Canadian National Railway Company Price & Performance (CNI)

Balance sheet gearing at period end was 14.5% and the group delivered operating earnings of $0.062 for security, together with a distribution of $0.052 both up on the prior corresponding period. Retail data is about to complete Australia's First sovereign public AI factory supercomputer and its interior asset and has recently launched an AI marketplace. These initiatives were unveiled recently at a major event hosting more than 200 investors and clients, and we were very pleased to see many of you in attendance. Explaining reset a little more on Slide seven. During the first half, Centurion completed the acquisition of a 50% interest in reset data, and we've now completed the onboarding of staff and systems integration. Reset data utilizes highly efficient and sustainable liquid immersive cooling, which employs in what is intended to be a series of sovereign AI factories or supercomputers, the first of which is designated AI Factory One or short AIF One and is located in a Satura asset in Victoria. These AI factories employ the latest high density NVIDIA H200 processing units, which are market leading in terms of AI capability, machine learning and large language learning, or in other words, inferencing. Maturity is unique in leveraging the unquestioned demand for AI processing power together with a real estate solution.

And we believe that AI take up in Australia, while still very much in its infancy, will grow immeasurably, making this a highly scalable business unit. Resid Data's NVIDIA Cloud Partner status and its Dell Technologies Titanium Partner status affords us unparalleled access to the latest technology processes and hardware, and we are looking forward to completion of AI F1 for the first factory in the final quarter of FY 'twenty five. Discussing ESG on Slide eight, we remain focused on ESG initiatives across the group. And during the period, we released our FY24 voluntary climate related disclosures, our sustainability report and revised framework. We continue to progress emissions targets, including the elimination of gas and diesel operations, repactical, and we continue to enjoy strong levels of employee engagement. Almost 9% of employees recommitting Centuria as a great place to work. Turning to the strategic position on Slide nine. It's fair to say that going into FY 'twenty five, we may have been slightly cautious regarding the possibility of an immediate domestic economic turnaround. But we're reasonably vocal about viewing the first half as a lead up to a tipping point. I think that's been proven to be correct. A number of relevant factors are converging in relation to this, however.

Jason and I have very strong conviction that the Australian commercial real estate markets have dropped and are at an inflection point. One of these factors is the recent reductions in cash rates in Australia and New Zealand, the location of our core activities. These rate decreases, together with the strong prospect of further reductions, improve and will continue to improve real estate fund returns relative to fixed interest return to profit returns. And this is very quickly rebooting our Analyst Real Estate Trust activities. This is a high margin and core interior competency, which resonates strongly with our Investor Network, and Jason will speak to the speed with which this is appearing shortly. Another important area of convergence is the momentum towards return to the office. This momentum, in conjunction with the high alternative construction cost of new office scrubbing and together with the increased demand horizon forecast population growth, is rapidly changing segments back to commercial office. Centuria believes in the Australia Office and we believe this commitment will be justified as these factors and others that Jason will discuss come into play. Equity capital markets too have an inflection point story. Experience tells us that as interest rates wane and economic conditions stabilize, this part of the real estate cycle promotes heightened rent prospects and tighter valuation capitalization rates.

Of course, these conditions create a very positive environment for the Centuria REITs and for the creation of new Centuria REIT vehicles as well as broader opportunities for the nimble and well capitalized. Turning to outlook on Slide 10. In summary, we believe that traditional unlisted real estate securitization markets in Australia and New Zealand are opening up very rapidly, which will increase transactional volumes. We're also confident that we can scale up the existing wholesale Centuria Bass credit offerings. During the half, the UBS warehouse facility for Centuria Bass rose $285,000,000 and there's strong interest in further institutional support for similar warehouse facilities. On Slide 11, I give a more granular view of where the management team believes we can scale activities up. So dealing with real estate equity, as I've mentioned, essentially a higher volume of unlisted activity is anticipated. Also, we're in advanced planning stage regarding two sector specific REITs in FY 'twenty six. Drilling down on real estate debt to subject to favorable market conditions, we are also planning the establishment of a credit listed investment trust in FY 'twenty six. And as I've previously stated, we're on track for a plus 20% EBIT growth in this division in FY 'twenty five relative to FY 'twenty four.

Research data, as I've stated, is Australia's First sovereign public AI package and as I've stated, AI demand we think that AI demand will drive demand for compute capacity, driving a pipeline of AI factories with directly related to Turia portfolio of benefits. This is considered potentially Centuri's most scalable business with 10 further sites for AI factories under consideration. Thank you, and I'll now hand you over to Jason for the additional overview. Thank you, John, and good morning. Starting on Slide 13, which outlines our seven real estate verticals that make up Centuria's twenty billion dollars real estate platform. Our strong diversification across core and alternative real estate sectors distinguishes Centuria from its peers. Centuria's platform is positioned for growth and its scalability allows for new investment products, funds and capital sources to be added as we identify further investment opportunities. Turning to our office platform on Slide 14, of which a third is held in our listed fund and two thirds in our unlisted platform. In total, our office assets account for less than a third of Centuri's overall platform. During the period, we began to see a turning point in domestic office markets, which signaled improving tailwinds over the medium term.

