Centuria Capital Group (CNI) Earnings Call Transcript & Summary

So thank you for your patience, everybody, but because it was an online meeting as well, we have to make sure we don't disenfranchise anybody. Anyway, good afternoon, and or just good -- and welcome. On behalf of Centuria's Board of Directors and senior management, I'd like to formally welcome you to our Annual General Meeting. I'm Garry Charny, Chairman of the Centuria Group. As a quorum is present, I declare the meeting open. I'd like to acknowledge the Gadigal people of the Eora Nation, traditional custodians whose land on which our AGM is being held and pay my respects to elders past, present and emerging. We also welcome our friends from Aotearoa. It is my pleasure to introduce in person, my fellow board members, John McBain, Jason Huljich, Kristie Brown, John Slater and -- sorry, Peter Done and Susan Wheeldon, who is attending the meeting virtually somewhere. She'll turn up in a minute. Together, the directors bring to the Board an important range of skills and experience across the businesses in which our company is engaged, including funds management, property and investment markets banking and finance, accounting, legal and technology. A brief profile of each director is included in the 2023 annual report. Also attending the meeting is our CFO, Simon Holt, along with James Lonie from K&L Gates Lawyers; and Paul Thomas, our audit partner from KPMG. Paul is available to answer any questions regarding the conduct of the audit and the content and preparation of the audit report. If any security holders who are attending remotely experience any technical difficulties, they should contact Boardroom by telephoning 1 (300) 737-760. If I might start with some housekeeping matters and meeting formalities, and I apologize, I need to be a bit technical with these, so bear with me. If you are present in the room today and have a mobile phone, please ensure it's turned off. The business of this AGM is set out in the Notice of Meeting. We propose to follow the order of business as set out in that notice of meeting. The Centuria Capital Group consists of Centuria Capital Limited, which I'll refer to as "the company," throughout this afternoon's meeting and Centuria Funds Management Limited as the responsible entity of Centuria Capital Fund which I refer to as, "the trust." I will refer to the collective group as Centuria. Each share in the company is stable to a unit in the trust, which formed stapled securities. This meeting is a concurrent meeting of the shareholders of the company and unitholders in the trust, which is permitted by the respective constitutions of the company and the trust. Every security holder and proxy holder in the room with us today should have registered on the way in, and all those eligible to vote should now have a blue voting card. Any person who believes they are entitled to vote but does not have a blue card should now be a member of the boardroom staff who are stationed at the registration desk outside. Please note any person with a green card or a white card is not entitled to vote. To those security holders who have appointed me as Chairman of this meeting as their proxy, I shall be voting undirected proxies in favor of each item. If you're a proxy holder and have been instructed how to vote, I ask that you ensure any vote you cast as a proxy holder is in accordance with those instructions. If you're a Centuria security holder or a properly authorized representative of a security holder, you'll have ample opportunity to ask questions or make comments on the proposed resolutions during the meeting. The online platform -- the conduct of this meeting enables securityholders to ask written and verbal questions. We will be also taking questions from security holders who are in the room. [Operator Instructions] For those security holders and their properly authorized representative present in this room, if you wish to ask a question at the relevant time, please raise your blue or green card and wait for a microphone. Before asking a question, please state your name. If you are not a Centuria security holder, please state the name of the security holder you represent. Please note that if you hold a white card, you are not entitled to ask a question. Every security holder and proxy holder attending online and in person and eligible to vote can ask questions should have registered using the online meeting user guide as in close within the notice of meeting. Voting on the resolutions will be conducted by way of a poll. Security holders voting online may vote at this meeting by clicking on the voting tab on the navigation bar. You may submit your vote on each of the resolutions by clicking the for, against or abstain buttons. Your selection will change color and a confirmation message will appear. Voting can be performed at any time during the meeting until I declare the poll closed. To those securities have appointed me, Chairman of this meeting, as their proxy. I shall be voting undirect proxies in favor of each item. If you're -- sorry, the Notice of this Meeting dated 17 October 2023, has been in security holders for the required number of days, and therefore, I propose to take it as read. The company's annual report has been placed on the company's website for your review and has been sent to those securityholders who have requested a hard copy. The minutes of the last AGM was signed as a true and correct record of the meeting and are available for inspection. Voting on the resolutions will be conducted by way of a poll. Resolutions 3 and 4 are ordinary resolutions and will be passed if more than 50% of the votes cast are in favor. Persons holding Centuria stapled securities as at 7:00 p.m. on the 15th of November were for the purposes of determining voting entitlement is taken to be the security holders of the vote. Voting exclusions apply to a number of the resolutions as detailed in the Notice of Meeting. I intend to read out and propose each of the resolutions and then conduct a poll. Our returning officer today is Teagan Purser from Boardroom. Shortly, I will take you through the formal resolutions. You will have an opportunity to submit questions. James, next year, we're really going to abbreviate that because it just goes on for too long. Thank you. So to my Chairman's address. Whilst we do not find ourselves in a dystopia reminiscent of the hyperinflation years of the Weimar Republic, the year was defined by a historically steep escalation of interest rates as the Reserve Bank increased the official cash rate 10 times during the financial year, bringing the policy rate from 0.85% to 4.1%. These increases signaled a departure from COVID-related emergency rates to current levels in a bid to control the inflation rate not seen in decades. It is hoped that we are at or near the peak of the interest rate rise cycle globally. Either way, FY '24 is a transitory period for many businesses as the harsh interest rate cycle test business models for vulnerabilities. In this context, we believe opportunities are available to quality business models that can absorb these financial conditions, and more specifically, to those which can adapt and diversify quickly to take advantage of rapidly changing market factors. A century of Centuria -- a benefit Centuria's larger and more diversified platform is that the breadth of real estate markets we operate within enables us to use countercyclical strategic growth levers. Having operated for over 25 years in our current iteration, we inherently understand the peaks and troughs that run through