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Operator: Thank you for standing by, and welcome to the Centuria Capital Group HY '26 results. [Operator Instructions] I would now like to hand the conference over to Mr. John McBain, Centuria Capital Group's Joint CEO. Please go ahead.
John McBain: Good morning, everyone, and thank you for joining us. I'm John McBain, Joint Chief Executive. With me today is my fellow joint CEO, Jason Huljich; and our Chief Financial Officer, Simon Holt; also Tim Mitchell and Peter Ho from our Investor Relations and Corporate Strategy team. Today, we'll cover group performance for the half, divisional execution, our financial position and our strategy and outlook. The group delivered repeatable earnings growth for the half, underpinned by both contracted and recurring revenue streams and conservative balance sheet settings. Execution during the half has improved forward earnings visibility, supporting our decision to upgrade FY '26 operating earnings guidance to $0.136 per security. I'll begin with an overview of the group's performance and our through-cycle approach to growth. Jason will cover divisional performance across property funds management, investment, real estate finance and data centers. Simon will cover the financial results before I comment on strategy and outlook. Key outcomes for the half are summarized on Slide 4. Group assets under management increased by 6% to $21.8 billion, supported by strong contributions across property funds management and real estate finance. Across the property platform, we executed approximately $500 million of real estate acquisitions during the half and are on track to exceed our $1 billion full year target. We also completed the acquisition of the Arrow funds management platform, adding $440 billion of agriculture AUM and further strengthening our private investor and family office networks. Taken together, this execution and improved earnings visibility underpins our decision to upgrade FY '26 earnings to $0.136, representing an 11.5% uplift on FY '25. This upgrade reflects underlying run rate momentum rather than one-off items. Moving to the platform overview on Slide 5, which highlights the scale and diversification of Centuria today and what matters for earnings quality and capital allocation. Virtually all verticals now exceed $1 billion in assets under management, supporting operating leverage, while preserving flexibility in how and where we deploy capital. We operate across listed and unlisted vehicles, real estate and credit and span most -- major property sectors across Australia and New Zealand. Diversification is not just about earnings volatility reduction. It allows us to allocate capital based on risk-adjusted returns and investor demand rather than being forced to pursue growth in any single product, sector or market. In the current volatile environment, that flexibility is vital. As the platform continues to scale, we see opportunities for margin expansion over time without reliance on any single product sector or capital source. Slide 6 demonstrates how diversification has supported earnings and AUM resilience through the sharpest rate hiking cycle in decades, with group AUM achieving a new record in this half. While performance fees can introduce period-to-period volatility, the underlying base of management fees, property income and credit earnings, continue to grow. This reinforces our conviction that the platform is designed to perform through the cycle, not just in support of market conditions. Turning briefly to the broader environment on Slide 7. Despite higher rates, the Centuria platform weighted average cap rate and product returns remain significantly above term deposit rates, and we continue to capture opportunities across real estate and transaction markets, many of which are showing signs of constrained supply and improving rental growth. Structural capital flows also remain supportive. These include ongoing superannuation inflows, continued SMSF growth and approximately $30 billion of capital expected to be repatriated from expiring bank hybrids over coming years. Turning to Slide 8. Private credit remains a strategic priority for Centuria and a good example of disciplined growth in a structurally expanded segment. We have been active in real estate credit since 2016, partnered with Bass Credit in 2018 and following a strong track record, we acquired a 50% interest in 2021, with the platform growing at a compound rate of approximately 36% per annum since that time. We increased our stake to 80% in 2024. And this morning, as previously forecast, we announced we have exercised our option to increase our interest to 100%. During the half, this business executed approximately $1.4 billion of total loan origination, restructuring and exit activity. Market share remains modest at around 1%, highlighting significant runway for the group within a large and growing market. Importantly, the previously announced succession and integration plan for Centuria Bass remains in place with David Giffin and Yehuda Gottlieb being promoted from within the business to CEO and Deputy CEO, respectively. We believe steps such as this support continuity and long-term sustainable growth. I'll now hand over to Jason to go through the divisional performance in more detail.