This was largely driven by increasing adoption of office centric work mandates, population growth underpinning a large white collar workforce and limited new office developments tapering future supply, all of which point to strong future tense demand and shifting investment sentiment towards the office sector. Looking more closely at new office supply, we estimate the total replacement cost of any built form has increased by at least 40% in the past four or five years. On a hypothetical development feasibility for an A grade Sydney Metro office building, we estimate total cost to exceed $15,000 per square meter, which is more than double what cost current valuation is, which averages under $7,000 a square meter. This goes somewhat to explain why there's no new supply currently forecast for Australian metro markets from 2027 onwards. Currently, domestic office markets show continuous bifurcation between prime and secondary office assets, and certain submarkets remain challenging, which has impacted Centurion's overall office occupancy, having Centurion leased more than 62,000 square meters of office space and transacted more than $330,000,000 of office assets during the period. Centuri is well known for its value add strategies and our most recent example is converting surplus office space into data infrastructure with construction of Australia's First AI factory supercomputer in Melbourne CBD.

The conversion has already provided a 10% valuation uplift to the existing building. Across The Tasman, the two New Zealand has recently converted a vacant office building in Northland to a high end South storage facility, complete with 10% to 12% wine storage, high security valves, personal deposit box and an upscale wine providore retail offering. Moving to our industrial platform on Slide 15, which also comprises about 30% of Centuria's platform. Persistent sector tailwinds have provided average leasing spreads of 50% across Centuria's Australian industrial properties with close to 160,000 square meters leased during the period. This is in part driven by Australia's portfolio of high quality urban infill industrial assets. The platform provides further potential rental uplift with 24% of industrial lease expiring within the next two years. Australia still has one of the tightest industrial markets in comparison to global peers. To help capture this demand, a $1,200,000,000 industrial development portfolio pipeline has been identified. More than $1,000,000,000 of this pipeline comprise opportunities within CIP. However, our New Zealand team is also redeveloping Woolworths' primary South Island distribution center, which will transform the asset into one of the largest industrial facilities in the South Island. During the period, Cypria exceeded over $200,000,000 of industrial transactions, with the disposals averaging over 8% above book.

With an attractive average size of less than $40,000,000 our assets are exposed to a wider transaction pool. The insurers industrial platform provides a higher occupancy exceeding 97% and a healthy well of six point six years. On Slide 16, it details about our 60 asset retail platform, which is focused on large format and daily needs centers. Since FY 'twenty three, Sensura has captured growing investor appetite for single asset unlisted daily needs and large format retail assets with more than $250,000,000 of retail funds being established. We've commenced the second half of the financial year with the largest LFR transaction in recent years, the 115,000,000 Logan Supercenter. The equity raising for this transaction has commenced and initial interest is very strong. Over the period, since surely 67,000 square meters across its retail platform, in particular our LFR assets provide an attractive 15% average re leasing spirit during the year. Both our data needs and LFR portfolio provide high occupancies of 9799% respectively, as well as healthy wilds of four point two and three point four years. Slide 17, Centurion Bass is a clear example of the group's ability to identify and scale new opportunities that are attractive for our investor clients and provide additional revenue streams for C and I security holders.

In less than four years, Centuria Bank has grown its line booked significantly from $250,000,000 to $2,300,000,000 and as at half year 'twenty five, contributing 16% of Cenai's operating EBITDA. The impressive growth of this business is continuing, and we remain on track to deliver an EBIT target 20% above last year's result. In recent years, we have seen very strong demand from our wholesale investors for our real estate credit products, which we expect to continue. That said, as John mentioned earlier, Centura Vast is positioned to expand its offerings with significant progress being made on a listed investment trust and retail products that can grow our loan book and provide opportunities to a wider range of potential investors and wealth managers. Looking more closely at the real estate credit platform on Slide 18. As a real estate fund manager, Centura is an early move into real estate credit back in 2021 and has quickly grown the platform and has loaned across a range of funds and products. We currently have two diversified wholesale funds, 44 SBVs and have originated over 160 loans since inception. Centuria Bass' platform is 93% secured by first for ranking mortgages, average LVR is 66% and concentrated towards domestic property middle market, which is reduced competition.

The platform was further bolstered in the period by increasing our institutional capital base with UBS upsizing its commitment to $200,000,000 as part of the Centuria Bass warehouse facility, which is now nearing $300,000,000 Non bank real estate lending conditions remain attractive for our real estate credit business as developers continue to search for alternative lending solutions across our real estate market that now exceeds $86,000,000,000 and is forecast for strong growth over coming years. Intirubat is well positioned to service its growing market demand. Moving to our healthcare platform on Slide 19, which also provides a high occupancy exceeding 97% and a long while of almost twelve years. More than 40% of our healthcare platform provides a short stay in day private hospitals, as this seems to ensure it's one of the largest landlords for these types of facilities in Australia and New Zealand. During the period, we completed Australia's latest private short stay hospital in Kyiv, Victoria as part of our joint venture with an investment vehicle sponsored by Morgan Stanley Real Estate Investing. Centuri is also committed to another $250,000,000 health care development pipeline, which provides new generation fit for purpose health care assets that lend themselves to efficient models of care.