both traditional real estate and emerging alternative markets. In the past year, our assets under management grew to $21 billion, of which [ $22 billion ] was real estate. And Centuria delivered a statutory net profit after tax of $105.9 million and an operating net profit after tax of $115.6 million. This represented an earnings per share of 14.5% and a distribution of 11.6% per share. These results were all higher than FY '22 and in line with guidance. John McBain will elucidate the financial details further in his address. Appetite from institutional investment grew as Centuria extended its relationship with Morgan Stanley Real Estate investing. During the previous period, we reported a health care-focused joint venture with Morgan Stanley. And it's my pleasure to announce that in FY '23, another venture partnership was established between Morgan Stanley and CIP called the Centuria Prime Logistics Partnership. Centuria continues to explore further institutional partnerships while seeking to expand its existing mandates, including those within the retail and office sectors. In office, the work-from-home phenomenon is slowly becoming more transparent and the argument is more grounded. There are advocates on both sides and unquestionably, what offices will look like in a decade will change. However, there does seem to be growing unanimity that building the culture of a business is well-nigh impossible when people cannot sit and meet in person. Whatever one's view work-from-home has reshaped the industry with businesses opting for accommodation more conducive to collaborative areas and building amenities that facilitate a better work-life balance with sophisticated end-of-trip facilities and concierge curated community events. These initiatives are strategically designed to draw workers back into the office to produce productivity. Centuria, with the benefit of managing the bulk of its own properties, has acted promptly and successfully on this. And it's pleasing to note that as at 30 June 2023, Centuria's Australasian office portfolio has an occupancy of 97% across the COF portfolio and 94% across the entire office portfolio. Interestingly, our 2023 office tenant survey results showed that approximately 75% of those who responded anticipate retaining or increasing their space requirements through the medium term. During the year, Centuria furthered its commitment to environmental, social and governance initiatives, including the formal launch of our ESG policy, which was detailed in our recently published FY '23 sustainability report. As Centuria evolves, so too does our commitment to the communities in which we operate. We continue to be committed to improving diversity within the group, and I am indebted to Susan Wheeldon as Chair of the Culture and ESG Committee, who has ensured that we will be putting appropriate metrics around all our targets to ensure that they can be both managed and measured. From a more holistic perspective, during the year, the Board and management also examined the identity of our broader group following the successful integration of Heathley, Augusta Capital, Primewest and Bass Capital. To ensure that we are a cohesive and focused unit, we analyzed our corporate strategies to focus on our raise on debt. It came down to this. We transformed real estate opportunities into compelling investments, which create sustainable long-term value for our stakeholders and the communities in which we operate. This statement is fundamental to our approach and how we wish to be perceived in the market. It underpins our attention and intention to deliver results for you, our security holders. We are focused on ensuring that our employees work in a safe, supportive and challenging environment. It is, therefore, pleasing and important that Centuria was named as part of the 2023 AFR Best Places to Work in Australia and New Zealand. Specifically, we were placed amongst the top 10 Best Places to Work within the property, construction and transport category. This external endorsement further supports the positive responses from our 2023 engagement survey, which incorporated feedback from over 90% of our workforce. Some of the new internal programs introduced during the year included mental health workshops as part of a wider employee mental health initiative, education workshops, a new manager orientation program, a new start of buddy program and interview recruiting training. We also continue to foster emerging talent and build internal succession capability through the group's leadership program. As markets become more challenging, we recognize that it is crucial to continue the development of our personnel and to retain an experienced exceptional team. With leaders such as John and Jason, our joint CEOs; Andrew Hemming in Healthcare; Mark Francis in New Zealand, Nick Goh and Giles Borton at Centuria Bass, the Board and I remain confident in our team's ability to navigate through the challenges that lie ahead in FY '24. If I might digress for one moment and deal with the subject often raised in our discussions with security holders and others, and that is our joint CEO structure. I have no hesitation in restating that the complementary, almost symbiotic skills that both John and Jace possess makes the joint CEO structure one of your Board's best decisions. We have not added layers of internal management, and they continue to work in discrete areas whilst collectively implementing the Board's overarching strategy. Before I hand over to John and Jason, I'd like to emphasize the depth of Centuria's experience in operating through our various property cycles and economic environments. The disciplines learned during these periods and the lens that the Board and management bring to getting new opportunity into capital management has been well integrated into our risk framework. This is coupled with our ability to execute on new opportunities with alacrity. To that end, it is worth mentioning the creation of our most recent Special Opportunities fund, designed to take particular advantage of opportunities arising out of the current economic climate. In closing, I would like to thank my fellow board members of both the group and responsible entity level as well as the wider management in Australia, New Zealand and the Philippines. This is a group of hard-working, well-motivated people who discharge their responsibilities with great care and pride. In particular, I'd like to recognize Peter Done, who is retiring from the Centuria Board. Peter has been Chair of our Audit, Risk and Compliance Committee for as long as I have been Chairman, and for some time for that as the word antediluvian springs to mind. His contribution has been extraordinary and his diligence and quiet assurance has made Centuria a better company. I am pleased that he will not be lost entirely as Peter will retain his ongoing directorships to the responsible entities for COF and CIP. We have been carrying out an exhaustive search to replace Peter. And I can genuinely say that is no easy task. However, I'm pleased to say that the search has almost concluded, and I'm hopeful of announcing the appointment of a new director shortly. In the meantime, I'm indebted to Kristie Brown for agreeing to take on the mantle of Interim Chair of our Audit, Risk and Compliance Committee. Finally, on behalf of the entire Board and management, I extend my sincere thanks to our security holders. I say this every year, but your support is never taken for granted, and we remain committed to the task at hand. If I can now call upon John to deliver his joint CEO address.