Jason Huljich: Thank you, John, and good morning, everyone. Half year '26 was another consistent period of execution for the property platform, as illustrated on Slide 10. Property funds management AUM increased by 5% to $18.3 billion during the half. We executed approximately $700 million of real estate acquisitions and divestments, supported by strong engagement from unlisted investors, which has underpinned transaction execution as other sources of capital have tightened. Property fundamentals remained supportive with limited forward supply and improving rental growth across most sectors underpinning earnings visibility. Turning to Slide 11. The half was a period focused on integration and value creation. We established Australia's largest unlisted single asset industrial fund at Port Adelaide with strong participation across our investor base and significant oversubscriptions. In agriculture, we secured Australia's largest hydroponic glasshouse by an off-market acquisition and commenced capital raising ahead of settlement. Listed REITs continue to selectively recycle capital, demonstrating the ability to divest assets at premiums to book value as well as generate strong leasing outcomes to improve the income profiles of each portfolio. Slide 12. Distribution remains one of Centuria's most important competitive advantages. Calendar year '25 was a strong period for new investors joining the platform, including more than 460 investors and family offices acquired through the Arrow transaction. Early engagement with these investors is already translating into interest across additional Centuria products, consistent with the proven integration blueprint applied across our M&A activity. We saw a similar outcome following the Primewest merger where 5 years on, strong integration and ongoing engagement has resulted in approximately 50% of Primewest investors committing to other Centuria products beyond their original investment. This behavior reflects the strength of Centuria's unlisted real estate platform where investors can self-diversify across multiple strategies within a single platform. Today, we have over 15,500 unlisted investors with more than 1,600 invested in 3 or more Centuria funds and almost 10% of these invested in 10 or more funds. This depth of engagement supports capital recycling as funds mature and position Centuria to consistently repatriate and redeploy private capital. We believe this distribution capability is difficult to replicate and represents a durable competitive moat for Centuria. Turning to Property and Development Finance on Slide 13. Property and Development Finance AUM increased by approximately 9% to $2.5 billion during the half. During the half, Centuria Bass Credit executed approximately $1.4 billion of loan origination, restructuring exit activity, while also raising $200 million of gross unlisted investor inflows. The business remains well positioned for further growth beyond its current market share of around 1% of Australia's private credit market. Turning to Slide 14. We can see that growth has been achieved alongside high-volume origination, restructuring and loan repayment activity. This has been paired with a strong focus on managing the book's composition, which remains largely exposed to residential asset-backed lending. Growth has not come from stretching average LVRs or loan structures across the overall book. Centuria Bass Credit is highly operational hands-on business within Centuria, underpinned by deep in-house expertise. Since the JV commenced in 2021, we have made targeted investments in systems, processes and people to support scalable growth, while maintaining disciplined risk management. In addition, Centuria Bass benefits from Centuria's broader platform with access to specialist expertise across valuation, governance, distribution and development as required. Slide 15 highlights Centuria's track record of progressively building the platform over time, primarily through organic growth, selectively supplemented by inorganic opportunities. From a data center perspective, the key takeaway is that this represents the early stages of a long-dated disciplined strategy aligned with durable long-term demand drivers. Slide 16. To further emphasize this evolving strategy, Slide 16 highlights that data centers and sovereign AI represent long-dated strategic optionality within a market characterized by sustained demand and significant capacity constraints. Accordingly, our current focus is on progressing planning and power outcomes to maximize development optionality across identified sites. As tangible milestones are achieved, we will assess the most appropriate value realization pathways on a site-by-site basis. ResetData remains at an early stage of this strategy. Since acquiring an interest in the business, we have partnered with leading global operators, successfully launched Australia's first public sovereign AI factory and scaled internal capability following initial integration. The business is now transitioning into an early commercialization phase as customer onboarding progresses, which is expected to support improving profitability over time. Importantly, capital deployment remains return-driven, fully considers balance sheet integrity and short-term profitability is not required to meet FY '26 earnings guidance. I'll now hand over to Simon to cover the financial results.
