Goodman Property Trust (GNZ) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to this Annual Meeting of Unitholders. I'm Keith Smith, Independent Director and Chair of Goodman New Zealand Limited, the manager of Goodman Property Trust. Alexandra Park is a new venue for us, and it's a pleasure to be here today. This meeting has a hybrid format with investors either attending in person or participating through a live webcast. For those in the room, please be aware that there are cameras and audio equipment streaming proceedings. Today's presentations will focus on our investment strategy for the trust and how we deliver sustainable long-term growth for the benefit of all our stakeholders. We will also address our Board renewal program and CEO succession plan. As such, the meeting will consider one ordinary resolution relating to my reappointment as an independent director. I have advised the board that this will be my final term and that I intend to retire once the transition of the new Chief Executive Officer is complete and a replacement director has been appointed. Before we proceed, I would like to cover off certain health and safety practices relating to the use of this venue. In the unlikely event of an emergency, you will be required to evacuate to a designated safe zone. Should this occur, please exit the room through the doors to my right. Actually, I think left, right, both sides. Well, for those with the rear, following the directions of the venue staff to the outside, it's a [ similar area ]. Probably the stage was not set the way it was, but we've got exit signs there. So we know where to go. Instructions for webcast participants. A key difference between the physical meeting and the live webcast is in the way questions and voting are dealt with. For unitholders participating through the live webcast, polling has now opened. Votes can be cast by selecting the polling icon on the instructions screen and following the prompts. Votes can be amended up until the time the poll closes, which is at the conclusion of this meeting. Now that the meeting is started, questions can also be submitted through the webcast portal. We have allocated time at the end of the presentations to answer these, but they can be submitted at any stage. If you experience any technical issues casting your vote or submitting questions, please refer to the online health or the instructions provided in the virtual meeting guide that accompanied the notice of meeting. I would now like to introduce the members of the Board and executives of the manager who are here in attendance with me today. My far left is Phil Pryke, who I think is only on the phone, not physically on the screen. Next to Phil -- thank you, Phil. We can hear you. It's Greg Goodman, David Gibson, Laurissa Cooney, Andy Eakin, Leonie Freeman; and John Dakin. On behalf of the Board, I'd also like to acknowledge and congratulate James Spence, who will replace John as CEO from 2023. After more than 18 years in the role, John is stepping down at the end of the year. He's not retiring, however, and will continue as a Director of the manager. James is a highly capable leader who has had extensive property and corporate experience, having worked in both Europe and New Zealand in investment management roles with Goodman. He has worked closely with John and the Board over the last 5 years, leading the property services team and implementing the wider business strategy for GMT. James, who is in the audience, James where we may have lost you? Can you stand up James, so everyone can see you. And you'll have an opportunity to hear briefly from him later in the meeting. In addition to the directors and executives present today, we also have representatives of the trustee and other advisers present. These representatives will be available to answer any questions if required. I'd now like to work through some of the formalities of an annual meeting. I'd like it noted that in accordance with the trust deed, I've been nominated by the trustee to act as Chair of this meeting, and I have now tabled their nomination. I also confirm that the meeting has been properly convened and notice has been formally given to unitholders. And finally, I can confirm that we have satisfied the requirements for a quorum. Now we can proceed to the formal part. Year-end review. The strength of GMT's recent operating results has reinforced the value of an investment strategy focused on urban logistics in Auckland. The continued execution of this strategy has been supported by a rapidly growing digital economy and sustained customer demand for warehouse and logistics space. The Board is extremely satisfied with the performance of the trust, high