BWP Trust (BWP) Earnings Call Transcript & Summary

Thank you, and good morning, everyone. Thanks for joining us. My name is Mark Scatena, the Managing Director of BWP Trust, and I'm joining you from Perth. With me today is Andrew Ross, the Trust's Head of Property; and David Hawkins, the Trust's Head of Finance. Today, we're pleased to announce BWP Trust's results for the half year-ending 31 December 2024. The Trust has released to the ASX this morning its half year results announcement, half year report and investor briefing presentation. This morning, I'll go through the presentation before taking questions. Turning to Slide 3. To commence today, we acknowledge the traditional owners of country throughout Australia and their continuing connection to land and waterways upon which we depend. We pay our respects to their elders, past, present and emerging. Turning to Slide 6 and highlights for the half. The half saw portfolio momentum continue, supported by strong focus on optimization and profitable growth. In optimizing the portfolio, during the half, the Trust reported like-for-like rental growth of 3.3%. 5 Bunnings market rent reviews were completed, achieving a 2.7% average increase and Bunnings exercised 9 lease options. As a result of the 9 options being exercised, the portfolio WALE increased 0.8 of a year or 22% to 4.4 years. In support of profitable growth, during the half, an agreement was reached for $14 million Bunnings expansion at Pakenham, Victoria, in addition to agreement being secured for the $11 million redevelopment and car showroom expansion at Midland, Western Australia. Also, the responsible entity continued to focus on operational effectiveness and our ways of working in an enlarged asset portfolio. In portfolio renewal, we advanced the divestment of Port Kennedy in Western Australia. We completed a non-deal Asian roadshow, debt roadshow and we increased our engagement with a large-format retail sector in support of customer store network expansion, which includes collaboration on the repurposing of BWP sites. Turning to Slide 7 and key portfolio metrics. Whilst I won't cover off on all the key metrics here, I'll touch on a couple of highlights, including total income increasing 22.2% to $100.6 million. The weighted average capitalization rate or cap rate fell 10 basis points over the half to 5.43%. Net tangible assets at the balance date were $3.92 per unit, which compares to $3.74 per unit at 31 December 2023. Portfolio occupancy increased to 98.7%, up 1.3 percentage points on the prior corresponding period. The weighted average lease expiry or WALE increased to 4.4 years and solar installations now exist on 54% of all Trust-owned properties. Turning to Slides 9 and 10 on financial performance. Whilst I won't spend time on Slides 9 and 10, they provide an overview of the financial performance for the half with key metrics focused on income, expenses, portfolio valuation, distributions, investments and cash generation and capital structure. Two important call outs from Slide 9 include a net profit for the half of $157.1 million, which included $93.2 million in net unrealized gains in the fair value of investment properties and which compares to net profit of $53.2 million in the prior corresponding period. And an interim distribution of $0.0920 per ordinary unit has been declared and will be made on 26th of February 2025, up 2.0% from the first half of last financial year. And turning to Slide 12 and the strategic framework that guides our areas of focus. In delivering BWP's objective of providing unitholders a secure and growing income stream and long-term capital growth, the group's key areas of focus align to 3 strategic pillars of portfolio optimization, profitable growth and portfolio renewal. Portfolio optimization focuses on optimizing and leveraging the existing network while managing asset repurposing requirements. Profitable growth seeks to expand the core portfolio and assess adjacent growth segments and addressable markets where feasible, and portfolio renewal focuses on active value creation through capital recycling and reinvestment in growth initiatives to complement the core portfolio while maintaining a strong and flexible balance sheet. Importantly, our supporting principles of operating excellence, efficient capital structure and effective asset management underpin these strategic pillars. And our enablers of commercial discipline, capital allocation and access, sustainability and active and effective collaboration, in addition to our values of being respectful, responsible, resourceful and responsive, reflect the behaviors and ways of working that guide our business approach in the areas we invest, the drivers of returns and how we create value. Turning to Slide 14. Excluding rental income from properties acquired, sold, upgraded or vacated and re-leased during or since the previous corresponding period, rental income increased by 3.3% for the half. As is shown in the chart, the growth in average rent over the last 10 years, being dollars per square meter, has been supported by an increased contribution of national large-format retail tenants, reflecting BWP's ability to repurpose and tenant effectively should Bunnings vacate an existing site. In aggregate, for the 2025 financial year, CPI reviews will apply to 34% of the base rent with leases subject to a market rent review comprising 12% and the balance of 54% reviewed to fixed increases of 2% to 4%. And turning to market rent review outcomes on