Thank you, Mr. Chairman, and good afternoon, everyone. Welcome. Jason Huljich and I, as joint Chief Executives, welcome you to the 2023 Annual General Meeting. We also recognize the Chairman's acknowledgment of the traditional Australian and New Zealand land owners in the theaters that we operate. It is my pleasure to address Centuria's financial performance and corporate activities today. I'll also provide an update on our market outlook, which will be followed by Jason's address, detailing Centuria's funds management and real estate activities during the year. It's common knowledge that geopolitical impacts, in addition to the lingering effects of the pandemic, have impacted global economic confidence and also disrupted financial markets. Australia and New Zealand were not immune to these global conditions, and we experienced both high inflation and steep cash rate rises. Bond yields, for example, have risen to levels not experienced of 15 years. All these factors have led to increased volatility across the ASX 200 indices and challenging conditions for all companies. However, these are the cards that everyone has been dealt, and you want to hear what we are doing to react to these conditions in a positive and constructive manner, rather than some sort of apologist report. So today, I promise you'll receive the former, not the latter. The Centuria management team has never worked harder to deliver this earnings and they are dedicated to maximizing financial results despite the prevailing financial conditions, whatever they are. I have never been more proud of this team and the effort they're putting in. Let me begin with an overview of Centuria's financial performance during FY '23. During the period, Centuria's growth was a function of strong recurring earnings, accounting for 91% of total revenues, complemented by the continued execution of our diversification strategy, resulting in group assets under management increasing to $21 billion. Despite the macroeconomic conditions, the group remained strong due to its scale and, in particular, its diversification. We delivered a statutory net profit after tax of $106 million and operating net profit of $115.6 million being $0.145 per security and a distribution of $0.116 per security. These results were all higher than FY '22 results and in line with guidance, of course. We also delivered a record operating earnings before interest and tax or EBIT of $166.8 million, which was up 7.5% on the previous period. Property Funds Management operating EBIT increased 6% itself to $84.1 million, underpinned by the full year impact of our platform expansions in the previous trading periods. Transaction fee income of $26 million was generated from $2.4 billion of total transaction activity during the year and performance fees of $28.5 million were also booked. As at balance date, the group recorded $126 million of embedded and latent unrecognized performance fees. Our investment earnings increased 8% to $52.4 million, reflecting the increased capital deployed to support our unlisted funds business. I'd also note that corporate overheads were substantially reduced during the year, primarily a few initiatives deployed across travel, consulting and other controllable expenses. Significantly, property development revenue experienced considerable growth of 45% year-on-year to 9.4 million, underscoring the talent of the in-house development team, who leveraged its project pipeline, delivering on profits on recently completed development, again, despite the market conditions. Our real estate finance venture, Centuria Bass, also significantly increased operating profitability by 61% to $6.6 million, reflecting it substantially increased loan book. This division is very countercyclical in nature and paradoxically is experiencing buoyant operating conditions. Throughout FY '23, Centuria increased its funding optionality with a new 5-year $50 million debt facility secured in addition to refinancing $67 million in near-term maturities. As at financial year-end, Centuria lowered its operating gearing ratio to 2.6%, while realizing $237 million from the sale and recycling of balance sheet assets. Importantly, Centuria's balance sheet is positioned to fund organic growth with $329 million of cash and undrawn debt as at balance date; superior benefits from a net operating interest cover ratio of 5x, which despite recent increases in financing costs, represents a significant buffer above our covenant requirements of 2x. Finally, the group recorded a net asset value of $1.77 for security as at balance date, up $0.04 from the prior period. Our tireless Chief Financial Officer, Simon Holt, who is accountable, in addition to his fiscal responsibilities, for the group's cybersecurity and their systems and processes. During FY '23, we've continued to comply with the requirements of CPS234 and remained ahead of our peer group. We also continued rolling out resilience and penetration testing, which improves our overall cybersecurity posture and maturity. Additionally, the group has continued on its path of enhancing systems and processes by modifying existing systems and improving available reporting and training to deliver better utilization of our business platforms. This continued focus and evolution of our infrastructure is critical in ensuring superior risk management as well as more efficient and targeted business decision-making. This leads us to the group's sustainability initiatives. During the period, we released our third sustainability report. In addition, we launched new sustainability targets, which include targeting 0 Scope 2 emissions by 2035, eliminating gas and diesel where practical by 2035 on equipment owned and operated by the group. Preparation for the impending international financial reporting standards in their sustainability disclosures with further investment in enhanced data collection storage and reporting systems. Pleasingly, Centuria has continued its 10-year, think it's over 10-year, support of St Lucy's School for Disabled in New South Wales, which provides education to students with disabilities. Additionally, we supported a large range of charities with relevance to the local communities in which we operate nationwide. The group supports a diverse workplace culture, and we're proud to have increased female participation in our workforce to 45%. We have continued our intern program. And in addition, during the current financial period, we're implementing a new scholarship program. And these initiatives are designed to raise awareness of the opportunities for young people in the financial services sector and also provide an important pathway for us to continue broadening diversity within the business. Finally, our employee engagement surveys during the period disclosed 88% of staff are proud to work at Centuria. This comes back to our focus on retaining and developing our in-house talent. Turning to our market outlook. Centuria's reputation as a fund manager is built on our ability to adapt to market changes by unlocking innovative new products. We have a strong focus on alternative well-performing real estate sectors to expand our platform and deliver diversified income sources. This is one of Centuria's points of difference. In addition to our recent success in alternative sectors, we'll continue to harness the strong tailwinds from the industrial sector as an addition. We want to ensure we are well positioned to continue our growth trajectory as markets normalize. Again, we refer this as a through-cycle approach. We believe the likely cessation of the upward trend in global interest rates during calendar '24 will provide the catalyst for improved sentiment for many Australian business sectors, including real estate. So we need to navigate what will be a challenging FY '24. At Centuria, we're confident that our strategy of entering alternative sectors will continue to support strong revenue flows. And we're very positive about our ability to find value in any distressed sectors. Our strategy remains focused on ensuring our substantial embedded management fee revenues are protected, supplemented by new alternatives in the credit and agricultural sectors, for example. Our industrial assets continue to perform in what is, by any measure, a standout real estate sector at the present. Centuria confirms its FY '24 guidance being operating earnings of $0.115 to $0.12 per security and distribution guidance of $0.10 per security. Before I pass over to Jason, I'd like to thank our team right across Australia, New Zealand and the Philippines for their loyalty, dedication throughout a challenging trading period. Similarly, thanks to our Chairman and Board of Directors, both across the group and the responsible entity boards as well as our external committee. His guidance and support are invaluable to the company's success. I want to add a personal note of thanks to Peter Done, who retires from the Centuria Capital Board today. Peter has been an outstanding Director in relation to both discharging his duties on the Board itself and in particular, the Audit and Risk Committees. Moreover, Peter has been instrumental in the growth of Centuria from a very small beginning, all those years ago to the size of the company today. Peter is well liked by both his fellow directors and the management team, and I'm delighted that Peter will remain on both the REIT and responsible entity boards. Peter, on behalf of Jason and I and the entire management team, thank you for your counsel, your wise counsel and the incredible effort you've put in to help make Centuria what it is today. I might just ask to be joined -- finally, as Garry did, I'd like to thank you, our security holders. In particular, people have chosen to come today and support the meeting. We really enjoyed meeting you and look forward to talking to you before and after the meeting. We look forward to updating you throughout FY '24. It's now my pleasure to hand over to my fellow CEO, who looks after the funds management and real estate sectors very, very capably, Jason Huljich.

