Centuria Industrial REIT (CIP) Earnings Call Transcript & Summary

Good morning. Thank you for joining Centuria Industrial REIT's Half Year 2025 Results Presentation. My name is Jesse Curtis, Head of Funds Management for Centuria Capital. Also presenting today is Grant Nichols, CIP's Fund Manager; and Michael Ching, CIP's Assistant Fund; Manager. Also present in the room is Jason Huljich, Joint CEO of Centuria Capital; and Tim Mitchell, Group Head of Investor Relations. Starting on Slide 3. I would like to commence today's presentation with an acknowledgment of country. We are joining you from the lands of the Gadigal people of the Eora Nation. Centuria manages property throughout Australia and New Zealand and pays its respect to the traditional owners in each country, to their unique culture and to their elders, past and present. Looking at the domestic industrial sector as a whole, opportune macroeconomic factors, including continued population growth, increasing e-commerce adoption and onshoring of supply chains are driving demand for urban infill industrial facilities. CIP's portfolio is well positioned to capitalize on these trends while demonstrating strong fundamentals, including a healthy WALE, high occupancy and considerable scale and reach across Australia. In today's presentation, Grant and Michael will provide an overview of CIP's financial performance, analysis of the operational performance, an update on CIP's development pipeline, a summary of market conditions and conclude with an outlook and guidance statement. Moving across to Slide 4. Centuria Industrial REIT is managed by Centuria Capital Group. Centuria has over $20 billion of assets under management and CIP is the largest fund managed by the group. CIP unitholders benefit from deep real estate expertise across the group, including a fully integrated property, facilities and asset management platform and in-house development management. Synergies from being part of the group's $6 billion industrial real estate portfolio and strong alignment as Centuria is CIP's largest unitholder with a 16% co-invest, ensuring the managers' interests are strongly aligned with yours as unitholders. On to Slide 6. CIP's long-standing vision and strategy remains unchanged. We aspire to be Australia's leading domestic pure-play industrial REIT with the primary focus of delivering income and capital growth to investors from a portfolio of high-quality Australian industrial assets. We have, over the long term, executed on our strategy by differentiating CIP through growing a portfolio of high-quality urban infill industrial assets that are relevant to our tenant customers, generating greater levels of tenant demand through the cycle. We believe these assets deliver superior returns to unitholders through favorable demand dynamics in markets with limited supply. The results that Grant and Mike will present today reflects execution of this strategy, supported by the deep real estate capability of the broader Centuria team to drive value for unitholders. I'll now pass you over to Grant.

