Argosy Property Limited (ARG) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Jeff Morrison, and I'm the Chairman of Argosy Property Limited. On behalf of my fellow directors and members of the management team, it's my pleasure to welcome you all to the 2025 Annual Meeting of Shareholders of Argosy. Before we get things underway, there are the usual housekeeping matters. First, can I remind you to have your phones on silent, please. In the unlikely event of emergency, please evacuate the building using the doors behind you at the Eastern exit and assemble in the carpark. The bathrooms are located next to the main reception area out this way. Today's annual meeting is a hybrid annual meeting, shareholders who are not attending in person can attend virtually and ask questions and vote through the Computershare online virtual meeting platform. Shareholders can also follow proceedings via the live webcast. Today's meeting will focus on our recent annual results to 31 March 2025, our long-term strategy for growth and progress around our sustainability goals. Before we get to that, there are a few procedural matters I need to run through for our hybrid meeting. For shareholders participating through the live webcast, polling on the 2 resolutions has now opened. If you are eligible to vote at this meeting, you will be able to cast your vote under the vote tab. Votes can be amended up until the time I declare voting closed. Now the meeting has started. Questions can also be submitted through Computershare's online virtual meeting platform. If you would like to submit a question, Q&A is always open, so please feel free to submit questions throughout the meeting. These will be addressed at the relevant time. If you experience any technical issues casting your vote or submitting questions, please refer to the instructions provided in the virtual meeting guide that accompanied the Notice of Meeting or type your query the Q&A tab or you can call Computershare on 09 488 8700. The Board. With those matters explained, let's get things underway. I'd like to record the Notice of Meeting was duly given on 23 June 2025, and as there are at least 5 shareholders here today, there is a quorum present. Accordingly, I declare the 2025 Annual Meeting of Argosy Property Limited open. There is detailed information about the Board in the 2025 Annual Report, however I will briefly introduce them to you. To my right is Stuart McLauchlan. Stuart was appointed to the Board in August 2019. He is a prominent businessman and company director. He is Chairman of the New Zealand Sports Hall of Fame and Scott Technology. He is a Director of Scenic Hotel Group, EBOS Group Limited, Dunedin Casinos Limited and several other companies. Stuart is also a past President of the New Zealand Institute of Directors. Next to Stuart, we have Rachel Winder. Rachel was first appointed to the Board in August 2019. Rachel has been involved in the property sector for over 20 years across a variety of senior roles, including strategy, portfolio management, financial management, development and leadership. Next to Rachel, we have Martin Stearne. Martin was first appointed to the Board in March 2020. Martin has over 25 years commercial and capital markets experience, primarily in investment banking. Martin currently holds appointments to the NZX's NZRegCo advisory panel, the Takeovers Panel, and the Investment Committee of the Impact Enterprise Fund and he is a member of INFINZ and Ice Angels. Next to Martin, we have Alex Cutler. Alex was first appointed to the Board in October last year. Alex has extensive global experience assisting multinational organizations and recognizing the strategic importance of sustainability. Alex is a prominent figure in the property industry and a dedicated sustainability expert. She was previously the CEO and Chief Sustainability Officer at RDT Pacific, and the CEO of the New Zealand Green Building Council. Alex's position as a director is up for election and we'll hear from her later in the meeting. Next to Alex, we have Chris Gudgeon and Mike Pohio. Chris and Mike have been on the Board from 2018 and 2019, respectively. They both have extensive commercial and governance experience and both have made extremely valuable contributions during their time on the board. One of those contributions is to board succession and renewal. For this reason, Chris and Mike have elected not to stand for reelection and will retire from the Board at the close of this meeting to provide capacity for recruitment of new skills and perspectives. The Board thanks Chris and Mike for their guidance and wisdom during their time as directors and wishes them both the very best for the future. This process of renewal and refreshment is ongoing, and I will touch on it again shortly. Finally, I've been a director since July 2013, and have been a property lawyer for some 40-odd years, as well as my role as Chairman, I sit on the Remuneration and Nominations Committee and the company's Audit and Risk Committee. The executive team. Next to the Board of Directors are Chief Executive, Peter Mence; and Chief Financial Officer, Dave Fraser. We also have several other members of the management team here today. And I would also like to welcome our auditors, Deloitte, our solicitors, Harmos Horton Lusk, our registrar, Computershare and our tax advisers KPMG to the meeting. The agenda for this afternoon's meeting is as follows. As Chairman, I will deliver a brief review of the '25 results. This will be followed by a more detailed review of Argosy's performance by our Chief Executive, Peter Mence. Following Peter's review, we will take questions from shareholders. We will then move to the formal resolutions of the meeting. And finally, we will attend the general business. After the meeting has been formally closed, please stay for