of the target gearing range. With ample headroom to debt covenants and a staggered debt maturities, the strength of CIP's balance sheet is reinforced.

Major milestone during the half was the inclusion in the S&P/ASX 200 Index, which has increased investor relevance for the REIT. Looking forward to the balance of FY '21, we are pleased to be upgrading guidance to a forecast FFO of no less than $0.176 per unit from the original $0.174 per unit.

Distribution forecast is reiterated at $0.17 per unit. Slide 9 details CIP's key metrics.

The portfolio at 31 December was valued at $2.4 billion with 59 high-quality industrial assets and strong income streams supported by high occupancy and a long WALE. Net Tangible Assets also increased 6% during the half to $2.99 per unit.

The balance sheet remains robust, providing substantial headroom to debt covenants to facilitate growth opportunities. Turning to the financial results on Slide 11.

Total revenue increased as a result of acquisitions completed during the first half of financial year '21. Like-for-like income was up 3.1%, mainly driven by leasing activity leading to higher occupancy and fixed rental increases embedded within our leases.

Industrial property has been largely unaffected by COVID with the portfolio maintaining strong rent collections at over 98%. Finance costs increased due to the growth of the portfolio.

However, with the change in the interest rate environment and new debt secured, the weighted average cost of debt decreased. With CIP's strong half year performance, full year FY '21 FFO guidance has been upgraded from $0.174 per unit to no less than $0.176 per unit from the commencement of FY '21.

Distributions per unit are forecast to remain in line with guidance at $0.17 per unit. Moving to capital management on Slide 12.

During the half, the strength of CIP's balance sheet was maintained. $230 million of new long-term debt facilities were established together with approximately $465 million of new equity raise, building on the quality of the property portfolio and providing the opportunity to capitalize on transaction opportunities.

Following these initiatives, reported gearing at 31 December was 29.6%, at the lower end of the target gearing range of 30% to 40%. CIP's cost of debt also reduced.

Our serviceability remains strong with significant headroom to debt covenants. Weighted average debt maturity sits at 3.3 years with the next maturity in FY '22.

Combined with a staggered debt profile and support from a diversified lender base, CIP's balance sheet continues to be well positioned to support future growth initiatives. Now to the property portfolio on Slide 14, which shows a snapshot of CIP's portfolio composition and the geographic spread of our assets.

Our portfolio at 31 December was $2.4 billion across a high-quality portfolio of industrial assets. We maintained critical mass in each of our core markets and held an 89% weighting to the strong performing eastern seaboard markets.

With over 1 million square meters of lettable area provided to more than 117 customers, our portfolio is well diversified. Let's move to Slide 15.

The first half of FY '21 was transformative with $693.7 million of high-quality landmark industrial acquisitions, increasing the scale and profile of CIP. These acquisitions were executed at an average yield of 4.8%.

The acquisitions were completed with 100% occupancy and introduced 8 new industry-leading tenant customers to the portfolio. Key acquisitions included the acquisition of the Telstra Data Centre in Clayton, Victoria for $416.7 million; 4 cold storage assets across New South Wales, Victoria and Queensland for a combined $214.1 million; and 4 high-quality industrial assets for a combined $62.9 million.

In particular, the acquisition provided CIP with valuable exposure to the compelling and tightly held data center and cold storage subsectors. 73% of these acquisitions were completed with triple net lease structures, removing any maintenance CapEx obligations and generating secure long-term income unit homes.

During the half, CIP also recycled capital with the divestment of 136 Zillmere Road, Boondall, Queensland for a 22% premium to the 30 June book value. We have also begun the second half of FY '20 with the off-market acquisition of 2 modern industrial facilities located in Derrimut, Victoria.

These assets were secured for $37.25 million. Slide 16 outlines our customer base.

CIP's key focus is to ensure ongoing reliability of income streams. The CIP portfolio is well diversified with over 80% of customers being national, listed or multinational entities, and 33% of income sourced from customers primarily associated with food production, distribution and cold storage.

Additionally, 26% of income is now secured under triple net lease structures, providing further certainty of cash flow. Looking closer at portfolio leasing and WALE on Slide 17.