Centuria currently manages 67 healthcare properties that serve as 116 individual tenants. Of these assets, 90% provide net or triple net lease covenants. Onto our ag platform on Slide 20. Through the unlisted $460,000,000 Centuria Agricultural Fund, we've become Australia's biggest large scale glasshouse landlord. Our protected cropping investment rationale also extends to our Centuria New Zealand Agricultural Fund. Across all 14 agricultural assets, the platform benefits from 100 net or triple net lease covenants. These assets provide 13 different irrigated crop types using best practice controlled environment style methods. Centurion's agricultural platform does well exceeding thirteen years and a 93% occupancy. Turning to Slide 21, growth in alternatives. During the post COVID period, in turn to the medium term view that economic conditions would continue to be subdued, we use this period to further diversify our earnings space into highly scalable alternative sectors. As you know, we have since added agriculture, real estate credit and technology verticals to our platform. As conditions improve, the entry into these sectors is proving extremely valuable from an earnings perspective, each business maturing over time as we integrate and support their activities. SensureVance credit is an excellent example of this strategy. It will contribute approximately $24,000,000 of forecast FY 'twenty five EBITDA and only a third full year of acquisition, a 485% decrease over its full year 'twenty two earnings.

So when we speak of diversity at Centura, we're always seeking to identify and grow businesses, which we believe can make a meaningful contribution to group earnings. Our alternative sectors now represent 24% or nearly $5,000,000,000 of our total AUM. Looking to our unlisted funds on Slide 22. As mentioned, two thirds of our real estate funds are weighted to the unlisted sector. This slide illustrates the diversification, breadth and range of our unlisted platform by capital sources, fund type and real estate sectors. Our unlisted funds service more than 14,000 investors with the growing percentage from the institutional sector. Significantly, almost half our unlisted funds have no expiry date or expiry views based beyond five years, providing opportunities to deliver through market fund management. The insurer generated $400,000,000 of unlisted capital inflows over the period, and we are experiencing a definite increase in demand as both New Zealand and Australia enter an interest rate reducing environment. Amerenced inflows are highly correlated to deposit rates, and as you can see, these decreased investment opportunities over our Amerenced investments increased significantly. We have experienced this with our latest oversubscribed rates in New Zealand recently, which is ahead of Australia in the rate reduction cycle.

Turning to our listed platform on Slide 23. Contura actively manages Australia's largest listed pure play industrial and office REITs and has co investments of 1619% into DIP and COF, respectively. Centuria Industrial REIT continued to accelerate its re leasing spreads to 50% across 79,000 square meters of leasing and commenced $60,000,000 of development projects in addition to progressing planning on its $1,100,000,000 future development pipeline. Capital management initiatives saw CRP hedge 85% of its debt, delivering carrying at 33.6%. CIP maintained a 97% occupancy in a seven point three year well across a portfolio of 87 assets worth $3,900,000,000 CIP's valuations for the period increased by $47,000,000 Insure office retained strong liquidity with $862,000,000 of debt refinanced and with no debt expiring before FY 'twenty eight. Top recorded balance sheet gearing of 42.9 and was 98% hedged at thirty one December 'twenty four. The office REIT's portfolio comprises 19 high quality assets with $1,900,000,000 with a four point two year well and 92% occupancy. Cost valuations for the period decreased by 1.4 with a circa 40% of the portfolio valuation staying the same or increasing. This confirms that office valuations have now begun to stabilize. Thank you, and I'll now hand over to Simon to go through the financial results for the period.

Thank you, Jason, and good morning, all. Starting on Slide 25, you'll see our statutory and operating earnings distribution for the full year and our reaffirmed FY 'twenty five guidance. Please report that despite the turbulent financial conditions we've seen, the group achieved a 3.6% increase in its operating earnings of $51,100,000 The statutory net profit after tax of $14,800,000 was achieved despite the continued unfavorable market conditions impacting the fair value of the group's co investment stakes. The increased operating profitability of the group translated to an operating EPS of 0.062 per security and has underpinned the interim distribution declared of $0.052 per security, which does reflect a 4% increase from the prior period. Our reaffirmed FY 'twenty five operating EPS guidance of $0.12 per security and distribution guidance of $0.104 per security underscores our continued confidence in the group's diversified operating business model, which now spans across the property value chain and supported by the group's fast emerging technology strategy. Moving to Slide 26, which highlights the key components of our operating earnings. Our Property Funds Management segment achieved an operating EBITDA excluding performance fees of $38,200,000 Although this result was largely lower than prior year, it proved to be robust despite subdued transactional activity and reduced property valuations.

The decline in transactional and management fees experienced during the period was substantially offset by the increase in property services and leasing fees, underpinned by more than 236,000 square meters of new lease agreements during the period. I'd also please note the group recognized a further $3,900,000 performance fees during the period despite a slight fall compared to the prior period. This revenue stream continues to be supported by the group's late unrecognized performance fees, which at the period end stands at $97,400,000 The Co investment operating segment delivered an EBITDA of $28,000,000 an increase of $1,700,000 compared to the prior period and reflects our continued recycling of capital into higher yielding products. Moving on to Property and Development segment. This segment contributed $12,000,000 in operating EBITDA to the period, representing an uplift in excess of 60% compared to the prior year. The increase in profitability reflects the continued growth in AUMs $2,300,000,000 as well as the increase in the group's ownership stake to 80% announced in April 24. The group's revenue and expense mix in this half reflects the 100% consolidation of Centuria Bats for this period compared to the 50% net contribution in the corresponding prior period. The Investment Bond Management segment continues to contribute to the operating profitability of the group, delivering an operating profit of $1,400,000 with a slight reduction in profitability reflecting the group's continued investment in enhancing compliance systems and processes in response to regulatory changes.