refreshments where the directors and executives of Argosy will be available to discuss any queries you may have. Proxies. Proxies have been received in respect of 372,867,519 shares and these have been audited by Deloitte. There are 860,975,391 shares on issue. I'm pleased to now present to you a summary of the company's performance for the year ended 31 March 2025. You will have received the 2025 annual report and financial statements, either by post or electronically, depending on your preference. Results. The Board is pleased the way the business management team and staff have performed in particular, during the second half of the year despite continued market weakness. Net property income was consistent with the prior year, and this was assisted by an annualized increase on rent reviews undertaken during the year of 3.5%. The annual revaluation gain was $72.7 million, and this was a significant turnaround from last year's revaluation loss of $111.7 million. The revaluation gain resulted in an increase in net tangible assets to $1.53 per share, up from $1.45 last year. Net distributable income was also consistent with last year at $55.8 million or $0.0658 per share. Peter will elaborate on financial performance in his presentation. The Board is comfortable with the company's capital position and balance sheet strength with debt to total assets of 35.7% in the middle of our target band of 30% to 40%. The sale of 8 Forge Way, Auckland was settled for $35.2 million in March, and proceeds will be applied to our green developments at 224 Neilson Street and Mt Richmond. The business has sufficient funding capacity to accommodate medium-term development requirements. Green developments and award-winning ones. The Board is very pleased by the progress made towards our sustainability goals as reflected in green buildings completed, certifications achieved and the commencement of new developments. We believe greening our portfolio means more sustainable buildings with appropriate certifications, validating their quality will drive long-term shareholder value. During the year, the company won the Supreme Award at the Property Council of New Zealand Awards for the 6 Green Star built property at 8 Willis Street Wellington. The Property Council Awards is a prestigious awards program that recognizes excellence in design and innovation in the built environment. The Board congratulates staff and all the company's partners who worked on the project. Additionally, the same building was highly commended at the World Green Building Council Asia Pacific leadership in Green Buildings awards, 1 of only 3 buildings to be recognized in this category. Building a better future. Many of you will be familiar with this slide. Our vision of building a better future continues to be underpinned by 3 core principles of being green, resilient and diversified. Our focus on greening the portfolio is significant as we target 50% of our portfolio being green by 2031. Our current green asset weighting of 37.2% sees us well placed to achieve this target. Peter will touch on this in his review, but there is growing evidence around rental premiums between green and nongreen buildings. Furthermore, we expect to see growing valuation differentials between green assets built with more climate resilient than those without. This all underpins the sustainability and stability of earnings and dividends over the longer term. Argosy's portfolio remains diversified by sector, tenant and location. We believe this approach will continue to reduce volatility in returns and widen growth opportunities over the longer term. Key policy targets including a weighting to industrial of 60% to 70% and a weighting of Auckland -- and weighting to Auckland of 70% to 80%. In summary, the future of our or your business is green. We will remain focused on being the market leader in retrofitting existing buildings to create modern, attractive working environments for our tenants and their people. We will continue to target strategic growth opportunities with green potential with Auckland industrial being the focus. Dividends. So none of you came here to hear about this today. Shareholders will also be pleased we delivered a dividend in line with guidance at 6.65% (sic) [ $0.0665 ] for 2025. Dividend guidance for this current year is consistent with us at still $0.0665 per share. Our dividend policy is to pay between 85% to 100% of adjusted funds from earnings, although the Board is comfortable being outside policy preliminary period to reduce dividend volatility. Based on current projections, we expect this year's payout to be within the policy range. Succession. As mentioned previously, the Board is strongly focused on current and future success of the business with succession planning, a central part of this long-term strategy. A structure plan is in place to ensure a smooth leadership transition at both the board and executive levels. Our CEO, Peter Mence has advised his intention to retire May 2027, allowing ample time for a well-managed transition with the search for his successor expected to begin late in 2026. In terms of Board succession, I will step down as Chairman at the conclusion of the 2027 Annual Meeting at the end of my current 3-year term. The Board has agreed that Martin Stearne will succeed me as Chairman. Martin will also assume the role of Chair of the Remuneration and Nominations Committee. As mentioned, Chris Gudgeon and Mike Pohio will retire at the conclusion of this meeting, and Alex Cutler appointed on October '24 will stand for election today with the Board's full endorsement. These planned changes reflect the Board's commitment to maintaining a balance of continuity and fresh perspectives to support Argosy's long-term performance. I'll now hand over to Peter to take you through a brief review of the business.

