==> picture [134 x 43] intentionally omitted <==

Centuria Industrial REIT and its subsidiaries

ARSN 099 680 252

Annual Financial Report For the year ended 30 June 2021

Centuria Property Funds No. 2 Limited ABN 38 133 363 185 is the Responsible Entity for Centuria Industrial REIT.

Centuria Industrial REIT Table of contents

For the year ended 30 June 2021

Contents
	Page
Directors' report	1
Auditor's Independence Declaration	6
Consolidated financial statements	7
Directors' declaration	37
Independent auditor's report	38
Corporate Governance Statement	42
Additional stock exchange information	43

Directors' report

For the year ended 30 June 2021

The directors of Centuria Property Funds No. 2 Limited, the Responsible Entity of Centuria Industrial REIT ('CIP') present their report, together with the consolidated financial statements of the Trust and its subsidiaries ('the Trust') for the year ended 30 June 2021 and the independent auditor's report thereon.

Directors of the Responsible Entity

The directors of Centuria Property Funds No. 2 Limited during or since the end of the financial year are:

Name	Appointed	Resigned	Directorship of other listed companies
Roger Dobson	01 Oct 2017
Peter Done	26 Jun 2017		Centuria Capital Limited
Nicholas Collishaw	01 Oct 2017		Centuria Capital Limited; and
			Redcape Hotel Group Management Limited
Natalie Collins	29 Jul 2020
Jennifer Cook	01 Jul 2021
Darren Collins	26 Jun 2017	29 Jul 2020
Matthew Hardy	26 Jun 2017	29 Jul 2020

The company secretary of Centuria Property Funds No. 2 Limited during or since the end of the financial year is:

Name	Appointed
Anna Kovarik	05 Jul 2018

Refer to Note D2 of the annual financial report for directors' unit holdings in the Trust.

No director holds a right or option over interests in the Trust. No options over any issued or unissued units in the Trust have been issued to any director.

There are no contracts to which any director is a party to under which a director is entitled to a benefit and/or confers a right to call for or be delivered interests in the Trust.

Principal activities

The Trust is a registered managed investment scheme domiciled in Australia.

The principal activity of the Trust is investment in industrial property within Australia. There have been no significant charges in the nature of the Trust's activities since the date of the Trust's establishment.

The Trust did not have any employees during the financial year.

Significant changes in the state of affairs

In the opinion of the Responsible Entity there were no significant changes in the state of affairs of the Trust that occurred during the financial year.

Review of operations

Results

The results of the operations of the Trust are disclosed in the consolidated statement of profit or loss and other comprehensive income of these financial statements. The Trust's profit from continuing operations for the year ended 30 June 2021 was $611,239,000 (30 June 2020: $75,337,000).

As at 30 June 2021, the Trust's Net Tangible Assets ('NTA') was $3.83 per unit, representing a 101.0 cents per unit ('cpu') increase from prior year (30 June 2020: $2.82).

Investment property valuations

Due to recent transactional activity in the industrial and logistics real estate sector, capitalisation rates across the sector have tightened. The Trust has externally revalued 56 investment properties as at 31 March 2021 and again revalued the entire property portfolio in June 2021. On a like for like basis, the investment properties valuation of the Trust increased $424.3 million from the prior year.

Centuria Industrial REIT 1 30 June 2021

Directors' report

Review of operations (continued)

Investment property valuations (continued)

The total value of the Trust's portfolio as at 30 June 2021 was $2,945.1 million (30 June 2020: $1,602.4 million).

On a like for like basis, the Trust’s weighted average capitalisation rate (WACR) firmed 124 basis points to 4.81% during the year. The Trust acquired a further 14 investment properties during the year at a WACR of 4.85%. The WACR of these acquisitions was 3.93% as at 30 June 2021. The Trust’s total portfolio WACR firmed to 4.54% as at 30 June 2021 (30 June 2020: 6.05%).

Leasing and occupancy

The Trust secured 239,950 square metres ('sqm') of leases across 33 transactions for the year ended 30 June 2021. This represented 22% of the portfolio's gross lettable area.

At 30 June 2021, the Trust's portfolio was 96.9% occupied with a Weighted Average Lease Expiry ('WALE') of 9.6 years. For the upcoming financial year ending 30 June 2022, lease expiries represent 4.7% of portfolio income.

Acquisitions

During the year, the Trust acquired 14 investment properties for $785.5 million, entered into unconditional contracts to acquire 4 investment properties for $89.6 million which had not settled as at 30 June 2021 and entered into an option to acquire one investment property for $27.0 million. Refer to Events Subsequent to Balance Date for settlement of acquisitions post reporting date.

Capital management

As at 30 June 2021, the Trust had a multi-bank loan facility totalling $1,210.0 million (30 June 2020: $650.0 million) with a weighted average expiry of 2.8 years (30 June 2020: 3.3 years). Drawn borrowings totalled $936.5 million (30 June 2020: $454.4 million), with an all-in interest cost of 1.83% (30 June 2020: 3.44%) and 10.7% of the total drawn debt at fixed rates via fixed rate borrowing (30 June 2020: 90.2%). The Trust's gearing at 30 June 2021 was 27.8% (30 June 2020: 27.2%). The Trust terminated all existing swaps at 30 June 2021 and established new swaps on 1 July 2021. Refer to Events Subsequent to Balance Date for more information.

Outlook

The Responsible Entity’s strategy and ongoing focus remains unchanged. The Responsible Entity continues to focus on portfolio leasing to ensure occupancy and income are maximised, active asset management, risk mitigation and repositioning strategies. The Responsible Entity is focused on acquiring quality assets in order to enhance existing stable and secure income streams.

The Trust's FFO guidance for the year ending 30 June 2022 is expected to increase to no less than 18.1 cpu, 2.8% from financial year 2021. The distribution guidance for the year ending 30 June 2022 is expected to be 17.3 cpu which will be paid in equal quarterly instalments.

Distributions

Distributions paid or payable in respect of the financial year were:

September quarter December quarter March quarter June quarter Total	30 June 2021 30 June 2020 Cents per unit $'000 Cents per unit $'000 4.250 21,638 4.675 14,086 4.250 23,404 4.675 16,225 4.250 23,452 4.675 16,244 4.250 23,451 4.675 18,713
	17.000 91,945 18.700 65,268

Key dates in connection with the 30 June 2021 distribution are:

Event	Date
Ex-distribution date	29 June 2021
Record date	30 June 2021
Distribution payment date	10 August 2021

Centuria Industrial REIT 2 30 June 2021

Directors' report

Review of operations (continued)

Distributions (continued)

FFO for the year ended 30 June 2021 was $91.4 million (30 June 2020: $63.5 million), representing a 44.0% increase from prior year.

The Trust paid distributions of 17.0 cpu during the 2021 financial year which was in line with guidance provided as part of the June 2020 year end result. The following table provides a reconciliation from the consolidated statement of profit or loss and other comprehensive income to the FFO for the year:

Net profit for the year t Adjustments: Net (gain) on fair value of investment properties Straight-lining of rental income Rent free and abatement Amortisation of incentives and leasing fees Net (gain)/loss on fair value of derivative financial instruments Transaction costs Funds from operations	30 June 2021 $'000 30 June 2020 $'000 611,239 75,337 (523,329) (18,129) (8,719) (7,508) 5,408 5,430 3,477 4,129 (1,966) 2,477 5,330 1,759
	91,440 63,495

The Trust issued 151.5 million units across equity raises undertaken in September, December and March quarters to fund the acquisition of new properties and to facilitate loan repayments. As units issued during a quarter were entitled to the entirety of the distribution attributable to that quarter, whilst the acquired properties were not held for the duration of the relevant quarter and therefore did not generate income for the entire quarter, distributions for the year have exceeded funds from operations.

Distribution reinvestment plan

The Trust has activated the September quarter, December quarter and June quarter Distribution Reinvestment Plan ('DRP') under which unitholders may elect to have all or part of their distribution entitlement reinvested by the issue of new units rather than distributions being paid in cash.

Environmental regulation

The Trust’s operations are not subject to any significant environmental regulation under Commonwealth, State or Territory legislation.

Options granted

No options were granted over unissued units in the Trust during or since the end of the financial year.

No unissued units in the Trust were under option as at the date of this report.

No units were issued in the Trust during or since the end of the financial year as a result of the exercise of an option over unissued units in the Trust.

Related party transaction

On 15 March 2021, the Trust sold 136 Zillmere Road, Boondall QLD to an unlisted Centuria syndicate, Centuria Industrial Income Fund No. 1 for $39.6 million on an arms length basis. No fees were paid by the Trust to Centuria Group and its subsidiaries in relation to this sale.

Centuria Industrial REIT 3 30 June 2021

Directors' report

Events subsequent to balance date

The Trust settled the following four acquisitions subsequent to 30 June 2021 for a total value of $89.6 million:

110 Northcorp Boulevard, Broadmeadows VIC for $37.1 million (plus costs);
160 Newton Road, Wetherill Park NSW for $33.5 million (plus costs);
95 South Gippsland Highway, Dandenong South VIC for $12.0 million (plus costs) ^; and
85 Fulton Drive, Derrimut VIC for $7.0 million (plus costs).

^ Upon settlement, the Trust will consolidate the title of this investment with 105 South Gippsland Highway, Dandenong South VIC. The Trust entered a Development Management Agreement to construct a six-tenancies industrial estate on 95-105 South Gippsland Hwy, Dandenong South VIC.