Thank you, John. Good afternoon, everyone. Let me begin with an overview of our Funds Management division. As market conditions across Australia and New Zealand evolved throughout FY '23, Centuria's suite of investment products were broadened to match investor appetite. It was pleasing to see our unlisted platform, which comprises 2/3 of our real estate AUM, benefiting from $600 million of capital inflows during the year. This is a testament to Centuria's resilient retail distribution network and long-term track record. The group's ability to create and raise equity for new unlisted funds and these challenging periods was exemplified by the successful launch and growth of our $324 million Centuria Agricultural Fund. On the institutional investment front, Centuria continued to expand its partnerships, up 11% over the year to $2.1 billion. In terms of asset sector exposure, only 1/3 of the group's platform comprises office assets while the remainder is exposed to industrial, retail and alternative property sectors. Centuria has rapidly expanded its new alternative sectors with real estate credit increasing 59% and agriculture by 33%, resulting in $1.4 billion of gross real estate activity, together with a $1.6 billion development pipeline. And I'll come back to these sectors in a moment. Across our broad real estate platform, we delivered robust fundamentals during the period, including a high 97% occupancy rate and a 6.1-year weighted average lease expiry. We own approximately 420 assets leased to over 2,500 tenants. During the year, we agreed lease terms for more than 548,000 square meters of space across 542 individual transactions. This represents 13% of our total platform. Rent collections remained high at 99%, with record low arrears. Significantly, at the close of FY '23 our weighted average capitalization rate across the group was 5.81%. I'd now like to take a few minutes to discuss the depth of our diversified real estate portfolio. Centuria's office portfolio provides a high 94% total occupancy rate and remains exposed to Australia's better-performing office markets. There remains a bifurcation within domestic markets based on asset size, quality and leasing risk. With Centuria's average office value of less than $100 million, its assets provide exposure to a deeper transaction pool. Throughout FY '23, Centuria divested 5 office assets at an average 4.5% premium to prior book value, demonstrating investment appetite for smaller metropolitan and near-city office assets. In terms of acquisitions, during FY '23, we secured a 50% interest in the Allendale Square office tower in Western Australia for a new unlisted wholesale fund. On the industrial front, the domestic market continues to provide strong tailwinds with Australia having the lowest vacancy rate globally at less than 1%. Centuria's $6 billion industrial portfolio is strategically positioned with an urban infill markets where occupier demand remains highest and land is most constrained. During the period, rental levels from our industrial assets improved significantly, particularly in the second half of the year, with average re-leasing spreads reaching 37% in the CIP portfolio. During the period, we secured several industrial assets for both Australian and New Zealand unlisted funds. Centuria's $3.2 billion retail portfolio is exposed to daily needs retail, underpinned by nondiscretionary spending and large format retail aligned to household needs. Approximately 44% of Centuria's daily needs portfolio income is derived from supermarkets, providing a resilient cash flow. The group's large-format sites have low site coverage which, like industrial property, provides value-add opportunities. Average re-leasing spreads for the Australian large-format portfolio were up to 11%, including 8% for existing tenants and an impressive 24% for new leases. During the period, we expanded our unlisted daily needs portfolio with 2 wholesale funds, which were fully subscribed. Moving to health care. Approximately half of Centuria's $1.7 billion health care platform comprise a short-stay and day hospitals. Makes Centuria one of the largest nonoperator landlords in Australia. Our health care facilities lend themselves to operational efficiencies, leading to better patient outcomes and cost efficiencies. The group's in-house development team is currently progressing a $360 million development pipeline for our unlisted health care funds. Across Centuria's $530 million agricultural platform, we are focused on precision farming assets, and more specifically, protected cropping. The 3 agricultural assets acquired in financial year '23 are high-quality glasshouses lending themselves to highly sustainable farming methods. Centuria is now Australia's leading large-scale glasshouse landlord. During the year, the unlisted open-ended Centuria Agricultural Fund acquired 2 additional glasshouses