Centuria Office REIT

Good morning.

Thanks for joining Centuria Industrial REIT's half-year 2026 results presentation. My name is Jesse Curtis, Head of Funds Management for Centuria Capital Group. Also presenting today is Grant Nichols, CIP Fund Manager and Head of Listed Funds, and Michael Chim, CIP Assistant Fund Manager. Also in the room today is Tim Mitchell, Centuria's Group Head of Investor Relations. Starting on slide three, I would like to commence today's presentation with an acknowledgement of country. We are joining you from the lands of the Gadigal people of the Eora Nation. Centurion manages property throughout Australia and New Zealand and pays its respects to the traditional owners in each country, to their unique culture and to their elders past and present. Turning to the domestic industrial sector, the Australian market continues to demonstrate strong structural momentum. supported by resilient population growth, sustained public infrastructure investment, and resurging tenant activity. Couple this with constrained long-term national supply, this is underpinning the need for high-quality industrial space. CRP is well positioned to leverage these favourable conditions through our focus on well-connected and strategic assets in urban infill markets. In today's presentation, Grant and Michael will provide an overview of CIP's half-year 2026 financial performance, analysis of the operational performance of the REIT, an update on our development projects and pipeline, an update on our data center projects and opportunities in this space, a summary of market conditions, and conclude with an outlook and guidance statement. Moving now to slide four, Centuria Industrial REIT is managed by Centuria Capital Group. Centuria has over 21 billion of assets under management, and CRP is the largest fund managed by Centuria. CRP unit holders benefit from deep real estate expertise across the Centuria Group, including a fully integrated property facilities and asset management platform, and in-house development capability. Synergies from being part of the group's wider industrial real estate portfolio, which exceeds $6 billion, and strong aligned as Centuria is CRP's largest unit holder, with a 16% co-investment, ensuring the manager's interests are strongly aligned with yours as unit holders. On slide six, CRP's long-standing vision and strategy remains unchanged. We aspire to be Australia's leading domestic pure-play industrial REIT, primary focus on delivering income and capital growth to investors from a portfolio of high-quality industrial assets. Over the long term, we have executed on our strategy, differentiating CIP by growing a portfolio focused on Australian urban infill industrial assets that are relevant to our tenant customers, generating greater levels of tenant demand through cycles. We believe these assets deliver superior returns to unit holders through favourable demand dynamics in markets with persistently limited supply. And the value of the portfolio is not properly reflected by the current trading price. Results that Grant and Mike will present today reflect the benefits of this urban infill strategy, supported by the deep real estate capability of the broader Saturia team to drive value for unit holders. I will now pass over to Grant.

Thanks Jess, and good morning everyone. I'll start on slide seven. CIP has reported a strong interim result for the 2026 financial year, delivering income growth underpinned by strong leasing activity and proactive capital management that has reinforced the CIP balance sheet. During the period, CIP completed approximately 144,000 square metres of leasing, representing about 11% of the portfolio GLA, resulting in average releasing spreads across our active portfolio of 44% and an increased occupancy to 95.7%. The volume of leasing is very encouraging as we witness across our portfolio and here anecdotally across the market, improving levels of tenant inquiry. Pleasingly, we have inquiry across virtually all of our remaining vacant and potential pre-commitment space and we're optimistic of further improved occupancy at full year end. The completed leasing supported a $75 million valuation gain, the fourth consecutive period of valuation gain. While the stabilisation evaluations indicate improving market confidence, they do not yet reflect the strong sales CIP has been achieving. In the first half, CIP sold yet another asset at a significant premium to book value. On the capital management front, CIP refinanced $450 million of debt on competitive terms. with margins secured between 10 to 20 bps lower than previous terms, while the weighted average debt maturity was extended to four years. The REIT also settled $325 million of exchangeable notes at an increasingly attractive fixed annual coupon of 3.5%. Turning to slide eight, the strong portfolio fundamentals and proven capital management enabled CIP to upgrade its FFO guidance range during the period to 18.2 to 18.5 cents per unit, while reiterating distribution guidance of 16.8 cents per unit. Due to the significant under-renting that persists across the CRP portfolio, there is considerable earnings and valuation upside for CRP unit holders, which we've detailed on slide 9. We assess the CRP portfolio to be approximately 20% under-rented on average, and this is the under-renting that has yet to flow into earnings. If we look at CIP's lease expiry profile out to FY29, we estimate about 60% of those leases expiring are under-rented, providing significant opportunity for future positive reversion. Further, the forecast downtime associated with the current vacancy and FY26 expiries are estimated to impede CIP's FY26 FFO by almost two cents per unit. Given the improving leasing activity evident across the CIP portfolio, we are optimistic it is likely to be lower in future years, providing scope for a healthy earnings kick. In addition to the earnings and income upside, we believe CRP retains substantial valuation upside too. Since FY23, CRP has divested around $270 million of non-core assets at an average premium to book value of 8%, including 42 Hope in the Road, which CRP sold for a 10% premium to book value in FY26. The significant premium highlights the ongoing disconnect between CRP's portfolio value and its trading price, which is currently around a 20% discount to NTA. In an effort to bridge the disconnect between the trading price and value, CRP commenced a $60 million buyback in August, with $36 million of units bought back during the period. When you couple the disconnect between CRP's divestment metrics and its trading price, and the positive earnings upside that could be generated, We believe the value CRP is currently offering to be very compelling. I will now hand over to Michael to take you through the financial results and portfolio overview.