On 23 July 2021, the Trust exercised a call option and exchanged contracts to acquire 29 Penelope Crescent, Arndell Park NSW for $27.0 million (plus costs). The settlement is expected to complete in September 2021.

The Trust exchanged contracts to acquire 164 Newton Road, Wetherill Park NSW for $36.8 million (plus costs) on 3 August 2021. The settlement is expected to complete in August 2021.

On 1 July 2021, the Trust established eight new swaps with a face value of $400.0 million. The Trust's loan facilities that are on a fixed interest basis increased to $500.0 million and 53.4% of drawn debt is fixed through swaps and fixed rate borrowings.

There are no other matters or circumstances which have arisen since the end of the financial year and the date of this report, in the opinion of the Responsible Entity, which significantly affect the operations of the Trust, the results of those operations, or the state of affairs of the Trust, in future financial years.

Indemnifying officers or auditors

Indemnification

Under the Trust's constitution, the Responsible Entity, including its officers and employees, is indemnified out of the Trust’s assets for any loss, damage, expense or other liability incurred by it in properly performing or exercising any of its powers, duties or rights in relation to the Trust.

The Responsible Entity has not indemnified or agreed to indemnify any auditor or other officer of the Trust, or any related body corporate.

Insurance premiums

The Responsible Entity has paid insurance premiums in respect of directors’ and officers’ liability and legal expense insurance contracts, for current and former directors and officers, including senior executives of the Responsible Entity.

Trust information in the directors' report

Responsible Entity interests

The following fees were paid or payable to the Responsible Entity and related parties during the financial year:

Management fees Property management fees Custodian fees Facility management fees Project management fees Leasing fees Due diligence acquisition fees Administrative costs	30 June 2021 $'000 30 June 2020 $'000 14,118 8,749 1,652 1,900 1,093 587 964 272 815 357 767 505 375 175 162 -
	19,946 12,545

Centuria Industrial REIT 4 30 June 2021

Directors' report

Trust information in the directors' report (continued)

Responsible Entity interests (continued)

The Responsible Entity and/or its related parties have held units in the Trust during the financial year are outlined in D2 to the financial statements.

Other Trust information

The number of units in the Trust issued during the financial year, and the balance of issued units at the end of the financial year are disclosed in Note C9 to the financial statements.

The recorded value of the Trust’s assets as at the end of the financial year is disclosed in the consolidated statement of financial position as “Total assets” and the basis of recognition and measurement is included in the notes to the financial statements.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.

Rounding of amounts

The Trust is an entity of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, related to the 'rounding off' of amounts in the Directors' Report and financial statements. Amounts in the Directors' Report and financial statements have been rounded off, in accordance with the instrument, to the nearest thousand dollars, unless otherwise indicated.

This report is made in accordance with a resolution of Directors.

==> picture [48 x 40] intentionally omitted <==

Roger Dobson Director

==> picture [61 x 42] intentionally omitted <==

Peter Done Director

Sydney 5 August 2021

Centuria Industrial REIT 5 30 June 2021

==> picture [90 x 67] intentionally omitted <==

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of Centuria Property Funds No. 2 Limited, the Responsible Entity of Centuria Industrial REIT

I declare that, to the best of my knowledge and belief, in relation to the audit of Centuria Industrial REIT for the financial year ended 30 June 2021 there have been:

i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in relation to the audit

==> picture [64 x 27] intentionally omitted <==

KPMG

==> picture [63 x 43] intentionally omitted <==

Peter Zabaks Partner

Sydney 5 August 2021

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

Centuria Industrial REIT Annual Financial Report

For the year ended 30 June 2021


Contents	Page
Consolidated statement of profit or loss and other comprehensive income	8
Consolidated statement of financial position	9
Consolidated statement of changes in equity	10
Consolidated statement of cash flows	11
Note to the financial statements	12
A About the report	12
A1 General information	12
A2 Significant accounting policies	12
B Trust performance	14
B1 Distribution	14
B2 Revenue	14
B3 Expenses	15
B4 Earnings per unit	16
C Trust's assets and liabilities	17
C1 Trade and other receivables	17
C2 Other non-current assets	17
C3 Investment properties	18
C4 Investment properties held for sale	23
C5 Intangibles	23
C6 Trade and other payables	24
C7 Borrowings	25
C8 Derivatives	25
C9 Issued capital	26
C10 Contingent assets, liabilities and commitments	26
C11 Cash and cash equivalents	27
D Trust structure	28
D1 Interest in material subsidiaries	28
D2 Related parties	29
D3 Parent entity disclosures	32
E Other notes	33
E1 Auditor's remuneration	33
E2 Financial instruments	33
E3 Events subsequent to reporting date	36
E4 Additional information	36
Directors' declaration	37
Independent auditor's report	38

Centuria Industrial REIT 7 30 June 2021

Consolidated statement of profit or loss and other comprehensive income

For the year ended 30 June 2021

Note Revenue Rent and recoverable outgoings B2 Total revenue from continuing operations Other income Interest income Net gain on fair value of investment properties C3 Gain on fair value of derivative financial instruments Total other income Total revenue from continuing operations and other income Expenses Rates, taxes and other property outgoings Finance costs B3 Management fees D2 Other expenses Loss on fair value of derivative financial instruments Profit from continuing operations for the year Net profit for the year Blank Other comprehensive income Other comprehensive income for the year Total comprehensive income for the year B4 Basic and diluted earnings per unit Basic earnings per unit (cents per unit) B4	30 June 2021 $'000 30 June 2020 $'000 160,348 118,163
	160,348 118,163
	14 70 523,329 18,129 1,966 -
	525,309 18,199
	685,657 136,362 31,532 28,583 25,860 18,621 14,118 8,749 2,908 2,595 - 2,477
	611,239 75,337
	611,239 75,337
	- -
	611,239 75,337
	117.7 22.5

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Centuria Industrial REIT 8 30 June 2021

Consolidated statement of financial position

As at 30 June 2021

Note ASSETS Current assets Cash and cash equivalents C11 Trade and other receivables C1 Other assets Investment properties held for sale C4 Total current assets Non-current assets Other non-current assets C2 Investment properties C3 Intangibles C5 Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables C6 Distributions payable B1 Total current liabilities Non-current liabilities Borrowings C7 Derivative financial instruments C8 Total non-current liabilities Total liabilities Net assets EQUITY Issued capital C9 Retained earnings Total equity	30 June 2021 $'000 30 June 2020 $'000 105,543 17,078 6,835 5,805 2,464 - 9,000 11,300
	123,842 34,183
	35,459 - 2,936,057 1,591,100 10,501 10,501
	2,982,017 1,601,601
	3,105,859 1,635,784
	26,832 19,608 23,451 18,713
	50,283 38,321
	933,276 452,401 - 6,019
	933,276 458,420
	983,559 496,741
	2,122,300 1,139,043
	1,531,361 1,067,398 590,939 71,645
	2,122,300 1,139,043

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Centuria Industrial REIT 9 30 June 2021

Consolidated statement of changes in equity

For the year ended 30 June 2021

Note Balance at 1 July 2019 Net profit for the year Total comprehensive income for the year Units issued C9 Dividend reinvestment plan ('DRP') C9 Equity raising costs C9 Distributions provided for or paid B1 Balance at 30 June 2020 Balance at 1 July 2020 Net profit for the year Total comprehensive income for the year Units issued C9 Dividend reinvestment plan ('DRP') C9 Equity raising costs C9 Distributions provided for or paid B1 Balance at 30 June 2021	Issued capital $'000 Retained earnings $'000 Total equity $'000 687,971 61,576 749,547
	- 75,337 75,337
	- 75,337 75,337 383,753 - 383,753 4,950 - 4,950 (9,276) - (9,276) - (65,268) (65,268)
	1,067,398 71,645 1,139,043
	1,067,398 71,645 1,139,043
	- 611,239 611,239
	- 611,239 611,239 465,786 - 465,786 7,704 - 7,704 (9,527) - (9,527) - (91,945) (91,945)
	1,531,361 590,939 2,122,300

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Centuria Industrial REIT 10 30 June 2021

Consolidated statement of cash flows

For the year ended 30 June 2021

Note Cash flows from operating activities Receipts from customers Payments to suppliers Interest received Interest paid Net cash generated by operating activities C11 Cash flows from investing activities Payments for investment properties Proceeds from sale of investment properties Net cash used in investing activities Cash flows from financing activities Distribution paid Proceeds from borrowings Repayment of borrowings Payments for borrowing costs Proceeds from issue of units Equity issue costs Net cash generated by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the financial year Cash and cash equivalents at end of financial year C11	30 June 2021 $'000 30 June 2020 $'000 167,575 122,986 (57,121) (36,737) 14 70 (26,801) (20,984)
	83,667 65,335
	(889,008) (361,587) 37,436 -
	(851,572) (361,587)
	(79,503) (54,064) 827,093 187,051 (345,000) (202,593) (2,398) (971) 465,786 383,753 (9,608) (9,194)
	856,370 303,982
	88,465 7,730 17,078 9,348
	105,543 17,078

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Centuria Industrial REIT 11 30 June 2021

Note to the financial statements

For the year ended 30 June 2021

A About the report

A1 General information

Centuria Industrial REIT is a registered managed investment scheme under the Corporations Act 2001 and domiciled in Australia. The principal activity of the Trust is disclosed in the Directors' report.

Statement of compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).

For the purposes of preparing the financial statements, the Trust is a for-profit entity.