occupancy levels, positive leasing results new development completions and strategic acquisitions have all contributed to the 3% increase in operating earnings before tax. A substantial portion -- portfolio revaluation gain has also underpinned a record statutory profit. With GMT outperforming its benchmark of listed peers by around 8% on a total return basis, our performance fee of $15.7 million was earned by the manager this year. This fee is excluded from operating earnings as the trust deed requires it to be reinvested in new GMT units. With a Cornerstone unit holding of around 25% and -- the requirement reinforces the already strong alignment of interest between the manager, Goodman Group and other unitholders. Cash earnings, a non-GAAP financial measure, is our preferred measure of underlying operating performance of the business. The trust recorded a 6.5% increase in cash earnings this year to $93.1 million and paid cash distributions of $0.055 per unit. The level of distribution represents around 83% of GMT's cash earnings. Guidance for 2023 year reflects a 7% increase in cash distributions to around $0.059 per unit, approximately 85% of forecast cash earnings. At yesterday's closing price of around $2.05 per unit, this represents a 2.9% cash yield to investors. And as a listed pie, GMT's distributions are tax paid for individuals, New Zealand resident Investors. Recognizing that today's economic outlook is more uncertain and that capital markets are volatile, our guidance for 2023 is subject to there being no material change in operating conditions or other adverse events. Strategies to deal with the disruption of COVID-19 evolved over the last 12 months as the public health response to the virus changed. New technologies and agile work practices enabled our people to work through the various alert level and traffic light restrictions. New health and safety measures were applied to our work sites and governed our interactions with customers, contractors and other stakeholders. These precautions protected everyone's well-being. While the pandemic has brought challenges, it has also accelerated the key structural trends that are contributing to GMT's strong results. The expansion of e-commerce is a positive trend for the trust with our customers adapting their operations to incorporate the rapid growth in online retail. GMT's $4.8 billion property portfolio provides essential central logistics infrastructure for these companies, facilitating the storage and distribution of goods and materials. The majority of the trust customers have adapted to the more challenging operating environment. New leasing and development inquiries remain steady. And with the portfolio at capacity, GMT's substantial rental cash flows are contracted well into the future. Adhering to our business strategy also means that we continue to make progress towards our 2025 sustainability objectives. These goals extend across the business encompassing our corporate operations, development and investment activity, our people and our community initiatives. Prioritizing carbon reduction and management projects has been reflected in lower emissions and an improved climate score from GDP, a global disclosure system for environmental reporting. The GDP rating of B and the assurance provided by Toitu carbonzero certification for our business operations show, we are making positive incredible progress towards our emission reduction targets. Our reporting has also been extended to include voluntary disclosures on embodied carbon within our development projects. It's an area of real opportunity with lower carbon materials and building systems being developed to reduce the high level of emissions generated by construction activity. While we are focused on carbon measurement and reduction, the purchase of New Zealand and internationally sourced carbon credits to offset both operational and development-related emissions, reinforces our carbon-neutral commitment. Our sustainable capital structure, which features low gearing and a diverse range of funding sources provides GMT with the financial resilience to withstand a more challenging operating environment. A strong liquidity position has enabled the team to secure new investment opportunities and commit to development projects that are expected to drive GMT's future growth. The Board continued its disciplined capital management approach with a new wholesale bond in December 2021. The launch of a sustainable finance framework in March 2022 and subsequent green bond issue in April 2022. I'd now like to pass over to Andy Eakin, who will continue the financial overview and provide more commentary on our sustainable finance initiatives. Andy?