Simon Holt: Thanks, Jason, and good morning, everyone. Before stepping through the numbers, it's important to revisit the segment changes introduced at the full year '25 and carried through into these half year accounts. These changes were made to better align reported performance with Centuria's underlying economic exposure and how the platform is managed. We restructured our operating segments and adopted a proportionate consolidation approach for co-invested property assets, providing a clearer view of underlying economics. Financing costs attributable to these investments are disclosed separately as nonrecourse loans. Now turning to the result. FY '26 was another period of disciplined execution. Statutory NPAT was higher, reflecting fair value movements on co-invested property assets and operating EBITDA of $89.3 million was delivered for the half. From a quality perspective, what's important here is not just the headline result, but the mix of earnings underpinning it. The majority of operating earnings continue to be generated from recurring and contracted sources with performance fees remaining a secondary contributor rather than a dependency. This provides confidence in the sustainability of the run rate as we move through to the second half. Property funds management earnings reflects -- reflected strong activity, increased transaction volumes and performance fee contributions. Investment earnings moderated as expected due to asset recycling rather than any deterioration in asset quality or returns. Real estate and Development Finance earnings were stable across the halves. ResetData impacted earnings and our share of Centuria's share was $2.8 million at 50% and this happened during the period and is expected to be a net negative contributor to full year earnings, reflecting its current investment and early commercialization phase. Importantly, this reflects a deliberate and disciplined approach. Capital is being deployed against long-dated strategic optionality rather than short-term earnings contribution. As customer onboarding progresses, we expect this impact to moderate over time. Cost savings remained contained across the platform, reflecting disciplined balance sheet management and access to lower cost of funding. As a result, operating profit after tax increased to $54.6 million, delivering operating earnings per security of $0.066, up 6.5% on the prior period. A distribution of $0.052 per security was declared. Turning to Slide 19 highlights. This page highlights the quality and sustainability of funds management earnings. Property Funds Management is considered a core segment for the group, and as such, the majority of the business resources are dedicated to this segment. Centuria's focus on accelerating operating leverage from this segment forms part of the group's overall growth strategy, and we anticipate that margins will continue to expand as the platform scales through time. Recurring management fees remain the dominant contributor to this segment. Performance fees were booked where funds formed part of their respective testing thresholds adopted by the group. Centuria's underlying funds also retain additional latent fees, which remained unrecognized. These are expected to fluctuate in line with prevailing valuations from period to period as well as when newer vintage funds mature through the cycle. Turning to Slide 20. During the half, the group realized $133 million of cash through the sale and recycling of balance sheet assets. And gearing remains steady. Liquidity is strong, and there are no near-term debt maturities. From a capital management perspective, the balance sheet is doing exactly what we want it to do, funding growth, supporting selective investment and preserving flexibility. Asset recycling continues to be a key lever, allowing us to redeploy capital without increasing balance sheet risk. Also, the average cost of debt reduced during the half following the repayment of our listed notes, lowering our all-in margin from approximately 325 basis points to approximately 275 basis points. This supports self-funded growth while maintaining a conservative and flexible funding profile. Turning to Slide 21 and talking about the platform. Beyond the corporate balance sheet, Centuria has access to $8.3 billion of diverse lending facilities across listed and unlisted funds provided by a broad group of 24 lenders. This diversity reduces reliance on a single capital source and allows us to manage funding proactively across market cycles. Average margins improved to 1.5% -- 1.57% in the half, highlighting the benefit of stronger lender engagement and an active funding strategy. The funding profile and covenants shown reflect a conservative and flexible balance sheet position with funding cost and risk setting actively monitored across the cycles. I will now hand you back to John for strategy and outlook.
John McBain: Thanks, Simon. To conclude on Slide 23, our focus remains on scaling core property funds management, progressing targeted acquisitions and continuing to build Centuria Bass Credit. Data center, [ certain ] AI initiatives will be progressed selectively and only where returns are compelling and customer demand is locked in. These initiatives provide the group with long-term strategic optionality as we go through the buildup of this business. The group balance sheet remains a strong asset and strategic asset. Our platform and deep distribution networks are unique competitive advantages, which can generate a diversified and predominantly recurring earnings base. Factors such as these provide a degree of visibility into earnings underpinning the guidance upgrade and allowing Centuria to build through cycle momentum while remaining nimble as markets evolve. Thank you. That concludes the formal presentation. I'll now hand back to the operator to commence Q&A.
Operator: [Operator Instructions] The first question comes from the line of Cody Shield from UBS.
Cody Shield: Firstly, just on second half drivers, can you maybe talk a little bit to what you're expecting out of ResetData and performance fees in the second half?
Simon Holt: Yes. So on the performance fees, we're expecting pretty much half-on-half to be about the same and consistent with what we said at the full year results back in August at around $20 million. In relation to ResetData, our expectation is that we probably will still make a loss, albeit smaller than this half in the second half. So obviously, setting us up for future tailwinds, but slight improvement.
John McBain: I think there's quite a good pipeline of demand now for our capability. But the timing of it, of locking in that demand just has to be finalized. And as those people slot in, then we'll get more visibility. But this is a very, very young business, and we've got a measured approach to it.