The financial report was authorised for issue in accordance with a resolution of the board of directors of Centuria Property Funds No. 2 Limited ('CPF2L'), the Responsible Entity, on 5 August 2021.

Basis of preparation

The consolidated financial statements have been prepared on the basis of historical cost, except for investment properties, derivative financial instruments and financial assets at fair value through profit and loss, which have been measured at fair value at the end of the reporting period. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, which is the Trust’s functional currency, unless otherwise noted.

(i) Going concern

The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

Rounding of amounts

The Trust is a scheme of a kind referred to in ASIC Legislative Instrument 2016/191, related to the ‘rounding off’ of amounts in the Directors’ Report and financial statements. Amounts in the Directors’ Report and financial statements have been rounded off, in accordance with the instrument to the nearest thousand dollars, unless otherwise indicated.

A2 Significant accounting policies

The accounting policies and methods of computation in the preparation of the consolidated financial statements are consistent with those adopted in the previous financial year ended 30 June 2020 unless specifically outlined below or in the relevant notes to the consolidated financial statements.

When the presentation or classification of items in the consolidated financial statements has been amended, comparative amounts are also reclassified, unless it is impractical.

Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events are reported.

These financial statements contain all significant accounting policies that summarise the recognition and measurement basis used and which are relevant to provide an understanding of the financial statements. Accounting policies that are specific to a note to the financial statements are described in the note to which they relate.

Use of estimates and judgements

In the application of the Trust's accounting policies, the Responsible Entity is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The judgements, estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements. Actual results may differ from these estimates.

Centuria Industrial REIT 12 30 June 2021

About the report

A2 Significant accounting policies (continued)

Use of estimates and judgements (continued)

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if the revision affects both current and future periods. The key estimates and judgements in the financial report relate to the valuation of investment properties (per Note C3), goodwill (per Note C5) and derivative financial instruments (per Note E2).

Judgements made by the Responsible Entity that have significant effects on the financial statements and estimates with significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.

Segment reporting

The Trust operates in one segment, being investments in Australian industrial property. The Trust has determined its one operating segment based on the internal information that is provided to the chief operating decision maker and which is used in making strategic decisions. The Responsible Entity has been identified as the Trust’s chief operating decision maker.

Centuria Industrial REIT 13 30 June 2021

B Trust performance

B1 Distribution

B1 Distribution
		30 June	2021	30 June	2020
	Cents per unit		$'000	Cents per unit	$'000
September quarter		4.250	21,638	4.675	14,086
December quarter		4.250	23,404	4.675	16,225
March quarter		4.250	23,452	4.675	16,244
June quarter		4.250	23,451	4.675	18,713
Total		17.000	91,945	18.700	65,268
Key dates in connection with the 30 June 2021 distribution are:
Event	Date
Ex-distribution date	29 June	2021
Record date	30 June	2021
Distribution payment date	10 August 2021

Distribution and taxation

Under current Australian income tax legislation, the Trust is not liable for income tax for the financial year as the Trust has fully distributed its distributable income as determined under the Trust’s constitution, whilst its unitholders are presently entitled to the income.

Distributions paid and payable are recognised as distributions within equity. A liability is recognised where distributions have been declared but have not been paid. Distributions paid are included in cash flows from financing activities in the consolidated statement of cash flows.

B2 Revenue

B2 Revenue
Rental income Recoverable outgoings Straight-lining of lease revenue	30 June 2021 $'000 30 June 2020 $'000 129,470 92,120 22,159 18,535 8,719 7,508
	160,348 118,163

Recognition and measurement

Revenue is measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Trust and the revenue can be reliably measured.

(i) Rental income

Rental income from investment property is recognised in profit or loss on a straight line basis over the term of the lease. Rental income not received at reporting date is reflected in the consolidated statement of financial position as a receivable. If rents are paid in advance these amounts are recorded as payables in the consolidated statement of financial position.

Lease incentives granted are recognised as an integral part of the net consideration agreed for the use of the leased premises, irrespective of the incentive's nature or form or the timing of payments. The aggregate cost of lease incentives are recognised as a reduction of rental income on a straight-line basis over the lease term.

Contingent rents based on the future amount of a factor that changes other than with the passage of time are only recognised when charged.

Centuria Industrial REIT 14 30 June 2021

Trust performance

B2 Revenue (continued)

Recognition and measurement (continued)

(ii) Recoverable outgoings

The Trust recovers the costs associated with general building and tenancy operation from lessees in accordance with specific clauses within lease agreements. These are invoiced monthly based on an annual estimate. The consideration is due 30 days from the invoice date. Should any adjustment be required based on actual costs incurred, this is recognised in the statement of profit or loss and other comprehensive income within the same reporting period and billed annually.

(iii) Interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding using the effective interest rate method.

(iv) Sale of properties

Any gain or loss arising on the sale of an investment property is recognised when the control of the asset is passed on to the buyer, which normally coincides with the settlement of the contract for sale.

B3 Expenses

Recognition and measurement

Finance costs are recognised in the profit or loss statement as they accrue. Finance costs are recognised using the effective interest rate applicable to the financial liability.

(i) Finance costs

Finance costs include interest expense and amortised borrowing costs.

Interest expense Loan repayment break costs Derivative instrument break costs Amortisation of borrowing costs	30 June 2021 $'000 30 June 2020 $'000 19,608 16,510 5,080 - - 1,634 1,172 477
	25,860 18,621

(ii) Other expenses

All other expenses, including rates, taxes and other property outgoings and management fees, are recognised in profit or loss on an accruals basis. Other operating expenses include legal, accounting and audit fees.

(iii) Goods and services tax

Revenues, expenses and assets are recognised exclusive of goods and services tax ('GST') which is recoverable from the Australian Taxation Office ('ATO') as an input tax credit ('ITC').

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included in receivables or payables in the consolidated statement of financial position.

Cash flows are included in the consolidated statement of cash flows with the amount of GST included. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the ATO is classified as operating cash flows.

Centuria Industrial REIT 15 30 June 2021

Trust performance

B4 Earnings per unit

Basic earnings per unit (cents per unit)

Earnings used in calculating basic earnings per unit ($'000) Weighted average number of units ('000)

30	June 2021 30 June 2020	June 2021 30 June 2020
	117.7	22.5
	611,239	75,337
	519,427	335,575

Centuria Industrial REIT 16 30 June 2021

C Trust's assets and liabilities

C1 Trade and other receivables

C1 Trade and other receivables
Current Trade debtors Expected credit loss provision Other current receivables	30 June 2021 $'000 30 June 2020 $'000 3,876 2,284 (221) (85) 3,180 3,606
	6,835 5,805

Refer to Note E2 for details on fair value measurement and the Trust's exposure to risks associated with financial assets (other receivables are not considered to be financial assets).

Recognition and measurement

Loans and receivables are initially recognised at fair value and subsequently amortised cost using the effective interest rate method less any allowance under the expected credit loss ('ECL') model.

Refer to the policy application below for further details.

Recoverability of loans and receivables

At each reporting period, the Trust assesses whether financial assets carried at amortised cost are ‘credit-impaired’. A financial asset is ‘credit-impaired’ when one or more events that has a detrimental impact on the estimated future cash flows of the financial asset have occurred. The Trust recognises loss allowances at an amount equal to lifetime ECL on trade and other receivables. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of the trade receivables and are a probability-weighted estimate of credit losses. Credit losses are measured as the difference between cash flows due to the Trust in accordance with the contract and the cash flows that the Trust expects to receive.

During the year, the Trust has provided $0.1 million ECL provision for the Trade receivables balance and no additional rental waiver was provided.

Given that COVID-19 is an ongoing situation, The Responsible Entity has continued to analyse the age of outstanding receivable balances post balance sheet date and applied estimated percentages of recoverability by tenant adjusted for waivers and deferrals granted, other current observable data as a means to estimate ECL, as well as the financial stress of counterparties and their ability to operate as a going concern. Debts that are known to be uncollectible are written off when identified.

C2 Other non-current assets

During the year, the Trust entered into unconditional contracts to acquire investment properties which have a settlement date after the balance sheet date. As at 30 June 2021, the Trust paid settlement balance for an acquisition that was settled on 1 July 2021. Refer to Note E3 for settlement information.

Non-current Settlement balance - 160 Newton Rd, Wetherill Park NSW	2021 $'000 2020 $'000 35,459 -
	35,459 -

Centuria Industrial REIT 17 30 June 2021

Trust's assets and liabilities

C3 Investment properties

Note Opening balance . . Purchase price of investment properties Stamp duty and other transaction costs Capital improvements and associated costs Capital developments and associated costs Net gain on fair value of investment properties Add back: fair value loss on investment properties held for sale C4 Gain on fair value of investment properties Change in deferred rent and lease incentives Disposed deferred rent and lease incentives Change in capitalised leasing fees Disposal at fair value Closing gross balance Closing balance^	30 June 2021 $'000 30 June 2020 $'000 1,591,100 1,209,850 785,455 310,284 47,424 21,569 4,928 11,512 11,007 11,163
	848,814 354,528
	523,329 18,129 2,300 100
	525,629 18,229 7,165 8,455 2,376 - 573 38 (39,600) -
	2,936,057 1,591,100
	2,936,057 1,591,100

Closing balance^

^ The carrying amount of investment properties includes components related to deferred rent, capitalised lease incentives and leasing fees amounting to $40.2 million (2020: $32.8 million).