Thank you, Keith, and good afternoon, everyone. GMT has continued to demonstrate that it's a robust and resilient property business, delivering an outstanding operating performance despite further disruption from COVID. We've continued to be successful by remaining agile, embracing opportunities and making positive changes to our business. Focusing our investment strategy exclusively on the Auckland industrial sector more than 5 years ago, recognized the emerging trends and unique structural drivers that have made this New Zealand's strongest performing commercial real estate market. Demographic changes, regional growth and the rapid expansion of online retailing have all contributed to the unprecedented level of demand for well-located and operationally efficient urban logistics space across the city. The unique demand drivers in our preferred property class are being reflected in high occupancy levels, sustained rental growth and an increased level of development activity for the trust. These factors, together with the additional revenue from recent acquisitions have offset the impact of redevelopment projects and contributed to the 2.7% increase in net rental income to over $157 million for the year. The additional income has driven a corresponding increase in operating earnings to $118 million before tax and $99 million after tax. A higher level of new leasing and development activity this year has provided additional tax deductions for GMT, contributing to a lower effective tax rate of just 16.1%. A positive feature of the PIE rating means that, in effect, these deductions are passed through to our unitholders, the majority of whom have no further tax to pay on the distributions they receive. A substantial portfolio revaluation is the main reconciling item between the Trust's operating profit and its tax statutory profit of almost $750 million. The increase in the value of the portfolio contributed $660 million of fair value gains to this year's record profit. The revaluation reflects a combination of strong property market fundamentals and increased investor demand for high-quality Auckland industrial assets, particularly in the first 6 months of the financial year. The portfolio capitalization rate strengthened 50 basis points to an average 4.2% at our interim balance date and was unchanged at year-end. New leasing and market rental growth were the main drivers of the further uplift in property values over the second half of the year. The revaluation also underpinned the 23% increase in net tangible asset backing to around $2.60 per unit at the 31st of March. Maintaining high occupancy and customer retention levels is a key driver of our success. The strength of our customers' business underpins our own financial performance providing strong rental cash flows that drive growth in both earnings and distributions. An occupancy rate of over 99% and weighted average lease term of more than 6 years means that these secure rental streams are contracted well into the future. The trust has always been managed prudently with a well-capitalized balance sheet, providing added resilience against the economic shocks and market disruptions that can impact property values. The 31st of March, the trust had a loan-to-value ratio of 21.3% and this level of gearing is at the lower end of the board's 20% to 30% preferred medium-term range and well below the 50% maximum allowed under the trust deed and debt facility covenants. GMT's financial strength is also reflected in its BBB investment-grade credit rating from S&P Global Ratings. This assessment has remained stable since it was first assigned in 2009. The trust debt is rated 1 notch higher at BBB+, benefiting from the security granted over the property assets. New capital management initiatives have provided additional liquidity and further extended the range of funding sources available to the trust. The successful issue of $200 million of fixed rate 6-year bonds to wholesale investors in December last year was the largest of these initiatives. Those bonds pay an annual interest rate of around 3.7%. The establishment of a sustainable finance framework in March provided a pathway to further diversify our capital structure. The new framework sets out how GMT intends to issue or enter into bonds and loans to fund new sustainable assets and achieve our broader sustainability commitments. The inaugural issue of $150 million of fixed rate 5-year green bonds was made on the 14th of April following the Trust's financial year-end. The proceeds from the issue are allocated to the development of new properties, targeting a 5 Green Star built rating from the New Zealand Green Building Council. With increasing numbers of investors now prioritizing sustainable investments in time, green bonds are expected to attract a premium -- pricing premium over ordinary debt, contributing to lower interest costs for the trust. The margin on the new bonds was just 110 basis points above the corresponding swap rate with the annual interest rate set at 4.74%. In addition to new bond issues, we've also refinanced and extended the Trust's syndicated bank facility. Renewed on competitive terms, the size of the facility was increased from $400 million to $500 million. And in addition, a new $100 million facility has been established with [indiscernible]. The extra liquidity these facilities provide enables GMT to continue to take advantage of new development and investment opportunities as they arise. While the impacts of COVID have tested many companies over recent years, the consistent operating performance of the trust has demonstrated the robustness of our business. A more challenging operating outlook doesn't change our approach. We'll continue to act prudently and remain focused on the delivery of sustainable long-term results. I'll now hand you over to John. Thank you.