Thanks, Jesse, and good morning, everyone. I'll start on Slide 7. During half year ' 25, CIP continued to harvest persistent industry tailwinds driven by demand for urban infill industrial facilities against the backdrop of limited supply. To this end, CIP achieved 50% re-leasing spreads and a strong like-for-like increase in net operating income of 6.4%. Noncore divestments totaling $60 million were achieved at an average premium to book value of 5%, delivering strong IRRs. CIP has consistently sold assets at or above book value for the past 18 months, both underpinning NTA and providing strong valuation evidence. In half year ' 25, the portfolio delivered a $47 million like-for-like valuation gain, which is the second consecutive period of valuation gains and indicates that valuations for quality Australian industrial property have well and truly moderated. Turning to Slide 8. CIP's 87 asset portfolio as at 31 December was valued at $3.8 billion with high occupancy of 96.6% and a weighted average lease expiry of 7.3 years. CIP maintains a strong balance sheet with gearing of 33% (sic) [ 33.5% ], 85% hedging and ample undrawn debt capacity. In our view, CIP's NTA of $3.89 provides a compelling proposition in light of its current trading price of $2.93. CIP's recent valuation and sales evidence and CIP's strong re-leasing spreads and NOI growth, all against the backdrop of persistent sector tailwinds that we will detail on Slide 9. E-commerce penetration within Australia is still well below comparable global peers and provides a long runway of growth for industrial markets. Continued growth in Australian e-commerce is expected to generate around 7.5 million square meters of demand for industrial space by 2030. Continuous population growth will be beneficial for many commercial real estate sectors, but particularly industrial. Recent data indicates that industrial demand per capita is increasing meaning that an increasing population will generate an even greater demand for additional industrial space with Colliers estimating that the Australian industrial market will need to expand by around 20% by 2030. Onshoring is another ongoing trend with greater investments in technology and automation, creating a more competitive manufacturing environment within Australia. Supply chain resilience continues to be a focus, reducing cost volatility in an uncertain geopolitical environment. Despite these strong demand drivers, the outlook for industrial supply is restrained. Higher construction costs, capital constraints, constant planning delays and restrictions on land supply are combined to limit supply, particularly in urban infill locations, which bodes well for existing landlords like [ Southeast ]. It is worth considering these sector tailwinds in perspective, the Australian market, which we'll do on Slide 10. A number of investors, particularly global investors, have been assessing the Australian industrial market against global industrial markets, where a significant increase in supply has led to higher vacancy in a number of major global markets. The chart on the left demonstrates all Australian industrial markets sustaining low vacancy rates below both the mutual rate and virtually all comparable global markets. As already noted, despite this, the outlook for Australian industrial supply remains very constrained, and our expectation is that demand will exceed supply over the medium term as indicated by the chart on the right. This suggests the outlook for rental growth within Australian markets remains very good. Specific to the Australian market, there has been divergence in market performance as conditions have somewhat normalized over the last 12 months. As indicated in the chart on Slide 11, there has been clear outperformance for both urban infill industrial markets compared to the urban fringe and for smaller unit sizes compared to big box units. Vacancy is concentrated amongst larger unit sizes across all markets, with around 1/3 of the national vacancy being comprised of units above 20,000 square meters. Further, infill markets have outperformed urban fringe markets with increased demand, higher rental growth and lower vacancy. As an example, within the CIP portfolio, we achieved our record highest rent for new tenants coming into our Derrimut portfolio twice during the half for unit sizes of 4,500 and 3,200 square meters, respectively. This leasing was achieved while we have seen increasing vacancy rates in Melbourne's West and North primarily to the delivery of some big box supply and some temporary weakness in 3PL demand. Turning to Slide 12. CIP is very well placed to take advantage of these industry growth drivers and market dynamics, primarily because CIP's portfolio has critical mass in Australia's urban infill industrial markets and an average tenancy size of 7,800 square meters. Since Centuria assumed management of CIP in 2017, the portfolio has been methodically constructed with every asset evaluated by its unique market proposition and value-add opportunities. CLP's portfolio has a significant amount of embedded value, which can be unlocked through future real estate cycles. Exposure to urban infill markets is important because location is critical to the majority of industrial users. Outbound transport is generally 4x to 5x the cost of rent as a proportion of an industrial tenant's operational expenditure. So being close to their customer base is a key for many tenants. Further, any automation or manufacturing improvements generally require a highly skilled workforce, amplifying the need for a well-located facility. The average tenancy size across the CIP portfolio is another key feature as it exposes CIP to the deepest levels of tenant demand and lowest competing vacancies. It is also worth noting that in the context of industrial markets, smaller unit sizes do not universally reduce tenant covenant quality. In fact, it is often the opposite. Many corporate industrial users are small to midsize and the high quality of CIP's tenant covenants is a testament to this. Finally, the average asset value of CIP's active portfolio is $37 million, another important portfolio attribute. A smaller average asset value increases the depth of investment demand, allowing CIP to execute nimbly at attractive pricing. Before I hand over to Michael, I will quickly highlight another value attribute of the CIP portfolio, its data center exposure. We expect these -- that there will be significant growth in data center demand in the coming years and CIP unitholders are well positioned to benefit from that growth. Approximately 12% of CIP's portfolio is already exposed to established operating data centers leased to blue-chip tenants. Further, CIP is currently assessing its potential power bank across its significant infill industrial portfolio, which may provide an opportunity to convert certain industrial facilities to data centers to provide a substantial increase in underlying land value. We hope to provide further details on this assessment in coming reporting periods. Finally, CIP's internal data center capability has been materially enhanced through Centuria's joint venture with ResetData, providing direction on our power bank assessment and a potential collaborator on future data center opportunities that may arise. I will now hand over to Michael to take you through the financial results and portfolio overview.