The group's reported corporate overheads have remained consistent with the prior year with a noted increase of $800,000 This increase reflects the costs associated with incubating the reset data business. We continue to anticipate a standalone unprofitable reset data and technology operating segment commencing in FY 'twenty '6. Moving to the group's finance costs, which increased to $18,400,000 for the half, reflecting increased financing costs associated with the acquisition of the healthcare business or the remaining healthcare business in addition to incremental interest costs associated with the extension of debt maturities across a variety of financing instruments. Finally, the decline in operating tax expense of $4,000,000 for the half reflects the ongoing shift in the relative percentage mix of earnings between the corporate structure and the passing income side of the structure. On Slide 27. The group's operating balance sheet has remained resilient during the half year. The net asset value per security saw a slight decline to $1.75 compared to 1.79 as of thirty June twenty twenty four, predominantly reflecting the reduced fair valuation of the group's co investment stakes. As demonstrated by the group's co investments, earnings for the year, Centrue continues to leverage its strong balance sheet to support the underlying business with over 164,000,000 of cash realized from the sale and reopening of balance sheet assets during the year.

The operating gearing ratio of 14.5% along with the balance sheet look through gearing of 38.5% remains well within the group's tolerances. This reflects our continued focus on capital management, whilst utilizing a flexible balance sheet to provide support to the business as needed. It's important to highlight the group has increased its average debt duration from two point six years to two point eight years by the end of this period. And as of the balance sheet, the group had access to over $300,000,000 in cash and underwriting debt facilities available to support its various platforms and upcoming initiatives. Turning to Slide 28. Centuria continues to recycle its sources of debt capital across the platform. Over the course of FY 'twenty five, we've successfully added two new lenders and refinanced 30% of our unlisted funds so that the fund's debt facilities do not become current with positive pricing and terms across all segments. The group continues to actively manage debt across the platform to ensure optimal financing outcomes demonstrated by the platform topping up its hedging profile as market opportunities present themselves. It's also pleasing the average margin across the portfolio is 160 basis points. Looking ahead, we will continue to take a prudent approach to the early extension of debt maturities and taking tenure where possible.

The duration presented here will continue to shorten over time in line with fund maturities as well. This concludes our opening remarks. We'll now open the line and invite you to your questions. Thank We have the first question on the line of Lou Bien from Jordan. Please go ahead. Good morning, John, Jason and Simon. If I can start with, I mean, you spent a bit of time talking about reset data and you're clearly very excited about it. Can you maybe give us an idea when that starts hitting earnings and what your return expectations are offsetting customers?

Look, we've seen it won't hit FY 'twenty five, so it's going to be FY 'twenty six. We haven't forecast our earnings from that division as yet. The first alloy factory is coming out of construction and should be complete by thirty June, and we're in numerous discussions with potential customers. So some of that is confirmed, and we'll come back to marketing and give updates. I think it's fair enough. I agree with Jason. It's just a little bit too early to be granular. And we're trying to give you as much information as we can. And yes, you're right, Lou, we're very excited. But it's like when we started credit or when we started agriculture, we tend not to wave our hands too quickly and shout at the top of rooftops until we have got something to fit firmly with and let you know some facts. But we believe it's going to be highly scalable and highly profitable.

Great. Thank you.

The other thing, sorry, I was just going to add one other little piece. I think we obviously, and many of you on this call probably came to our recent announcement around the AI factory and the AI marketplace, and we have had a considerable uptick of conversations with many organizations around future sales. So that's a real positive to and a step in the right direction from when we acquire the Bakken or Worse.

Great. And then, Simon, maybe just a few questions on the accounts. I noticed that the operating cash flow was fairly minimal in the half. Any one offs or timing issues to flag there?

Yes. Look, what's really started to come through is, and I think you're referring to the statutory cash flow in the, we do put an operating cash flow segment. So it's still around the $20,000,000 mark of net operating cash flows. My comment to that would be there's a couple of things. There is some timing there. The other piece is a full six months of consolidation of Centuria Bass. And because of the speed at which it has been growing, there's an element of revenue that is cash flow does come at the back end of those lines as opposed to the expenses of managing that business. So there is an element that we're carrying some, well, there's future cash flow on the revenue side still to come in that's affecting that number at the moment.

Yes, that's helpful. And then while we're at that, I mean, it's clearly in the cash flow statement now a lot of movements with these STVs, which I imagine is all Centuria but related. Can you just help me understand kind of what are these STVs? Who is behind them? And what is the liability of you, Centuria, particularly on that $1,000,000,000 of liabilities?

