Thank you all for standing by, and welcome to the Centuria Industrial REIT Half Year 2022 Results Presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question at that time, you'll need to press star one on your telephone. I'd now like to hand the conference over to Mr. Jesse Curtis, Fund Manager at Centuria Industrial REIT. Thank you. Please go ahead.
Good morning. I'm delighted to present CIP's first half financial year 2022 results presentation today. I am Jesse Curtis, Centuria Industrial REIT's Fund Manager. I would like to commence today's presentation with an acknowledgement of Country. I am joining you from the lands of the Gadigal people of the Eora Nation. Centuria manages property throughout Australia and New Zealand, and pays its respects to the traditional owners of the land in each country, to their unique culture, and to their elders, past and present. It's been a busy start to the year for CIP. We've achieved significant leasing across the portfolio and increased occupancy to support long-term income. CIP has also continued to build its exposure to urban infill industrial assets, having executed on strategic acquisitions, providing value-add opportunities, and improving portfolio quality.
The half year strong performance resulted in the portfolio growing to AUD 3.9 billion across over 80 high-quality industrial assets, and being able to deliver an FFO guidance upgrade for FY 22. CIP remains Australia's largest domestic pure play industrial REIT. It provides a high-quality portfolio of Australian industrial assets diversified by geography, industrial subsector, and tenant profile. With high occupancy, a long WALE, and a strong balance sheet, CIP is well-positioned to deliver reliable income streams and capital growth to unitholders. Earlier today, we published various documents on the ASX, including this results presentation, which I'll step you through now. Today, I'll provide an overview of CIP's half year portfolio activities and a FY 2022 outlook, along with earnings guidance. At the conclusion of the presentation, we will offer the opportunity for questions. Let's begin on slide four.
CIP is an externally managed REIT that forms part of the larger Centuria Capital Group family, a leading Australasian real estate fund manager operating under the ASX ticker code CNI, and is included in the S&P/ASX 200 index. With more than AUD 20 billion of assets under management, Centuria Capital Group specializes in real estate markets, including decentralized offices, urban infill industrial assets, cost-efficient healthcare property, daily needs retail, large format retail, and agriculture across Australia and New Zealand. It also provides non-bank financing for Australian property markets through Centuria Bass Credit. Its suite of investment products include listed and unlisted real estate funds across debt and equity markets. Additionally, it provides investment bond options with its LifeGoals product range. CIP accounts for around 20% of Centuria Capital's total assets under management, and is the platform's largest industrial real estate fund.
This half year 2022 results period marks five years since Centuria assumed management of CIP. Slide five highlights under Centuria's management, CIP's proven track record of creating value and enhancing portfolio metrics. The industrial portfolio has grown to AUD 3.9 billion, achieving meaningful scale and major index inclusions, notably being included in the S&P/ASX 200 index and the FTSE EPRA Nareit Global Developed Index. Tenant asset quality has also substantially improved, with occupancy now in excess of 99% and a long portfolio WALE. Since we began managing the REIT in 2017, CIP has delivered 12% average annual growth in net tangible assets, while the balance sheet has been strengthened substantially. Return on equity has also been strong, averaging 23% per annum over the five-year period. Looking to slide six.
Major portfolio transactions through targeted and strategic acquisitions under Centuria's management have delivered CIP unit holders with significant value. These acquisitions transformed the portfolio and align with long-term market trends, which continue to benefit CIP unit holders. Notable transactions to mention include the acquisition of the Telstra Data Center, delivering 34% value uplift while strengthening the ongoing income streams of the REIT, and AUD 1.1 billion of urban infill assets that have risen by 18% in value and continue to provide exposure to rental growth in the market. Centuria Capital Group remains CIP's largest unit holder, holding 16%, and has been a strong supporter in CIP's evolution to becoming Australia's largest ASX-listed domestic pure play industrial REIT. To slide seven. CIP's strategy remains unchanged, aiming to deliver reliable income and capital growth from a high-quality portfolio of Australian industrial assets located in urban infill locations.
Our consistent vision is to remain as Australia's leading domestic pure play industrial REIT. Turning now to slide nine, which outlines CIP's strategy execution. CIP delivered a strong half year performance as the Centuria team continued to execute the REIT strategy. Our team's active management approach continued to drive leasing success with terms agreed over more than 109,000 sq m during the half, including new leasing and resolving major near-term expires, driving occupancy to a high of 99.2% and WALE of 8.9 years. Leasing success and investment demand for industrial assets resulted in valuation uplift of more than AUD 280 million during the half, with NTA increasing 10%.