CIP experienced significant leasing activity during the half with more than 140,000 square meters leased, driving high occupancy of 97.7%. 14 leasing deals were completed during the half with major near-term lease expiries successfully secured.

Notably, this renewal of Woolworths cover over 54,000 square meters at their regional distribution center at Warnervale in New South Wales; the renewal of Visy cover over 27,000 square meters at their manufacturing facility at Warwick Farm; and a New Lease to Complete Supply Company cover over 10,000 square meters at our Dandenong South asset for a new 6-year term with no downtime from the previous occupier. Following this leasing success, portfolio customer retention was a high 81%.

Given high occupancy across the portfolio and favorable leasing conditions, a commercial agreement was reached with the existing tenant at 14-17 Dansu Court in Hallam, Victoria to surrender their lease early. An active marketing campaign is well progressed to source new customers for this property.

Following the successful half of leasing and with the acquisition of new assets, CIP's WALE now sits at 9.8 years. The team's focus on derisking forward leasing and customer relationships has paid off with 60% of FY '22's expiries now secured.

The expiry profile is significantly derisked with less than 8.5% of the portfolio expiring during the 18 months to 30 June 2022, and no single-tenant expiry of more than 2.5% of portfolio income for the next 4 years, providing limited concentration risk. This result reinforces the strength of the market and the leasing capability of CIP's team.

The team will continue to focus on our customers and vacancies to drive leasing outcomes to the benefit of the portfolio. Turning now to valuations on Slide 18.

Net Tangible Assets, or NTA, continued to grow with an increase of 6% for the half. The growth in NTA was driven predominantly by revaluation gains of $103.8 million on a like-for-like basis.

Industrial real estate sector continued to strengthen, with tailwinds from e-commerce and tenant demand supporting investor appetite and driving asset values. Scarcity of investment-grade stock continues to drive investment yield compression while leasing markets remain buoyant.

For the CIP portfolio, leasing outcomes have been a key driver of valuation uplift across the portfolio. Of particular note was the successful leasing of Visy and renewal of Visy at Warwick Farm, driving a 20% increase in property value.

Capitalization rate compression continues with the competition for high-quality industrial assets driving uplift across the CIP portfolio. Notably, the Arnott's portfolio purchased in December 2019 rose 17% in value throughout the 12 months from acquisition.

Turning over to Slide 20. The acceleration of e-commerce and online retailing continues to provide structural tailwinds to the industrial real estate sector globally.

While having grown rapidly during the pandemic period, online retail penetration in Australia lags the rest of the world, representing 12% of total retail sales. By comparison, in the U.S.A., online retail penetration sits at 19% and 26% in the U.K.

Online retail spend is highly correlated with industrial takeup, with the retail trade sector having contributed to 42% of recent industrial takeup. Food and cold storage-related users of industrial property continued to be beneficiaries of the rapid increase in food spending as a proportion of total retail sales.

This trend is expected to drive greater space requirements for well-located quality cold store facilities in a market where demand already outstrips supply. In summary, as Australia's largest listed domestic pure-play industrial REIT, CIP will continue to be a beneficiary of these established themes.

During the half, CIP executed on its strategy, delivering the acquisition of nearly $700 million of high-quality industrial assets and extended the portfolio's exposure across a range of industrial subsectors, in particular, cold storage and data centers. The portfolio increased from 50 to 59 high-quality industrial assets.

A significant half of leasing drove occupancy to 97.7% and high retention of 81%. The expiry profile is now significantly derisked, with near-term major expiry secured and limited concentration risk.

As a result, CIP's WALE now sits at 9.8 years. Valuation gains drove NTA growth and, together with acquisitions, grew the portfolio value to $2.4 billion while maintaining a suitable capital structure.

CIP's position has been reinforced as a major owner of industrial property, having grown the fund's scale and investor relevance reflected in its inclusion in the S&P/ASX 200 Index and potential for inclusion in the EPRA NAREIT Index. Looking to the balance of the year ahead, CIP continues the year in a strong position, having transformed the fund's portfolio metrics.