Thanks Grant. Turning to slide 11 and the financial results. Net property income for the half was $101.2 million, an increase of $5 million on the prior period. This reflects the continued strength in the underlying portfolio operation performance which translated into a like-for-like net operating income growth of 5.1% for the half. High average cost of debt over the period increased CIP's total interest expense by $4 million to $32.2 million. Before class, CIP's average all-in cost of debt to be 4.9% for FY26. CIP announced upgraded FFO guidance of between 18.2% to 18.5% per unit in FY26, with distribution guidance of 16.8 cents per unit. Moving to capital management on slide 12. During the half, CIP completed a significant refinancing program with approximately $450 million of debt refinanced on improved terms. Importantly, margins tightened by around 10 to 20 basis points compared to prior facilities, while the weighted average debt maturity was extended to approximately four years. This reflects the continued strong support CIP receives from its lending group. Additionally, a new $325 million exchangeable note was issued following the repurchase of the previous note. The new issuance lowered the all-in coupon to 3.5%, representing a substantial discount relative to the current marginal cost of debt. Furthermore, the initial conversion price was raised to $4, providing a premium to CIP's current net tangible assets. Post-balance date, CIP reduced its overall facility limit by $150 million to maintain $408 million in undrawn debt capacity. Approximately 77% of debt is hedged, and we continue to actively manage interest rate exposure to balance earnings stability with some flexibility as the interest rate cycle evolves. Moving on to slide 14, CIP continues to provide investors with exposure to Australia's largest listed domestic pure play industrial REIT. The portfolio has been deliberately constructed around key structural demand drivers. 85% of assets are located in core urban infill markets, close to population centers, critical infrastructure, where demand is deepest and supply is most constrained. CIP's average tenancy size of approximately 7,800 square meters aligns with the most active segment of the leasing market, while the REIT's average asset size of around $39 million supports portfolio liquidity and transactional optionality. The portfolio composition continues to underpin CIP's ability to generate strong leasing outcomes through cycles, while also providing multiple avenues for future value creation through asset repositioning and select development. Slide 15 represents a case study on Melbourne, demonstrating the benefits of CIP's portfolio construction and Centuria's active management. Conditions in the broader Melbourne industrial market remain challenging, with vacancy increasing to approximately 4.7% over the half, the highest nationally. Despite this backdrop, CIP executed approximately 80,000 square meters of leasing across its Melbourne assets, representing around 20% by area, and increasing Melbourne portfolio occupancy to approximately 99%. Significant transactions include a new 10-year lease to Tesla at 346 Boundary Road in Derhamut, which secured a releasing spread exceeding 130%. The asset was earmarked for redevelopment in Q1 of FY26. However, following strong leasing interest, management pivoted strategy, securing a global covenant and resulting in a $21 million uplift in value. Another noteworthy outcome was the successful leasing at 24 Stanley Drive in Somerton. This 24,000 square meter facility became vacant when the previous tenant unexpectedly entered liquidation. The team efficiently released the premises with minimal downtime. These results highlight the benefits of CIP's in-house asset management capabilities, as well as the continued portfolio construction, focusing on smaller functional assets in established infill locations. Looking at valuations on slide 16. During the half, approximately half of the portfolio was externally revalued. with the overall portfolio recording a like-for-like valuation uplift of $75 million. The weighted average capitalization rate remained broadly stable at 5.81%, marking the fourth consecutive reporting period of valuation growth. This slide illustrates that CIP's portfolio valuations are significantly below estimated replacement costs. Management estimates the current average portfolio to be approximately 45% lower and replacement cost estimates. Further, CIP continues to execute divestments at substantial premiums to book value while currently trading at around a 20% discount to NTA. This persistent disconnect further supports management's view that the listed trading price does not adequately reflect the quality or value of CIP's underlying portfolio. Moving to development on slide 17. A key feature of CIP's development strategy is flexibility. All of our pipeline projects are income-producing assets, allowing projects to be sequenced and delivered at optimal points in the cycle, rather than being forced by mounting holding costs. This flexibility is highlighted by the recent lease to Tesla at Boundary Road in Dermott, with the site earmarked for development and about to be demolished. management pivoted strategy, retaining the existing improvements under a new 10-year lease to Tesla that delivered a value uplift in excess of the expected redevelopment profit. In addition to flexibility, all identified development projects are located in infill markets where supply is severely constrained, supporting feasibility and future rental outcomes. TIP has one current project under construction at 50 to 64 Mirage Road in Direct, South Australia, which is expected to complete in the second half of FY26. There are three projects identified for commencement over the next 12 to 24 months, which requires approximately $130 million of incremental development spend. Management estimates that the capital required to fund this pipeline could be satisfied through limited ongoing non-core asset sales alone. I will now hand you over to Grant to talk through the data centre opportunities for CIP. Thanks, Michael.