for a combined $143 million, and the Centuria New Zealand Agricultural prefund launched, seeded with an $18 million glasshouse. Last but definitely not least, our $1.3 billion real estate credit platform experienced significant growth as the property industry looked to nonbank financing as the major banks tightened their lending criteria. We provide lines to developer and investor clients, and we developed debt fund opportunities for our wholesale investor clients. During FY '23, Centuria Bass launched 4 single-asset wholesale credit funds, which were fully subscribed in addition to expanding our 2 open-ended credit funds. We anticipate that during FY '24 demand for our Centuria Bass funds from our high net worth distribution network will be significant. We believe this will be an important revenue driver for the group. We have a highly capable award-winning in-house development team. We develop modern and sustainable properties in the aforementioned property sectors. During FY '23, Centuria delivered $400 million of projects throughout Australia and New Zealand. Projects such as property upgrades, refurbishments and redevelopments as well as new assets were delivered for the group's listed and unlisted funds. Our team is currently progressing $820 million of committed projects alongside a further $810 million of future projects. In summary, Centuria continues to actively manage a high-quality sustainable portfolio throughout Australia and New Zealand across a broad range of sectors, which is supported by a diverse range of tenant customers. These assets are held within well-managed funds across the listed and unlisted markets to the benefit of retail, wholesale and institutional investors. Our access to a diversified range of capital sources assists us to grow our assets under management with a strong focus on earnings growth. We are committed to being a best-in-class Australasian real estate funds manager. Looking forward to FY '24, the group is leveraging its diversification and scale as we carefully navigate global economic conditions. FY '24 commenced with a sharp focus on the industrial and alternative real estate sectors. Recently, we have provided a market update noting the group's performance for the 3 months to 30th of September 2023. Some notable [ full ] points include group AUM lifted to $21.1 billion, comprising $14.1 billion of unlisted real estate; $6.2 billion of listed real estate; and $0.8 billion of investment bonds. We executed $335 million of gross real estate activity within the first quarter. We reaffirmed our FY '24 operating EPS guidance of $0.115 to $0.12 per security, and distribution guidance of $0.10 per security. During the first quarter, we continued to introduce new product offerings and capital sources to our unlisted real estate division, including securing a $500 million institutional mandate on behalf of Starwood Capital known as Last Mile Logistics Partnership. It is also pleasing to note that we've already filled over $145 million of this new mandate and have a pipeline of exciting opportunities. Our expansion to real estate credit has been particularly strong with $238 million of growth. Since Centuria Bass Credit performed, its AUM has increased from circa $270 million in 2021 to $1.5 billion today. We have recently launched the wholesale Centuria select Opportunities Fund, which will operate a high conviction, co-investment strategy, targeting medium-term countercyclical opportunities across diverse property sectors, including debt. Our New Zealand business is tailoring high net worth total return funds under the Centuria Private Partners banner. The first closed in wholesale fund intends to acquire an Auckland-based asset to be repositioned into a high-end storage facility. Additionally, our listed REITs, CIP and COF announced solid quarter 1 operating updates, which included CIP's re-leasing spree accelerating to 48% across 53,000 square meters of leasing with the portfolio recording 99% occupancy and a 7.8-year WALE. CIP continues to unlock its embedded value with over 57,000 square meters of development projects due for practical completion in quarter 2 FY '24. COF continues to demonstrate solid operational performance, recording 97% occupancy and a WALE of over 4 years, and approximately $100 million of combined divestments were executed and proceeds were used to strengthen COF and set balance sheets through debt repayment. Finally, I'd like to echo John's early comments and thank our Chairman, the directors of the group and our responsible entity Boards as well as my fellow joint CEO, John McBain. John and I have worked together in partnership for nearly 3 decades and it is an honor to continue to work alongside them. Sincere thanks also to you, our security holders for the confidence you place in Centuria and your enduring support. I'll now hand back to the Chairman. Thank you.