Thanks, Jeff, and good morning. It's a pleasure to be back here at Squadron to take you through the annual results. There are a few faces that I recognize who saw me very recently at the investor presentation road show, I apologize we're talking about the same year and some of the information is the same. Key highlights. Portfolio highlights for the year include some fairly sound metrics. Occupancy at 96.5%, a pretty solid result. There's no such thing as a good vacancy. Vacant buildings don't earn us any income. We are well aware that there are challenges there for us to lease the remaining portion of the portfolio and to ensure that we lease any forthcoming vacancies on the road ahead. Just on that topic, over the last 6 months, 12 months, it has certainly been a challenging leasing market. We expect that to continue, but I'm blessed with having the best team around to fill those vacancies. We continue to see some very good inquiry for green builders. In fact, within Argosy, over 80% of our lease inquiry at the moment is specifically for green buildings. And the tenants who are in the green buildings, we're yet to see 1 move out of a green building into a non-green building. But the tenants who are in those buildings tell us that the reasons they like the green buildings as they have happier staff, they have better staff retention and they have less staff absenteeism. So they're all good positive reasons. Looking at the portfolio, these charts highlight our sector and locational weightings across the portfolio. The portfolio is most heavily weighted. You can see in green -- to industrial buildings in the Auckland marketplace. And most recently, that is affected by our continuing completion of our green industrial buildings in that space. We expect to move into a target weighting of 60% to 70% of industrial property in the medium term. Within that portfolio, 7 properties have been identified as being noncore with a combined book value of $147 million. And over the medium term, we will look to divest those properties as market conditions allow. Turning to development projects. We're not a developer per se. We develop our buildings only to retain them. And the first of those that I wanted to talk about today was 224 Neilson Street, and that's the first of our value-add industrial estates. The development is progressing well. The 3.5 hectare site is strategically located 8 kilometers from the Auckland CBD with excellent access both to the airport, State Highway 20 and State Highway 1. We've successfully concluded a 12-year lease agreement with Bascik Transport, it's a national transport operator for the first of the 2 warehouses on the site and that lease commenced in April 2025. Additionally, the second warehouse at Neilson Street comprising a further 15,300 square meters of NLA and canopy is expected to be complete as planned in October this year, and we currently have strong leasing inquiry for that building. Both warehouses are targeting a 6-star design and as built rating. Following completion, 224 Neilson Street is expected to have an end value of $110 million and a development margin of $11.1 million. Mt Richmond, as a further 10.6 hectare value-add green development that we're working on in the central industrial precinct at Mount Wellington and the first development in that phase is -- 1 of what will be 6 buildings ultimately. That's been leased to international pharmaceutical company called Viatris, and we are constructing the building platforms for the second and third buildings at the same time as construction of that asset. The Business Park has very solid metrics, including an internal rate of return of 9.4% and a total expected capital gain of $44 million. In 2024, we unconditionally contracted to purchase a further property, which will again be a 6-star industrial green development in East Tamaki Road, and that's a 4.6 hectare level site in a well-established industrial precinct with excellent motorway access to State Highway 1, both from the Highbrook interchange and from East Tamaki Road. The initial purchase price and our attendant capital works is about $60 million. The fully let holding return of the existing buildings on the site is 5%. The building is 58% leased at this point and the balance we expect to have leased in September or October of this year. This is a strategic acquisition, which will provide us a solid holding return in the interim, but will be developed to a high 6 Green Star Built Standard in due course. Revaluations. The revaluations for the year, as Jeff has said, is a welcome lift from a decline last year. That's nearly $112 million decline last year and nearly $73 million lift this year. But it's the makeup of the cause of those valuations that is giving us cause for optimism going ahead. Basically, those revaluations were driven by improved rentals and the improved rentals will mean that when capitalization rates firm as the official cash rate declines, we'll be capitalizing a higher rental at a firmer cap rate that should give us confidence on building values in the future. With financial performance, Argosy reported a net property income of $116.9 million for the period, which was consistent with last year. Pleasingly, interest expense of $41.6 million was lower than last year, just due to the combination of lower overall debt levels, lower interest rates and higher capitalized interest on our redevelopment plans. After the revaluation gain, there was a full year net profit after tax of $125.9 million