Cody Shield: Yes. Okay. Maybe if you could just provide a little bit more detail on what was causing the flip, because it wasn't '26, I think you're going to get a positive contribution from ResetData?
Simon Holt: It's just timing of signing up customers.
Cody Shield: Okay. That's clear. Maybe just turning to acquisitions that are in DD or secured. Can you just provide a read on maybe what type of assets are falling into that? And also what level of divestments you're expecting in the second half?
Jason Huljich: Sure. It's Jason here. On the acquisition side, look, we obviously can't go into too much detail on some of them as we're still in due diligence. But it's a mix across industrial, data center, retail and office, both in Australia and New Zealand. So it's a nice mix of geographies and asset classes. Some of that has been secured and some is in DD. But it's nice to have a really good pipeline there. On the divestments, I think we had just under $200 million for the first 6 months. As I think I said at results, we'll probably end up somewhere around $500 million full year.
Operator: Your next question comes from the line of Andrew Dodds from Jefferies.
Andrew Dodds: Just following on from Cody's question around ResetData. I mean, you've called out that the lease-up is expected to sort of strengthen in the second half. But I mean the drag on earnings is pretty significant. So given that you've said that you sort of expect this to be a net negative contributor this year, I mean, when can we realistically expect this segment to become at least breakeven?
John McBain: I mean, Simon, perhaps go through how significant it is. It's -- our half is 2-point-something million out of a $50 million after-tax profit. Is that right, $3 or $4 million?
Simon Holt: Yes, $2 million or $3 million.
John McBain: So I think -- Andrew, I think we've tested that comment up to where you think that's significant. And yes, we would prefer it not to be a drag -- but of course, like all things, when it goes away, when these customers sign up, and they could sign up sooner than we think, there's a very strong pipeline of significant clients. I guess that will help us not be on -- not have these conversations.
Andrew Dodds: Right. Okay. Maybe just on Centuria Bass then. Are you able just to talk around the level of bad debt you're seeing across the book? And I sort of asked this just in the context of -- I mean, there's been some recent press around your exposure to a troubled developer in Western Sydney and if that's having any impact on the business?
Jason Huljich: No. Look, that's basically nothing at the moment. The portfolio is in very good shape. We deal with a lot of different counterparties in this business. We're very comfortable with the book. In particular, relationships we have with some customers, we steer more towards things like residual stock, which are very liquid and a lot lower risk than obviously development finance. But yes, look, the book is in very, very good shape. It's probably as good as it's ever been.
Operator: The next question comes from the line of Tom Bodor from Jarden.
Tom Bodor: I'd just be interested in seeing your comfort with look-through gearing, it's ticking up to almost 38% now. And just noting that around 1/3 of your asset base is intangibles. And what level starts to cause this comfort from a gearing perspective?
John McBain: Simon, [indiscernible] [ go ahead ].
Simon Holt: Look, I think the first comment I'd make, Tom, is all of that debt that sits in property investments is nonrecourse. So it doesn't actually flow up to the head stock and vice versa, doesn't us -- require us investing back down if there is anything challenged. So look through gearing moves around from time to time. Mainly the big 2 investments that we have are CIP and cost on our balance sheet and cost gearing has moved down a little bit. So that does have an impact to our look-through gearing. But I think what's important, we use operating gearing as a measure and supports looking at the intangible value as an important part of our business. We buy organic assets through funds management and we from time to time buy inorganic transactions. So we are sitting at around that 12.5% on that operating gearing level for which it's consistent with the half year and has been consistently in that target band that we've been quoting for, I'm going to say, 2 to 3 years now, that 10% to 15%.
John McBain: Yes, Tom, I know it's a metric that a lot of you guys look at, and we understand that. But I think the other submission, I think Simon touched on it, we think the intangibles on our balance sheet are worth something. We think Centuria Bass is worth something. Centuria New Zealand is worth something.
Jason Huljich: Primewest.
John McBain: Primewest is worth something. So it's easier to just -- the word intangible has a connotation about it that could be negative, whereas we're very proud of those businesses, and we think they're highly valued. And in some cases -- well, a lot of cases were far more than we paid for them. But look, we get the question, Tom, we understand it, respect it.
Tom Bodor: Okay. And then just on ResetData, just going back to that. I mean, has any leasing actually occurred to date? And what is the revenue from that leasing on a per annum basis?