Turning to slide 18. An increasingly valuable attribute of the CIP portfolio is its data centre exposure. CIP continues to leverage its exposure to the Australian data centre market, which has experienced substantial growth. with demands now outpacing supply amid accelerated digital transformation and AI adoption. CRP currently manages $450 million of operating data centres leased to blue-chip tenants. Further, CRP continues to assess its power bank and data centre development potential across multiple sites. There is currently an undersupply of development sites within Australia that could provide an operational data centre before 2030 due to power, water or planning constraints. In many instances, development sites are reliant on the construction of new power substations that are not yet funded. Consequently, development sites that could facilitate an operational data center before 2030 stand to achieve outsized returns as they capture the unsatisfied and social demand for data center space. In relation to CIP, we believe there are a number of sites within the existing portfolio that may facilitate an operational data center before 2030 and we continue to progress processes seeking power and planning outcomes. As detailed on slide 19, during HY26, significant progress has been made in assessing the data center potential across CRP's existing portfolio, highlighted by a DA submission for a new circa 40 megawatt data center adjacent to the existing Clayton Data Center in Victoria. Taking advantage of an underutilized section of the site area, CIP can create an additional data centre development at the highly connected site without purchasing additional land or materially impacting Telstra's existing data centre. Further to the existing portfolio, CIP has secured two additional strategic assets that continue to build the reach exposure to data centres. In Wellcamp, Queensland, CIP has acquired a Tier 3 certified 2.5 megawatt operational data centre that is leased for 15 years. Located within the Toowoomba Technology Park, the carrier neutrals facility provides a further expansion opportunity to deploy significant data centre facilities. In Yarraville, Victoria, SOAPI has acquired a two hectare site with low site cover in an established urban infill market. While it does not provide an immediate data centre development opportunity, it is a strategic data centre site within Melbourne's availability zones providing an opportunity to leverage the existing network infrastructure. In the meantime, it is a highly desirable industrial location that will generate deep tenant demands. Looking at ESG highlights on slide 20. Under Centuria's management, CIP has created a flexible and relevant sustainability framework, including the sustainability target of zero scope 2 emissions by 2028, targeting five-star green star design for all future industrial developments, A continued partnership with Healthy Heads, an organisation focused on mental health in the transport and logistics industries. A continued assessment of how to maximise roof space through solar installations across CRP assets. Turning to an overview of Australian industrial markets on slide 22. As already noted, we have seen an improvement in tenant inquiry across the CRP portfolio during the past few months and expect net absorption to materially improve in the calendar year 2026 compared to 2025. Despite the improving outlook for tenant demand, supply is becoming increasingly constrained. Economic rents remain cemented above prevailing market rents for the majority of development sites, impairing development feasibilities. Due to these challenges, many proposed developments are being deferred. Continuing to slide 23. These conditions present an optimistic outlook for Australian industrial markets. Vacancy rates are expected to peak at what are still very healthy levels in 2026, before declining below 2% by 2030. This in turn will see incentives begin to contract, particularly in infill markets with limited supply, those markets consistent with the broader CRP portfolios. As a result, it is expected that the effective rental growth will trend decidedly higher over the medium term. Moving to slide 24 of CIP's FY26 continued priorities. CIP is well positioned to harness the strong market fundamentals for Australian urban and industrial markets. CIP continues to generate strong income growth and leasing spreads capturing significant under renting that is yet to be realised. We expect that this will begin to have a meaningful impact on CRP's FFO profile in the coming periods. Additionally, CRP's current discount to MTA represents excellent value considering the significant portion of value underpinned by land and the potential accretion that could be extracted by development or data center conversion. Concluding on slide 25, for the remainder of FY26 and beyond, our focus is on maximizing CRP's earnings and value growth potential. while maintaining suitable balance sheet capacity. We are pleased to provide upgraded FY26 FFO guidance of between 18.5 cents per unit and distribution guidance of 16.8 cents per unit. That concludes the formal part of the presentation. I will now hand back to the operator for any questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Lauren Berry from Morgan Stanley. Please go ahead.