Portfolio scale increased with 21 high-quality urban infill industrial acquisitions secured for AUD 680 million, growing the scale of CIP's portfolio and increasing exposure to the high-performing eastern seaboard markets. The REIT's gearing at 30.5% continued to trend at the lower end of the target gearing range. CIP also completed its inaugural bond issuance, successfully raising AUD 350 million. With ample headroom to debt covenants, staggered debt maturities, and a more diversified lender base, the strength of CIP's balance sheet is reinforced. 12-month return on equity to the end of the half was an impressive 46.5%.
Looking forward to the balance of financial year 2022, we are pleased to provide upgraded guidance with CIP forecasting funds from operations of no less than AUD 0.182 per unit, up from AUD 0.181 per unit at the beginning of financial year 2022. Distributions are forecast at AUD 0.173 per unit. Slide 10 details CIP's key metrics. The portfolio, as of 31 December, was valued at AUD 3.9 billion, with strong income streams supporting high occupancy of over 99% and a long WALE of 8.9 years. Net tangible assets also increased 10% to AUD 4.21 per unit. Based on the closing share price on 31 January, CIP offers an attractive forecast distribution yield of 4.6%. Turning to the financial results on slide 12.
Total revenue increased as a result of acquisitions and leasing completed during the first half of FY 22. Like-for-like income was up 2.9%, mainly driven by strong leasing activity and fixed rental increases embedded within our leases. Operating expenses increased on the back of portfolio growth and new acquisitions. Half year financial year 2022 FFO, AUD 53.9 million, was delivered, equivalent to AUD 0.091 per unit. As a result of CIP's strong half performance, full year financial year 2022 FFO guidance has been upgraded to no less than AUD 0.182 per unit. Distributions for the half were paid in line with FY 22 guidance. Moving to capital management on slide 13. During the half, CIP's balance sheet was further strengthened. CIP was assigned a Baa2 stable outlook credit rating by Moody's.
CIP also completed an AUD 350 million medium-term note issuance. The issuance further strengthens CIP's balance sheet by increasing debt duration and broadens its range of capital sources. Approximately AUD 300 million of new equity was also raised during the period. These capital management initiatives further improved the portfolio quality, enabling key urban infill acquisitions and providing the ongoing opportunity to capitalize on prospective transactions. Following these initiatives and valuation gains, reported gearing at 31 December was 30.5% at the lower end of the target gearing range of 30%-40%. Weighted average debt maturity increased to 4.8 years. CIP remains well supported by our diversified lender base, and our servicing ability remains strong with significant headroom to debt covenants. Now to slide 15, which shows a snapshot of CIP's portfolio composition and the geographic spread of our assets.
The portfolio spans 80 majority freehold, high-quality industrial assets. We maintain critical mass in each of our core markets with a 90% weighting to the strong-performing eastern seaboard markets, and 82% of the portfolio located within urban infill markets. Taking a closer look at portfolio leasing and WALE on slide 16. CIP experienced another significant period of leasing activity with approximately 109,000 sq m leased, driving occupancy to a high of 99.2%. Impressively, over the 26 leasing deals completed, average rental growth of 10% was retrieved from prior passing rents, demonstrating favorable leasing conditions in industrial markets and quality of CIP portfolio. Major near-term expiries successfully secured include renewal of Orora Packaging, over 19,000 sq m at the manufacturing facility in Bibra Lake, Western Australia for a new 10-year term.
Renewal of Real Pet Food Company, over 26,000 sq m at its manufacturing and distribution facility in Ingleburn, New South Wales for a new 15-year triple net lease. Major new leasing was achieved with 13,000 sq m of space leased at our Edinburgh property in South Australia. CIP's WALE continues to sit high at 8.9 years. Looking forward, the portfolio offers the near-term opportunity to capture rental growth, with 32% of income expiring over the next four years. However, the income and expiry profile still remains low risk, with high tenant retention and over the next four years, no more than 12.5% of the portfolio expiring in one year, providing limited concentration risk. This result reinforces the strength of the market and the leasing capability of CIP's team. This leasing success has extended to our value add projects, detailed on slide 17.