CIP will continue to focus on its strategy to deliver reliable income streams and capital growth for investors. With the strong performance of the portfolio, CIP upgrades forecast FFO guidance to no less than $0.176 per unit, an increase from $0.174 per unit at the commencement of FY '21.

Distributions are reaffirmed at $0.17 per unit. Thank you for listening to this presentation.

And at this point, I'll open the call up to any questions.

I just had a couple of questions. Just the $800,000 rent relief that you provided in the first half, can you give some more color on what that is?

And is that -- do you expect further ongoing rent relief to be provided?

The $800,000 is reflective of a number of tenants that we have agreed rent relief packages with and a number of tenants we remain in negotiation with. And at this stage, it's a fair estimate of the rent relief that we will need to provide over the course of this first half.

Looking forward, we do have provisioning in our numbers to provide further rent relief in the second half of FY '20. But as I'm sure you're going to appreciate, Richard, we still don't know the full extension duration of COVID, so our current forecast reflects a position that provisions for some ongoing rent relief.

Okay. And then just in relation to the renewals for Woolworths and Visy, can you just give us some color on what the rents were and how they compare to prior rents?

Yes. So the Woolworths rent was a slight negative spread to passing at that particular facility to renew them up there, and the Visy lease was a slight increase to passing to renew them at that asset.

Okay. And then just, obviously, it's been a pretty active period for you guys.

Just wondering what you see or how you feel the kind of acquisition environment is. And are there many opportunities that you're looking at, at the moment?

I think if you look, there was a good article in the paper this morning that gave a good summary of the year of transactions that was last year. It was nearly $6 billion of transactions for industrial.

Last year, we accounted for about $700-odd million of that. So a reasonable market share for CIP there.

I think we can expect to see a similar theme going into the balance of the year as well. So we'll continue to see limited trading from institutions to institutions, and I think we'll continue to see a trend around sale and leasebacks within the market by corporates.

So I'd expect to see a similar volume of industrial transactions to what we've seen over the past 12 months.

I think, Jesse, you covered on a few that I had, but just on the cold storage assets. I was just wondering if you could maybe sort of talk us through what the maintenance CapEx profile of the double net lease assets looks like maybe compared to the rest of the portfolios.

Sure. I think this is probably a case of 2 tiers here.

The older asset at Girraween we acquired was on a triple net basis, so we won't incur any CapEx -- maintenance CapEx or outgoings on that property for the full term of that lease and any further options under that particular asset. For the Scott's Refrigeration assets and the Ormeau assets that we bought, these are both modern assets that were completed in 2010 and 2014, respectively, those assets.

And so we would expect minimal maintenance CapEx for those in the near term. We would expect you to start to see major replacement of CapEx with those assets from about an age of about 20 years old.

Okay. That's great.

And then just maybe on, I guess, where kind of is the demand for space requirements you guys are seeing coming from right now. I mean, is it coming from the sort of traditional retailers?

Or is it more sort of supply chain or logistics type tenants?

I think -- as I stipulated at the last results, I think portfolios that have high occupancy will continue to have high occupancy. We've seen a pretty large amount of tenants renew across our portfolio.

But where we've seen that incremental demand is those tenants that have been less affected by the COVID period. And so we're talking about people who have extended into that online, so people who are investing in their online platforms and that includes some of the retailers out there who are increasing their footprint within the market for industrial space.

All right. That's perfect.

And then just one final one for me just in terms of the gearing. Obviously, you're kind of sitting just below the low end of the target 30% to 40% range right now.

Where would you guys sort of be comfortable sitting now at this kind of stage in the cycle? I mean you've still got a fair bit of liquidity to deploy.

I'd expect us to remain in the early 30s.

Early 30s. That's great.

Just to follow up on the Woolworths and Visy lease. Was there any sort of color around the incentives on those leases?

They're both market incentives.

And so can you just sort of give a feel for -- I think you've previously said early double-digit sort of numbers. Is that sort of in line with where they were?

Both remain confidential around the incentive figures. But if you have a look at where market incentives are currently sitting in Sydney, I think you'd expect to see those incentives in line with what we're seeing across those assets.

Okay. And then I guess the other question is just more around the strategy.