compared to a loss of $54.5 million driven by that devaluation I mentioned last year. Distributable income, this is what pays the dividends. Net distributable income was $55.8 million, basically the same as last year. This year, Argosy incurred incremental tax expense of $2.8 million, following the removal of the tax deduction for depreciation on buildings. Many of you will have heard, especially those that attended the roadshow presentation, we've had introduced by the government, the investment boost policy announced in this year's budget. And that provides a one-off 20% tax deduction for new building structures that were available for use at any time after the 22 May 2025. It also provides for accelerated deductions for other newly acquired depreciable assets such as fit outs. Given the green development program, that we've outlined today, you can see that it is clear that will be a positive for Argosy over the next few years. Adjusted funds from operations, adjusted net distributable income and that makes basically in simplistic terms, a deduction for what we call maintenance capital, and maintenance capital or maintenance CapEx is the amount of money we spend to maintain the income of the portfolio and the buildings in that portfolio. So if we're putting a new roof on or repainting the foyer and lobby, we won't get more rent for that, so that becomes maintenance CapEx. After deduction of maintenance CapEx and other items such as incentives, leasing costs, then the dividend is paid out of that remaining amount. The dividend policy, as Jeff outlined, is to pay 85% to 100% of AFFO, although that the Board is comfortable being outside policy for limited periods to reduce volatility, and I don't think any of us want to see our dividend bouncing denoted by Jeff. We expect to be well within policy again in the financial year ahead. Leasing expiry profile. The team has worked pretty hard to deliver some solid releasing outcomes. I've mentioned that it's a tough market for leasing, and we've seen an extended time period to close transactions. We have completed 54 leasing transactions across 57,000 square meters of space during the year, made up of 22 new leases, 24 renewals and 8 extensions. We've managed to retain many valued tenants with a tenant retention rate over 80% and also to attract new tenants to the portfolio. With the benefit of current information, I can tell you that our expectation is that we will retain the largest expiries in each of the next 3 years within the portfolio. The chart you're looking at on the screen shows obviously the current vacancy in the gray box and the dark green box to the bottom of each of those bars, which represent the number of expiries by value during the year. The green box is the largest single expiry during that year. And the next 3 years, we think we've got those major expiries already locked away. The strong bottom-up fundamentals across the market and the industrial sector are expected to underpin growth for the year ahead. And particularly in the Argosy case, we've got quite a bit of under-renting in the industrial sector, and we expect that to contribute to rental growth over the year ahead. [Technical Difficulty] economic condition, flexible working arrangements continue, but full-time remote working is declining. It's yet to show [Technical Difficulty] a meaningful difference in the Wellington market, but traffic volumes and density in Auckland are suggesting that we're already back to pre-COVID levels. It is clear from our tenancy demand that there's an increasing focus by employers and providing good quality environments to entice their workers back into the office. The desire from the government to see more employees back in the office will be a positive for the Wellington office market. And although there are some cutbacks in Wellington past trends tend to indicate the core civil service numbers will remain relatively resilient. Current research by both CBRE and JLL Research has highlighted an expected shortage of sustainably rated space in both the commercial office market and notably in the industrial sectors over the next 5 years. We're well placed to benefit from such an occurrence. In fact, the JLL research numbers show a deficit between now and 2030 of rated sustainable space of around 100,000 square meters in Wellington alone and 165,000 square meters in the Auckland market. So when we look at the building statistics and the vacancy statistics across the market, to ignore what is green and what is not green means that you're not getting the full picture of those statistics and the data that they're providing to us. In the retail space, Argosy has invested only in large-format retail and principally for us, that is the Albany Mega Center. Fortunately, that has continued to give us very high occupancy levels and solid rental growth. Turning to the outlook. We think Argosy is reasonably well placed. It has a very strong balance sheet and a growing high-quality portfolio of diversified properties with a clear focus on sustainability and on green assets. Our large and increasing weighting to the industrial sector will continue to deliver security and stability to our cash flow and our earnings. Focus areas for us are obviously to exist -- address existing vacancies and to address key expiring to progress existing green developments at Neilson Street and Mt Richmond and to continue to position the business for the future. I'll hand back to our Chairman for the residual of the presentation.