Leases as lessor

The Trust leases out its investment properties under operating leases. The future minimum lease payments receivable under non-cancellable leases are as follows:

Less than one year Between one and five years More than five years	30 June 2021 $'000 30 June 2020 $'000 135,750 100,183 439,116 288,126 1,056,285 577,334
	1,631,151 965,643

Centuria Industrial REIT 18 30 June 2021

Trust's assets and liabilities

C3 Investment properties (continued)

C3 Investment properties (continued)
	Fair value		Capitalisation rate			Discount rate
										Last
Property	30 June 2021	30 June 2020	30 June 2021	30 June	2020	30 June 2021	30 June	2020	30 June 2021	independent
	$'000	$'000	%		%	%		%	Valuer	valuation date
QLD
46 Robinson Rd E, Virginia QLD	289,000	211,800	3.88		5.00	5.75		6.75	Savills	Jun 2021
60-80 Southlink St, Parkinson QLD^	56,200	-	4.63		-	6.00		-	CBRE	Jun 2021
22 Hawkins Cres, Bundamba QLD	56,200	47,400	4.88		6.25	6.00		6.50	Savills	Jun 2021
1 Ashburn Rd, Bundamba QLD	55,400	41,250	4.75		6.25	5.25		7.25	M3	Jun 2021
1 Lahrs Rd, Ormeau QLD^	51,500	-	4.63		-	6.00		-	CBRE	Jun 2021
33-37 Mica St, Carole Park QLD	39,200	31,800	5.00		6.25	6.25		7.25	CBRE	Jun 2021
69 Rivergate Pl, Murarrie QLD	36,600	28,500	5.00		6.00	5.75		7.00	Savills	Jun 2021
149 Kerry Rd, Archerfield QLD	35,800	30,800	5.00		5.75	5.75		6.50	JLL	Jun 2021
21 Jay St, Mount St John, Townsville QLD*	32,700	28,300	5.50		6.75	6.25		8.00	CBRE	Jun 2021
46 Gosport St, Hemmant QLD	27,500	23,000	5.50		7.00	6.25		7.75	M3	Jun 2021
680 Boundary St, Richlands QLD	24,000	19,750	5.50		6.75	6.25		7.25	M3	Jun 2021
616 Boundary Rd, Richlands QLD	21,000	16,700	5.75		6.50	6.00		7.25	JLL	Jun 2021
42 Hoepner Rd, Bundamba QLD	18,100	4,300	-		-	6.00		-	M3	Jun 2021
35 Cambridge St, Coorparoo QLD^	14,500	-	5.50		-	6.25		-	JLL	Jun 2021
24 West Link Pl, Richlands QLD	9,500	8,000	5.50		6.50	6.25		7.00	M3	Jun 2021
43-45 Mica St, Carole Park QLD	1,950	1,800	5.25		6.50	-		-	CBRE	Jun 2021
136 Zillmere Rd, Boondall QLD#	-	32,500	-		6.50	-		6.75	-	Jun 2020
NSW
2 Woolworths Way, Warnervale NSW	112,000	74,000	5.00		7.00	5.75		7.00	CBRE	Jun 2021
67-69 Mandoon Rd, Girraween NSW^	90,250	-	4.50		-	5.75		-	Savills	Jun 2021
37-51 Scrivener St, Warwick Farm NSW	65,000	36,750	4.00		6.50	5.50		7.00	CBRE	Jun 2021
29 Glendenning Rd, Glendenning NSW	64,000	52,500	4.13		5.00	5.75		6.25	JLL	Jun 2021
92-98 Cosgrove Rd, Enfield NSW	63,400	50,500	4.50		5.75	5.75		6.50	JLL	Jun 2021
10 Williamson Rd, Ingleburn NSW	60,600	53,400	4.75		5.50	6.00		6.75	Knight Frank	Jun 2021
12 Williamson Rd, Ingleburn NSW	48,000	38,500	4.75		6.00	6.00		6.50	Savills	Jun 2021
457 Waterloo Rd, Chullora NSW	43,500	34,000	4.25		5.25	5.75		6.50	JLL	Jun 2021
74-94 Newton Rd, Wetherill Park NSW	39,000	37,000	4.75		5.50	6.00		6.50	Knight Frank	Jun 2021
6 Macdonald Rd, Ingleburn NSW	30,500	25,100	4.38		5.50	5.75		6.50	Savills	Jun 2021

2 Woolworths Way, Warnervale NSW 67-69 Mandoon Rd, Girraween NSW^ 37-51 Scrivener St, Warwick Farm NSW 29 Glendenning Rd, Glendenning NSW 92-98 Cosgrove Rd, Enfield NSW 10 Williamson Rd, Ingleburn NSW 12 Williamson Rd, Ingleburn NSW 457 Waterloo Rd, Chullora NSW 74-94 Newton Rd, Wetherill Park NSW 6 Macdonald Rd, Ingleburn NSW

Centuria Industrial REIT 19 30 June 2021

Trust's assets and liabilities

C3 Investment properties (continued)

	Fair value	Fair value	Capitalisation rate	Capitalisation rate		Discount rate	Discount rate
										Last
Property	30 June 2021	30 June 2020	30 June 2021	30 June	2020	30 June 2021	30 June	2020	30 June 2021	independent
	$'000	$'000	%		%	%		%	Valuer	valuation date
8 Lexington Dr, Bella Vista NSW^	28,500	-	4.50		-	6.00		-	CBRE	Jun 2021
8 Penelope Cres, Arndell Park NSW	27,500	21,750	4.38		5.50	5.88		6.50	Savills	Jun 2021
52-74 Quarry Rd, Erskine Park NSW	26,500	18,000	4.00		5.50	5.75		6.50	CBRE	Jun 2021
30 Clay Pl, Eastern Creek NSW	24,700	19,500	4.00		5.25	5.75		6.25	Colliers	Jun 2021
144 Hartley Rd, Smeaton Grange NSW^	21,800	-	4.25		-	5.75		-	Knight Frank	Jun 2021
75 Owen St, Glendenning NSW	15,300	9,700	4.00		5.50	5.50		6.50	CBRE	Jun 2021
.
VIC
Telstra Data Centre, Clayton VIC^	505,000	-	3.38		-	5.25		-	Colliers	Jun 2021
207-219 Browns Rd, Noble Park VIC	56,000	45,300	5.00		6.25	6.00		7.25	JLL	Jun 2021
45 Fulton Dr, Derrimut VIC^	56,000	-	4.50		-	6.00		-	CBRE	Jun 2021
324-332 Frankston-Dandenong Rd, Dandenong
South VIC	50,000	34,250	4.65		5.75	5.75		6.75	CBRE	Jun 2021
1 International Dr, Westmeadows VIC	49,000	43,500	5.75		6.75	6.00		7.25	Colliers	Jun 2021
102-128 Bridge Rd, Keysborough VIC	47,500	38,500	5.25		6.50	6.00		7.00	JLL	Jun 2021
24-32 Stanley Dr, Somerton VIC	39,400	31,700	4.75		6.25	6.00		7.00	Savills	Jun 2021
2 Keon Pde, Keon Park VIC	35,500	27,750	4.50		5.50	6.00		6.50	JLL	Jun 2021
69 Studley Ct, Derrimut VIC	35,000	27,000	4.65		5.75	5.50		6.50	CBRE	Jun 2021
75-79 and 105 Corio Quay Rd, North Geelong
VIC	34,300	27,500	5.00		6.00	6.50		7.00	M3	Jun 2021
14-17 Dansu Ct, Hallam VIC	33,000	21,700	4.25		6.50	5.75		7.00	Colliers	Jun 2021
500 Princes Hwy, Noble Park VIC	30,500	24,250	5.00		6.50	5.75		6.75	Colliers	Jun 2021
513 Mt Derrimut Rd, Derrimut VIC^	24,000	-	4.50		-	5.75		-	CBRE	Jun 2021
140 Fulton Dr, Derrimut VIC^	23,350	-	4.50		-	6.00		-	Savills	Jun 2021
12-13 Dansu Ct, Hallam VIC	23,250	19,100	4.50		5.50	6.00		6.75	Savills	Jun 2021
49 Temple Dr, Thomastown VIC	19,750	15,600	5.00		6.25	6.00		7.00	JLL	Jun 2021
179 Studley Crt, Derrimut VIC^	18,300	-	4.50		-	5.75		-	CBRE	Jun 2021
51-73 Lambeck Dr, Tullamarine VIC^	16,600	-	5.00		-	6.00		-	CBRE	Jun 2021
95-105 South Gippsland Hwy, Dandenong Sth
VIC (Site 2)^	15,607	-	-		-	-		-	Directors	Mar 2021

Centuria Industrial REIT 20 30 June 2021

Trust's assets and liabilities

C3 Investment properties (continued)

Property
40 Scanlon Dr, Epping VIC^
9 Fellowes Ct, Tullamarine VIC
WA
310 Spearwood Ave, Bibra Lake WA
Lot 14 Sudlow Rd, Bibra Lake WA
23 Selkis Rd, Bibra Lake WA
16-18 Baile Rd, Canning Vale WA
103 Stirling Cres, Hazelmere WA
92 Robinson Rd, Belmont WA
155 Lakes Rd, Hazelmere WA
.
SA
23-41 Galway Ave, Marleston SA
32-54 Kaurna Ave, Edinburgh Park SA
9-13 Caribou Dr, Direk SA
ACT
54 Sawmill Cct, Hume ACT*