Slide 15. Market rent reviews on 5 Bunnings Warehouses were finalized during the half with rents increasing on average 2.7%. And while above the 3-year average of 2.3%, we remain of the view that overall, the portfolio rent is broadly at market. For the second half of the 2025 financial year, 6 market rent reviews are scheduled, which are in addition to 3 unresolved reviews carried forward from the 2024 financial year. Turning to Slide 16 and rental mix, WALE and occupancy. The charts illustrate the continued covenant mix strength of the portfolio, driven by Wesfarmers Group and national retailers representing approximately 97% of total rent. In addition, occupancy at 98.7% and an increased WALE of 4.4 years reflect continued improvements in portfolio quality. Turning to Slide 17 and capitalization rates. As evidenced in the capitalization rate chart, the half to 31 December 2024 saw increased market transaction activity with 3 Bunnings Warehouse transactions completed. These were all purchased by private investors at an approximate average cap rate of 5%, with transactions comprising 1 regional asset sale and leaseback and 2 metropolitan secondary market transactions. Turning to Slide 18 and valuation summary. During the 6 months to 31 December 2024, the Trust's total property portfolio was revalued with revaluations performed by independent valuers for 13 properties. The Trust's weighted average capitalization rate for the aggregate portfolio at 31 December was 5.43%, down 11 basis points from 30 June 2024 and down 10 basis points compared to 31 December 2023. Importantly, at 31 December 2024, the average cap rate for the stand-alone Bunnings Warehouses within the portfolio was 5.16%. The cap rate compression in the half and the consequent net fair value portfolio valuation gain of $93.2 million reflect the strength of the Bunnings Warehouse asset class. Turning to Slide 19 and independent valuations. The independent valuation movement in the half reflects cap rate compression and rental growth with a cohort of 13 independent valuations completed, representing 15.7% of the BWP portfolio value. The average cap rate of 5.64% for the independent cohort was in line with June 2024, with no cap rate change reflecting the impact of West Ipswich and Geraldton valuations due to asset-specific attributes. When excluding West Ipswich and Geraldton, the cap rate of the independently valued cohort decreased 5 basis points in the half. Turning to Slide 20 and the lease expiry profile. In the first half of the 2025 financial year, Bunnings exercised 9 of 10 options expiring, which also comprised a number of third options being exercised, taking the effective age of a number of these leases to beyond 25 years. As outlined in August, when assessing the probability of Bunnings exercising any upcoming expiry, we expect Bunnings network decisions to be influenced by store location, physical store format and lease structure with Bunnings potential to vacate often linked to the availability of an alternate site, which includes consideration of planning approval time frames. Importantly, our near-term expiry peak in FY '26 and FY '27 reflects the cycling of the initial terms of historic tranche portfolio acquisitions with these upcoming expiries supported by an improved core portfolio and option exercising history. In addition, these near-term expiries are weighted towards existing or current Bunnings store formats and comprise largely first and second options. When coupled with our assessment of those sites' respective locations, warehouse formats and lease structures and there being at most 1.7 years remaining to notify for the FY '27 lease expiry cohort, these afford confidence that these upcoming expiries have a good probability of being exercised. Turning to Slide 21. This chart shows the Trust's near-term lease expiry and the status of the leases expiring in each financial year. In regards to recent history, 9 options representing 11% of income were exercised in the 6 months to 31 December 2024, with 4 relating to the 2025 financial year and 5 relating to the 2026 financial year. And when we think of lease mechanics for the lease expiry notification periods for the 2026 and 2027 financial years, of the options yet to be exercised, 33% have a 3-month notice period with 67% having a 6- to 12-month notice period. Turning to Slide 22 and core portfolio. The core portfolio represents these properties with stable long-term leases in place and excludes any properties held for sale currently being repositioned or where Bunnings has notified of its intention to vacate. As can be seen through the respective charts, core portfolio improvement has been driven by effective asset repurposing and renewal and growth activity. Importantly, the improvement in the core portfolio over the past 4 years is reflected in the higher proportion of core properties, continued individual asset scale, a high metropolitan location ratio and improved WALE rental growth and capitalization rates. Turning to Slide 24 and Bunnings expansions and key tenant upgrades. Upgrades were agreed in the half at Pakenham and Midland, reflecting strong tenant partnerships and BWP support to drive improved lessee store format and customer propositions. Specifically, terms are agreed with Bunnings for an expansion, subject to development approval and completion of legal documentation of a site in Pakenham, Victoria, comprising a cost of $14.0 million at a funding rate of 6.5%, with a new 10-year lease to be