Obviously, there's been a big improvement in WALE and portfolio quality and the like, but the earnings were a little bit diluted last year to get there. I'm just wondering, would you do further deals that dilute FFO if you could improve portfolio quality further?

And do you need a longer WALE? Or do you think where it sits now is kind of comfortable?

I think looking at future transactions, we'll continue to assess transaction opportunities that come across our desk. And if we feel there's a compelling transaction, we'll assess the merits of that at that point in time.

So WALE, I think, looking at the expiry profile, there was very limited expiries coming for the REIT. So I'd expect it's probably an opportunity for us to -- as we did with our Hallam asset in taking a surrender, it's probably an opportunity for us to look to add some value through a bit more leasing or even potentially some more development activity.

Jesse, just a follow-up on the Woolworths' lease at Warnervale. Could you just perhaps speak to the term of that renewal and whether there's anything that we can read into that in terms of Woolworths' intentions or your expectation of their intentions?

Woolworths extended for 5 years at Warnervale. That was in line with the option that they held at that property, and we are still in discussions with Woolworths as to what their intentions are beyond that 5-year period.

But as I foreshadowed in the last couple of results, we've always been confident that Warnervale is an important part of their supply chain.

Yes. Okay.

And then just in terms of the leasing expiries coming up, fair chunk of it is based in Western Australia. Can you perhaps just talk to that market and what we should be expecting around downtime and where rents and incentives are trending?

Yes. I think with the majority of those expiries over in Perth, we're in well advanced discussions to renew a number of those tenants.

So I would expect you -- consistent with the rest of the portfolio and the half of leasing that was seen, the majority of those tenants will see retention there. The leasing market in Perth has -- we've really seen an uptick over the last 6 months or so, particularly for the style of assets that we own over in Perth.

So I would expect that we'll get favorable leasing outcomes on the balance of those expiries.

Okay. And just finally, clearly, you've been pretty active over the last 6 to 9 months.

Could you just give us a feel for sort of the volume of opportunities you're seeing on a weekly or monthly basis?

Yes. I think for us, as a key player in the industrial market, there aren't many deals that -- as a group, we don't see, particularly given our alignment with the Centuria Capital -- the wider Centuria Capital group.

I think we can continue -- as I mentioned to Richard before, I think we can continue to see a trend of sale and leaseback-type transactions in the market going forward. And I think we can continue to see people finding some liquidity in that way.

Just a few questions from me this morning. Your cost of debt dropped down to 2.7%.

Can we assume that's going to hold in the second half? Or do you think you'll be putting in some more hedging which might escalate that average cost of debt?

I think you can expect the cost of debt to remain stable for the balance of this financial year. We've obviously got a chunk of debt that expires out in FY '22, which we'll be looking to resolve over the course of this 6 to 12 months.

That's great. In relation to your comment about less [ in-store ] transactions and more sale and leaseback, just wondering if you can comment on the -- is there any specific industries that you think there will be more sale and leaseback transactions?

No. Look, I don't think there's a specific industry, but I think you could probably expect that the majority of cold store -- sorry, the majority of sale and leaseback-type transactions would probably fall in the manufacturing sector.

That's probably where traditionally tenants have been owner-occupiers rather than tenants because of the nature of the investment that goes into these facilities, the long-term occupancy and the sort of essential requirement of that facility to their business operations. So I think you can expect where tenants have previously held that real estate on balance sheet, they'll look to find some liquidity in that and put significantly long-term leases on that in order to get that liquidity.

That's terrific. And one final question for me.

In relation to Visy and Woolies, I appreciate you said that the incentives are at market. Just wondering how were the incentives taken.

Were they given in the form of rent-free or were they given in the form of new rackings, et cetera? Can you disclose it?

Both those incentives were given as rent repayment.

Jesse, really quick. What was the size of the surrender payment from Dansu?

And was that -- has the cash been received?

The cash is received over a number of payments throughout this next financial year, Pete, and it equates to approximately a full payout of their rent to their expiry in November '22 and to make good.

Thank you for all the questions, guys, and thank you for everybody's ongoing support of Centuria Industrial REIT. Looking forward to discussing these results with you over the next couple of weeks.