Fair value
Capitalisation rate
Discount rate
30 June 2021
$'000
30 June 2020
$'000
30 June 2021
%
30 June 2020
%
30 June 2021
%
30 June 2020
%
30 June 2021
Valuer
Last
independent
valuation date
15,500
-
5.25
-
6.25
-
Directors
May 2021
6,150
5,100
5.00
6.50
6.00
6.50
JLL
Jun 2021
61,750
55,500
6.25
7.00
6.75
7.50
JLL
Jun 2021
41,500
34,500
6.25
7.00
6.75
7.50
JLL
Jun 2021
21,750
19,500
6.25
7.25
7.25
7.75
CBRE
Jun 2021
19,250
18,100
6.00
7.00
6.50
7.00
Knight Frank
Jun 2021
17,500
15,600
6.00
6.75
7.25
7.00
Savills
Jun 2021
12,500
10,250
6.00
7.25
7.00
7.50
Savills
Jun 2021
10,000
8,000
6.00
6.75
7.00
7.25
Savills
Jun 2021
36,000
24,500
5.00
7.25
6.25
8.00
Colliers
Jun 2021
19,000
19,500
6.25
7.00
7.00
8.00
CBRE
Jun 2021
11,400
8,800
5.75
7.25
6.50
7.75
JLL
Jun 2021
22,000
19,000
5.00
6.00
6.00
6.25
Colliers
Jun 2021
2,936,057
1,591,100
306.09
312.25
375.13
341.25

The Trust holds a leasehold interest in 21 Jay St, Mount St John, Townsville QLD and 54 Sawmill Cct, Hume ACT.

^ Investment properties acquired by the Trust during the year.

The Trust sold 136 Zillmere Road, Boondall QLD on 15 March 2021 for $39.6 million. Refer to Note D2 for more information.

The Trust's weighted average capitalisation rate for the year is 4.54% (2020: 6.05%).

Centuria Industrial REIT 21 30 June 2021

Trust's assets and liabilities

C3 Investment properties (continued)

Recognition and measurement

Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are initially recorded at cost which includes stamp duty and other transaction costs. Subsequently, the investment properties are measured at fair value with any change in value recognised in profit or loss. The carrying amount of investment properties includes components relating to deferred rent, lease incentives and leasing fees.

An investment property is derecognised upon disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

Valuation techniques and significant unobservable inputs

The fair values of the investment properties were determined by the directors of the Responsible Entity or by an external, independent valuation company having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

The valuations were prepared by considering the following valuation methodologies:

Capitalisation Approach: the annual net rental income is capitalised at an appropriate market yield to arrive at the property's market value. Appropriate capital adjustments are then made where necessary to reflect the specific cash flow profile and the general characteristics of the property.
Discounted Cash Flow Approach: this approach incorporates the estimation of future annual cash flows over a 10 year period by reference to expected rental growth rates, ongoing capital expenditure, terminal sale value and acquisition and disposal costs. The present value of future cash flows is then determined by the application of an appropriate discount rate to derive a net present value for the property.
Direct Comparison Approach: this approach identifies comparable sales on a dollar per square metre of lettable area basis and compares the equivalent rates to the property being valued to determine the property's market value.

The valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market’s general perception of their credit-worthiness; the allocation of maintenance and insurance responsibilities between the lessor and lessee; and the remaining economic life of the property. It has been assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and, where appropriate, counter notices have been served validly and within the appropriate time.

Fair value measurement

The fair value measurement of investment property has been categorised as a Level 3 fair value as it is derived from valuation techniques that include inputs that are not based on observable market data (unobservable inputs).

nputs).
Significant	Fair value measurement	Fair value measurement
unobservable	sensitivity to significant	sensitivity to significant
inputs	increase in input	decrease in input	Range of inputs
			30 June 2021	30 June 2020
Market rent	Increase	Decrease	$25 - $641	$31 - $195
Capitalisation rate	Decrease	Increase	3.38% - 7.75%	5.00% - 7.75%
Discount Rate	Decrease	Increase	5.25% - 8.00%	6.25% - 8.00%

The above unobservable inputs are considered significant Level 3 inputs. Refer to Note E2 for further information.

Centuria Industrial REIT 22 30 June 2021

Trust's assets and liabilities

C3 Investment properties (continued)

Fair value measurement (continued)

A further sensitivity analysis was undertaken by the Trust to assess the fair value of investment properties values. The table below illustrates the impact on valuation of movements in capitalisation rates:

	Fair Value	Capitalisation rate impact	Capitalisation rate impact
at	30 June 2021	+0.25%	-0.25%
	$'000	$'000	$'000
	$88,888.00
	2,945,057	(153,700)	171,700

C4 Investment properties held for sale

Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition.

99 Quill Way, Henderson WA	30 June 2021 $'000 30 June 2020 $'000 9,000 11,300
	9,000 11,300

Recognition and measurement

Investment properties are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. These investment properties are carried at fair value. The valuation techniques to determine the fair value of investment properties held for sale are the same as the valuation techniques of investment properties described in Note C3.

Where sale completion is delayed by events outside the control of the Trust, and the sale is not completed within one year from the date of classification, the Trust may still classify the asset as held for sale. In this circumstance, there must be sufficient evidence the Trust is committed to sell the asset.

C5 Intangibles

Goodwill

Goodwill - at cost	30 June 2021 $'000 30 June 2020 $'000 10,501 10,501
	10,501 10,501

Indefinite life of controlling interest

Goodwill recognised by the Trust in a business combination is initially measured at fair value and reflect the controlling interest in Australian Industrial REIT (‘ANI’).

Goodwill

Goodwill recognised in a business combination is measured at cost and subsequently measured at cost less any impairment losses. The cost represents the excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired.

Centuria Industrial REIT 23 30 June 2021

Trust's assets and liabilities

C5 Intangibles (continued)

Impairment

Goodwill is tested annually for impairment. It is impaired if the recoverable amount, calculated as fair value less costs to sell, is less than its carrying amount.

Based on impairment testing performed as at 30 June 2021 the fair value of the portfolio less costs to sell is less than the recoverability of goodwill by $4.1 million. Despite the continued growth in the fair value of assets, the expected realisable value of the business net of selling costs has consistently remained in excess of $100 million above the net book value of the business over the last 24 months. At balance date and immediately after balance date the current market price of the Trust units do not indicate a permanent structural decline in the fair valuation of equity below the net assets of the Trust. No intangibles were impaired in 2021 (2020: nil).

C6 Trade and other payables

C6 Trade and other payables
Current Trade creditors and expenses payable Other current creditors and accruals	30 June 2021 $'000 30 June 2020 $'000 7,804 3,700 19,028 15,908
	26,832 19,608

Refer to Note D2 for amounts payable to related parties.

Recognition and measurement

Trade payables and other accounts payable are recognised when the Trust becomes obliged to make future payments resulting from the purchase of goods and services and are recorded initially at fair value, net of any attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost.

A provision is recognised if, as a result of a past event, the Trust has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

Centuria Industrial REIT 24 30 June 2021

Trust's assets and liabilities

C7 Borrowings

C7 Borrowings
Non-current Secured loan - fixed Secured loan - variable Borrowing costs	30 June 2021 $'000 30 June 2020 $'000 100,000 250,000 836,500 204,407 (3,224) (2,006)
	933,276 452,401

As at 30 June 2021, the Trust had the following secured debt facilities:

Secured loan facilities Facilities limit Facilities unused Facilities used Interest rate swaps Fixed rate borrowings Hedged amount	1,210,000 650,000 (273,500) (195,593)
	936,500 454,407
	- 160,000 100,000 250,000
	100,000 410,000

As at 30 June 2021, the Trust had $100.0 million (2020: $250.0 million) of fixed rate loan. The Trust terminated all interest rate swaps that were hedged against its drawn debt at reporting date (2020: $160.0 million). Refer to Note E3 Events Subsequent to Balance Date for information on new swaps established post balance sheet date. At the end of the reporting period, the Trust's debt facilities that are on a fixed interest basis is $100.0 million (2020: $410.0 million).

All facilities are interest only facilities and are secured by first mortgages over the Trust's investment properties and a first ranking fixed and floating charge over all assets of the Trust.

The secured loans have covenants in relation to Loan to Value Ratio ('LVR') and Interest Coverage Ratio ('ICR') which the Trust has complied with during the year.

Recognition and measurement

Borrowings are recorded initially at fair value, net of any attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest rate method with any difference between the initial and recognised amount and redemption value being recognised in profit or loss over the period of borrowing and are derecognised when the contractual obligations are discharged, cancelled or expire.

Refer to Note E2 for details on the Trust's exposure to risks associated with financial liabilities.

C8 Derivatives

Interest rate swap contracts

Under interest rate swap contracts, the Trust agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Trust to mitigate the risk of changing interest rates on the cash flow exposures on the variable rate debt held. The following table details the specific instruments held at reporting date, showing the notional principal amounts and contracted fixed interest rate of each contract:

Centuria Industrial REIT 25 30 June 2021

Trust's assets and liabilities

C8 Derivatives (continued)

C8 Derivatives (continued)
			Notional
		Contracted	amount of	Fair value of
		fixed interest	contract	liabilities
Type of contract	Maturity date	rate	$'000	$'000
30 June 2020
Extendible interest rate swap	27 Jun 22	0.98%	110,000	(2,852)
Interest rate swap	28 Dec 23	2.14%	50,000	(3,167)
		3.12%	160,000	(6,019)

The Trust terminated all swaps on 30 June 2021. Refer to Note E3 Events Subsequent to Balance Date for information on new swaps established on 1 July 2021.