Thank you Peter. I will now open the meeting for questions about the Company's performance generally. Other issues can be addressed as General Business later in the meeting. I would like to remind you that only shareholders, proxy holders or shareholder company representatives may speak. In addressing the Chair with questions would you please clearly state your name and advise whether you are a Shareholder, a proxy holder or a shareholder company representative. If you have a question, there are people here with cordless microphones in the aisles, please use these so we can hear your questions. Are there any questions from the floor or online?

Barbara O'Connor from the New Zealand Shareholders' Association, as a proxy holder. We have 2 questions. And one, we know that you've been very open about succession planning and renewal. But we're wondering who is going to oversee the appointment of a new CEO given that you and the CEO are stepping down almost at the same time.

I hoped I might have addressed that. We did signal that the search for a new CEO will begin approximately a year before -- quite a few months before Peter's scheduled retirement and my retirement. And the remuneration -- Remuneration and Nominations Committee will lead that process for the company; and Martin, who is designated or has agreed to be the next Chair to take over from me, will lead the process.

My second question is really around the occupancy rate in your rental business. Is it the same in Wellington and Auckland, or is it lower in Wellington, given the economic conditions in the public sector?

I think we can all probably guess at the answer to that. But Peter, would you like to respond?

Yes. Look, at the present point with the numbers that we're looking at are much the same in Auckland and in Wellington. But obviously, challenges in Wellington suggest that Wellington would be higher over the year ahead than it is in Auckland. Look, it's all just selling an asset, but the reality is we need to make the right value decision for shareholders at the right time. We've got a fantastic team on being able to get the leases done. So we'll make the right asset decision at the right time.

Do I have any other questions? Do we have -- none online?

My name is [ Yu Chen ], I'm the shareholder. So during the presentation, the term green building was repeatedly mentioned. But I don't see any clear indicators related to the result for example, compared to other competitors or -- and even within itself, for example, electricity residents, any solar panels on the top or micro hydro underneath and then the energy efficiency of the building. And how do you use water for flushing, for example? Is it enough rain water collection for efficiency and so on. Yes. So it would be great if you can cover some.