Thanks, Andy, and good afternoon, everybody. Thanks for coming out on a fairly gloomy Friday. It looks like we've got a bit of the rain that Sydney has been enjoying over the last couple of years. Thanks, Greg and Phil. But look, I do also like to acknowledge Susan Paterson, who's in the audience, a very long-serving director, who spent, I think, maybe 15 years on this side of the table. So it's good to see you too, Susan. Look, at recent meetings, I've spoken about our investment strategy and how the focus on urban logistics is positive, both for our business and for our customers. This year, I'd like to turn the spotlight on to those customers and the value of the long-term relationships we have fostered and will continue to build with these companies. As Andy noted earlier, it's the strength of our customers' businesses and the growing demand for space that actually underpins our own success. In my presentation today, I'll also explain how we're making our development program more sustainable with Green Star-rated and carbon-neutral projects. GMT now has a very substantial portfolio totaling almost 1.1 million square meters of warehouse and logistics space across Auckland. The scale of the portfolio and our development capability means we have a warehouse property -- warehousing property solution for most businesses. The current slide includes a satellite image of Auckland. The map highlights the density of the metropolitan area and also the city's natural geographic constraints. Overlaid on the map are our estates. There are 15 in all, an increase from last year with complementary acquisitions in Albany, Mangere, Mt Wellington and Penrose over the course of the year. You'll note also the location of our properties relative to key transport infrastructure, such as the airport, the port, motorway network and rail corridor. With a rapidly growing digital economy, easy access and proximity to consumers are important factors in the property decisions of many of our customers. It simplifies distribution and creates efficiencies that leverage the growth in e-commerce. There are over 220 customers that lease our properties, and we estimate that combined, they employ around 10,000 Aucklanders. These businesses represent a range of industries, but are predominantly focused on warehousing and logistics. Our largest 20 customers provide almost half of GMT's net annual income. The top 8 are shown on the screen now. And you'll note that the list includes many leading national and international businesses. The largest of these customers is New Zealand Post. And our relationship with New Zealand Post traces back to 2007, when the trust delivered its first facility for the customer at Highbrook Business Park and East Tamaki. Since then, we have developed additional facilities, establishing a business partnership that now encompasses almost 10% of our portfolio at 110,000 square meters of warehouse space. The relationship continues to grow with 2 large parcel processing facilities to be developed for New Zealand Post at our new sites in Mt Roskill and Albany. The Mt Roskill development is already underway, while the second project in Albany has a longer lead time and will commence once existing leases expire in 2023. Both the New Zealand Post commitments are reflected in our development workbook, which is sitting at a record $426 million of work in progress that's now 100% leased or precommitted. And these 7 developments will add almost 100,000 square meters of net lettable area to the portfolio. That represents about 9% of the current portfolio and the additional space will generate around $21 million of additional income for the trust when completed. As I mentioned, is an increased level of development activity with the new facilities for New Zealand Post two of the larger projects that we've got going on. And New Zealand Post as a business, has adapted to the new digital age and the huge demand for its logistics and fulfillment services created by the rapid growth in e-commerce, and we've certainly seen this through course of the pandemic. More than 80 million parcels were delivered in the last year, and the trend is expected to continue with the customer investing substantially in its network infrastructure over the next 10 years. Bringing forward our redevelopment plans for Roma Road and Mt Roskill and acquiring the Bush Road property in Albany has facilitated the latest development agreements with this customer. The location of these brownfield sites close to consumers, we would have heard me talk about this over the last few years, certainly provides competitive advantages for the customer, minimizing travel distances and transport related emissions while improving the delivery times of its fulfillment services to the consumer because the consumer wants more and more convenience. A commitment to sustainable business ensures that both these projects, like all our new developments, will be carbon neutral. This means using lower emission building materials and systems in the construction process, minimizing waste and offsetting any residual carbon embodied in the building structure. Also to ensure our facilities are industry leading, we are targeting a minimum 5 Green Star rating for all new projects. This certification, which is through the New Zealand Green Building Council assesses the sustainability attributes of each project and the quality of the work spaces it provides, and a 5 Green Star rating in New Zealand reflects excellence in this market. The current slide highlights the typical features of a Green Star rated industrial building, similar in size at around 17,700 square meters, both New Zealand Post developments will incorporate many of these design features. The new parcel processing facilities will be highly sustainable and energy-efficient with high-quality workspaces designed around the well-being of the occupants. And to align with its own sustainability commitments, New Zealand Post is adding a rooftop solar energy system and including charging infrastructure for a growing fleet of electric vehicles, again, a trend that Goodman is seeing all around the world. New Zealand Post will also be investing in new automated sorting equipment in its warehouses to extend the efficiency of its distribution network. The smart technology is easily scalable and will allow them to accommodate the expected growth in parcel volumes over the next 20 years. Again, a trend we're seeing in warehousing all around the world with more and more automation within the building. And all these customers investing in automation and sophisticated warehouse management is a trend that we think will continue for some time. It's a feature of a highly constrained leasing market and reflects inflationary pressures that everybody is feeling as businesses mitigate the impact of rising costs through better space utilization. Construction is now well advanced on the New Zealand Post facility at Roma Road, the first of 4 warehouses planned at the Mt Roskill estate. It's located alongside State Highway 20, and so many of you that have been to the airport would have seen that structure rising over recent weeks. And Urban Forest will also -- is in the process of being planted, which will improve