Recognition and measurement

Derivatives are initially recognised at fair value and attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and the resulting gain or loss is recognised in profit or loss.

The fair value of interest rate swaps is the estimated amount that the entity would receive or pay to transfer the swap at reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

The Trust has not applied hedge accounting to its derivative financial instruments.

Refer to Note E2 for details on the Trust's exposure to risks associated with financial liabilities.

C9 Issued capital

Opening balance Units issued Distribution reinvestment plan ('DRP') Equity raising costs Closing balance	30 June 2021 30 June 2020 Units '000 $'000 Units '000 $'000 400,275 1,067,398 270,847 687,971 149,036 465,786 127,921 383,753 2,497 7,704 1,507 4,950 - (9,527) - (9,276)
	551,808 1,531,361 400,275 1,067,398

All units in Trust are of the same class and carry equal rights to capital and income distributions.

An equity instrument is any contract that evidences a residual interest in the assets of a Trust after deducting all of its liabilities. Equity instruments issued by the Trust are recognised at the proceeds received, net of direct issue costs.

C10 Contingent assets, liabilities and commitments

Unless otherwise stated in this report, the Trust has no contingent assets, liabilities or commitments as at 30 June 2021.

Centuria Industrial REIT 26 30 June 2021

Trust's assets and liabilities

C11 Cash and cash equivalents

Cash and cash equivalents

30	June 2021	30 June 2020
	$'000	$'000
	105,543	17,078
	105,543	17,078

Reconciliation of profit for the year to net cash flows from operating activities:

t
Net profit for the year
t
Adjustments:
Net gain on fair value of investment properties
(Gain)/loss on fair value of derivatives
Change in deferred rent and lease incentives
Change in capitalised leasing fees
Borrowing cost amortisation
t
Changes in operating assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
Increase in payables
Net cash generated by operating activities

611,239
75,337
(523,329)
(18,129)
(1,966)
2,477
(6,594)
(4,581)
1,352
1,202
1,172
477
(1,031)
928
(58)
296
2,882
7,328

83,667
65,335

Cash and cash equivalents comprise of cash on hand and cash in banks.

Centuria Industrial REIT 27 30 June 2021

D Trust structure

D1 Interest in material subsidiaries

Recognition and measurement

(i) Business combination

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Trust elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.

When the Trust acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised directly in profit or loss. Refer to Note C5 for details of management's assessment.

(ii) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Trust and entities controlled by the Trust. Control is achieved where the Trust is exposed to, or has rights to, the variable returns from its involvement with an entity and has the ability to affect these returns through its power over the entity.

The Trust accounts for business combinations using the acquisition method when control is transferred to the Trust. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. When the Trust loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date on which control commences until the date on which control ceases.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the consolidated group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

(iii) Subsidiaries

The consolidated financial statements include the assets, liabilities and results of Centuria Industrial REIT and the subsidiaries it controls. Subsidiaries are entities controlled by the Trust in accordance with AASB 10. Control exists when an investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the financial report from the date that control commences until the date that control ceases.

The Trust uses the purchase method of accounting to account for the acquisition of subsidiaries. Intercompany transactions, balances and recognised gains on transactions between Trust entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Trust.

Centuria Industrial REIT 28 30 June 2021

Trust structure

D1 Interest in material subsidiaries (continued)

Recognition and measurement (continued) (iii) Subsidiaries (continued)

*(iii)* *Subsidiaries (continued)*
	Country of	Class of
Name of entity	domicile	units	Equity interest
			30 June 2021	30 June	2020
			%		%
BIPT Preston No. 1 Sub Trust	Australia	Ordinary	100		100
BIPT Marple Ave Holding Trust	Australia	Ordinary	100		100
BIPT Marple Ave Sub Trust	Australia	Ordinary	100		100
BIPT Clarinda Rd Holding Trust	Australia	Ordinary	100		100
BIPT Clarinda Rd Sub Trust	Australia	Ordinary	100		100
BIPT Noble Park Holding Trust	Australia	Ordinary	100		100
BIPT Noble Park Sub Trust	Australia	Ordinary	100		100
BIPT Scrivener Street Holding Trust	Australia	Ordinary	100		100
BIPT Scrivener Street Sub Trust	Australia	Ordinary	100		100
Australian Industrial REIT	Australia	Ordinary	100		100
AIR Somerton Trust	Australia	Ordinary	100		100
AIR Wetherill Park Trust	Australia	Ordinary	100		100
AIR Glendening Trust	Australia	Ordinary	100		100
AIR Ingleburn Trust	Australia	Ordinary	100		100
AIR Ingleburn 2 Trust	Australia	Ordinary	100		100
AIR Ingleburn 3 Trust	Australia	Ordinary	100		100
AIR Eastern Creek Trust	Australia	Ordinary	100		100
AIR Enfield Trust	Australia	Ordinary	100		100
AIR Tullamarine Trust	Australia	Ordinary	100		100
AIR Thomastown Trust	Australia	Ordinary	100		100
AIR Henderson Trust	Australia	Ordinary	100		100
AIR Dandenong South Trust	Australia	Ordinary	100		100
AIR Bibra Lake Trust	Australia	Ordinary	100		100
AIR Glendening 2 Trust	Australia	Ordinary	100		100
AIR Erskine Park Trust	Australia	Ordinary	100		100
AIR ST1 Trust	Australia	Ordinary	100		100
CIP Sub Trust No. 1	Australia	Ordinary	100		-
CIP Sub Trust No. 2	Australia	Ordinary	100		-
CIP Sub Trust No. 3	Australia	Ordinary	100		-
CIP Sub Trust No. 4	Australia	Ordinary	100		-
CIP Sub Trust No. 5	Australia	Ordinary	100		-
CIP Sub Trust No. 6	Australia	Ordinary	100		-
CIP Sub Trust No. 7	Australia	Ordinary	100		-
CIP Sub Trust No. 8	Australia	Ordinary	100		-
CIP Sub Trust No. 9	Australia	Ordinary	100		-
CIP Sub Trust No. 10	Australia	Ordinary	100		-
CIP Sub Trust No. 11	Australia	Ordinary	100		-

D2 Related parties

Key management personnel

The Trust does not employ personnel in its own right. However it is required to have an incorporated Responsible Entity to manage the activities of the Trust. The directors of the Responsible Entity are key management personnel of that entity and their names are:

Roger Dobson Peter Done Nicholas Collishaw Natalie Collins Appointed 29 July 2020 Jennifer Cook Appointed 1 July 2021 Darren Collins Resigned 29 July 2020 Matthew Hardy Resigned 29 July 2020

Centuria Industrial REIT 29 30 June 2021

Trust structure

D2 Related parties (continued)

Key management personnel (continued)

No compensation is paid directly by the Trust to any of the directors or key management personnel of the Responsible Entity.

Key management personnel loan disclosures

The Trust has not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their personally related entities at any time during the reporting period.

Responsible entity fees and other transactions

The Responsible Entity is entitled to a management fee which is calculated at 0.65% of the gross value of assets held plus GST, in accordance with the Trust's constitution. The Responsible Entity has elected to charge 0.60% per annum.

The following fees were paid and/or payable to the Responsible Entity and its related parties from the Trust and all subsidiaries during the financial year:

Management fees Property management fees Custodian fees Facility management fees Project management fees Leasing fees Due diligence acquisition fees Administrative costs	30 June 2021 $'000 30 June 2020 $'000 14,118 8,749 1,652 1,900 1,093 587 964 272 815 357 767 505 375 175 162 -
	19,946 12,545

At reporting date an amount of $1,917,744 (2020: $2,071,840) owing to the Responsible Entity and its related parties was included in trade and other payables. The payables are non-interest bearing with payment terms and conditions consistent with normal commercial practices.

All transactions with related parties are conducted on normal commercial terms and conditions. From time to time Centuria Property Funds No. 2 Limited, its directors or its director-related entities may buy or sell units in the Trust. These transactions are on the same terms and conditions as those entered into by other Trust investors.

Related party investments held by the Fund

At 30 June 2021, the Trust did not hold any units in the related parties of the Responsible Entity (30 June 2020: nil).

Centuria Industrial REIT 30 30 June 2021

Trust structure

D2 Related parties (continued)

Units in the Trust held by related parties

At 30 June 2021, the following related parties of the Responsible Entity hold units in the Trust:

Units in the Trust held by related parties At 30 June 2021, the following related parties of the Responsible Entity hold units	in the Trust:
30 June 2021 Centuria Capital No. 2 Industrial Fund Centuria Capital No. 5 Fund Centuria Property Funds No. 2 Limited Centuria Growth Bond Fund Centuria Balanced Fund Roger Dobson Jennifer Cook 30 June 2020 Centuria Capital No. 2 Industrial Fund Centuria Capital No. 5 Fund Centuria Property Funds No. 2 Limited Centuria Growth Bond Fund Centuria Balanced Fund Roger Dobson	Closing units held Closing interest held 68,966,756 12.50% 21,593,800 3.91% 2,181,086 0.40% 895,191 0.16% 485,879 0.09% 50,703 0.01% 5,729 -%
	94,179,144 17.07%
	48,898,176 12.22% 16,999,400 4.25% 2,181,086 0.54% 704,725 0.18% 382,501 0.10% 18,000 -%
	69,183,888 17.29%

No other related parties of the Responsible Entity held units in the Trust.

Other transactions within the Trust

No director has entered into a material contract with the Trust since the end of the previous year and there were no material contracts involving directors’ interests subsisting at year end.