I suspect you have an engineering background. There are members of the staff and management team who could keep you engaged here for a very long time answering your questions. Peter, you or maybe even Alex, like to...

I'll start and let Alex can fill in any gaps. But basically, for us, there are over 300 different categories that we look at in terms of what makes a green building. But principally, they fall into 3 key areas. The first is the quality of the services that the building provides in terms of into trip facilities, common areas, co-working facilities and other such things. The second is the quality of the air that you're breathing when you're inside that environment. And the third category is the quality of the materials that are used to create that environment. Alex, do you want to?

That's interesting. I would have said that energy efficiency is incredibly important. So actually, the energy efficiency of the buildings. I mean we're using Green Star, the rating tool as a proxy for a green building. And I don't know how familiar you are with Green Star, but Green Star has a number of different criteria that you can use to add up to make a green star rating. So there's lots of detail, but I would suggest that you maybe afterwards have a conversation with Saatyesh, who's our Head of Sustainability, and he can have, as Jeff said, a very long conversation with you about the details.

And we do. Maybe, Pete, you could just talk briefly about the solar array at Neilson Street.

Obviously, energy efficiency is important. So Alex and I are agreeing with each other. The Neilson Street, the second building that's being constructed at the present, will have 1 of the largest solar arrays in the country. And the team are working on a vertical access wind turbine for the Mt Richmond development, which will be erected as a trial. So energy efficiency and the nature of that energy that you're creating is fundamentally important.

And please hit Saatyesh up after the presentation for an answer on your micro hydro generation. I will be fascinated to know the answer myself. Do we have any other questions? Cool. Thank you very much. All right. We'll now consider the formal resolutions of the meeting. Resolution 1. Here we go. The resolution is for consideration today, may only be voted on by shareholders, either in person or virtually or by proxy and proxy holders and shareholder company representatives present. As noted earlier, I have been provided with a record of the valid proxies received. Proxies have been received in respect of 372,867,519 shares, and these have been audited by Deloitte. There are 860,975,391 shares on issue. Resolution 1, proposes that Alex Cutler be elected as a Director. Alex was appointed to the Board last year and being eligible offers herself for election. The Board has determined that Alex, if elected, will be an independent director. I'll now ask Alex to say a few words.

Thank you, Jeff. Good afternoon. Thank you for the opportunity to say a few words. My name is Alex Cutler. I am of European extraction, as you can tell by my accent, but I have chosen to live in New Zealand with my Kiwi partner and our children. And when I wrote that, I thought they're actually fully grown adults. They are 21 and 18, so it's an expensive year in terms of both their presence this year. As Jeff has already mentioned, I have spent most of my career to date in the world of sustainability and ESG, half of it in the property sector. I have been fortunate over the last 30 years to have been involved with some significant international companies as well as some homegrown sustainability advocates here in New Zealand. And yes, 30 years. I know that I look much younger than that. We live in turbulent times. I don't need to give you a lesson in global politics for you to know this. Regardless of those global influences, it has not changed the long-term outlook. Climate change continues to impact our world. And as Board Directors, we continue to act on our fiduciary responsibility to address the risks to our business. CBRE's recent research report stated that there is a clear gap between the sustainability goals of major occupiers, and the environmental performance of the buildings that they occupy. This disconnect presents a significant opportunity for landlords and developers. As you've heard before and had reinforced today the Argosy business is aligned with a sustainable future and the opportunity that, that presents. Argosy, many years ago, determined that sustainability was strategically important and has, in my view, correctly identified that the journey is won with a perennially moving finishing line. The challenge for this business is to be able to anticipate the changing environment and respond to the requirements of the market. This business does indeed see that as opportunity, and I believe that my appointment is some evidence of the intent to continue realizing it. Buildings last longer than leases. And as a business, we must ensure that the portfolio meets not only the current needs of the leasing market but the future needs too. A future that research tells us is to demand a marked contribution to a lower carbon pathway. Shareholders today are benefiting from the decisions made over a decade ago. The portfolio of the future needs to be examined in the same light. We are already in a position where there is high demand for space with certified sustainability credentials, and this demand is projected to increase. I think it is accepted that the standards will continue to get higher. With the work that Argosy has already done in this space, there is a great opportunity to build to greater success. My aim is to help this business reach their ESG goals and to empower management to aspire to loftier ones. I personally regard this as my opportunity to help a good company do even better. Thank you.