With a long WALE and high occupancy, CIP continues to focus on opportunities to leverage Centuria's management capabilities through selective value add initiatives to reposition and refurbish assets to drive outsized value for investors. Our approach is to identify and execute opportunities within existing assets, leveraging tenant demand for urban infill markets to increase income streams and realize valuation uplift across the portfolio. Recently completed projects include two newly acquired assets. First, 160 Newton Road, Wetherill Park in New South Wales. Acquired in July 2021, we undertook a refurbishment program and achieved a leasing outcome where the existing tenant expanded, increasing the WALE and achieving a 21% valuation uplift within the six-month period. Next was 48-54 Kewdale Road, Welshpool in Western Australia. Acquired in September 2021, 32% of the asset was expiring within six months.
Following its refurbishment, we secured a new lease over the space, expanding the WALE to 3.7 years, achieving a 6% valuation uplift within three months. Our current active projects include our Bella Vista asset, which has refurbishment works underway and terms agreed with a major international e-commerce brand, and our recently acquired Port Melbourne assets. These assets are well-suited to capitalize on demand from last mile users for urban infill facilities. Moving to slide 18 and our developments. Selective development activities provides CIP the opportunity to increase brand new stable assets into the portfolio to secure long-term reliable income from high-quality customers. These assets are future-proofed and built to the highest standard and include the latest sustainability initiatives. Centuria has an experienced industrial development team to deliver these projects to CIP.
CIP has also completed its first five-star Green Star industrial development in Bundamba and is also undertaking another five-star Green Star development of a multi-unit estate in Dandenong South, which is due for practical completion in August this year. The development is currently supported by a coupon on funds deployed and a two-year rent guarantee on completion. Already, two of the six tenancies are pre-committed at above underwrite rents. CIP has a number of projects in the pipeline, including the recently acquired Campbellfield site. CIP also owns a number of sites that provide development potential over various time horizons and has continued to amalgamate adjoining assets to create further development sites of scale. Looking now at CIP's acquisitions on slide 19. Transactions in the first half of FY 22 have continued to complement the scale and quality of CIP's portfolio.
A focus on urban infill assets increased CIP's exposure to industrial markets with limited land supply and competition. These markets are forecast to outperform in terms of tenant demands and rental growth. AUD 680 million of high-quality urban infill industrial assets across 21 transactions were executed at an average capitalization rate of 4.26%, representing an attractive spread to prevailing market pricing. Key acquisitions include 56-88 Lisbon Street, Fairfield. A 60,000 sq m super prime distribution center on an 8-ha site in the geographic and population center of Sydney for AUD 200.2 million. Three adjoining sites in Wetherill Park, New South Wales, consolidating a 5.3-ha land holding in a land-constrained infill Sydney market for AUD 82.5 million.
17 high-quality urban infill logistics assets for a combined AUD 397.4 million. 95% of the acquisitions were in the tightly held Eastern seaboard markets of Sydney, Melbourne and Brisbane, with 56% weighted to the tightly held and rare to acquire Sydney market. CIP also recycled capital with the divestment of 99 Quill Way, Henderson in Western Australia for a 16% premium to 30 June book value. 100% of the acquisitions were either secured off market or via select campaigns, illustrating Centuria's strong market relationships and ability to secure attractive acquisition opportunities in a highly competitive environment. Leading on from acquisitions, slide 20 details our site consolidation strategy. To complement growth of the portfolio, CIP has focused on creating scale in core urban infill markets.
The focus is paying off, with nine acquisitions this half adjoining existing CIP assets, which is almost half the transactions in the period. This strategy is beneficial to unit holders, as it provides future development sites of scale to meet the growing demand from e-commerce users while maintaining income and access to rental growth. It also provides diversity across tenancy size and type to facilitate higher portfolio retention. In Wetherill Park, three adjoining sites have been acquired to create a 5.3-ha land holding in an infill last mile Sydney market. In particular, these assets were acquired at close to land bank and provide future development potential while maintaining income from quality buildings. In Derrimut, since 2020, CIP has acquired eight assets to build a scaled portfolio in two key locations within the market.