Hi, good morning, guys. First question, I just wanted to pick up on your comments around releasing spreads. You highlighted that spreads were materially higher if you exclude cold storage. Can you just talk a bit more about the dynamics in the cold storage leases at the moment, please?

So the leases that we did, so we excluded three leases from that 44% releasing spread. One was to our largest lease that we completed through the period, which was Fantastic Furniture in Fairfield. They exercised an option that had a capped so we couldn't do too much about that and that facility remains materially under-rented. The two cold storage leases that we completed was a portfolio lease transaction. It was a relatively short lease that we were renewing, so the rents were already fairly akin to where market rents were, so there was no material leasing upside in those two leases. Overall on cold storage, We think there is a lot of embedded rental growth to come through into cold storage. We are seeing very limited supply coming through into cold storage, and nationally vacancy rates are almost 0%. So we think there is certainly opportunity for cold storage growth. The other complicating factor for cold storage is competing with data centres. So when you're thinking about cold storage supply coming into Australia, they will be competing with data centres for sites with power, which will limit the ability to provide additional cold storage. We think there is a very, very good opportunity for colour storage rental growth into the future.

Okay, great. Thank you. And then just on the development pipeline, you talked a lot about additional tenant inquiry picking up this half. What are your triggers to kick off the next three developments? You've got in the 18 to 24 month bucket and would you potentially consider any spec development at this stage?

So the two developments that we highlighted in the results pack, one at Wetherill Park and one at Cooper Plains in Queensland, they are quite different. At Wetherill Park, it is a circa 30,000 square metre development and we will be seeking a pre-commitment before commencing that construction. At Cooper's Plains, it is a much smaller development that will be targeting tenants in size ranging from 1,500 square metres to 3,000 square metres. We think there is a very, very deep pool of tenants seeking that style of accommodation in Queensland and that's something that we will spec build. The other development that we are considering through the next 12 months is subject to tenant lease expiry. So that won't expire until the very end of calendar year 26. So that is something that we will look at in due course. I think it is worth reiterating what Michael said about our development pipeline and just referring back to the Tesla lease. We did have four developments we were seeking to complete through the next 12 months. One of those developments has now been leased to Tesla. That flexibility that we have within our development pipeline, given it is all existing properties with existing improvements, I think that Tesla lease reiterates that we do have flexibility, and if we do get very strong leasing inquiry, we can pivot from a potential development to an existing lease. And in the instance of Tesla, as Michael mentioned, the lease that we put in place, the evaluation upside exceeded the expected development profit we were going to get from that project.

Great, thanks. And just last one from me. You know, with the industrial leases, you flagged that you can fund that through a small amount of asset sales. You're now talking more about data centre development, which is a lot more capital intensive, and you've also flagged, you know, you want to get stuff on the ground before 2030. How are you thinking about what could be potentially a much larger spend on those projects?