So the accounting standards are putting us into a position of having to consolidate all our effectively all of our loans that we do in our Centuria Bats business, they are all effectively single lend SPVs that are all non recourse. And effectively, it's the investor or the lender into that SPV who carries the risk around the capital side of it or the borrowing to the market. The outcome is that effectively we have to consolidate. You get cash coming in and you get cash effectively, the same amount of cash going out in terms of the revenue and expense, the interest income and interest expense to your investors. Now there's a timing. Again, the same principle I just described in relation to our operating cash flows applies to this as well. There are some elements where we pay out cash on a month to month basis to investors and where some of those don't pay till the end of those loans. So we'll see that flow continue to flow through into the statutory results and hence why that part of the group, we do separate out and put that in our non operating segments throughout the accounts.

Great. Sounds like something we should spend some time on offline. Final question for me. Just where are you at with redemptions in the unlisted vehicles? Where does that level sit at the moment?

Yes. So we only have three vehicles that have redemption facilities, which are Centuria Diversified Property Fund, our Health Care Fund and our Ag Funds. The Ag Fund is sitting at zero redemptions Q, CDPF at 6% and our health care funds at 14%. So it's remained pretty steady over the last twelve months.

We have the next question on the line of James Juss from CLSA.

Jason, John and Simon. Following on from Lou's question, what sort of divestments are you anticipating for the second half? Look, going through the unlisted side, we are obviously, there's always funds coming out. We've got 140 of them. So there's always something being sold. We've got a few smaller healthcare assets that we've taken to market. We're always recycling all the industrial assets, which are smaller assets usually. We have the last asset in our Australian Technology Park Fund that's currently in due diligence. So that should settle by thirty June, which is a positive. That's got about a $23,000,000 performance fee attached to it. So there, obviously, a big chunk of that is going to be already been accrued. However, the $23,000,000 of cash would come back to our balance sheet at that settlement.

So yes, there will be a mix bag there of our usual sort of disposal through a normal six month period. Right. So And this is going to be a 200% return on that fund too. That's all we're Yes. I'm just trying to get a feel for the net sort of divestments for the second half or just in terms of the fund movements that you'd expect in a broad sense. We probably have to look at activity too, Jason. I think you've got an uptick with Logan, the scale on the acquisition side. Yes. On the acquisition side, we talked about Logan. That we just automatically raised, done very well. We've got EIs over $53,000,000 for $70,000,000 raise. I don't know if it's been March 10. On that same theme in New Zealand, we just, we had a raise for a project called Shands Road, which will be Woolworth's largest distribution center in the South Island, which is an extension of the $26,000,000 raise. We closed that five weeks early, but Tandem takes a bit of raise over $50,000,000 for it. So we're really seeing the market sort of turn over there and invested demand turn back on, which is great.

Obviously, the interest rate cuts have gone a lot further than in Australia. But yes, this is definitely looking back for that Amethyst product to get that yield differential. So that's really nice to see over there. You've been obviously in a tough market the last few years, but it's definitely one of our most profitable areas when we can distribute the Allison product over there. So I really look to say that market has turned. I saw a draft letter today from the CEO of New Zealand to the investors, apologizing for closing down two, three quarters of the roadshow and then not being able to issue equity and the investment didn't, which just reminded me of the last thirty years. The twenty seven of those, that's the situation we've been in. The yield return the term deposit relative return has been so favorable that we're able to raise as much money as we want. I think that's going to turn extremely quickly. It's turning right now because we're at the bleeding edge of that coal face. Okay. So net net, you're expecting Real Estate Farm to be growing when you offset the acquisitions from the divestments? Yes. It would be, yes, depending on what happens for the next three or four months, but and what sells.

But yes, look, I think it should be reasonably balanced and hopefully we have growth in some way. Okay. And maybe just for the second half. I mean, you're sort of printing ahead of guidance for the first half, so just curious on the drag. Obviously, real estate funds dropped a little bit, but is there anything you'd be calling out there?

I don't think so. I think it's similar to last year, a little bit of timing between the halves.

Okay. That's clear. And just one question on Page 18 of the accounts. From the segment information, you've got tech sales of $1,600,000 coming through the corporate line. Just wondering what that is?

Yes. So that's really reset data sales that we do have in the business. They're coming through. We've put recent data in the corporate segment at the moment. As it gets larger, we'll move that out of corporate. But that's where it sits at the moment, James.

And then the cost of sales of, I think, it's 1.4%, is that a fair representation of the business?

We well, it's about 0.8 net of costs that we carry out. I think, by the attrition, no, it's not. That's what's going forward. That's a very, very minor part of recent data business. Just the on sale of hardware. That would be almost inconsequential part of the business going forward. So that's not a fair representation. That's why we're not giving those numbers now because we need to build those numbers up. It's the sale of the compute capacity that where the huge dollars are. Is that a helpful answer, James? Yes, yes, no. That's helpful. Thank you. That's it for me.

We have the next question from the line of Simon Chan from Morgan Stanley.

I noticed property unlisted property AUM dropped by about $1,000,000,000 in the first half, which is pretty big. And it seems like the bulk of the due to divestments. I was wondering if you could just talk me through what drove that pile of divestments? Like was it selling to meet redemption, the loss of mandates, etcetera? Yes.