Thank you, Alex. Are there any questions on this resolution from the room or online?

Hi, Ms. Alex Cutler. Again, my name is Yu Chen, the shareholder. For your talk just now, I'm not too sure why you hardly mention anything about your qualification, skill and cycle magic factors that can greatly benefit this company and yes, but you seem to cover quite a lot. So other variables, including history and other external factors. Do you mind if you can give shareholders an answer regarding those that I mentioned.

Sure. So I think briefly, my qualifications are mentioned in here. So I have an academic background in Environmental Management, BSc and Masters. And then I have spent a number of years working for a large number of different organization -- well, not a large number, some different organizations in the sustainability space. So we're both working with international organizations such as Ford Motor Company, Shell, Nike, et cetera, helping them to develop their sustainability strategies over the years. And then more recently, I have been very focused on the property sector in New Zealand. As mentioned, I was the CEO of the Green Building Council. So spent lots of time with lots of property companies here as well as the broader property and building and construction sectors to understand sustainability. So the reason I mentioned Green Star, of course, as I was responsible for delivering Green Star to the market when I was the CEO. And that has a huge amount of detail in it about sustainable buildings. I am very happy for you to go have a look at my LinkedIn profile. It's got lots of detail about all the jobs that I've had over the years. And yes, hopefully, that kind of gives you enough information in terms of some of the organizations I've worked for. But I'm also very happy to answer more direct questions afterwards, if you'd like.

Thank you, Alex, for a very comprehensive answer. Anyone else have any questions on the resolution? I now put to the vote the resolution that Alex Cutler is elected as a Director of the company. Please mark your voting papers or select your voting option on screen. I'll now pause for -- to give you an opportunity to do that. [Voting]

Thank you. Has everybody settled and been able to do what they need to do? That's good. Thank you. I'll now move to the next resolution. Resolution 2 seeks to authorize the Board to fix the auditor's fees and expenses. Is there any discussion on this resolution from the room or online? Please mark your voting papers or select your voting option on the screen. As this is the final resolution, in a minute, I will close voting. Please ensure that you have cast a vote on all resolutions. The votes will then be counted by Computershare who will now begin collecting the voting papers from within the room. [Voting]

The votes collected from the room and online will be added to the proxies already received, and the results will be compiled by Computershare registrar and scrutinized by the auditor. The results once available will be published on the Argosy website and provided to the NZX. I now move on to the general business of the meeting, and open the floor for questions or comments. Again, I ask that in addressing the chair with questions, would you please clearly state your name and advise whether you're a shareholder, a proxy holder or a shareholder company representative. For those shareholders online, if you wish to ask a question, select the question icon button on your computer, tablet or mobile phone and then type in and submit your question. The question will then be sent to the Board to answer. At the beginning of this meeting -- as I noted at the beginning of this meeting, we will try to get as many of the questions as possible -- get to as many of the questions as possible, but not all questions may be able to be answered during the meeting. In this case, questions will be followed up by our e-mail after the meeting. I would like to remind you that only shareholders, proxy holders or shareholder company representatives have a right to speak or ask questions. Is there any general business?