entered into on completion of works with 6, 6-year options. Annual CPI reviews are capped at 3% with market rent reviews scheduled every 10 years with a 10% cap and collar applied. The expansion will increase total retail area by 4,407 square meters across both timber trade sales and main trading floor areas and is expected to be completed in late calendar year 2026. Furthermore, redevelopment and car showroom expansion works to upgrade the Midland Carco site at a cost of $11 million was agreed at a funding rate of 7.5%. The upgrade includes a new 15-year lease on completion of the works with a 1-year -- sorry, with 1, 10-year option. Annual rent escalation is at the greater of 3.5% or CPI with a market rent review to be completed at 10 years. The redevelopment of the premises is to accommodate existing and incoming car dealership brands as well as the addition of new facilities, including a tavern, gym, office and workshop with completion expected in late calendar year 2025. Turning to Slide 25 and alternate use activity. The Trust continues to make progress in the reduced number of repurposing activities in stores vacated by Bunnings with this reduced alternate use activity, reflecting improved portfolio quality. And with Hervey Bay providing a template for near-term repurposing activities, which reflects the development capability we have built over time. Of note are the current sales process for Port Kennedy, development application lodgements and leasing campaigns advanced for Noarlunga and Fountain Gate and rezoning options in review for Northland while securing a new third-party tenant. Turning to Slide 27 and capital management. The weighted average cost of debt for the half was 4.4% compared to 4.2% for the prior corresponding half, reflecting the higher interest rate environment. Average borrowings of $793.9 million during the half was 58% up on the prior corresponding half, largely due to the NPR debt assumed as part of the takeover with borrowing costs of $17.2 million, up 63.7% on the first half of last financial year. As at 31 December 2024, the group's interest rate hedging cover was 52.4% of borrowings with a weighted average term to maturity of hedging at 1.4 years. The group's gearing ratio at 31 December 2024 was 21.4%, which is at the lower end of the Board's preferred range of 20% to 30%. The lower gearing provides flexibility for the group to take advantage of investment opportunities to create long-term value when they arise. BWP is committed to maintaining a strong investment-grade rating for appropriate capital and balance sheet management with current ratings comprising an A- stable rating by Standard & Poor's and an A3 negative rating from Moody's. Finally, a non-deal Asian debt roadshow was completed during the half with continued investor engagement resulting post the visit. Whilst it's important to call out that our bank facilities with the CBA and Westpac can be extended a further year each year, subject to agreement, during the second half, focus will be on refinancing to support upcoming debt maturities. Now turning to Slides 29 and 30 on the outlook. In delivering BWP's strategic agenda of portfolio optimization, profitable growth and portfolio renewal, BWP's primary focus areas for the balance of the 2025 financial year include continuing to progress the repurposing of vacated properties, filling vacancies, completing store upgrades, extending existing leases through the exercise of options, finalizing market rent reviews and the continued rollout of energy efficiency improvements. BWP will actively assess and action suitable opportunities to grow the portfolio that will create value for BWP with a focus on investing in the core retail portfolio to support network -- to support tenant network optimization and expansion plans and partnering with existing tenants to potentially over time, participate in adjacent parts of the retail value chain. Where feasible, we will recycle proceeds from the divestments of noncore assets into growth initiatives whilst maintaining a strong and flexible balance sheet. We'll continue to focus on lessee relationships to support asset expansions and to optimize available space and we'll seek to further optimize the cost of capital. In regards to the operating market and environment, the Trust remains well positioned with rental income comprising largely the Wesfarmers Group, other national large-format retail automotive and self-storage businesses and Commonwealth state governments. Bunnings remains well positioned to provide leading customer value supported by ongoing productivity and efficiency initiatives, housing undersupply and net inbound migration continuing to support demand. And Bunnings continues to pursue opportunities to grow the addressable market and customer participation through new ranges, network optimization, commercial strategies and digital channel growth. Six market rent reviews are to be finalized in the second half in addition to 3 unresolved from the 2024 financial year. Finally, consistent with the interim distribution, up 2.0% to $0.0920 per unit, subject to no major economic disruptions or material change in market conditions, BWP provides full year distribution per unit guidance of approximately 2% growth on FY '24. And with that, we'll conclude our prepared remarks. And I'll now hand back to the moderator to facilitate any questions where myself, Andrew Ross, the Trust's Head of Property; and David Hawkins, the Trust's Head of Finance, are available.