Yeah, thanks, Lauren. I think our focus at the moment is about extracting value. At the moment, there is nothing that we have to fund materially in relation to data centres because we have no approvals in place. So the focus at the moment is very much trying to secure upside on the existing land that we have, and from there, we will consider what the options are I think it is probably worth noting in regards to the data centre that we have submitted a DA on, that is effectively a data centre that we haven't had to pay for. So it's effectively a free option on existing land. And I think that hasn't been, well, it definitely hasn't been included in current net tangible assets. And it is really about us trying to extract value from that. Now, if we get a DA and a power allocation for that site, as mentioned on the call, we think there is certainly opportunity to get some very, very strong value out of that and if it is materially accretive we think we'll be able to find a funding solution for that.

Would one option be carving off that land and divesting it?

For that particular example that would be somewhat difficult because if you were to subdivide that land you would have an impact on things like setbacks. So at this stage, our ambition is to keep the land as one parcel because it does have an impact on what you can build on it.

Okay, great. Thank you.

Thank you. Your next question comes from Cody Shield from UBS. Please go ahead.

Morning Grant, Jesse, Michael, thanks for the time. Just a quick question on the secured DC opportunities, those settling post-balance data. Are you able to provide any detail on yields or rents for those opportunities? How should we be thinking about that?

So the two acquisitions we made recently, they were definitely made on merit. The first acquisition, the operational data centre up in Wellcamp, that was bought on about a 6% yield. As mentioned on the call, it's got a 15-year lease with some development opportunities. So We think that represents pretty good value at the moment. The acquisition at Yarraville, that was acquired on an initial yield with a two-year lease in place, slightly over 5%. That particular acquisition has got very low site cover. So the improvements on that site represent about 24% of area. As mentioned on the call, that is a cracking site as an industrial site remaining in Melbourne, very, very much infill location. Whether or not for a data center or for an industrial development in the future, we think there is inherent value in that underlying land.

Yeah, okay, that's great. And maybe just to expand on Lauren's question a little bit around the funding piece, I mean, gearing's come up a tick. Where do you kind of see that settling over the next 12 to 18 months just in the context of valuation growth?

Yeah, so the gearing uptick that we incurred through the half was somewhat expected given we were conducting the buybacks. We are very cognizant of where Gearing sits and what our debt covenant headroom is. As mentioned on the call, I think Michael pointed out, we have had no issues generating liquidity from our portfolio and we'll continue to be cognizant of where our debt headroom remains. And if need be, we'll continue to trickle out asset sales that will facilitate Gearing being managed.

Are you able to put a number to what you consider in terms of asset sales?

Not at this stage, mate. We do not highlight assets we would continue or consider for sale because it does somewhat inhibit our process in trying to find buyers for those assets.

Okay, that's clear. That's all from me. Thanks.

Thank you. Your next question comes from Richard Jones from JP Morgan. Please go ahead.

Hi, Grant. Clarifying the comments just around the portfolio under renting being set at 20% and then the comments around expiries out through FY29, I'm surprised that only 60% of leases are under rented. I was just wondering if you can put a bit more colour around, I guess, the balance and whether the 20% number you quote is representative of those leases over the next three years or so?

Yeah, it is pretty much on average, Richard. So that 60% that's expiring between now and FY29 probably would average out at around that 20%. As we've mentioned in the past, there is skews to the level of under-renting. The under-renting in Sydney has been materially greater than pretty much every other city. So there is probably if you do get more lease expiry occurring within New South Wales in a given period, you could see those re-leasing spreads certainly be slightly higher than in other periods. But on average, across that circa 60% under-rented FY29, it does average out at about that 20% level.

Sorry, Grant, just to clarify, on 100% of the leases expiring, you'd expect a 20% uplift, or on the 60% that are under-rented, you'd expect a 20% uplift?

Yeah, sorry, thanks for asking that question. On the 100%, an average of about 20% under-renting. So if you quarantine that 60%, it would be inflated more.

Yep, OK, makes sense. Just on the refi, I'm just interested in what your current all-in-debt margin is and how that compares to the margin you got in the first half refi and just the capacity for... potentially refinancing some of the other bank debt that sits with expiries perhaps two to three years out, whether you can bring that forward.