the biodiversity of that location and replaces the aging exotic pines that used to line the urban boundary of the property. We're also planting another 3,600 natives at Highbrook on land that's not developable. Again, improving the biodiversity across our estates. So just to talk a little bit now about Mainfreight, which is another substantial business, well known in this market that we have extended our relationship with over the last 18 months. To support its growth, the global logistics operator has committed to a long-term lease over a new twin warehouse facility to be built at Favona Road in South Auckland. This is formally commercial glasshouse and Market Garden, 6.1 hectare property has been redeveloped into a 36,000 square meter supersite for the supply chain service provider. This will be Mainfreight's largest New Zealand facility with the company expected to become GMT's second largest customer when the project completes in mid-2023, and that's also well underway. With the development program increasingly focused on the regeneration of our noncore assets, over 70% of the current workbook is being constructed on brownfield sites like this. The redevelopment of these properties into modern and sustainable distribution facilities makes use of existing infrastructure and improves the efficiency of Auckland's industrial building stock. Through intensification of use, it also helps limit urban sprawl, while the recycling of demolition materials minimizes landfill waste. And this site is actually a great example because the deconstruction of the 40,000 square meters of glass house structure, including -- included the sorting and transportation of all the metal framing, glass panels and concrete to resource recovery operators. And in total, there were more than 260 truckloads and over 2,500 tonnes of material recovered from the site. And of that, around 90% of the demolition material at Favona Road was recycled and diverting that volume of waste from landfill was a very impressive result and illustrates our commitment to a more sustainable development style. In terms of future pipeline, New Zealand Post and Mainfreight are good examples, they demonstrate the importance of the development capability that we've built up over almost a 20-year period. And with the remaining land hybrid business park now fully allocated, we're increasing our investment in strategic locations to accommodate the rapid growth that we continue to see in demand for urban logistics space. We've made a total of 6 acquisitions since the 31st of March last year, and that's had a combined acquisition cost of $300 million. These properties were required for the future development potential and the value-add opportunity that they provide. The largest transaction is the one you see on your screen now is 34 hectares of industrial land adjoining the Villa Maria winery in Mangere; the $75 million purchase will replenish the trust land bank and is expected to support the development of up to 120,000 square meters of new warehouse and logistics space over time. The balance of our acquisitions are 94% leased with existing improvements, providing steady holding income. These new properties have a combined site area of another 15 hectares. And offer a range of intermediate and longer-term redevelopment options, which will help facilitate the growth for our customers. Next look, I'd just like to touch on the Goodman Foundation, which I think has always been a unique point of difference compared with other listed property entities in this market. It's an initiative of the manager of Goodman Group. It's an area of our business that as I know, provides a sense of great pride within our team and is rewarding for those involved with those activities. You've heard me talk previously about KiwiHarvest. That's the largest of our community partnerships with the rent and operating costs of its distribution center at Highbrook paid for by the Goodman Foundation. With its focus on food rescue, KiwiHarvest is an organization that is having a real impact on the communities within which we invest. They collect large volumes of food distant for landfill and redirect it to those in need, and they're certainly contributing to better social and environmental outcomes. And in the last year, when food and security, I think, was exacerbated by the impacts of the pandemic and rising inflation, KiwiHarvest distributed a record 1.8 million kilograms of food to food banks and other social agencies. And just to put that in perspective, that's the equivalent of 5 million meals. So they've done an extraordinary job in the last 12 months. Our support of KiwiHarvest as a founding partner is one of the many social initiatives that are making a tangible and sustainable difference to people's lives in the location within which we invest. If you'd like to learn more about this, there's details in the annual report in terms of what the foundation does and the goals of our wider sustainability program. And I think Jonathan has also reports available here today for those that are interested. Finally, on the topic of new leadership, as many of you all know, it was announced in early June that I'll be stepping down as the CEO at the end of this calendar year. But as Keith also pointed out, won't be retiring. So I'll be continuing on as an Executive Director. And I'll also be continuing on as an executive of Goodman Group with some additional responsibilities to come. So -- but certainly, from my point of view, look, it's been a real privilege to lead this business over the last 18 years. It seems to have gone quite fast, but I'm incredibly proud of the business that we have here today, I'm incredibly proud of what the management team have achieved, that all the team have achieved. Proud of the portfolio of assets that we have today and the benefits that have come to our customers and also our investors. So I think we -- I think GMT is really positioned in a great spot today, and it feels like a right time for a new leader to oversee the next phase of this business' growth. And that leader is James. He's been an outstanding executive for us, both in New Zealand and also internationally. And I'm also proud of the fact that we've been able to provide a successor from within the business, and he's also a kiwi, that's important, very important. Yes. Thanks. Sorry if there were any Aussies on the call. But certainly, look, look, I'm hugely supportive of James, and I'm really confident that he's going to lead this business well. And he'll balance all the needs of all of our stockholders, our customers, our people and our investors. And look, before I ask James to come up, look, I just -- I did also want to extend a thanks to the Board, I think, both present and past as well and again, Susan, thanks for coming. I've been very fortunate that I've had a very supportive Board. I think they've been always active very much in the spirit of partnership and in particular, Keith, who has been the chair for the majority of that time has been hugely supportive of me and the business and ask the right questions at the right time. But we couldn't have achieved what we've done without a very, very strong and supportive Board. So thank you. Thank you very much.