The Derrimut portfolio now provides assets ranging from 3,000 sq m to 14,000 sq m and diverse subsector customers in cold storage, distribution centers, and transport logistics, providing a highly desirable estate-like diversified exposure. CIP will continue to pursue this strategy in favored markets to deliver long-term value and income to unitholders. Slide 21 outlines our customer base. CIP's key focus is on ensuring ongoing reliable income streams. CIP's income remains dependable, with 43% derived from CIP's top 10 blue-chip customers. Given our strong customer relationships, most of these top 10 customers have multiple sites within the portfolio and have long leases. This group alone has an average WALE of over 14 years.
Half year 2022 introduced a number of new and high-quality tenant customers through leasing and acquisitions, and the portfolio is now supported by 155 tenant customers, adding to the resilience of CIP's income streams. Turning to valuations on slide 22. Net tangible assets or NTA continued to grow to AUD 4.21, a 10% increase during the half. The growth in NTA was predominantly driven by revaluation gains of AUD 281 million on a like-for-like basis. Valuation uplift was driven by competition and investment demand for industrial and logistics assets, with elevated transaction volumes setting new benchmarks for major asset and portfolio sales. Pleasingly, major leasing across the portfolio was a key driver of valuation uplift, with approximately 25% directly attributable to leasing outcomes.
Of particular note was the renewal of Real Pet Food Company at Ingleburn and Orora Packaging at Bibra Lake. CIP's weighted average capitalization rate now sits at 4.91%. Looking into sustainability on slide 23. CIP benefits from Centuria Capital Group's threefold sustainability framework, defined by conscious of climate change, valued stakeholders, and responsible business principles, with each aligned to either an environment, social, or governance theme. In October 2021, Centuria published its first sustainability report, including ESG initiatives undertaken by CIP, including initial disclosures aligned to the Task Force on Climate-related Financial Disclosures, disclosures aligned to Global Reporting Initiative Sustainability Reporting Standards, and delivery of Centuria's second modern slavery statement. It is important to note that CIP is externally managed by Centuria, meaning the REIT does not employ personnel, which is a consideration when assessing sustainability.
Specific to the environment on slide 24, throughout half year 2022, CIP participated in the NABERS Warehouse and Cold Storage Accelerate program, designing the next generation of sustainable industrial assets. It's seen an additional 1 MW of solar installed across the portfolio, reducing total emissions across our value chain. Having already completed one of Australia's first five-star Green Star industrial developments under the new ratings guidelines, CIP is on track to also achieve a five-star rating on its new development in Dandenong South. On to slide 26. Since commencing half year 2022, CIP has made a strong start and acquired four urban infill assets with AUD 93.2 million, increasing CIP's portfolio to 84 high-quality industrial assets skewed to urban infill locations and a portfolio value of over AUD 4 billion. To conclude on slide 26, Australian industrial property remains a highly favored asset class.
Tenant demand remains unabated, driving national industrial vacancy rates to record lows. With demand for industrial space expected to remain elevated, thanks to consumer shifts to e-commerce and onshoring to maintain supply chain resilience, we continue to see limited supply within these urban infill markets. On the back of this, expect to see industrial rents continue to rise. Coupled with sustained global investment demand for quality Australian industrial assets, upward pressure continues to be applied on asset values. As Australia's largest domestic pure-play industrial REIT, CIP has delivered an exceptional half-year 2022 result. During the half, CIP executed its strategy, delivering on leasing and value add projects to drive occupancy to over 99% and crystallizing rental growth on key leasing outcomes.
Acquisitions continue to complement the portfolio with the addition of AUD 680 million of transactions, providing increased exposure to urban infill markets on the eastern seaboard to capture the forecast rental growth and bolster CIP's value add pipeline. Valuation gains drove NTA to AUD 4.21 per security. Together with acquisitions, grew the portfolio to AUD 4 billion while maintaining a suitable capital structure. CIP's position has been reinforced as a major owner of industrial property, having grown the fund scale and investor relevance. With an active approach to management and dedicated industrial team, the portfolio is well-positioned to leverage this scale as investor appetite and tenant demand continues. Let's move to our final slide on guidance.
Looking to the balance of the year ahead, CIP started the year in a strong position and will continue to focus on a strategy to deliver reliable income streams and capital return growth to investors. With the strong performance of the portfolio, CIP upgrades forecast FFO guidance to no less than AUD 0.182 per unit, an increase from AUD 0.181 per unit at the commencement of financial year 2022. Distributions are forecast at AUD 0.173 per unit, reflecting a 4.6% distribution yield, absent any unforeseen events. Thank you for listening. At this point, I'll open the call to any questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. If you need to cancel your request, please press the pound or hash key. Our first question comes from Richard Jones at JP Morgan. Please go ahead.