Thanks, John and Jason. So what I propose to do now is we'll deal with the financial report and the auditor's report and the various resolutions. In terms of process, I'll read all the relevant resolutions. I'll invite questions on each individual resolution, but the actual voting will be -- will wait until the end, until we've gone through them all, so. So the first item of business on the agenda is to receive and consider the financial report, directors' report and auditor's report of the company for the financial year 30 June 2023. As I've mentioned, Paul Thomas from the company's auditors, KPMG, is here and able to answer any questions on the preparation and content of the audit report and the conduct of the audit itself. He cannot respond to questions on the results. I ask that if you have any questions to the auditor, you direct them through me as Chair of the meeting. I'd like -- now like to open the matter for any questions, either from the floor or I'll check with the moderator if there are any questions via the online platform.

[indiscernible] Page 155 recognition and measurement of equity-settled share-based payments to employees and other -- others providing similar services. Can you read the second paragraph -- if you want to look at the top of Page 155, the second paragraph says, a fair value to determine at the grant date of the equity-settled share-based payments is expected -- is expensed on a straight-line basis over the vesting period based on the group's estimate of equity instruments that will eventually vest. At the end of each reporting group, the group revises its estimates, the rest of the number of equity instruments expected to vest. The impact of revision of the original estimates with respect to nonmarket vesting conditions, if any, is recognized in profit for the year that such that the cumulative expense reflects the revised estimate with a corresponding adjustment to the equity-settled employee and of its reserve. Why am I raising this? The shares, over a long time now, haven't been that since -- I have to look it up, I'm not sure how many years, I have to look it up. We're all suffering with the value of the shares, but you can't have employees necessarily still making a profit. I'm afraid to say, people have decided in the room, we own the company, institutions here, they own the company, and if you look at the largest shareholders, HSBC has got 24%, 0.68%; JPMorgan, 18%. Isn't it strange, why did BlackRock sell their shares recently? Now they've got less than 5%? I noticed this looking when the shares were [ died by many ] to the present level of $1.20, BlackRock went below 5%. Is that not a worry? I say it is, unless we're saying BlackRock are not a smart investor that I don't think...