So I'll just talk to Jason. So $400,000,000 of the Woods Matrix, which we talked about last period, which was the retail mandate. We sold $100,000,000 office tower sorry, office building in that ATP fund, which is the second asset that we sold, which is the Biomed building. We sold Grand Street in Auckland, which is a $60,000,000 building, a couple of Melbourne. We sold $25,000,000 in HealthKEA. So So I guess, there was sort of a mixed bag across it all.

Jason, were they I mean, our outlook matrix and I guess ATPs are end of life out of fund. Were the others just pruning the portfolio? Were they just a cessation of the of single asset funds like cash flow?

Yes, look, a lot of it was.

Yes, a lot of it was just end of funds and things like that. It was pretty spread across all the sectors. But the big one was nearly half of it was retail, which was electric basically. And then obviously a couple of decent sized office assets. So GlimeStrick and which was in the guide of excellence, that was actually in the listed read over in New Zealand. However, the $100,000,000 ATV building was obviously unlisted.

Great. And in your sorry, Joe, did I cut you off?

I was just going to say, I mean, I think that's normal course of business for unlisted securitization. The fact is FY 'twenty five, first half, been very hard. You look at most accounts and most presentations from similar managers, they're divesting. We're not divesting at a much higher rate. It's about the normal rate. The problem is the acquisitions, and that's the thing that's really turned the corner. And pretty well, around the time we thought it was, you might recall, we were, I was accused of being quite negative at the start of FY twenty twenty five. And I'm not always right, but I think I mean, well, I think we, the team, are are pretty accurate, and we're just seeing that inflection really coming home right now. I can see Robert Hardy must have stolen my script notes this morning. And it will happen far quicker than you think, Simon. And so across all those sales, and it's quite clear than there, but we've got a premium to book about 2.5%. So that includes all the office assets, but everything across the different cities.

Okay. Cool. And in the slide deck and also I think in John's presentation, you guys made reference to potentially looking at launching a couple of specific IPOs, REITs. Can you clarify like what subsectors you may be looking at? Is it basically recycling some unlisted funds into the listed market? Or is it going to involve new assets coming onto the platform? Any color would be great.

Yes. Look, it's probably a bit early to go into exactly the sectors, but yes, it's a mix of both. So it's new assets and some existing as well for two new potential vehicles, and we'd like to execute them both this calendar year. The banking is Ed. It's John. To Jason's comment, he's absolutely right. Probably, we could have bought some of those one of those launched forward a little bit, But the problem is the mixture of assets internal, particularly external, we didn't think we could borrow at $5,000,000 good enough value. So for us, it's great to have an IPO and make lots of fees, good for the headstock. But if it's not good for the downstream investor that's actually the unitholder and the REIT, we won't do it. We have to find good real estate value. So those core real estate value propositions are sacrosanct to us.

Great. And my last one, guys. Hey, it looks like you've mopped up Heathly. Can you remind me of the history there and the state you've bought and all that stuff?

Look, I'll Simon will jump in, but we did the deal at T3 five years ago or just nearly six years ago. The deal was there. We bought circa 60% upfront with a five year put in call. So that came up in the period and we mocked up the rest of it. So now that we own it 100%.

We have the next question from the line of Tom Bordeaux from UBS.

I'll just be interested in touching on Bath a bit more. Just be interested in whether Centuria Capital typically participates in underwrites or guarantees any of the loans in the BAS business?

Guarantees alone.

No, we don't. So we do support from time to time, Tom, where we are going through our Centuria channels As we've done the rain and we underwrite the line. But Northland itself. Yes.

So let's say there's a $30,000,000 loan, we're going to put it out through our single asset single loan sort of fund. We might take it on balance sheet for a few weeks while we're raising the money. That's about the extent of it.

And do you receive fees for that or for the risk you take? Or is it just a part of the growth there? Yes, we do. We receive fees. But we had an agreement with the other shareholders at the start that if we use that sheet to help its growth, then we do get paid fees on.

Okay, great. And then you talk on, I think, one of the early slides about a couple of listed rates, which you're in advanced stages on subject to market conditions. What are the sectors that are being targeted there?

Yes. Look, as I just said before, it's probably a bit early to go into that. We're progressing them. They're well progressed. And we've been looking to execute on both of them this calendar year. So but yes, we're not quite ready to go into too much more detail at this stage.

Okay, great. And then just in terms of the commentary around markets troughing and being at an inflection point, what is the capacity across the platform to really deploy into that in terms of across all your funds capacity and obviously the group? I mean, I know you put your cash number on debt, but like how much can you really play into that recovery?

Yes. Look, it's different across the group, right? On the unlisted side, we as I mentioned earlier, we've definitely got a tick up in demand from our Armistice investors. It's nice to see over the last after the last couple of years. So I think both New Zealand and Australia will be pumping more product through those distribution channels. We're seeing the wealth managers, the financial planners also come back into the market. So it's not just the direct investors. So once they activate, we can raise really good flows through them. So I think you'll see a lot of it in the Armistead side. On the institutional side, we've got a lot of activity there at the moment across a range of sectors where we talk with groups about possible JVs and mandates as well. Obviously, listed is a little harder with the bonus trading. SIP is sort of inching up, but costs a bit harder. But I think SIP put out some pretty good results on Tuesday. We're seeing really good re leasing spreads and the valves return going back up. So look, I think we'll be going across the platform to different capital pools and using the flows where we can to buy more assets that we can see value.