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Lou Pirenc with Jarden.

First one, just on Slides 9 and 10. Can you just go through -- it's quite a big difference between your profits of $66 million and your operating cash flow of $53 million. So, just curious to see if there's anything there to call out why that is.

[indiscernible] let me think of it, Lou. I'll have to get back to you on that one, if that's okay.

No, that's fine. And then, Mark, you talked about continuing to look at investment opportunities. Can you just talk about the market? I mean, clearly, interest from private investors in the asset class is quite strong and at quite tight cap rates. But how does it -- I don't know, are you looking at more opportunities at the moment compared to the last few years? Or how is the outlook for inorganic growth, I guess?

Yes. I'll touch on that, Lou, and then Andrew can just cover off on how the property team -- how active the property team is. Look, I think I think we've always said, Lou, that we've been very active. And we've got a big repository of things we look at and targets. We certainly guided in the release to the types of assets that we're most certainly interested in. I think the cap rate profile, you've seen some transaction activity increase in the half, again, as confidence in the outlook, some stability perhaps in that -- in the prospect for interest rates and buyer and seller expectations aligning a little more. So we would expect that momentum to continue into the second half. Yes, Lou, I think we're as active as we've ever been, but we absolutely are focused on delivering the objective of the Trust and to facilitate growth in earnings. And so making sure that the team is up and about as it relates to opportunities, Lou, it's a really big focus. So, we looked hard in the half as we always do. Yes, and we made some offers on a couple of sites, which weren't successful, but we'll continue to be absolutely in the market, Lou. I don't know if Andrew wants to...

Yes. Yes. In addition to that, Lou, we're seeing another large format retail center coming to the market. I've got a meeting with agents in 2 days' time. It's something that we would seriously have a look at. We did put in an offer for another large format retail center back in September-October and we missed out on that one. There seems to be a renewed level of confidence in the market in 2025. That's the feedback that we're getting from the agents that we're talking to. So, I think we'll see increased transaction activity and potentially firming of cap rates from -- or particularly from when we did the transaction with NPR last year.

Fair enough.

Sorry, Lou. David. The operating cash flow, it's transaction costs relating to NPR that were paid on the 1st of July, the variance.

Yes. No, that makes sense. And then final question for me. I mean, Mark, you mentioned or there's on Slide 29, objective to further optimize the cost of capital. Can you maybe go in a bit more detail how you see that? Is that waiting for RBA cuts? Or are there other initiatives that you could use to optimize your cost of capital?

Well, I think Lou is just an incredibly important focus for David in his role. And I think as we have some maturities that we're thinking about. So, how we fund those is important and how we think about the cost structure, and I talk about that in a slightly more broader sense. So making sure that the system is focused on productivity, including the cost of capital. So that over time, if we can fund well and we can optimize that, then, of course, the addressable market for opportunities grows and we become more competitive in regards to our ability to transact. So, just a continued focus, Lou, and making sure that us as a team, we're absolutely focused on that particular element so that there's opportunities that universe does grow.

Your next question comes from Tom Bodor with UBS.

Mark, just following on that last question of Lou's around optimizing cost of capital. I just wanted to check if any of your near-term expiries are the Newmark debt that was sort of in place when you bought the vehicle or whether that's all been replaced since you've sort of consolidated that acquisition.

Yes. So Tom, we refinanced all of the NPR debt on 28th of June last year. So, all this debt is actually in BWP Trust head stock. Some of that was some short-term funding from the banks that we'll look to put into a long-term MTN in the coming months.

Right. So optimizing doesn't just mean cost, it could be duration and other terms and conditions.

Yes. And looking at how much headroom we're carrying is debt headroom as well and the like.

Okay. Great. And then the other question I had, just one more for me. With the revaluation, which was actually relatively healthy, was that quite concentrated on the Newmark assets? Or would you say it was broader than that across sort of the broader portfolio that I think it was $93 million of uplift you saw there?

Yes. Tom, the NPR assets moved by 7 basis points. They compressed 7 basis points. But the majority of the movement was 11 basis points in the non-NPR assets.

Right. So, the uplift on NPR was sort of actually less than what you saw across the broader portfolio?

Correct, yes.

And did the NPR evidence inform the valuers? Or did they sort of look through that as a bit of a portfolio deal one-off distressed type situation?

No. The 3 transactions that we've put in the slide on cap rates, that's informed the valuers on our entire portfolio. That's more recent than NPR.