Jason Huljich: Yes. Look, we have leased part of the facility. I won't go into numbers, but we've leased a chunk of the facility. We have got strong demand over the rest of the current capacity as well which we...
Tom Bodor: [indiscernible] that you are talking about?
Jason Huljich: Correct. Correct. So we do expect that to lease up over the shorter term, as Simon talked about. So yes, probably the big thing that we've realized it is a longer decision process, a longer sales cycle to get both enterprise and government committed. There has definitely been increased demand over the last 4 or 5 months. And we have got, as I said, a very strong pipeline. So we've done a chunk of it and demand over the rest of it, good pipeline over the rest.
Tom Bodor: And is there a point at which we can think of this business as breakeven? I don't know if it's 40% of the capacity or some number that as a guide will get the business to be breakeven?
Jason Huljich: Yes. Look, it obviously depends on terms, and it depends on a lot of things. The revenues can fluctuate depending on lease -- on the terms of the customer commitment, on term. So it's a hard one to actually give you a number on that.
John McBain: Yes. I think -- Tom, I think if we just looked at the Melbourne facility and looked at just leasing that up, the GPU capacity, and looked at our capital and looked at our return on capital there, I think that can come to profit quite easily. It's, ResetData is a very young start-up business, and it will go -- it will require further expenditure as time goes on to grow it. And that's no different than Centuria Bass, no different than Augusta, [ no different ] than all the other businesses we've built. We do think -- we're just trying to be measured about making predictions about when that point happens, but we're certain that it will occur. And look, we do think it's a huge opportunity in the space we're in and being an NVIDIA cloud partner in Australia. But it will take time to play out. But we are excited about it.
Operator: Your next question comes from the line of James Druce from CLSA.
James Druce: Apologies. Another question on ResetData. I'm just curious, from an industry perspective, single-phase direct-to-chip cooling technology seems to be preferred over immersion cooling even as we move down the track from [ Ruben ] to finement chips. It just seems to be easier to handle with equipment when it's not liquid. How do you think about the 2 technologies? Why would a customer necessarily prefer immersion? Or is it more about just getting access to some compute?
Jason Huljich: Look, I think it is about access. We've got something built there ready to go. It doesn't necessarily affect the customer at all. They're after compute and those high-performance chips. So as we've seen with NVIDIA and others are doing and where they're going and what's happening in the chip space and the densities, it is going to go to a sort of combined unit of direct-to-chip as the next stage. But liquid emission works very well as well. So for our existing facility that we've now built, I think it's very fit for purpose. It suits customers, and we've got a wide range of customers looking at it all the way from large enterprise to government. So they seem very comfortable with it. Future facilities, assuming we build out further ResetData facilities, may go towards more the new version of direct-to-chip.
John McBain: Reset guys are very close to NVIDIA. I think we'll follow what technology they spearhead really.
Jason Huljich: All the facilities -- the facilities we build are built on the NVIDIA architecture. So they have to be happy with it, and we use their design protocols.
John McBain: Well, the interesting part is the sovereign nature of -- there are 3 Neo cloud partners, NVIDIA partners in the country. We're one of them. And we're the only one that's purely sovereign. And I think particularly when you're talking to state and federal government, and universities, for example, that sovereign initiative or a capability or mandate is becoming more and more important. So that's another thing that we're really looking forward to unfolding where we have a competitive advantage, but very early days.
James Druce: Yes. No, on the sovereign AI. Just a follow-up. Just remind me how the chip finance works? Are you on the hook if you don't have a tenant? What are the terms there?
John McBain: Yes. It really is a P&I asset finance lend that we have at the moment on 818 in particular. So it's a P&I and if you have a tenant, you're generating revenue. If you don't, you still have the cost.
James Druce: Yes. Okay. That's clear. And then just on the $0.8 billion of acquisitions and DD post balance date. Can we just get a -- you might have provided this on the call, I'm sorry if I've missed it, but can you just provide some color on what sectors they're in and where the momentum is coming from?
John McBain: Yes. Look, I think I said earlier, it's a mix of geographies being Australia and New Zealand and sectors. And it's got a bit of everything. So we've got industrial, we've got data center, we've got retail and we've got office. So it is a nice range of asset classes and all opportunities that we think will be well received by our investors, both in New Zealand and Australia.