And the other thing I'd just add to that from our balance sheet point of view, we've got probably about $40,000,000 to $50,000,000 of cash that's been in assets that have been stuck on our balance sheet for a period of time that we know are coming back in the next three to four months as well. So that's added cash flows coming back into the business.

I think historically, if I think over the last twenty years, I can't recall an instance where, for example, for an unlisted trust where we've run out of capital for deposits or we've always had enough money. I suppose you could just kind of match it with the flows that demand too, Tom.

Appreciate that. I guess what I'm asking though is just sitting here today, it sounds like your capacity will be subject to raising equity, which should be possible, but you need to raise equity really to come back in a meaningful way.

But that's always the case, isn't it? That's hardly something new. It's just that what we're saying now is that relative fixed interest, real estate return delta has just clicked over to be really favorable and it's going to get more favorable every time there's a rate reduction. And this is not a cut, this, that old legacy business of ours is not a complicated business and you're going to see huge demand coming from these people. You want to think about the hybrids going off the market. So there'll be a clamor for yields like you've never seen. We've got some dry powder in some of the mandates as well. But yes, a lot of it will be new capital. But some of it's pretty well progressed already.

Okay. Just a very quick last one for me. Were there any development in your earnings in the period? I think you've rolled that into the property funds management.

Yes. Immaterial, there's a few things finished. We've got we commenced two new industrial developments in South Australia, which has been announced. A lot of work is being done around the planning for the $1,100,000,000 industrial pipeline. So that's where I think you're going to start seeing those development earnings flow through over the next sort of twelve to twenty four months. But we've had a lot of progress on planning across one of those sites, which is good.

Thank you. We have the next question from the line of Richard Jones from JPMorgan. Please go ahead.

Sorry, just to follow on a few of the earlier questions. Just in terms of the regs planning, is that in addition to Centuria Bass listed credit fund? Just to clarify. Yes.

Okay.

So is it able to are you able to set through what the cost of the investment is to the original AI supercomputer you're doing at the moment in Malverness? Look, it's broken up into a couple of ways, right? The actual cost to construct the facility, which is we've talked through before, that actually comes from the fund, from cost as basically capital incentive to build the facility. And then the second part of it is obviously the reset operation and the outfitting of the facility with chips. So that is it's broken up into two parts. Okay. And ballpark number? Look, we don't really want to go into it yet. I think we'll be a lot better progress by probably next period once it's complete and we've got some customers.

Thank you. We have the next question from the line of Ben Brazo from Berenjoy. Please go ahead.

Good morning, guys. Thanks for the presentation. I was wondering if you could just discuss the opportunity that you might see within the data center space for real estate equity AUM, just given your early news in reset data, whether that's an asset class that you would consider relevant for scaling up the tons business? We'll probably pipe back a few comments. Yes, Praveen, it's John. Look, it comes in a number of streams. I think the obvious stream at the start was our initial interest was just in immersion cooling because the latest chips, the H100 and H2O chips can't be cooled in. And so that started off rolling. And then we could see in our portfolio there's between seven and ten Centuria properties of interest where we could see we could achieve over market rents just by simply employing the tubs and getting colocation fees. So that was, that's a direct real estate positive outcome. But as it got further into it, we could see that Nelwah in Australia, in fact, NVIDIA could see that Nelwah in Australia was really about to service an Australian sovereign public AI entity marketplace. And they were very keen for us to sort of convert the first factory, AI factory, so it's called F1, into processing found compute capacity.

And what that's allowed us to do is give us access to NVIDIA's client base. And we've also, Dell, who are our partner as well, they've got a very active sales force of other 200 people in the country who are also out there looking for customers for computer activity. So I think in Australia compared to globally, and Simon will probably be over or Jason will give you more details, but globally, Australia is really behind the angle because at the moment, there are only large scale companies or government that has access to the compute capacity to really put AI inferencing to work. And the fantastic thing about the reset solution is it's got this marketplace, which I really like a series of apps, it's the closest way to think about it, where smaller companies can access inferencing solutions. And I think this thing is going to be ways where we catch up the rest of the world. So I'm not sure how well I just got it. I'll add one thing. Look, as John mentioned, we've sort of got close to 10 assets that we're looking at as a pipeline. They're all existing assets, so it's using existing anything from office or industrial and turning them into AI factories.

They're smaller facilities in terms of megawatts, which helps with pallet needs. These are all sort of one to five megawatt facilities. So you don't have these huge 50 to 100 plus megawatt requirements to the grid. So we give them more flexibility. We also own sort of $500,000,000 worth of data centers within set with Telstra and Malaga already. So yes, so we're working through it all and we think there's going to be some pretty good real estate opportunities to go with the reset platform. Yes, terrific. And just referencing Simon's comments earlier, just want to clarify that the performance fee that may be paid more upon the settlement of the ATP property by 30 gs? Has that been provided for in guidance at this stage?

Yes. The earnings the revenue side has been in the numbers for some time across that platform as we saw three assets.

So We're not on cash flow, Ashutosh, because the cash will be coming back. The majority of it's accrued, Ben, in the P and L. Got it. Thanks, Anton. Thanks, Pete.