Thanks, Grant. Moving to the HY '25 financial results on Slide 15. Gross property income for the period was $126.4 million, an increase of $15.5 million year-on-year and was partly impacted by asset divestments executed throughout the FY '24 period. Continued leasing outcomes achieved across the portfolio resulted in a growth in like-for-like net operating income of 6.4%. Increases in statutory outgoings led to an overall rise in direct property expenses. However, the timing of these expenses is recognized mainly in the first half of the financial year. On a full year basis, direct property expenses are expected to normalize to an approximate 10% increase year-on-year. High interest rates during the half resulted in CIP's total interest costs increasing by $2.9 million to $28.2 million for the period. CIP delivered funds from operations of $56.6 million or $0.089 per unit for the first half of FY '25. Pending vacancies and an increase in interest expenses is anticipated to deliver slightly lower earnings in the second half. On a full year basis, CIP reiterates FFO guidance of $0.175 per unit and distribution guidance of $0.163 per unit for FY '25. Looking at capital management in more detail on Slide 16. During the period, CIP divested $60 million of assets to repay debt and entered into $200 million of interest rate swaps, taking into advantage the volatility in the interest rate markets to lock in favorable terms. CIP is now 85% hedged with an average hedge maturity of 2 years, and we will continue to actively manage CIP's interest rate exposure. We forecast CIP's all-in cost of debt for FY '25 to be approximately 4.6%. Further details on CIP's hedge position have been provided on Slide 38. During the half, we refinanced $200 million of debt facilities at attractive terms and continue to be well supported by our financiers. CIP maintains a robust balance sheet with gearing of 33.5%, over $230 million of available liquidity and ample headroom to our debt covenants. Moving to Slide 18. This slide outlines CIP's portfolio, highlighting its position as Australia's largest listed domestic pure-play industrial REIT. CIP offers investors 100% industrial real estate portfolio with 99% of assets under freehold ownership. The portfolio maintains a geographically diversified profile with a favorable 90% allocation to Australia's East Coast. 87% of CIP's portfolio is situated in core urban infill markets, close to densely populated areas. As Grant mentioned earlier, these markets, which have limited future supply and high tenant demand are anticipated to deliver higher returns. Turning to Slide 19. HY '25 saw continued leasing momentum with over 79,000 square meters or more than 7% of the portfolio being leased, achieving average leasing spreads of 50%. These robust re-leasing spreads can be attributed to our long-standing portfolio construction strategy, which focuses on functional assets in key urban infill location and tenancy offering where demand is highest. Notable leasing transactions completed during HY '25 include the renewal of K&S Freighters across 11,000 square meters of warehouse and 48,000 meters of hardstand at [ Enfield ] and the renewal of Silk Logistics across more than 14,000 square meters at Studley Court in Derrimut. Looking forward, the portfolio offers near-term mark-to-market opportunities with 37% of leases expiring by FY '28, providing us the opportunity to mark-to-market the significant under-renting across the portfolio. Slide 20 details CIP's high-quality customer base. A significant 93% of our customers are listed national or multinational corporations. Moreover, 99% of our leases are net or triple net, ensuring stability in our income streams from some of Australia's most recognizable brands. I will now hand you back to Grant to talk through the strategic transactions during the year.