Yes. Hi, everybody. Thank you, John, and good afternoon, everybody. It's a pleasure to be here and a real honor to be taking the role of CEO of Goodman New Zealand from next year. To many of you, I'll be a familiar face, having met you at meetings like this or road shows around the country. But I might just touch on a bit more about who is the incoming CEO for Goodman New Zealand. I'm James Spence, and I've been a part of the Goodman business, both here and in Europe since 2006. My roles have included property management, fund management, capital transaction management, and for the last 5 years, of being Director of Investment Management for GMT here in New Zealand. I'm firmly entrenched in the strategy, decision-making and I'm part of the team that has driven the trust's recent business growth. Many of you here today will remember GMT's early beginnings and subsequent transformation into New Zealand's leading property investment entity. Much of this is due to John's leadership and vision. I've spent a lot of time working with John over the last few years, and I have enormous respect for and have learned a lot from him. His supportive and inclusive style has helped build a loyal and high-performing team. The sense of team and collaboration is also part of who I am. We do have an exceptional team here at Goodman. There is a real breadth of skill among our people who, like me, are driven to -- and we are dedicated to drive strong outcomes for all stakeholders. We're in it for the long term, and we're really keen and driven to make a positive impact. A great example of what's been achieved is Highbrook Business Park. The estate is unrivaled in New Zealand in terms of its scale and quality and is one of the best assets and Goodman's almost $70 billion global portfolio, which I'm sure Greg will attest to. On screen now, you can see both the quality of the buildings and the work done to integrate 500,000 square meters of warehouse and logistics space into the natural environment. Joining 40 hectares of Parkland and 14 kilometers of walking and biking tracks, Highbrook is truly world-class. Importantly, the estate has driven strong returns for unitholders and now has 100 customers who employ over 5,500 people, as a member of the leadership group that has overseen the creation of this award-winning asset, it's a real source of pride for our business. It showcases our capability and highlights what is possible with long-term planning. I will continue this approach with my own leadership, building on what we've achieved and delivering the next generation of warehouse and logistics property solutions for our customers. So just on that, our business has always focused on the customer, maintaining strong relationships with these companies is especially important through periods of change and disruption like we're experiencing now. My experience with Goodman's European business between 2011 and 2016 gave me insights into the e-commerce and sustainability changes that are driving demand in our local market here today. The relationship with Goodman Group keeps us ahead of these emerging trends. Look, after 16 years, I know this business and our customers very well, I'm passionate about its future success and proud to be leading such a great team and to be working with the Board going forward. I'll be available after the meeting for any questions. Thank you very much.

