Centuria Industrial REIT (CIP.XA) Earnings Call Transcript & Summary

[Audio Gap] Chairman of Centuria Property Funds #2 Limited, which is the responsible entity for Centuria Industrial REIT, which I'm going to refer to as CIP or the Fund. I've been appointed to Chair this meeting. On behalf of the Board of Centuria Property Funds #2 Limited, which I'll refer to as CPF2L, I'd like to welcome you to this General Meeting of Securityholders of CIP. It's now just after 12 noon. I confirm that the quorum requirements for this meeting have been satisfied, and I declare that this meeting of CIP securityholders is now open. In attendance today are Anna Kovarik, Company Secretary; Jesse Curtis, Head of Funds Management; Andy Ma, the returning Officer. Now just a few housekeeping items. Before proceeding with the formalities of the meeting, just as I say, some housekeeping to address. The Teams platform enables security holders and their appointed proxies, attorneys and corporate representatives to ask written questions. To ask written questions through Teams, you need to open the Q&A panel, type your question and click send. Please note the questions are moderated and may be published for all attendees to view. Securityholders have been given the opportunity to submit written questions prior to the meeting. I'll be reviewing and responding to any written questions received later in this meeting, and you can continue to submit written questions on the resolution now and at any time during these proceedings. Questions relating to the meeting procedure and how to vote may also be submitted up to the close of the voting. The results of the poll will be announced on the ASX platform later today. So I'll now proceed with the formalities of the meeting. A notice of meeting dated 24 November 2025, including an explanatory memorandum and proxy form was sent to securityholders. The required 21 days' notice of the meeting has been given. I'll take the notice of meeting and the explanatory memorandum as read. The purpose of this meeting is to seek securityholder approval under ASX Listing Rule 7.4 to refresh CIP's placement capacity under ASX Listing Rule 7.1. ASX Listing Rule 7.1 operates to limit the number of equity securities that may be issued or agreed to be issued by CIP in any 12-month period to 15% of its equity securities on issue unless the issue is approved by security holders or an exemption applies. On 27 and 28 August 2025, CIP announced the launch by the fund of a fully underwritten $325 million guaranteed exchangeable notes offering due September 2030, with those notes exchangeable into units in the fund and a concurrent reverse book build process to repurchase up to $300 million of the outstanding 3.95% exchangeable notes due in March 2028 by CIP Funding PTY Limited. As a result of this offer, a wholly owned subsidiary of the fund issued 1,625 exchangeable notes in the fund on 3 September 2025, which are exchangeable into a maximum of 81,250,000 units in the fund based on initial exchange price of $4. The resolution today seeks unitholder approval for the prior issue of the exchangeable notes on the basis that they are convertible for up to 81,250,000 units in the fund. The exchangeable notes were issued to repurchase the existing notes and to the extent not required for that purpose for general corporate purposes. Accordingly, securityholder approval is being sought at this meeting to subsequently approve or ratify the issue of those CIP securities in order to refresh CIP's placement capacity and provide it with maximum flexibility as to how it manages its future capital requirements. Now to the item of business. The resolution for the refresh of CIP's placement capacity under ASX Listing Rule 7.1 is set out in the Notice of Meeting. I'll read out the resolution and provide securityholders with an opportunity to ask questions on the resolution. The resolution proposed for securityholders is to consider and if thought fit, to pass -- sorry, the following resolution as an ordinary resolution of CIP. That for the purposes of ASX Listing Rule 7.4 and for all other purposes, unitholders ratify the issue of 1,625 exchangeable notes, which are exchangeable into a maximum 81,250,000 units in the fund based on an initial exchange price of $4 on 3 September 2025 as announced to the ASX on 27 and 28 August 2025 and summarized in the explanatory notes. So at this point, I'd like to give you an opportunity to ask any questions you may have in relation to the resolution. But please, if you have any questions, please ask away.

Just curiosity, will it dilute the current share price after issuing of this?

It's a good question. The answer is no. It doesn't -- what would dilute would be -- potentially would be if we actually did an offering of securities. What we're trying to do with this is just get back to the position where we've got the 15% capacity back in case there's an opportunity for us to go and acquire an asset or do something where we think it's in unitholders' best interest to actually raise some additional capital without having to go back to security holders for another resolution. So it's just giving us flexibility. It's not connected to any specific future offering of securities that we have in mind at all. It's just really just bringing us back to -- we've got that 15% capacity if we need it.

What's the gearing on the fund now?

About 34%.

34%.

Yes. 34%.

Is there any covenants that could be contravened?

And this is not -- this doesn't increase gearing. This is not playing around with our capital structure at all.

How do you find 34% in today's market?

We are very comfortable with 34%. It's -- our covenants in our finance documents are way above those thresholds, both from an interest cover ratio and a loan-to- security value ratio. It's something we monitor incredibly carefully. So we're very comfortable. We also have a lot of very good quality assets, great tenants. And frankly, our leasing is at, what, 98% or -- so there's nothing to suggest that our income stream is at risk. So we are very comfortable. We also, as you probably know, the last few assets that we have sold, we have sold well above our book price. So when we look at our loan-to- security value ratio, we actually think there's probably quite a buffer in there. Not that we build that into anything, but it gives us additional comfort.

Is there any more plan for like expanding the data center?

Of course, Roger. Look, data centers represent about 12%, 11%, 12% of CIP's portfolio today. It's an area that's obviously very interesting to us. We currently own 2 data centers. One is our big Telstra data center, which is a very long leased asset through to 2050. The other is a small Fujitsu data center over in Perth. That's leased for another 5 years from today. That tenant recently renewed. We'll continue to look at what data center opportunities are available to CIP. CIP obviously has a number of industrial assets that sit in zones that could have power accessibility. Our team continues to look at what those opportunities might look like to generate value for our CIP securityholders.

From that onwards from that, is there any plan for any more capital raisings after this?

There's nothing planned. We don't have anything specific at the moment. So as I say, we're just doing this to give us the flexibility in case an opportunity arises where we think it's in the best interest of investors for us to do that. But there's nothing specific. Are there any online questions?

Nothing online.

Any other questions? Thank you. So I'll just now discuss voting. Voting on the resolution will be conducted by way of a poll. On a poll, each security holder has 1 vote for each $1 of the value of the units held in the fund. The resolution is an ordinary resolution and will be passed if more than 50% of the votes cast by securityholders who are not disqualified from voting on the resolution are in favor of the resolution. CIP will discard any votes cast in favor of the resolution by or on behalf of any person who participated in the issue of the exchangeable notes or an associate of that person or those persons. As disclosed in the Notice of Meeting, as Chair, I intend to vote all undirected proxies, which appoint or are taken to appoint the Chair of the meeting as proxy in favor of the resolution. As indicated in the notice of meeting, persons holding securities in the fund at 7:00 p.m. Australian Eastern Daylight Time on Monday, the 15th of December 2025, were taken to be fund securityholders for the purposes of determining voting entitlements at this meeting. Valid proxy votes on the resolution that were received prior to the deadline for receipt of proxy votes are as follows: in favor of the resolution, 283,478,360; against the resolution, 14,485,032; and open 967,361. So summarizing that, that's about 95% of those votes cast are in favor of the resolution. We'll now conduct the poll on the resolution. I now formally open the poll and call on anyone who has not yet voted to cast their votes. If you haven't voted and you want to vote, you can do that on the back of the form and hand that in [indiscernible]. [Voting]

Okay. So we finished the voting. So voting is completed, I'll close the poll. The results of the poll will be announced on the ASX announcement platform later today. And that ends the meeting, which I now declare closed. Thank you very much, for coming.