James Druce: Yes. Okay. That's clear. And one more, if I may. Just on the performance fees coming through, which -- and just a bit of color on the funds where they're coming from, please?
John McBain: Coming -- a lot of what's coming through this year is coming through from Primewest assets.
Jason Huljich: Mainly retail and industrial.
John McBain: Mainly retail and industrial, yes. That would be the 2 main ones.
Operator: Your next question comes from the line of Richard Jones from JPMorgan.
Richard Jones: Just wondering if you can discuss the Arrow Funds Management acquisition, just maybe perhaps how that came about? And I guess how you think about organic growth versus bolt-ons?
Jason Huljich: Sure. I'm happy to take. On your first question, look, Arrow, we've been talking to them for a number of years. I think Primewest we've been talking to them before we merged that business in, sort of came to a hit last year, where we worked with the owners of that business. Why we liked it? Our ag strategy is quite focused. What it does allow, we like the portfolio of 26 assets, and it got us some very strong tenant relationships in some other subsectors in ag that we like, such as poultry. I think Bard is about half their tenant exposure, a very strong company. And there are a few other subsectors in there as well. So I think it gave us a bit more diversification into ag, but into ag subsectors that we'd like. On the investor base, there's just under 500 investors. Another thing we liked was the makeup of those investors, a lot of high net worth and a lot of family offices. It's sort of been owned out of Melbourne. And a lot of the investors, substantial individuals and family offices out of Victoria, which would strengthen our investor base down in that state. So I think we've got a number of benefits out of it. Obviously, the financial stacked up, too, with synergies. We're picking up for about 5.5 multiple, which I think screens pretty well. And it's something that we think we can grow. And as we said in the presentation, we're already talking to some of the larger groups about investing into other asset class -- other products. Obviously, CAP, we've built organically, which is the other large ag vehicle. And your second part of the question, organic versus nonorganic. Look, obviously, we like to grow organically and with $800 million of acquisitions in the pipe, that part of the business is going strong. Inorganic growth, we like buying platforms that really add value to us, be it a new sector that we like, that we can scale up. Also, we like, obviously, things that are very accretive as well. But this sort of did help us scale up that ag vertical and get us through that $1 billion mark -- well through the $1 billion mark and get us into those other subsectors.
Richard Jones: Okay. And then just a second question. Just a second question just on -- sorry, half on the ResetData. Just what is the likely capital deployment that business needs over the next, call it, 2 years? And can you discuss the options from a funding perspective that you guys are thinking about?
Jason Huljich: Look, it really depends where we take it. As John said, we're being very measured. I think we think it's a huge opportunity. You're seeing what others are doing, some of our peers are doing at the moment and some are scaling up pretty quickly. We have chosen really to, as I said, take a measured approach, work out how it plays out in the sort of subsector of AI and data centers -- the relationship with NVIDIA is definitely a huge asset. We are very close to them. And I think it helps the other play, which is our real estate ownership of data centers as well, and does give us some optionality there. So I think it's something that we don't necessarily have to commit a lot of capital to, unless we want to, unless it makes sense. But at this stage, we're just doing the sort of measured approach and scaling up in that sort of fashion.
John McBain: Yes. I think to add to what Jason said, I completely agree. It's nice to make it clear, Richard, look, we started buying data centers in 2020. Am I correct, Jason, but the Telstra one for $400 million. Back at that time, no one heard the word data center, right? And we've been adding to that. There's about just over $500 million of just real estate investments, just data center but -- with data center operators as tenants or Telstra or someone [indiscernible]. That's fine. So -- but as Jason said, that gives us -- so we're going to have an involvement in data centers whatever happens. ResetData came along, that just gave us an opportunity just to be at the leading edge. And I think some of the important things about ResetData are the NVIDIA relationship. And if we can build out where I think we're different to other people and your balance sheet question, the answer to it is probably this. We want customers to be locked in before we go out and secure some sort of debt that Simon described before. It's unlikely that we're going to try and attempt to raise a lot of debt and then hope customers arrive. So a little bit of build as they come. We are actually the only ones that have built such a big [ data ] so far outside government. And -- but less hope, more measure, more locking in clients. Once that happens, I think we can find outside sources to fund progress as we make it.
Richard Jones: Just one more quick one.
John McBain: Yes, sorry.
Richard Jones: No, you keep going. I don't want to cut you off.