Thanks, Michael. Turning to Slide 21. Two noncore divestments were completed in half year '25, underpinning CIP's net tangible assets while demonstrating portfolio liquidity. The sales were achieved at an average premium to book value of 5% and an excellent IRR of 16% to 19%, respectively. CIP also acquired 876 Lorimer Street in Port Melbourne. The acquisition adds to our adjoining asset at 870 Lorimer Street, creating further scale for a medium-term redevelopment opportunity. Touching on valuations on Slide 22. During the half, CIP's portfolio increased in value by $47 million, while the weighted average cap rate remained relatively stable at 5.83%. As already mentioned, this is the second consecutive reporting period of positive valuation, marking the end of the devaluation cycle. Based on assessment of comparable land sales, we also estimate that around 60% of CIP's portfolio valuation is underpinned by land value. Considering the significant cost of construction, this should provide considerable comfort to investors. Looking at ESG highlights on Slide 23. Under Centuria's management, CIP has created a flexible and relevant sustainability framework, including a sustainability target of 0 Scope 2 emissions by 2028, targeting 5-star Green Star design for all future developments, a continued partnership with Healthy Heads, an organization focused on mental health in the transport and logistics industries, and the continued rollout of solar across CIP assets. Moving to Centuria's development capability on Slide 25. CP has established a strong track record of unlocking embedded value from urban infill industrial sites. Looking ahead, CIP maintains a development pipeline in excess of $1 billion based on estimated value on completion. This pipeline focuses on the limited completing development capability within urban infill industrial markets and the key growth drivers for industrial markets. When thinking about CIP's development pipeline, it is worth considering the identified pipeline is expected to be delivered over a period of 5 years at a run rate not dissimilar to what CIP delivered in FY '24 and FY '23. While the pipeline has an expected end value of $1 billion, it only requires approximately $400 million to $500 million of funding and CIP has multiple avenues to explore, including self-funding through continued asset divestments. 100% of the development pipeline is currently income-producing, providing optionality and timing flexibility and 100% of the development pipeline is located within urban infill markets where supply is severely constrained. During the half year, CIP commenced $60 million of development projects, including 15 to 19 Caribou Drive in Direk South Australia, a circa 6,700 square meter facility that adjoins CIP's existing 9 to 13 Caribou Drive. PC is anticipated in Q1 FY '26. And 50 to 64 Mirage Road also in Direk, South Australia, a circa 21,000 square meter facility that can be split into 3 units ranging from 4,000 to 10,000 square meters. PC from Mirage Road is anticipated in Q3 FY '26. A further update on specific development projects has been provided on Slide 26, including a 60,000 square meter multilevel development in Wetherill Park has received SS approval, which aims to cater to a severe lack of modern stock in a long-established infill industrial market. The DA has been submitted for a 12,400 square meter brownfield development in Derrimut, Victoria with significant container-rated hardstand, which seeks to maximize the currently underutilized site and satisfy the growing demand for container rated hardstand within Derrimut. And DA has been received for an 8,300 square meter brownfield development at 31 Hallum Road in Hallam. Development aimed at the corporate demand that is evident in the supply-constrained Southeast Melbourne market. In addition to the potential developments, CIP has progressed the repositioning of a cold storage facility in Keysborough, which has secured a 10-year lease from PC and the expansion of an existing facility at 30 Fulton Drive in Derrimut. Both Victorian projects are expected to complete in the second half of FY '25. In summary, on Slide 28, CIP is well positioned to harness the strong fundamentals for Australian urban infill industrial markets. CIP continues to generate strong income growth and leasing spreads and maintain significant under-renting that is yet to be realized. As CIP approaches a potentially lowering marginal cost of debt, we expect this will begin to have a more meaningful impact on CIP's FFO in coming periods. Additionally, CIP's current discount to NTA represents excellent value considering the significant proportion of portfolio value underpinned by land and the potential accretion that could be extracted by development Maintaining a strong balance sheet and a diversified urban infill portfolio, CIP is well placed to benefit from the positive market fundamentals and opportunities. Concluding on Slide 29. For the remainder of FY '25 and beyond, CIP's focus is on maximizing value-add opportunities, both from leasing and development while maintaining balance sheet capacity. We are pleased to reiterate CIP's FY '25 FFO guidance of $0.175 per unit and distribution guidance of $0.163 per unit. That concludes the formal part of the presentation. I will now hand back to the operator for any questions.

[Operator Instructions] Your first question comes from Tom Bodor with UBS.

I'd just be interested in a little bit of a discussion around the vacancy across the portfolio and how you're progressing with leasing up, what the strategy is there? And also near-term expiries where you see re-leasing spreads heading in the logistics space?

Sure, Tom. In regards to leasing, we have inquiry on virtually all our vacancies, and we're confident they'll be leased in time. In relation to tenant demand more broadly, tenant demand in 2024 was probably not as strong as what we've seen in prior years. Part of this was related to 3PLs being relatively inactive. Not that, that is a big component of the CIP portfolio, but it has relevance to the overall market. Now despite that, we've seen through the end of 2024, a reduction in sublease availability. So sublease spaces has either been withdrawn or absorbed. And when you couple that with reducing supply, the vacancy outlook now is better than it was probably even 6 months ago. So we are still very confident on the short- to medium-term outlook for industrial properties. In regards to our specific vacancies that are noted on Slide 35, we are comfortable that we'll be able to re-lease them, hopefully within the coming period. In relation to re-leasing spreads, look, re-leasing spreads have continued to be strong, like we've achieved 50% re-leasing spreads in the half. Now we believe that our portfolio is still around 20% to 25% under rented. So re-leasing spreads will continue to be strong into the future. Exactly how strong they will be will depend on geography. So the re-leasing spreads have been absolutely the strongest in Sydney and to a lesser extent, markets like the TradeCoast in Brisbane. So depending on where we execute leasing, we'll probably depend on how strong those re-leasing spreads are.

And can you just give us a feel for where they are in the -- where the weaker markets are and where those spreads are in those weaker markets?

So as noted on the call, Tom, probably the weakest market over the last 6 to 12 months has been Melbourne's West and North. And this is what we've really tried to articulate on the call. There is still quite a significant amount of divergence even within what people would consider weaker markets. So as noted on the call, we achieved our record rents twice during the half in Derrimut, which has been surrounded by a market where we've seen increasing vacancy. So overall, that market has probably seen rents moderate. But at the same time, we've achieved some very, very strong re-leasing spreads within that market. So it's pretty hard to pinpoint exactly where leasing spreads sit within markets because we are seeing such divergence within markets themselves.