Thanks, and good morning, Jesse. Just interested, as we head into the second half, the full benefit of the occupancy gains and the debt refinance, are they likely to be a stronger contributor to growth than what was experienced through the first half numbers?
Yeah, I think there's two things to think about in relation to going forward. A lot of the leasing that we saw and the higher occupancy is back-ended or will come through at points of time in the second half of the financial year. In addition, you'll note that our cost of debt for the first half of the year was rather low at 1.8%. That's gonna look to normalize at more like 2.6% as we've rolled off shorter-term facilities and rolled into the longer term bond. You're gonna see acquisitions and leasing start to provide positive impacts to the second half of the year, but our debt costs will be higher.
Okay. The debt cost is an average and then what spot is higher at the moment, is it in sort of that mid two range post the bonds?
Yeah. Correct.
Sorry, Jesse, I don't know whether I cut you off there, but just looking at future acquisitions, can you talk about how you balance kind of NTA or NAV growth, which you've obviously been able to deliver, you know, exceptional growth over the last sort of three years versus earnings growth, which, you know, has obviously not been as strong. Just how you think about balancing those two.
Yeah. I mean, you look at our gearing today, and we're sitting at 30.5%. That's at the very lowest point in our gearing range. One of the levers is obviously to look at debt funding any future acquisitions. We've also completed a large number of shorter WALE urban infill acquisitions, which we believe are gonna provide good value add pipeline to the portfolio moving forward. Acquisitions we've completed over the half have an average WALE of 4.4 years. You can expect to start to see this rental growth that we're seeing in the market start to be realized as we start to deal with those lease expiries and complete the value add pipeline, as well as any developments that we've got coming through the book.
Great. Thanks, Jesse.
Our next question comes from Tom Bodor at UBS. Please go ahead.
Morning, Jesse. Thanks for the update. I think a similar sort of line of questioning from me I just wanted to understand how you reconcile that like-for-like income growth of 2.9%, which slowed from 3.5% last financial year, despite very strong leasing spreads on renewals.
Yeah. I think the first thing to think about is timing. Some of the deals won't have hit in the last half, and they'll continue to hit in the next half and also into FY 23 as well. Other drivers of our strong positive reversion on those leases was there were a number of assets that weren't included in our like-for-like. We achieved strong results at Bella Vista, Cooper Plains and Bushells that all sit outside of our like-for-like. We've also got a number of smaller assets that have also offset that, where rents have come back slightly. The Warnervale asset, for instance, at the beginning of this financial year, saw a slight negative reversion on that renewal and re-leasing.
Okay. That leasing was done in the prior period, was it, the Warnervale asset?
Correct.
Yeah. Okay. Thanks. Then the other.
The lease commenced in July of this year.
Yeah.
Sorry.
Okay. Yeah, thanks. The other question I had was just how you're sort of thinking about accessing this rental upside, just given now that occupancy is pretty high, and there's been a more near-term lease expiry and a pretty long WALE?
Yeah, I mean, we've got over 30% of the portfolio expires over the next four years, as I stepped through in the presentation. Our exposure to positive reversion is going to be on that expiry profile in any of those upcoming years. Alternatively, if we bring forward leasing of some of those vacancies as well, you might see that start to come through earlier. We're also still gonna remain active on the transactions front, and that's gonna continue to drive additional income streams through either deploying our funds into developments as we have in Dandenong and Campbellfield, as well as our value add projects such as Wetherill Park and Bella Vista.
Okay, thanks. Just one final one, just around the debt restructuring of AUD 3.2 million. Can you just talk to what that related to?
The debt restructuring?
The FFO.
Uh.
In the FFO to stat rec, there was a AUD 3.2 million charge around debt restructuring.
The charge around debt restructuring was in relation to the bond issue.
Okay
write-offs.
Okay, thanks.
Our next question comes from Sholto Maconochie at Jefferies. Please go ahead.
Hi, Jesse. Just a couple of follow on from the earlier questions from Jamesy and Tom. The lower WALE, I take it, was because of the acquisitions that were backdated that were lower WALE assets, so you kept that reversion. Is that correct?