Centuria Industrial REIT 31 30 June 2021

Trust structure

D3 Parent entity disclosures

As at, and throughout the current and previous financial year, the parent entity of the Trust was CIP. The table below represents the stand alone financial position and performance of CIP. This table does not include the financial position and performance of its subsidiaries and the parent entity's investment in underlying subsidiaries are measuring at fair value. Accordingly, the amounts reflected above may be different from the consolidated financial statements.

Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Retained earnings Total equity Financial performance Profit for the year Total comprehensive income for the year	30 June 2021 $'000 30 June 2020 $'000 59,161 12,374 3,032,994 1,617,309
	3,092,155 1,629,683
	36,580 32,220 933,275 458,420
	969,855 490,640
	2,122,300 1,139,043
	1,531,361 1,067,398 590,939 71,645
	2,122,300 1,139,043
	611,239 75,337
	611,239 75,337

Centuria Industrial REIT 32 30 June 2021

E Other notes

E1 Auditor's remuneration

E1 Auditor's remuneration
KPMG: Audit and review of financials Property due diligence services & advice	30 June 2021 $'000 30 June 2020 $'000 218 205 - 50
	218 255

E2 Financial instruments

The directors of the Responsible Entity consider that the carrying amount of the financial assets and financial liabilities approximate their fair value in the financial statements with the exception of fixed rate borrowings. The carrying value of fixed rate borrowings is $100.0 million and the fair value is $101.6 million at 30 June 2021. All financial instruments are measured at amortised cost with the exception of the derivative financial instruments. Derivative financial instruments are measured at fair value and have a level 2 designation in the fair value hierarchy. There were no transfers between levels of the fair value hierarchy during the period.

Independent valuations are obtained from third parties to support the fair value measurement of financial instruments at each reporting date to meet the requirements of International Financial Reporting Standards.

(i) Valuation techniques

The fair value of financial assets and financial liabilities are determined as follows:

The fair value of interest rate swaps are determined using a discounted cash flow analysis. The future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contracted interest rates, discounted at a rate that reflects the credit risk of various counterparties.

The Trust classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: derived from quoted prices (unadjusted) in active markets for identical assets or liabilities that the Trust can access at the measurement date.
Level 2: derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement by the Responsible Entity. The Responsible Entity considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Capital management

The capital structure of the Trust consists of cash and cash equivalents and the proceeds from the issue of the units of the Trust.

The Trust has no restrictions or specific capital requirements on the application and redemption of units, other than the approval of the Responsible Entity.

The Trust's overall investment strategy remains unchanged from the prior year.

Centuria Industrial REIT 33 30 June 2021

Other notes

E2 Financial instruments (continued)

Financial risk management objectives

The Trust is exposed to a variety of financial risks as a result of its activities. These potential risks include market risk (interest rate risk), credit risk and liquidity risk. The Trust’s risk management and investment policies seek to minimise the potential adverse effects of these risks on the Trust’s financial performance.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Trust’s activities expose it primarily to the financial risks of changes in interest rates. The Trust enters into derivative financial instruments to manage its exposure to interest rate risk and these include interest rate swaps that the Trust has entered into to mitigate the risk of rising interest rates.

There has been no change to the Trust’s exposure to market risks or the manner in which it manages and measures the risk from the previous year.

Interest rate risk management

In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at reporting date:

their effective interest rates at reporting date:
	30 June	2021	30 June	2020
	Effective	Total	Effective	Total
	interest rate	$'000	interest rate	$'000
Financial assets
Cash and cash equivalents	0.01%	105,543	0.01%	17,078
	0.01%	105,543	0.01%	17,078
Financial liabilities
Borrowings - fixed (excluding borrowing costs)	3.00%	100,000	3.59%	250,000
Borrowings - variable (excluding borrowing costs)	1.69%	836,500	2.31%	204,407
Interest rate swaps	-%	-	1.19%	6,019
	4.69%	936,500	7.09%	460,426

Centuria Industrial REIT 34 30 June 2021

Other notes

E2 Financial instruments (continued)

Market risk (continued)

Interest rate sensitivity

The sensitivity analysis below has been determined based on the Trust’s exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period, in the case of financial assets and financial liabilities that have variable interest rates.

At reporting date, if variable interest rates had been 100 (2020: 100) basis points ('bps') higher or lower and all other variables were held constant, the impact to the Trust would have been as follows:

Variable + / - 30 June 2021 Net (loss)/profit 100 bps 30 June 2020 Net (loss)/profit 100 bps	Sensitivity impact Rate increase $'000 Rate decrease $'000 5,033 (5,354)
	5,033 (5,354)
	4,660 (5,846)
	4,660 (5,846)

The Trust’s sensitivity to interest rates calculated above is after taking into account the impact of interest rate changes on the interest rate swap fair values. The methods and assumptions used to prepare the sensitivity analysis have not changed during the year.

Credit risk

The Trust has adopted the policy of dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the financial risk of financial loss from default. The Trust’s exposure and the credit ratings of its counterparties are continuously monitored by the Responsible Entity.

At 30 June 2021, the main financial assets exposed to credit risk are trade receivables. There were no significant concentrations of credit risk to counterparties at 30 June 2021. Refer to Note C1 for details of trade receivables.

The credit risk on receivables is minimal because of the proven remittance history of the counterparties. Credit risk from balances with banks and financial institutions is managed by the Responsible Entity in accordance with the Trust's investment policy. Cash investments are made only with approved counterparties.

The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date.

Liquidity risk

The Trust’s strategy of managing liquidity risk is in accordance with the Trust’s investment strategy. The Trust manages liquidity risk by maintaining adequate banking facilities and through the continuous monitoring of forecast and actual cash flows and aligning the profiles of financial assets and liabilities.

Centuria Industrial REIT 35 30 June 2021

Other notes

E2 Financial instruments (continued)

Liquidity risk (continued)

The following tables summarise the maturity profile of the Trust’s financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Trust can be required to pay. The tables include both interest and principal cash flows:

		Total
		principal and	Less than 1
	Effective	interest	year	1 to 5 years	5+ years
	interest rate	$'000	$'000	$'000	$'000
30 June 2021
Trade and other payables	-%	50,283	50,283	-	-
Borrowings	1.83%	1,018,269	17,118	899,652	101,499
	1.83%	1,068,552	67,401	899,652	101,499
30 June 2020
Trade and other payables	-%	38,321	38,321	-	-
Borrowings	3.01%	499,058	13,700	380,903	104,455
Derivative financial instruments	1.19%	5,306	1,911	1,903	1,492
	4.20%	542,685	53,932	382,806	105,947

The principal amounts included in the above borrowings is $936.5 million (2020: $452.4 million).

E3 Events subsequent to reporting date

The Trust settled the following four acquisitions subsequent to 30 June 2021 for a total value of $89.6 million:

• 110 Northcorp Boulevard, Broadmeadows VIC for $37.1 million (plus costs);

160 Newton Road, Wetherill Park NSW for $33.5 million (plus costs);
95 South Gippsland Highway, Dandenong South VIC for $12.0 million (plus costs) ^; and
85 Fulton Drive, Derrimut VIC for $7.0 million (plus costs).

^ Upon settlement, the Trust will consolidate the title of this investment with 105 South Gippsland Highway, Dandenong South VIC. The Trust entered a Development Management Agreement to construct a six-asset industrial estate on 95-105 South Gippsland Hwy, Dandenong South VIC.

The Trust exchanged contracts to acquire 164 Newton Road, Wetherill Park NSW for $36.8 million (plus costs) on 3 August 2021. The settlement is expected to complete in August 2021.

On 1 July 2021, the Trust established eight new swaps with a total face value of $400.0 million. The Trust's loan facilities that are on a fixed interest basis increased to $500.0 million and 53.4% of drawn debt is fixed through swaps and fixed rate borrowings.

E4 Additional information

The registered office and principal place of business of the Trust and the Responsible Entity are as follows:

Registered office: Principal place of business: Level 41, Chifley Tower, 2 Chifley Square Level 41, Chifley Tower, 2 Chifley Square SYDNEY NSW 2000 SYDNEY NSW 2000

Centuria Industrial REIT 36 30 June 2021

Directors' declaration

For the year ended 30 June 2021

In the opinion of the Directors' of Centuria Property Funds No. 2 Limited, the Responsible Entity of Centuria Industrial REIT ('the Trust'):

(a) the consolidated financial statements and notes set out on pages 7 to 36 are in accordance with the Corporations Act 2001 , including:
(i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
(ii) giving a true and fair view of the Trust's financial position as at 30 June 2021 and of its performance for the financial year ended on that date, and
(b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable.

Note A1 confirms that the consolidated financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

This declaration is made in accordance with a resolution of Directors.

==> picture [54 x 45] intentionally omitted <==

Roger Dobson Director

==> picture [63 x 43] intentionally omitted <==

Peter Done Director

Sydney 5 August 2021

Centuria Industrial REIT 37 30 June 2021

==> picture [79 x 31] intentionally omitted <==

Independent Auditor’s Report

To the unitholders of Centuria Industrial REIT

Opinion

We have audited the Financial Report of Centuria Industrial REIT (the Fund).

The Financial Report comprises:

• Consolidated statement of financial position as at 30 June In our opinion, the accompanying 2021; Financial Report of the Fund is in • Consolidated statement of profit or loss and other Consolidated statement of profit or loss and other accordance with the Corporations Act comprehensive income, Consolidated statement of 2001 , including:

Consolidated statement of profit or loss and other Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended;
giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and
Notes including a summary of significant accounting policies; and
Directors' Declaration.
complying with Australian Accounting Standards and the Corporations Regulations 2001 .