Thank you, James. The Board looks forward to your leadership and working with you over the coming years. And thank you John and Andy for your presentations. GMT's strong operating performance and record financial results have shown again that it is a resilient and robust business. The trust is being positioned to benefit from the growth of e-commerce and the structural trends that are driving demand for warehouse and logistics space close to consumers. With a more challenging operating environment -- while a more challenging and operating environment which is expected, the quality and scale of the portfolio, low gearing and focused investment strategy, gives the Board confidence for the year ahead. Fellow unitholders, we will now move to questions. For those of you participating through the live webcast, I encourage you to submit any questions you'd like to address now. As I mentioned earlier, these need to be entered through the webcast portal. To do so, please click on the Q&A tab at the top of the instructions screen and follow the prompts. I'll now move into questions starting from those in the room. Now I'm struggling with the lights. So there are roving microphones. If you can put your hands up, the people will the microphones will probably see them before I do. So, Susan here. I can't see you.

Thank you, Keith. You talk about your new buildings being 5-star. What are you doing with regards to some of the older properties and investing in insulation, energy efficiency, water, et cetera, for those properties that perhaps weren't booked to that standard in the past.

John?

Yes. Why don't you get Andy to talk to that. Andy, just everybody knows, has been leading our sustainability strategy. So...

Yes, that's a really good question, Susan. So our focus 18 months ago or so was very much around the new builds. And more recently, we've put an increased focus on the existing buildings and what we can do to improve the sustainability features within them. So some really good examples of what we've committed to between now and 2025, changing all of the lighting within the existing portfolio to LED lighting, which reduces the energy use within the building, removing some of the more damaging gases within the HVAC systems, they are 22 gases, which are really climate damaging, replacing them with less damaging gases. Rainwater harvesting on buildings where there's more significant water use in those buildings where we can capture that off the roofs, store and then reuse it. And also installing electric vehicle chargers, for example, with a lot of our customers, we've got to focus on it. And depending on the customer and their energy usage profile, we've often put solar panels on to the roof as well. And that provides them some really significant cost savings by not having to pay for electricity from the grid.

Thank you looking around here. All right. Anton?

I have 2 questions for you, Keith. The first is from [ Locke Campbell and Anette Campbell ], unitholders. Is the company happy with a return to unitholders less than current bank deposits?

John?