There's gonna be a natural roll-off of leases as you roll forward. But yes, there have been an element of the acquisitions coming through being lower WALE than our average WALE.
Just when you look at the expiry from Tom's question, you look at the expiry, you're obviously 31%, but the near term is pretty low. You got 0.8% this year, 0.2% this year, 5.6% next year. It's more back-ended. How you've obviously got the developments and things like that, but how do you sort of capture bigger growth? Because is it. I'm trying to understand, what do you have any inflation-linked leases in your portfolio?
We do. There's gonna be three main drivers that are gonna drive rental growth over the near term. One, we've got the Telstra asset, which accounts for approximately 11%-12% of income, and we've seen historic inflation. The last rent review we did was about 3% on that lease. You've then obviously got the expiries that are gonna come through the book naturally. For the balance of this year, 2%, 5.6% the year after. You're then looking at also. ... the developments and the value add projects that are coming through as well. We'll complete- on our Dandenong development in August, and we've got a number of others in the pipeline to deliver over different time horizons.
Is the Telstra lease, it's got a floor. Is it got CPI or is this fixed and it has reviews? How does the lease work on that again?
It's CPI linked, and the rent can't go backwards, and it's rebased every year. You capture every increase in CPI.
Okay, great. It says you've got fixed rent reviews of 79% across the portfolio. What's the average fixed rent review of that 79%?
2.8%.
Okay, 2.8%. Okay. And then, just confirming on the debt, I think you said to Jamesy 2.6% is a probably normalized rate for second half because of the bond issue. So we should put that in because it was more an end of period things. Is that correct?
Correct.
Just if you look at the full year, because you had the back end of leasing like for like came off, what are you targeting for the full? Because you get the benefit second half for the like for like. Are you still targeting at 3.5 in line with last year?
I think it's gonna be close to 2.5-3.
2.5-3. Okay, cool. Just finally, given you've hit close to AUD 4 billion, if you look at just the back end, you're buying stuff on four. If you've got AUD 290 million of liquidity, if you buy stuff on 4, you've got 2.5 cost debt. That gives you 1.5 plus 60 bits, 0.9. Has there been talk by the manager to lower the fee when assets go above AUD 4 billion to 50 basis points? I know it may not be your domain, but has there been talk of that given the cap rates have come down so much?
We think that the current management fees are in line with market, probably even a little bit below market. I think the other thing you've got to remember about our fees is we don't charge acquisition fees, we don't charge divestment fees, and we don't charge performance fees. It's a flat fee.
Okay. That's probably why the NTA grows. Okay, that's great. Thanks very much for your time.
Thanks, Sholto.
Our next question comes from Andy MacFarlane at Jarden. Please go ahead.
Oh, hi, James. Just a quick one from me. Given how strong the market's been, could have been, you know, at least to you know, increased the asset base by 21%, have you given any thought to disposing assets? Where you think, you know, you did one during the period, but where you think their actual mark to market is stronger than what you really believe the outlook is?
We've had a history of divesting assets where we felt they weren't complementary to the portfolio anymore. During this half, we divested 99 Quill Way over in Perth for a 16% premium to book. We've previously divested our Boondall asset in Queensland, also at a premium to book on the back of leasing outcomes. We're continuing to review the portfolio and where there's an opportunity to achieve mispriced or favorable pricing, we'll look to divest those assets.
Got it. Thanks, Jesse.
Our next question comes from Lauren Berry at Morgan Stanley. Please go ahead.
Well, thanks. Hi, Jesse. Just a question on the leasing spreads. You did 10% in the half. Could you just give a bit more color around what the spreads were like in each state?
Yeah, sure. I'll give you the spreads of where we saw new deals and renewals to start with. New deals, we saw an 18% positive spread to new deals and about a 5% premium to renewals coming through over that. The majority of the leasing came from our New South Wales portfolio, with a small portion being our VIC portfolio and then our WA portfolio, with all states delivering positive reversion across all of them.
Cool. What about incentives? How have they been tracking versus the last couple of halves?
Yeah, incentives have been trending down, so we're averaging incentives around 13% on new deals.
Cool. Can I just ask a bit more about the debt deal that you did in the half, you know, where you restructured the swap and it looks like it's gonna increase, the rate in three years' time? Could you just explain that one a little bit further?