If I could ask, is there a question in this?

The question is on what basis do you work out that paragraph on the top that page…

I'll answer that.

In the remuneration, because with the shares, organically -- and if you look on the bottom of Page 154, the tranches of fair value, they're all over the place. But if some of them are done with the shares right now, the top employees ended up extremely well. I wish we can do that well also. We've been suffering with the share price.

John, do you want to start with that…

Yes. Just one thing. Probably it is best for the Chief Financial Officer there, relation to the interpretation of the paragraph.

Yes.

But just so that we can resolve the mystery of BlackRock's reduction in their shareholding. BlackRock closed the fund that was previously invested in Centuria. They have been an investor for a very, very long time, and I simply closed that fund and they had to dissipate the investment. So whilst we don't sit on BlackRock's investment committee, and I don't think there are any BlackRock representatives here today, that seems to be the explanation. Simon, perhaps you'd like to comment on the share, the market [ payment ], Simon?

Simon Holt, the Chief Financial Officer. Just in relation to the performance rights. In essence, we are required to expense them through the P&L, and that's based on a valuation at grant date. That doesn't mean that these executives received those shares. They have to go through the vesting conditions. If they aren't met, even though they're expensed through the P&L, if they're not met, those shares are not issued to the senior executives. And in the context of this particular year, those -- the ones that we're to vest this period did not vest and were not granted because those hurdles were not met even though the expense went through the P&L.

And in the previous year, 90% of them were not met and weren't received. So I think of this side of the room, there is some pain too. Just to clarify that. And can I just add one thing to that. We are unusual in our, amongst our peers in that part of the test for LTIs is total shareholder return. So most of our competitors do their grants based on peer comparisons. So if I'm the best amongst the worst bunch, back of bad bunch, I still get my vesting. We are one of the very few companies that actually says, no, no, no, our senior management's interests are aligned directly with the shareholders' interest. So for what that's worth, it doesn't help the share price, I accept that, but there is an absolute alignment. And as I say, we are unusual in that respect. Paul, did you want to -- as the auditor, did you want to add anything? Or are you happy with what's been…

No. It's all good.