Look If I can comment on that. Look, I think the question is probably based around the dividend yield, and the I think we're paying out sort of super $0.059 on going forward. But look, I think the fact that the stock price actually -- look, everyone's share price has been at by interest rates. I think that's probably the first thing. It is macro things happening in the world that we all know about that are affecting most people's investments in some form. And -- but I would say that the share price for Goodman Property Trust has held up relatively strongly. You would notice other trusts in the market where you can probably get a bit of yield, but a better yield comes with a different risk profile. So I think a low yield on GMT shares, would take as a very good thing.

I think the presentations today have probably reinforced the commitment of the company to get quality product, quality tenants and invest wisely.

And the second question from the same unitholder, [ Locke Campbell and Anette Campbell ], is 4% growth rent return on your new builds typical of GMT developments?

Yield on costs across the development book is in excess of 5% yield on cost. So I'm quite unsure here the 4% came from. That may be a valuation number or an average portfolio valuation, but the yield on cost that we're seeing across the development book at the moment is in excess of 5%.

No further questions, James.

Check the room here. I don't think there's any further questions on my side. Thank you all very much. We'll now move on, and I'll ask Leonie Freeman to chair the formal business of the meeting.

Thank you, Keith. And if you're wondering why I'm hobbling around on crutches; about 4 weeks ago, I was boxing, and manage to tear not 1, but 2 ligaments in my knee. And that's one thing I would not recommend to anybody. Yes. I recommend the boxing not the tearing the ligaments. So the formal business of today's meeting relates to the election of one Independent Director. Keith Smith is retiring by rotation and being eligible, has offered himself for reelection. Following the call for nominations, none were received and Keith stands unopposed. Before we conduct the poll, I will invite Keith to address the meeting.

Thank you, Leonie, and thank you, unitholders. I think in the Notice of Meeting and the letter that went out with the notice of meeting made it clear that I am only standing again so that I can be part of the transition between John and James, and then at the same time, go through the process to get another independent director, probably take between now and into March. I suspect by the time we go through the process, at that time I will be stepping down. So I think most people know me. I've been here for 18 years or so, probably, but at least I thought, but in any case, 18 years goes fast when you're having fun. I think -- the company has grown. I think what John said and James has said is I totally reinforce where we came from over that period of time through a GFC and the others. It has been a privilege to lead this company. And I know that when I do go early next year that the company will be in extremely strong hands with a new leadership team under James still having the benefit of the independent directors, Greg and Phil and John still being around. So I do thank you for your support of me over this period over these number of years. And next year, I'll be sitting with Susan at the annual meeting. So -- thank you all very much.

Thank you, Keith. Keith, as you all know, is an experienced and highly effective member of the Board. The other directors and I unanimously recommend that unitholders vote in favor of his reappointment. The resolution is set out in the notice of meeting and on the voting form you have received. As it has been notified, there is no requirement for a seconder. A majority of not less than half of persons entitled to vote and voting is required to carry the resolution. Are there any questions on this resolution? As there are no further questions, I will now hand back to Keith to conclude the final part of this meeting.

Thank you, Leonie. Leonie has done on knee, I did on my shoulder 2 days ago. So I'm actually -- if you think I'm struggling at the moment, I tried to put a sling on it, it didn't work. So we are a couple of cripples up here at the moment. In any case -- we'll now conduct the poll for those participating through the live webcast that have not already voted, please submit your vote now. The poll will be closing in a few minutes. For those of you in the room that have not already voted, please complete your voting in proxy form and place it in the boxes. I think it's circulating we're at the back here, there come now the boxes. The result of the poll will be announced to the NZX in due course, and a copy of the announcement will also be available on our website. Finally, on behalf of the Board, I'd like to thank you all for your participation this afternoon and your continued support of the trust. I'd also like to thank the Goodman team for their outstanding efforts and contribution over the past 12 months. It's certainly been without its challenges, I can assure you, and therefore, it gives me pleasure to close this meeting and ask you to join with us for afternoon tea. I think it's through there and meet -- you'll see all the Goodman team that got badges on and we look forward to chatting to you afterwards. So thank you all very much.