Your next question comes from Lauren Berry with Morgan Stanley.

Are you able to give us a bit of color on what kind of yield on cost you're doing those SA developments at, please?

Sure. So across our development pipeline, we are looking for yields on cost in excess of 6.5%. For the 2 assets in direct, we'll be hoping to get closer to 7%.

Great. And you've given us a bit of color about funding the pipeline from here. I know it says average of $100 million spend per year. But in terms of the ramp-up, when should we expect kind of to get back to those '23, '24 levels? And can you comment on what you're thinking about starts for the second half, please?

1 Yes. Look, I think in terms of the consistency of when or how the drawdown will occur for the development pipeline, a lot of that will be dependent on both planning. So we've got a number of DAs that remain outstanding and also the scale of the developments to get approved. So obviously, some of the larger developments that we're considering into the future will probably have a more heavier drawdown. In relation to what we're considering for the second half of this particular year or through calendar year 2025, our expectation is that we could potentially get a start on potentially between 1 and 3 developments through that period. But again, some of that is planning related and some of that is also leasing related.

And the Wetherill Park, one that got SSDA, are there any other milestones that you need to hit before you commence that one?

No. So there is currently a lease in place on that particular site. As noted on the call, 100% of our development pipeline is currently income generating. So there is also lease constraints on fulfilling our development pipeline. But in terms of planning, now that we have the SSDA, we do have the capability to pursue a multilevel development on that site, subject to the land being available.

Okay. Great. And final one for me. Can you just talk a bit about what incentives you're seeing across your leasing? I note that your lease -- your rent-free abatement in the income statement has virtually doubled or more than doubled this period versus PCP. So just keen to see what you're seeing on the leases that you're doing, please?

Yes. Yes. So the average incentive that we provided for the leasing that we completed in the half was 15%, which is very consistent with what we provided in FY '23 and FY '24. In relation to that rent-free component in the FFO breakdown in said accounts, that relates to the add-back for the period. Now tenants can take their incentives in any number of ways. So in the half, we just saw more tenants taking them as a proportion towards rent-free, which has increased that add-back number. The overall incentive that we have been providing has not materially changed.

And sorry, what were tenants taking them if it wasn't an abatement?

So they're taking them as a rent-free or a greater proportion taken as rent-free. So where they have 2 or 3 months rent free at the start of a 5- to 10-year lease term rather than a rebate over the entire term, which reduces the add-back.

Your next question comes from Richard Jones with JPMorgan.

Just interested in the lease-up at Bolinda Road, Campbellfield. It's obviously a development you completed about 18 months ago. You still got 20,000 square meters to lease. I know I think you previously called out a couple of deals fell over. Just wondering what the status is on the remaining space there?

Yes, yes. So just to clarify, time of completion was about -- was only about 6 to 8 months ago. So it hasn't been that long. It hasn't been -- I don't know if the line was correct, but we haven't been sitting on this space for 18 months. In terms of leasing, as mentioned on the call, the West and the North has been slower. The unit sizes at M80 are at that larger scale of around 10,000 square meters. As noted to the earlier question with Tom, we have got leasing inquiry on virtually all our vacancies at the moment. We are confident that we'll be able to lease them in time. But there has been no doubt that tenant demand in the north of Melbourne has probably been a little weaker than we would have liked.

Okay. But nothing overly progressed at Campbellfield then?

Nothing that we could release at this point. We are in discussions, but nothing has been confirmed.

[Operator Instructions] your next question comes from Callum Bramah with Macquarie.

Just a couple of questions from me. Can you just give a little bit more clarity around the drivers of why the second half for the year is going to be down based on guidance in the order of 3.4%?

Sure. So the biggest component of that, we had a $300 million swap roll off at 31 December. That swap had a rate of 1.05%. So we've obviously reverted to a much higher rate. So that's probably the key driver. And then in addition to that, we do have some pending vacancy at Fairfield that is going to create a little bit of volatility on earnings, but the majority of it relates to that roll-off of swap.

And so just to clarify, so the Fairfield one, so that's in the 6.5% expiry in the second half. Is that -- so you know that, that's going to go vacant, do you?

Correct.

And how much is that of the 6.5%.

What are we looking at -- about -- yes, 2% to 3%.

2% to 3%. Okay. And have you got any leases that you know are starting at this point in the second half? Or you expect basically at the moment, everything else being equal, vacancy is going to move up from, I think it's 3.4% now, to closer to 5% to 6%?