Sure. We raised AUD 350 million through a six-year bond, and that rate was 3.02%. We swapped that back to variable and then entered into a three-year swap. That reduced, for the next three years, the all-in debt cost to 2.4%. We'll obviously adopt a floating rate at a point in time in three years, and our structure there is reflective of our view or probably a neutral view around where interest rates are heading.
Okay. Right. It just swaps back to floating. It doesn't go to a different fixed rate after that. Okay. Cool. Can I just ask about, you know, your view on the acquisition pipeline over the next six to 12 months? We've had a pretty significant interest rate, you know, increase in bond yields. Does this change your view on your acquisition strategy or the portfolio in any way?
I think our acquisition strategy remains consistent. We've had a focus on urban infill assets with shorter WALE over the last 12-24 months, with the view that we saw pretty significant rental growth starting to come through the market, and being leveraged to that was one of our key objectives. Most of all, in fact, all our deals over this last 6 months and the majority of deals we do are off market, and majority of those deals are targeted. We have a very, very strong industrial transactions team within the business. We have very strong relationships within the market, and we're seeing deals that potentially other competitors aren't through our targeted approach, and our strategy around being able to consolidate these sites. I think we still see value in the market.
We still see mispricing to our benefit to be able to extract value out of our acquisition opportunities. I know I've talked about it a lot in the presentation, but Wetherill Park's a good example of that. We're all in on that land across those three acquisitions for AUD 1600 a sq m, and you're seeing prevailing market pricing for Sydney land prices at close to AUD 1500 a sq m. You know, we're seeing good arbitrage where you can get good quality buildings at near or close to land value in certain markets.
Great. Thanks.
Once again, if you wish to ask a question, please press star one on your telephone. Our next question comes from Taylor Whiteley at Macquarie. Please go ahead.
Morning, Jesse and team. Thank you for your time this morning. Just wanted to go back to the comments around guidance. Obviously a positive upgrading there. After reaffirming post the equity raise and a couple of debt-funded acquisitions, be keen to hear about what you're thinking in terms of composition of guidance, any assumptions, and particularly relating to rent relief over the second half, driving that AUD 0.182 per share number.
Sure. Rent relief is gonna be a very minor, and COVID-related relief is gonna continue to be a very minor part of our book. The industrial tenant base has continued to remain resilient, and we've continued to collect in excess of 99% of our rent. Looking at what's factored into the balance of the year of guidance, there are no acquisitions factored in for the balance of the year. There are 0.8% of leasing assumptions that have various start dates. We're still carrying a small amount of vacancies, so there's some provisions in there to achieve leasing outcomes on those, as well as the higher debt costs, which I mentioned earlier.
Yeah, sure. Is that sort of, I guess, offsetting a lot of these debt-funded acquisitions in some ways? It's looking like on a per share basis, at least an even split first half, second half. Is it fair to say that those two impacts are washing each other, at least for this financial period?
Yeah, that's a fair assessment.
Fantastic. Final one from me was just on the active portfolio, and you mentioned the potential for rental upside there. Obviously a WALE of 5.1 years, but just any color you can provide around, I guess, the embedded level of underrenting on that active portion of the portfolio and, you know, what time horizon can investors realistically expect, you know, that upside to come through?
Yeah. I think the best way to reflect that is with our WALE. The natural opportunity to capture rental reversion is at the expiry of a lease or expiry of the contract we sign with tenants. Our weighted average lease expiry graph that we've got on slide 16 is your best guide.
Sure. Any comments around, I guess, embedded upside potentially in there? Obviously, it's been a focus of some recent acquisitions. Can you speak to where maybe the portfolio fits relative to the broader market?
Yeah. At an overall level, the portfolio is very marginally overrented, but that's driven primarily by four assets within Coalplant. When you quarantine those assets out, the portfolio is underrented. The markets with the biggest exposure to that underrenting is New South Wales and Victoria.
Fantastic. That's all from me. Thanks very much, guys.
Thank you, everyone. We have no further questions. Jesse, I'll hand back to you for closing comments.
Excellent. Thank you, operator, and thank you everyone for dialing in today. Thank you also for your support of Centuria Industrial REIT. If you have any follow-up questions, please don't hesitate to contact either myself or Tim Mitchell, our Group Head of Investor Relations, and we look forward to discussing our half year results over the next few weeks. Thank you.