Thank you. We have the next question from the line of Edward Day from NA Financial. Please go ahead.

Good morning. Simon, in your earlier remarks, you made a comment around your co investment income and it redeploying capital into higher yielding investments. Can you just give some color around what those investments are? Are they co investments in credit?

That's the main one where they have been at higher returns than the equity investments, correct.

And are they just sort of is that a facilitation investment or are they for the duration of the term? Short term facilitation, underwrite support for a couple of weeks here and there, but there's been a few of them. So we get good returns off that.

So fair to say you'd expect to see that consistently moving forward?

Yes, I don't see why not.

Okay. And then just on your unlisted phone business, obviously, you've done Logan this half. Maybe just some color around other potential opportunities you are looking at? Yes. Look, looking across the board, retail is definitely something that the investors like we've still done in over the last eight months to the Hawes Head, Manning or now Logan. So in Australia, I think you'll see more retail. Industrials would have to be more sort of total return funds because they obviously got a lot of yields, the sort of stuff that we were trying to buy that's under renters. But we do have a good demand for industrial. So we're about to fill out opportunistic funds. So there could be possibly another opportunistic fundraise. And in New Zealand, they're looking across a number of different sector opportunities over there as that market's picked up as well. So I think it's going to be a mixed bag. Thank you. We have the next question from the line of Calum Brama from Macquarie. Please go ahead.

Good morning. Thanks a lot for taking the question. I just wanted to go back just to understand in the guidance and what is in the second half. Is there any requirement for recovery in acquisitions? Or and are you able to talk about maybe what the expectation is for performance fees into the second half?

On the performance fees question, look, I think it's going to be fairly consistent flat. I don't see it going up into that number.

I'm not sure I quite understood the first half of your question though, I guess I was just looking at it and thinking it's down 6% half on half. And I was just trying to understand why.

I don't think there's anything major is there. It's really timing and it's just going to depend a bit on what acquisition flows through over the next few months. Yes.

I mean, obviously in the second half, but January is a pretty slow month relative to the first six months. It doesn't really have a slow month because everyone's on holiday. So I'd really just think that there is a bit of timing in that conversation.

Okay. So it's sort of more like historic seasonality? Correct. Okay. And I just wondered if you could provide a little bit of, I think you mentioned there's unrealized performance fees of a touch over $97,000,000 Can you just give us a little bit of an idea of timing of when they'd be realized?

Most of them are like coming out of Prime West portfolio. And so some of those have been really out in 2029. A big chunk of Prime West funds were extended by ten years in 2019 when they listed. So not all their funds, but a decent chunk of their funds expire in 2029. So look, I think you'll get realizations over the next three or four years. Some of our funds come up earlier. But yes, there is a chunk as the back end in 'twenty nine.

Okay. And just to understand, again, going back to this, the A REIT opportunity, it sounds as though a portion of the portfolio of assets is potentially some version of a liquidity event for existing investors in those assets. Do you end up running, having or needing to run parallel processes? So in effect, if the to your point, if the market's not conducive, do you are you able to recap them in an unlisted or you end up selling the assets to provide that liquidity back to share to unitholders or you simply defer and retain the assets in those funds?

So we've got good flexibility under constitutions and good relationships with the investors and the wealth managers that put their clients in. Usually, if we're going down a strategy, we bring the investors along for the ride. They understand the risks and potential timing changes. So for those assets that we currently own in different structures, Look, there's always that market risk for the for RPOs. But we keep the investors up to date and timing isn't we've always got flexibility around timing.

And so typically, would they simply stay in and convert from being an unlisted unitholder into a listed unitholder? Look, that's definitely an option. Sometimes not Typically, we give them the choice, and we don't try and hold people investments that suit them. And most of it, if to the extent that we might launch a vehicle with some presently held assets within portfolios, it's the driving force is generally not that they are close to expiring or termination. The driving force would be what REIT sector we think we'd like to approach, where we could produce a REIT, where we could launch it, not like a zombie REIT, but a REIT that's really popular, large of of sufficient scale to list well and increase unit value. That's probably where we start from, not whether something's terminating.

And my final one, and maybe there's a way to find this out, and so apologies if I've missed it. But just looking at that unlisted fund portfolio, and I suppose, I think it's $13,700,000,000 I think. I was just trying to understand how the performance is tracking across a lot of those vehicles. So I don't know how you think about it, but what production are currently beating their original target return by number or value?

Look, it's 145, so it's a little bit different. Look, I think on the negative side, I think we have one $10,000,000 fund that's not distributing. So the rest are all distributing across the board. It's and a lot of them, it depends on the hedge and what's happened with rates, but are performing well. It is hard to find the right benchmarks. What we use is the NISQI PFA unlisted index. They put out a quarterly report. I think we've had six to seven of the top 10 funds for basically the last six years, so last 24 quarters. So yes, look, I think we're definitely performing pretty well compared to our peers. And look, our investors on the whole are very happy.

There are no further questions at this time. I'll now hand back the conference over to Mr. MacBayne for closing comments.

Just on behalf of Jason and myself, Tim Mitchell and Simon Holt, thank you very much for sharing your interest today. There is an interesting time in the market as we're seeing this uptick and look forward to speaking further with all of you.