The Group consists of the Fund and the entities it controlled at the year-end or from time to time during the financial year.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report.

We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period.

Liability limited by a scheme approved under Professional Standards Legislation.

==> picture [54 x 25] intentionally omitted <==

This matter was addressed in the context of our audit of the Financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Valuation of investment property ($2,936.1m)	and investment property held for sale ($9.0m)
Refer to Notes C3 & C4 to the Financial Report
The key audit matter	How the matter was addressed in our audit
The valuation of investment properties is a key audit matter as they are significant in value (being 94.8% of total assets) and contain assumptions with estimation uncertainty. The properties being valued at fair value increased the judgment applied by us when evaluating evidence available. The Group approached the uncertainty risk using internal methodologies and through the use of external valuation experts. We focused on the significant forward-looking assumption the Group applied in external and internal valuation models including: • Discount rates: these are complicated in nature and differ due to the asset classes, geographies and characteristics of individual investment properties; • Capitalisation rates (cap rates): reflects the yield that an investor would look to recover their investment in a particular class of asset; and • Forecast cash flows, including: market rental income, leasing and rental relief assumptions. In assessing this Key Audit Matter, we involved our real-estate valuation specialists, who understand the Group’s investment profile and business and the economic environment it operates in. We paid particular attention to knowledge and sources of information available regarding market conditions specific to year end.	Our procedures included: • Understanding the Group’s process regarding the valuation of investment property and the resulting valuation approach; • Assessing the Group’s methodologies used in the valuations of investment property for consistency with accounting standards and Group policies; • Assessing the scope, competence and objectivity of external experts engaged by the Group and internal valuers; • For the total portfolio, taking into account the asset classes, geographies and characteristics of individual investment properties, we assessed the appropriateness of adopted discount and cap rates and market rental income through comparison to market analysis published by industry experts, recent market transactions, other market data points available, inquiries with the Group and historical performance of the investment properties; • Assessing the appropriateness of the Group’s leasing assumptions against each property’s actual rental income, weighted average lease expiry, actual vacancy levels, the Group’s tenant credit risk assessment and expected rental relief with consideration of industry views; • Consulting with our real estate valuation specialists: o To gain an understanding of prevailing market conditions, including existence of market transactions, and o Assess the appropriateness of the property valuation risk profiles and approach to evaluating the appropriateness of valuation assumptions. • Held discussions with external valuers to gain further understandingof specific investment

==> picture [54 x 25] intentionally omitted <==

property valuations and underlying assumptions adopted and updated market conditions; and

Assessing the disclosures in the financial report including checking the sensitivity analysis calculations, using our understanding obtained from our testing, against accounting standard requirements. This was considered in light of changes and uncertainties of COVID-19 that existed at balance date and up until issuance of our audit report.

Other Information

Other Information is financial and non-financial information in Centuria Industrial REIT’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors of Centuria Property Funds No. 2 Limited (the Responsible Entity) are responsible for the Other Information.

The Other information we obtained prior to the date of this Auditor’s Report was the Director’s Report, Corporate Governance Statement and Additional ASX Information. The Letter from the Chairman & Fund Manager, portfolio overview and portfolio profile are expected to be made available to us after the date of the Auditor’s Report.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors are responsible for:

preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Fund's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

==> picture [54 x 25] intentionally omitted <==

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at:

https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.

==> picture [63 x 28] intentionally omitted <==

KPMG

==> picture [63 x 43] intentionally omitted <==

Peter Zabaks Partner

Sydney

5 August 2021

Corporate Governance Statement

The corporate governance statement for the Trust was last updated on 11 September 2020 and is available on the Centuria website at https://centuria.com.au/centuria-capital/corporate/sustainability/governance/.

Centuria Industrial REIT 42 30 June 2021

Additional stock exchange information

As at 2 August 2021

Distribution of units

Holding 1 - 1000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over	Number of units Number of holders Percentage of total (%) 515,012 1,180 0.09 11,080,300 3,623 2.01 21,136,422 2,805 3.83 77,174,027 3,299 13.99 441,901,697 123 80.08
	551,807,458 11,030 100.00

Substantial unitholders

Substantial unitholders
CENTURIA CAPITAL GROUP THE VANGUARD GROUP BLACKROCK INC Total	Number of units Percentage of total (%) 94,122,712 17.06 47,324,856 8.58 39,662,652 7.19
	181,110,220 32.83

Voting rights

All units carry one vote per unit without restriction.

Top 20 unitholders

Top 20 unitholders
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CITICORP NOMINEES PTY LIMITED CENTURIA INVESTMENT HOLDINGS PTY LIMITED NATIONAL NOMINEES LIMITED CENTURIA INVESTMENT HOLDINGS PTY LIMITED CENTURIA INVESTMENT HOLDINGS PTY LIMITED BNP PARIBAS NOMINEES PTY LTD BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED AUSTRALIAN EXECUTOR TRUSTEES LIMITED CHARTER HALL WHOLESALE MANAGEMENT LIMITED BNP PARIBAS NOMS (NZ) LTD BNP PARIBAS NOMINEES PTY LED HUB24 CUSTODIAL SERV LTD CENTURIA PROPERTY FUNDS NO 2 LIMITED BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD NETWEALTH INVESTMENTS LIMITED BNP PARIBAS NOMINEES PTY LTD ONE MANAGED INVESTMENT FUNDS LTD MISS YVONNE CATHERINE LYNCH	Number of units Percentage of total (%) 118,991,103 21.56 86,469,022 15.67 53,209,502 9.64 45,136,934 8.18 25,504,131 4.62 23,829,822 4.32 21,593,800 3.91 10,848,105 1.97 5,410,312 0.98 4,641,213 0.84 3,343,662 0.61 3,000,000 0.54 2,992,027 0.54 2,813,466 0.51 2,181,086 0.40 1,907,487 0.35 1,758,612 0.32 1,309,624 0.24 1,300,000 0.24 1,176,500 0.21
	417,416,408 75.65

Top 20 unitholders

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
CENTURIA INVESTMENT HOLDINGS PTY LIMITED
NATIONAL NOMINEES LIMITED
CENTURIA INVESTMENT HOLDINGS PTY LIMITED
CENTURIA INVESTMENT HOLDINGS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
CHARTER HALL WHOLESALE MANAGEMENT LIMITED
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMINEES PTY LED HUB24 CUSTODIAL SERV LTD
CENTURIA PROPERTY FUNDS NO 2 LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMINEES PTY LTD
ONE MANAGED INVESTMENT FUNDS LTD
MISS YVONNE CATHERINE LYNCH

Number of
units
Percentage of
total (%)
118,991,103
21.56
86,469,022
15.67
53,209,502
9.64
45,136,934
8.18
25,504,131
4.62
23,829,822
4.32
21,593,800
3.91
10,848,105
1.97
5,410,312
0.98
4,641,213
0.84
3,343,662
0.61
3,000,000
0.54
2,992,027
0.54
2,813,466
0.51
2,181,086
0.40
1,907,487
0.35
1,758,612
0.32
1,309,624
0.24
1,300,000
0.24
1,176,500
0.21

417,416,408
75.65

Centuria Industrial REIT 43 30 June 2021

AI assistant

CENTURIA INDUSTRIAL REIT — Annual Report 2021

64654_rns_2021-08-04_fbb732be-2513-45cf-829a-8ea84f8d31c3.pdf

Centuria Industrial REIT and its subsidiaries

ARSN 099 680 252

Centuria Industrial REIT Table of contents

Contents

Directors' report

For the year ended 30 June 2021

Directors of the Responsible Entity

Principal activities

Significant changes in the state of affairs

Review of operations

Results

Investment property valuations

Review of operations (continued)

Investment property valuations (continued)

Leasing and occupancy

Acquisitions

Capital management

Outlook

Distributions

Review of operations (continued)

Distributions (continued)

Distribution reinvestment plan

Environmental regulation

Options granted

Related party transaction

Events subsequent to balance date

Indemnifying officers or auditors

Indemnification

Insurance premiums

Trust information in the directors' report

Responsible Entity interests

Trust information in the directors' report (continued)

Responsible Entity interests (continued)

Other Trust information

Auditor's independence declaration

Rounding of amounts

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

Centuria Industrial REIT Annual Financial Report

For the year ended 30 June 2021

Contents

Consolidated statement of profit or loss and other comprehensive income

For the year ended 30 June 2021

Consolidated statement of financial position

As at 30 June 2021

Consolidated statement of changes in equity

For the year ended 30 June 2021

Consolidated statement of cash flows

For the year ended 30 June 2021

Note to the financial statements

For the year ended 30 June 2021

A About the report

A1 General information

Statement of compliance

Basis of preparation

(i) Going concern

Rounding of amounts

A2 Significant accounting policies

Use of estimates and judgements

About the report

A2 Significant accounting policies (continued)

Use of estimates and judgements (continued)

Segment reporting

B Trust performance

B1 Distribution

Distribution and taxation

B2 Revenue

Recognition and measurement

(i) Rental income

Trust performance

B2 Revenue (continued)

Recognition and measurement (continued)

(ii) Recoverable outgoings

(iii) Interest revenue

(iv) Sale of properties

B3 Expenses

Recognition and measurement

(i) Finance costs

CENTURIA INDUSTRIAL REIT Annual Report 2021