Sure. Okay. So, it's fair to say that the NPR evidence was sort of, is essentially older than the mortgage?

It's old, yes.

Yes, it's not current market.

Your next question comes from Howard Penny with Citi.

Congrats on the results. Just following on the other questions, just one item. So, we saw expense growth slightly outpacing income growth. And I guess it's because of the higher CPI inflation we've had generally. But perhaps there's also a little bit of NPR effect in that expense growth. Could you comment at all just looking forward, how you expect those 2 lines to behave?

Obviously, the management fee increased as well, Howard, because of increased the valuations. There was an increase in basic insurance and land tax is probably the 2 largest contributors to the increase in the actual other expenses. And we think, hopefully, that should moderate, but it depends on what the governments are forecasting in their land tax going forward.

Great. And maybe just elaborating on the options for FY '25 that haven't been exercised and if you -- and even FY '26, just any commentary on the probability of those moving forward, if you can, as far as you can? And maybe just any comments on that?

Look, Howard, I'd love to be able to give you an estimate -- a high-quality estimate on the probability. But I think what we tried to do as we did at the full 1.5 years is explain the composition of the decision-making, we think, as it relates to Bunnings as the tenant. So, the recent history in FY '25, those 3 non-exercisings, they form part of the repurpose portfolio, which we're active on now. We've had some good success in terms of option exercising in the half completed. And as I said, in regards to lease format, the actual format and the network nodes. When we look at that within the portfolio, when we look at the duration or, I suppose, the maturity of the lease, the age of the asset that's being -- that's coming up for option exercising, I think as I called out, it does give us some confidence that we expect that probability to be relatively high. But of course, Bunnings will make its decisions, I think as we've mentioned before, Howard, in terms of its network plans. But again, when we look at the 3 attributes that we think Bunnings applies, when we look at perhaps the maturity of those assets and there's a degree of confidence that the portfolio is high quality than what it was. I think, again, in the deck, Howard, we've tried to explain why we think the portfolio as it sits today is a high-quality portfolio. So a consequence of that, we hope, and we expect that the probability of option exercising is a little higher as well than recent history.

Congrats, again.

Your next question comes from Richard Jones with JPMorgan.

Just on the new developments that you've announced, good to see a much better yield on cost that you're generating in those projects. Just wondering if you can just talk us through the different lease structures on new leases that are entered into for Pakenham and Midland and just kind of discuss how those terms are negotiated.

I'll start and then Andrew perhaps can cover off. I think with Bunnings, it's like any negotiation, it's most certainly robust, Richard, as you would expect. And the lease structure, as we've guided, I think there's a respect in that revised lease structure that, that funding rate is more reflective of the cost of capital, which, of course, that's incredibly important. And then that 10-year lease, we are trying to manage, I suppose, 2 things, and that is to secure a high-quality tenants like Bunnings and support their network expansion with tenure and we think the 10-year lease reflects that. And of course, Bunnings is keen, again, those 3 attributes I mentioned before, to the extent that we can accommodate their tenure over time in a high-quality location like Pakenham, then we've negotiated our suite of options with Bunnings. And then I think as you see in the standard leases, moving forward that market rent reviews are increasingly capped and collared and 10% is the upper and lower threshold. So, the Pakenham negotiation was one of wanting to support the expansion of Bunnings, so they can have a larger trade sales area and increase their selling floor, and we've delighted to do that. We're respectful and they were respectful of our cost of capital. And within the lease structure, we've endeavored to accommodate a good initial term to reflect that capital investment and then some options that reflect Bunnings' intent to remain in that asset over a long time. So that's Pakenham. Carco, I'll perhaps let Andrew touch on. But again, a tenant seeking to absolutely invest and expand their proposition. And that's been a successful repurposing of that asset. And so again, we were delighted to work through with them what their intent was and they've got some ambition for that site. It's well located. It's a relatively vibrant business as it currently sits and wanting to enable, again, the expansion and improvement to their proposition, which has a number of elements in that development. Again, a good location. They were seeking some good security and good tenure. And given the investment, we were very happy to execute a 15-year lease and then with an option to give again that investment the underwrite that it needs. And again, a funding rate reflective of the cost of capital. So yes, like any negotiation, Richard, they take time. Some of them happen faster than others. We would love to do -- we talked to this in terms of portfolio growth and optimization, we would love to do more of these. And we are -- we try and bring these to life as best we can. We have ongoing discussions with our tenants on how they would like to optimize their assets. And I think if we can -- if security, asset proposition improvement and funding cost align and we're respectful, obviously, as the landlord of highest and best use, then I think we can come to good outcomes for both lessor and lessee, but they are long processes to get to those.