Yeah, so thanks for the question, Richard. For the refinancing we just did, we did a combination of three, four and five-year debt terms. On average, that would have been about 120 bps as an all-in margin for the duration. That probably compares to What was previously somewhere between 130 to 140 bps is an average margin across our portfolio. Now, looking forward, we'll certainly continue to do refinancing as we think is necessary across our debt book. Obviously, you need to consider what upfront you'd be burning to consider doing a refi, but that is something we would consider. We think there is still very, very strong demand for lending to CIP, and we think we can do... some good refinancing into the future, but it really will depend on what the opportunities are and whether or not it's feasible.

Okay. And then just the final one, Grant, do you expect to utilise, I think, a 60 mil buyback that you've spent 36 of? Will you continue that?

So we were very active in undertaking the buyback through the first half. That probably doesn't change. We see excellent value in where CIP currently trades. So that is probably something we'll continue to consider.

Thanks Grant.

Thank you. Your next question comes from Andrew Dodds from Jefferies. Please go ahead.

Good day, guys. Just a follow-on from Jonesy's question earlier. How do you balance the intention of the buyback and considering that back in August this was sort of presumed or completing it was sort of a part of guidance and how do you sort of balance that with where gearing's at sort of above 36% today?

So completing the buyback from here, the circa $24 million that we still have to go within that $60 million amount will increase gearing on our estimates by about half a percent. It's certainly not an insurmountable number. As mentioned earlier in relation to gearing, we are very cognizant of where gearing sits and what our debt covenant headroom remains. And we have got, in our view, ample opportunity to find liquidity across our portfolio if we think that gearing is significant for them.

Alright, thank you. And then just secondly on leasing, the 144,000 square metres of leasing you did in the first half implies about 100,000 square metres done in the second quarter alone, which is a very positive outcome. Just looking back and marrying this up to the comments on the downtime and the earnings drag, what's the biggest thing holding you guys back at the moment?

So I probably wouldn't think about it holding us back because we have provided earnings guidance that is pretty accrued from FY25 to FY26. I'd probably think of it more as the opportunity set that's in front of us. As mentioned, we are seeing very, very strong inquiry across our portfolio at the moment. We are seeing much better inquiry for our space than we were seeing 12 months ago. And if you think about the first half, we did incur a 5% NOI growth for that first half year on year. we did incur probably a much greater proportion of vacant space across our port fire than we were competing with 12 months ago. So I think there is certainly opportunity for us to close that gap into the future, and that will hopefully give us further earnings growth into FY27 and FY28. All right.

Thank you.

Thank you. Your next question comes from Tom Bodor from Jarden. Please go ahead.

morning grant just on the telstra surrender on the data center i just was interested was there is there any reduction in rent there and if so how much is it yeah there is a slight reduction in rent time but it's not material we don't see that it'll have a material impact on ffo uh so yeah it's not in the scheme of things the existing culture data center is pretty unimpacted by the potential redevelopment so like less than a million dollars

Is there any indication from them that they may want to give more space up or is that it?

No. The way it worked is that Telstra have been reconfiguring that space over quite some time. This is before our ownership and they've got some very contemporary space that they utilize fully. What we are taking back is some older buildings that were underutilized and probably no longer required by Telstra operations. The way it will work is we will get that space back. Telstra will continue to utilise their data centre as they currently do. They'll be fairly separate entities. So the two buildings won't really interrelate. It is not expected that Telstra will be a tenant of the new data centre either.

Right, so they've given back everything they want to give back, basically. Correct. OK, great, thanks. And then just sort of on the data centre opportunity, I presume you're looking at powered shell only, is that right?

So our focus at the moment is on extracting value and we haven't really thought too much beyond simply getting a tangible opportunity that we can put to market. So our focus at the moment is on getting planning, power and water allocations that will allow us to put something tangible to market. From there we'll determine what the opportunity set is. You would assume that for an ongoing market Real estate vehicle, power chill would make the most sense, but at this stage we are considering all options.

Then just a final one from me. How should we think about potential data centre rents versus logistics rents?

Well, again, time really depends on what agreement is struck. You could do a land lease once you have got those allocations and the tenant could take all the risk on the development, in which case you'd be getting a lower rent, but obviously You wouldn't have to incur any of the development risk. Powered shore through to turnkey, the rent does materially change. What I would say is regardless of what circumstances you take, you would be getting a much stronger rent than what you would get for standard logistics.

Maybe asking another way, how should we think of the land value? you know, in the data centre usage context versus a logistics... Is it sort of to be thinking multiples, like 3x? Is that sort of the base way to think about it?