Yes. Okay. Are there any other questions with regard to the annual financial report, directors' report and auditor's report? In that case, I shall ask to be recorded in the minutes that the annual financial report, directors' report and auditor's report for the year ended 30 June 2023 were received and considered at the AGM, and we will now move on to the next item of business. That is the adoption of the remuneration report. The remuneration report is set out in the annual report, and it sets out, not only the details of the exact payments made to the directors and the CFO, but also addresses the policy framework on which those payments are made. We are required by law to put the remuneration report, which forms part of the company's financial report to a vote. In accordance with the Corporations Act, the status of the vote is nonbinding. Security holders may be aware that legislation regarding remuneration reporting was introduced, commonly referred to as the 2 strike rule. If the remuneration report receives a no vote of above 20% at 2 successive AGMs, then a spill resolution must be put to the security holders. If at least 50% of the security holders vote in favor of the spill resolution, another security holder must be rescheduled within 90 days in which the directors vacate their office and stand for reelection. In any event, it is important that our security holders understand how remuneration and our directors, senior management and personnel is decided within the company. Our philosophy regarding remuneration is stated in the remuneration report and is contained in the company's annual report, which is available on the website. Centuria recognizes the important role people play in the realization of its long-term objectives. To grow and be successful, Centuria must be able to attract, motivate and retain capable individuals at a cost that is acceptable to security holders. The policy focuses on providing competitive rewards to attract and retain executive talent, aligning remuneration to the creation of value to security holders and linking the overall cost of remuneration to the ability of the company to pay. The resolution is set out in the notice of motion, for those at the meeting, it reads as follows. That the company's remuneration report for the financial year ended 30 June 2023 be adopted. If I can then ask if there are any questions either from the room or the moderator? No? Then questions on this item have closed. And I would advise the meeting, the proxies received for the resolution are 488,841,556 votes for or circa 81.37% and against 111,904,953 or approximately 18.63%, and there are abstentions of 8,143,613 shares. Item 3 then is the reelection of Director Ms. Kristie Brown. The first resolution is that Ms. Kristie Brown be reelected as a Director of the company. In accordance with the terms of the company's constitution, Kristie retires by rotation at the close of the AGM, and being eligible, offers herself for reelection as a director. Kristie was appointed a Non-Executive, an Independent Non-Executive Director of the Centuria Capital Group on the 15th of February 2021. She is an experienced real estate investment and legal professional, who is appointed to the Board as an Independent NED as well as a member of the group's Audit Risk and Compliance Committee and also its Conflicts Committee. Kristie has a background in corporate law with over 17 years' experience in funds management and M&A. She has practiced at Clayton Utz and Ashurst, formerly Blake Dawson Waldron and has considerable experience working with large corporations, fund managers, financial institutions, private equity and hedge fund operators, real estate investment trusts, developers and financiers. Subsequent to her legal career, Kristie established a private investment business, Danube View Investments, which primarily operates in the Australian property sector. She is also a founding partner of investment firm, Couloir Capital, and was established in 2020 to invest its own capital in the unique investment opportunities and to introduce such opportunities to like-minded family offices and high net worth investors. The Board considers Kristie an independent Non-Executive Director. The Board, other than Kristie, who is being reelected and abstained from participating in the consideration of this item, unanimously support this resolution and recommends that the securityholders vote in favor of the resolution. Are there any questions from the floor or through the moderator? In that case, I will close the questions. Proxies received 625,237,877 in favor, 961,126 against and 32,316 votes abstaining. That is circa 99.85% in favor of the resolution. Item 4A and item 4B is the grant of Tranche 11 performance rights under the Centuria Capital Group incentive plan to Mr. John McBain and to Mr. Jason Huljich. The following resolutions deal with the allocation of performance rights to executive directors. Please note that the securities will only vest in the directors if the long-term performance hurdles as set out in the notice of meeting are met. The executive incentive plans form a key element of the Centuria incentive and retention strategy for senior executives. The primary objectives of the [ Nom ] & Remuneration Committee and the Board in setting remuneration for the executive directors and providing with equity-based LTIs under the plan for '24, '25 and '26 financial years are to focus the executive directors on the long-term performance of the Centuria Capital Group and creation of security value, ensure the executive directors' remuneration outcomes are aligned with securityholders' interests, in particular, the strategic goals and performance of the group, ensure the executive directors' remuneration is competitive and aligned with general market practice of ASX-listed entities. The resolutions related to each executive director are detailed on the screen as follows: to consider, for all purposes, including ASX Listing Rule 10.14 and, if thought fit, to pass the following resolutions as ordinary resolutions of the group. Item 4A, approval be given for all purposes, including ASX Listing Rule 10.14, the issue of Tranche 11 performance rights to Mr. John McBain and the issue of equity securities on their exercise under the Centuria Capital Group Executive incentive plan on the terms summarized in the explanatory notes. Item 4B, approval be given for all purposes, including ASX listing rule 10.14, for the issue of Tranche 11 performance rights to Mr. Jason Huljich and the equity of -- and the issue of equity securities on their exercise under the Centuria Capital Group Executive Incentive Plan on the terms summarized in the explanatory notes. I wish to draw your attention to the fact that these 2 resolutions will be voted separately stated on Page 5 of the Notice of Motion. The Board, other than Mr. McBain and Mr. Huljich unanimously support these 2 resolutions. It's not to say they don't support those who can't vote on them and recommend that the securityholders vote in favor of those resolutions. We have in attendance on the screen, Susan Wheeldon, who is the Chair of the REM Committee. I will now check both at the meeting and the moderator if there are any questions for the meeting with regard to those issuances. None? In that case, bear with me, questions are now closed, and the proxies received in relation to these -- relation to John McBain 607,494,606 in favor, 4,870,754 against, and the abstentions are 6,030,677. In relation to Jason, there are 608,932,186 in favor, 4,821,672 against. Circa 99.21% in favor and 0.79% against. So I would now like to call a poll on items 2 to 4. Accordingly, for our security holders in the room, if you would complete any voting cards, I'll ask Boardroom to complete them for the purposes of the poll. For those attending online, please complete your votes online by selecting the voting icon at the top of the screen. We will have a short 5-minute pause in the meeting to allow Boardroom to collect any votes. [Voting]

I'll close the poll in a minute. As the accounting of the votes and the conduct of the poll may take some time, I propose, in a moment after questions, to close the meeting and to publish the results of the poll as soon as possible through a release made to the ASX. In relation to general business, we have received one general question, which has approximately 10 sub paragraphs and relates to an administrative matter in relation to the transfer of shares. I propose to deal with that at the meeting. However, we take all questions seriously and there will be a proper response sent to that individual unitholder. Are there any other general questions from the floor of the meeting? No? In that case, we have now completed all items of business for today's meeting. I'd like to thank you all for attending on behalf of the entire Board, we continue to appreciate the support that unitholders show towards us. And let me take this opportunity, somewhat early, to wish you all a safe and happy festive season in due course. I now declare the meeting closed. Thank you.