So that's covered in detail. The only thing you didn't cover was the escalators. So I mean, I look at Midland review, greater of 3.5% of CPI versus Pakenham CPI capped at 3%. I mean you'd rather do the Midland structure every day of the week. Just interested in...

Yes. I think Pakenham is also, Richard, a function of the existing leases I mentioned. So, there are terms that we'll negotiate as we fund an expansion with our key tenant, Bunnings. And so some of those terms will retain and some of those terms will amend. So, I'm not sure they're necessarily comparable given the Bunnings lease can be a relatively standard lease in some locations.

Okay. And just one other question. Just is a buyback a legitimate option being considered?

Look, we -- you would expect us, Richard, to be looking at those things, which we do, and we value different uses of capital, of course, and we discuss those at an executive and a Board level. It's not something that has been a key topic of discussion recently, Richard, we're most certainly looking to invest the balance sheet into growth opportunities and to repurpose and optimize the existing estate. So that's been a key focus. But of course, it's an option that when we're looking to invest, we will compare that perhaps to some capital management and we'll make a decision based on the best prospects for unitholders. So yes, we if they're on the list of things that we absolutely will look at frequently, but we're optimistic that there are opportunities out there, both in existing and perhaps in an incremental sense. So that's where I think the focus is at the moment.

Your next question comes from Lauren Berry with Morgan Stanley.

Just a question on the FY '26 options that were exercised in the period. Just interested to know if those options were exercised within the standard notice period that you had for them? Or were you starting to do some early discussions around renewals a bit earlier along than you would normally?

No, it's all within the window that Bunnings has to exercise the option.

Okay. So in the next 6 months, how many of those windows are kind of coming up?

Yes, sure. So to 30 June, there's 4. So, if you look at the chart, that's got FY '26, and there's 14 yet to be exercised, 4 of them will fall in the next period, next half period. And then the balance are all -- will all need to be exercised by the 31st of December 2025. So, this time next year, if Bunnings has exercised all of those, there won't be any lease expiries in FY '26.

Great. And then the other one is on the Northland lease that you've negotiated. Just interested in the spread between what the new tenant will be paying versus Bunnings and also if there's any CapEx required for the new tenant?

Yes. Lauren, the strategy around Northland is we're going through -- and we're going to be lodging this with the state government shortly is to rezone that property and redevelop it. And so what we've done is we've done a short-term lease, a 3-year lease with a tenant with a 5-year option, but we can break that lease at any time after the 3 years. So if we get the rezoning through and we get all our development approvals in place, we can give the tenant notice and then we can move forward with the development. So the rental is -- it's about 20% lower than the Bunnings rent, but we're happy to accept that lower amount given the flexibility that we've been able to negotiate with that tenant.

Great. And then final one, just on Port Kennedy. Do you have like a buyer for that asset? Or is it still under negotiation?

It's still under negotiation. So we don't have a contract in place. And sorry, just to answer your other question in relation to the new tenant at Northland, there's no capital as part of that. And there's no incentive as part of that.

The next question comes from Adrian Atkins with Morningstar.

It's really good to see the better returns on the Bunnings development at Pakenham. And I know every site is going to be different, but should we expect most future developments to be more like these terms compared to, say, Dubbo? Or is it just that Pakenham was just a much better location?

Yes. I think, Adrian, the question in terms of relativity to Dubbo and Lismore, for example, is timing. And so again, those developments were agreed before the tightening cycle of interest rates, so, in a very different set of circumstances and reflected, again, some prevailing costs at the time. Now we've secured or we committed to expansions with our tenants at a higher funding rate, again, more reflective of the cost environment as it relates to funding, more reflective of our cost of capital. We would hope that, that continues. So, if we were to secure more investments in terms of expansions with tenants, that would again be reflective of our prevailing cost of capital.

Okay. Great. And just one other quick one. Just Moody's downgraded your outlook. It's been quite a long time now. Is there any update on what they're thinking?

We're actually meeting with them when we do the results briefings next week. So we're continuing discussions with them. Part of the downgrade was relating to the NPR debt being refinanced, which we have refinanced. So now we'll just work through any other concerns they have.

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

Thanks, everyone, for attending today's results briefing and we look forward to seeing and speaking to many of you over the coming days and weeks. Please reach out should you have any queries, very happy to discuss anything. Thanks very much, and have a nice day.