John McBain: No, just -- we don't want anyone to be surprised. This space is dominated by flash releases, quick -- we just don't want any of it. This is slow -- I hope it's not too slow, but measured and deliberate and based on customer demand. And we -- it's exciting because it's a big pipeline, but we want that pipeline to be cemented and then we want to come back and tell you we've done it.
Richard Jones: Just a quick one for Simon. Just the second half cost of debt, just can you tell us where you think that heads and any capacity for further margin reduction on balance sheet?
Simon Holt: So obviously, this first half had the list of notes being repaid. So the weighted average cost came down about 60 bps from last full year, and it will probably come down another 60-odd bps in terms of the full second half. Sorry, what was the second part of your question?
Richard Jones: So that will be 7% for second half is what you're saying? And I just...
Simon Holt: Yes.
Richard Jones: And the other question was any further capacity for margin reduction on the rest of the book, whether you can bring any of that forward?
Simon Holt: No. Look, we've got to a point that we've got -- we've refinanced all of our corporate notes out. So at the corporate level, I think at 2.75 or 275 bps is about where we're going to land for the moment. Some of the shorter term debt may roll off, it might come in slightly, but that's where we're kind of sitting on the margin side.
Operator: Your next question comes from the line of Ben Brayshaw from Barrenjoey.
Benjamin Brayshaw: You previously flagged the potential for the IPO of a couple of listed entities. Just wondering if you could provide an update on that? And is that something you're still considering?
Jason Huljich: Yes. Look, we are. It's subject to obviously market conditions. Obviously, the market is a little over the shop at the moment. So that window isn't there. We have done a lot of preparations. So if that window does open, we're ready to go on certain vehicles. But yes, it's totally at the mercy of the market at the moment. And look, we don't need those particular vehicles to be launched over the next 4 months to hit our guidance either.
Benjamin Brayshaw: And just a question on the financials. I was wondering if there's been any development operating earnings recognized from the inventory on the balance sheet for this period? And if so, if you could just quantify those roughly, please?
Simon Holt: No, there's no profit coming through from that activity. I'm just trying to remember what was in my list of inventory. Yes. So most of what was in inventory were properties held for sale as opposed to development properties. So it's just more of a classification thing under accounting standards as to why they call inventory. So yes, no, not a lot of profit coming through on this period, was 0 profit coming through from any developments on balance sheet.
Operator: Your next question comes from the line of Simon Chan from Morgan Stanley.
Simon Chan: Performance fee is pretty good, and you've reiterated $20 million for the year. Just the way I'm thinking about it, you started booking performance fees. That suggests to me that there are probably some funds or some AUM that's coming towards the end of their set periods, right? Am I right? And if I am right, like how big is that chunk? How much of your unlisted platform have funds coming to the end of their lives over the next, I guess, 18 months?
Simon Holt: Yes. The majority still is in '28, '29, which has been there since we've purchased Primewest. And a lot of what is the unbooked performance fees relates to that particular period of time. These are just some other funds that are inside that 2-year window, that have come into that 2-year window. Some of that will because the funds expiring, some of it will because there's opportunities with investors to do different things with that particular asset that create that outcome of something likely to happen within -- in the next year. In addition, in many cases, as has been the case the last couple of years, investors choosing to extend those funds as well, even though they come into that 2-year window. So it's a mix of things that are going on. But in essence, there's a number of funds, as we said earlier, around industrial and retail that are coming into that 2-year window.
Simon Chan: How big is that bucket, Simon?
Simon Holt: Well, the latent performance fees of -- that are in there, it's about $70 million, isn't it?
Simon Chan: No, no, I'm not talking about fee. I'm talking about the funds bucket that you're referring to?
Jason Huljich: A few hundred million.
Simon Chan: Yes. Sorry, Jason, did you say a few hundred?
Jason Huljich: Yes, a few hundred million roughly.
Simon Chan: Okay. Okay. Fair enough. And that excludes the Primewest, right, Simon?
Simon Holt: No, no. That would include the Primewest assets.
Simon Chan: Okay.
Simon Holt: Most of what's been booked through this period is off the Primewest assets.
John McBain: A big chunk of the Primewest assets got extended out to '29 upon their listing, but there was a big -- it was also a part that didn't. So they did expire earlier.
Simon Chan: Okay. Cool. How is fundraising at Two Wells going?
Simon Holt: It's good. So that vehicle has got a large cornerstone investor. We expect them to take a significant chunk of the equity required for that purchase, which is positive as well as new investors coming into the fund.