So I'm a shareholder through Sharesies. I hold the shares through Sharesies, online broker. So my question is, I read an article on NZ Herald that Auckland CB prices are going down. So I read somewhere that there was a gain realized on the lease property or something very small amount. And my question is, what is the outlook for the overall property prices, whether we build the asset or whether we lease it, like whether we can charge higher leases to the customers, clients? Is it possible? Because if the article of New Zealand Herald says that the Auckland CB prices are coming down on residential side?

Right. The commercial property market doesn't track the residential market. It's that we have -- as you would have seen from our result, seen a slight uptick in values for the year just gone, and we have yet to start, we'll get too far down the track on where values might go this year. But Peter, would you like to add anything by way of response?

Yes. Happy to. Thank you, Jeff. The article you referred to was specifically about residential property, which have a different set of drivers economically and practically to commercial property. We don't just rely on the sale prices of assets within our portfolio to determine asset values. They determined at least annually generally twice a year by independent valuation by qualified valuers who will look at the total market and do what we call a discounted cash flow analysis. Looking at the total return of the asset over at least a 10-year period discounted into today's dollars. So it's quite technical. What we're seeing at the present point is a low point in the valuation cycle that was around the middle of last year. And since then, we've seen asset prices increase as evidenced by the revaluation number this time around. And we can't predict what asset values will do in the future. But from where we're sitting with an OCR that is lower than it has been, rental rates that are higher than they have been, that should give us an expectation of relative optimism for asset values going forward.

Yes. So I have 1 more question. Actually, just Googled it. So like the market value of the company, so this shareholder net worth is around $1 billion, and market cap of the company is around $945 million something. So is the stock trading below book value right now? So I just wanted to understand how the prices and things work?

I'm not sure I understood the question then.

So I'm just simply comparing the shareholders' net worth on the balance sheet side. On 1 of the page it was like $1,038 million something -- like around $1,000 million, which is around $1 billion. And I think on Google, I saw the price and market cap of the stock, it is $945 million. So is the stock trading -- does management have any view that whether the stock is trading below the book value or not? Because generally, investors would prefer to invest a stock, which is below book value. And if the business looks genuine, people will invest the money.

Chairman, I think that question is looking at the market price for the shares today versus the NTA. So if we take all of the simplistically, add up all the value, all the assets in the portfolio, deduct the amount of debt, divide that by the number of shares that are on issue, each share is technically worth $1.53 at the present point. It's currently trading as you'd be aware, today at $1.14. So that demonstrates a discount to the NTA. So the share price will go up and down. We've tried to keep the dividend as predictable as possible. The difference is what am I having to pay today to buy that dividend. And at today's share price, that is relatively less than the value of all the assets in the portfolio.

My name is John Miller. I'm a shareholder in person and as Trustee [ SN Trust ]. I think I've asked this question before, and it also relates to NTA. Over quite a long period of time, the NTA has consistently been above the share price. Have the directors given any thought to buying some of the company shares and canceling them or holding this treasury stock or whatever?

Yes, sir, they have, particularly when the stock is trading at a very deep discount to the underlying asset value, but capital is a short commodity and share buybacks are not easily implemented. And we have recently taken long-term strategic decisions to apply capital to future development opportunities. But on the implementation side of share buybacks and their effectiveness, Dave, would you like to make a comment?

Yes. I mean with share buybacks, first of all, you need to have the cash to do it. And we actually don't -- we'd have to sell assets to buy back our shares. So at current settings, that's only marginally accretive. So what we've chosen to do is, as Jeff said, apply that capital to our green development. And if you look at, for example, Mt Richmond, we've already made $13 million just sitting on the land. We expect to make another $28 million through the development process. So that's huge, huge value for shareholders that we are getting through allocating that capital to the green developments. So I don't think many shareholders want us to sell assets and buy back shares. They'd rather be putting towards assets that have great real long-term value. So that's what we decided to do.

Thank you. Are there any further questions? Thank you. That completes the formal business of the meeting. Thank you, everyone, for your attendance and participation this afternoon. I formally declare the meeting closed and invite you to join us all for refreshments at the back of the hall. Thank you.