Yeah, I think that's probably a good way. If you just think about underlying land value, and again, this will bounce around depending on how much power you get allocated and some other things in terms of, you know, your connectivity to potential users, but arguably it could be anywhere from two to five times. OK, thanks. Question?

Yeah, that's clear.

Thank you. Your next question comes from Murray Connellan from Awellis, Australia. Please go ahead. Morning, Grant and team.

I was hoping to just touch quickly, please, on the guidance range and some of the assumptions that would be in the bottom end versus the top end. I imagine it relates to the leasing out to some of the vacant space and the outcomes on some of the incoming or the upcoming expires rather. Maybe if you could just give us a bit of a sort of high level feel of what to expect towards the bottom end and top end of that 18.2 to 18.5, please.

Yeah, Murray, you're completely right. Pretty much the remaining variability on the guidance range all relates to leasing. Just in regards to interest, even if we had a 50 bid increase in interest rates today, that would only impede FY26 earnings by about 0.1 to 0.2 cents per unit. So yeah, all the variability remains in leasing and predominantly those two big boxes that we've got at Bundamba and in the remaining space in Fairfield. Now as a veteran on the call, pleasingly we have got activity on both of those spaces We've got multiple parties potentially looking at Fairfield. We've got a heads of agreement issued on Bundamba. Now, nothing's done until it's done, but we're certainly pleased by the amount of activity that we're seeing.

Thank you. Your next question comes from Claire McHugh from Green Street. Please go ahead.

Hi, guys. Just a quick one from me on capital allocation. So you're doing a bit of everything in terms of the buyback, acquisitions, development, and leverage is going up. I just wanted to ask, you know, how do you view the most optimum use of your capital? Like, would you rank the buyback highest, just given the discount you're trading at? Or, you know, is it deleveraging? Like, how are you thinking about the most optimum use of your capital?

Thanks, Claire. It's a good question. I think given where CIP is currently trading, we think the buyback is probably the most appropriate use of capital. It's certainly, in our view, a very compelling investment. Beyond that, there are certainly opportunities across our development pipeline that we think are accretive. For the majority of our development pipeline, we are seeking a minimum yield on cost of 6.5%, but in some instances, that yield on cost will be in excess of 7%. If we have the ability to sell assets that are yielding in the low fires and replace that with developments that are yielding in excess of 7%, we think that is also very accretive. Now, to reiterate the point I've made through the call, In saying that and deploying capital, we are very cognizant of where gearing sits. We do not want to see it move materially higher, and we will continue to manage that gearing through selective asset sales to keep gearing at a manageable level.

Okay. And then just one other, just in relation to Yarraville, I understand that the data center of plans is really just about creating optionality, but Are you looking at other adjacencies such as iOS? I mean, I was recently in Melbourne. There's seemingly a lot of appetite in that space. But, you know, how are you looking at other adjacencies and the risk and return profile of those?

Yeah, look, I think it's something that we are considering. Centuria is investing both time and resources into our data centre expertise. And depending on where we see value, we will continue to look at investing.

Yeah. OK, thanks.

Thanks, Cliff.

Thank you. Once again, if you would like to ask a question, please press star 1 on your telephone and we have your name to be announced. Your next question comes from Ben Brayshaw from Baron Joey. Please go ahead.

Hi, Grant. I was just wondering what you're seeing in the industrial market for construction costs, whether there's anything that you could point to based on recent projects you might have attended or discussions that you could be having with some of the builders?

Yeah, thanks, Ben. We haven't seen a material change in construction costs probably over the last six to 12 months. If anything, we are seeing probably more favourable conditions in that builders are happy to hold pricing and they are willing to work with you to find a solution if there are some development constraints that need to be worked around. So we haven't seen things materially change. Probably the only outlier is we still see a higher, it's probably 10% to 15% higher in Brisbane construction costs than we are seeing in other parts of the country. In the other parts of the country that we are considering development, the proposed development costs are relatively consistent.

Yeah, great. That was my question. Thanks.

Cheers, Beth. Thank you.

Thank you. There are no further questions at this time. I'll now hand back to Mr Nicholls for any closing remarks.

Thank you everyone for joining today's presentation. If you have any follow-up questions, please don't hesitate to contact me or any of the team. That concludes the presentation. We thank you for your ongoing interest in COP and wish you a very good day.