Simon Chan: Okay. Which sector would you say was -- I mean, over the last, I guess, 12 months, you've done Logan, you've done -- well you're doing Two Wells and you've done Port Adelaide.
Simon Holt: Yes.
Simon Chan: Which of those 3 sectors was the easiest to get money?
Jason Huljich: The Port Adelaide raise is probably the best I've ever seen, to raise sort of circa $300 million for $116 million raise, which we thought was reasonably large at that time for an Adelaide asset. We got bought over. Everyone got scaled back over 50%. We also said no to a number of offshore institutions that wanted minority stakes as well. So yes, that was definitely the most demand I've seen. Logan went well as well. That was oversubscribed. But yes, I think we've got pretty good demand across the book, particularly retail and industrial. Ag is good, but that one cornerstone is a big chunk of the demand into that fund, which they keep supporting, which is great.
Simon Chan: Great. And just one last one. Can I check in on Allendale? Are you guys still holding on to some units there? Or have you managed to get it the way now?
Jason Huljich: We do have a holding. It's been coming down over time, but there is a holding at this stage.
Simon Chan: How big is it? That's [ alright ]. You can get back to me. That's fine.
Simon Holt: We'll come back to you.
Simon Chan: Yes, of course.
Operator: Your next question comes from the line of Andy MacFarlane from Bell Porto.
Andrew MacFarlane: Just a couple from me. Can you just talk about the level of redemptions, if any, across the various funds at the moment?
Jason Huljich: Yes. Look, we only have the 3 funds that have redemptions, the -- which are the open-ended funds. So CDPF, which our diversified fund, it's a small fund, our health care fund and our ag fund. We have quarterly redemption -- limited quarterly redemption features. Now both the health care fund and the CDPF came up with their 5-year liquidity events where we go out to investors and -- we go out to investors and give them the opportunity to let us know if they do want to redeem out the fund. We then have a period of time to raise more equity, sell assets and so forth to satisfy that. CHPF, I think we reported last results, we were at over 30% of investors, put their hand up there, and we're just going through the process of satisfying those. The latest was CDPF diversified fund. Again, around 30-odd percent, put their hand up for redemptions. We've already satisfied about 25% of them, and the rest will be sorted out pretty quickly with some assets that are going through the sale process at the moment. It's not a lot. It's sort of less than $120-odd million across the board.
Andrew MacFarlane: Just in the pack, you got a chart on bank hybrids rolling off and some of your peers looking at doing things as product replacements. How do you think either Bass and Centuria could play a role in finding products here, if so?
Jason Huljich: Look, we think these investors are looking for yield. Our products can supply that across either the credit or equity side of things. So we think it will be a tailwind for us and obviously other managers as well. As I said earlier, we have been pretty surprised on some of our raises and the amount of demand out there. As these hybrids roll off year-on-year over time, I think that will help support demand for our sorts of products. So yes, as long as we can keep up an attractive yield and a buffer over term deposit rates, which is looking like we can do on both sides of the Tasman, our products should be pretty well received.
Andrew MacFarlane: So last one, if I may. LVR, it's creeping up a little bit in the debt book. Just wondering kind of where you're happy with that sitting?
Jason Huljich: On the -- in the funds?
Andrew MacFarlane: Yes.
Jason Huljich: Look, our funds hasn't -- I don't think it's moved too much. We sort of sit normally around that for a new fund in that 45% to 50% range.
Andrew MacFarlane: Sorry, Jason, I meant, Centuria Bass, apologies. Centuria Bass.
Jason Huljich: Centuria Bass. Look, a couple of percent on LVRs. But look, we put that graph on there to show it hasn't moved that much. It's been pretty stable. We stuck to about, I think, just over about 92% first mortgage. It's about 90% residential. Look, where the LVRs around where it is now is where we're comfortable. Each deal is obviously diligence on its merits on the counterparty, on the quality of the asset, but how we look at it is it's an asset [ lead ] and what is the value of what we're lending against and having the teams in-house that can really have a close look at it, a large development team, a large valves team. I think it really gives us a bit of a point of difference compared to most of the other managers out there.
Operator: There are no further questions at this time. I will now hand back to Mr. Bain for closing remarks.
John McBain: Yes. I'd like to thank everyone for attending this morning and for the questions. We enjoy it and send out thanks to Tim and Peter, in particular, for helping put a really nice set of documents together. Thank you.
Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.