Look, in our view, there's still a lot of work to go on bridge between now and reporting at 30 June, and we're hopeful we'll be able to address a number of our vacancies and pending expiry. So I probably wouldn't -- I wouldn't be alluding to where vacancy would be at 30 June other than to state that where we are -- we have got a reasonable level of confidence on being able to address our vacancies.

Okay. And are you just able to also quantify for me the level of under-renting you believe in the portfolio at the moment?

So we believe we're about 20% to 25% under-rented as we look across -- 20% to 25%. When we look across our portfolio, we believe that about 40% of our portfolio or around 40% is at market, over 50% is under market and the balance is slightly above market. So there is still a significant portion of our portfolio where there will be some positive reversion into the future.

And just while you got that because that's good color. Just on the '26, '27 sort of expiries, the 5.5% and the 13.1%, is there anything we just need to be aware of as to whether or not that is more under-rented or at market?

No, there's probably not. Just given every unit within the CIP portfolio is relatively insignificant, we haven't got a lot of big box expiry. There isn't really anything that is a material move up one way or the other.

And then just 2 quick ones for me, sorry, on development. So one, just on understanding the active repositioning and the kind of that classification and returns, if you can just give me some idea of how that works relative to, say, the 6.5% yield on cost that you look on the normal development. And then the second one was, you did clarify regarding the income-generating assets and that being some restriction, if you like, on timing of when you can start development. Do most of your leases have development clauses in them? Or do you actually have to wait for the lease to expire or choose to buy it out? And I suppose what's the kind of preferred pathway?

Look, in a perfect world, the expiry lines up at the exact moment, you've got a development ready to go. In terms of our leases, some do have development clauses, which give us access to the site if we get to a point where we can pursue a development. In other situations, we do have to wait until the lease expiry. And, Callum, forgive me, I've forgotten what your original part of that question was.

Sorry, it's a bit long. The returns on the active repositioning and how we think about that. And I assume they're included in the $1 billion pipeline, are they?

Some aren't. So the 2 examples we've given you there. So because we've expanded 30 Fulton Drive, we see that more as a development play. So we are seeking a return on that spend in excess of 6.5% in the same manner that we seek for a standard development. The development of [indiscernible] (00:35:06)is probably slightly different. That has been a full refurbishment of existing premises. So we apply different return parameters to that.

And the refurb, so it doesn't go into maintenance CapEx, it sits in development CapEx. And sorry, that will be my last question.

It depends on what component. So some of the components within that redevelopment would be both maintenance and some would be what we determine development CapEx. So if we are [indiscernible] (00:35:34 semantics, but basically, if we're replacing like-for-like, that will be considered maintenance CapEx. Anything we do over and above that, which will increase the rent that we can potentially apply to that space, we would consider development CapEx.

Your next question comes from Edward Day with MA Financial.

Just a couple around incentives. I think you said your average incentive was 15% for something like Campbellfield or some of the larger ones like Fairfield East. Can you just give, I guess, the upper end of where incentives are on deals like that?

Yes, we don't see incentives on that space being materially different to what we're doing across the general portfolio. Probably for those larger vacancies and it's probably played out of M80, we'd probably just be cognizant and we will probably incur a longer downtime than we would for a smaller unit, but we don't see the deal metrics being materially different.

Yes. So just in terms of downtime for something like Fairfield East, what are your assumptions there?

So at the moment, we're assuming that we will have about 9 months downtime on that space.

And is that position sort of fluid, I guess, has that changed over the last 6 months?

No, it's not materially different to where it would have been 6 months ago. No. The only difference was that DB Schenker -- the expiry of DB Schenker has probably around somewhat. So they were originally to expire in the early part of FY '25, and they have extended into the early part of calendar year '26 -- the early part of calendar year '25, sorry.

Okay. Just one more. On your re-leasing spreads, is that on a net basis? And if so, what does it look like at an effective level?

Yes. So it is on a base rent basis because our incentive has been relatively stable, as mentioned, at 15%, it's very consistent with what we've been providing previously. And if anything, it's probably below where incentives would have been when some of these leases were entered into in, say, 2018, 2019. I'd imagine our effective re-leasing spreads would be that or potentially even greater.

There are no further questions at this time. I'll now hand back for closing remarks.

Well, thank you for joining today's presentation. If you have any follow-up questions, please don't hesitate to contact any of the team. That concludes the presentation. Thank you, and have a good day.