Growthpoint Properties Australia (GOZ) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Growthpoint Properties Australia, Growthpoint's First Half 2024 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Timothy Collyer, Managing Director. Please go ahead.

Good morning, and welcome to Growthpoint Properties Australia's first half financial year '24 results. My name is Tim Collyer, Managing Director of Growthpoint. Joining me this morning are Michael Green, Chief Investment Officer; and Dion Andrews, Chief Financial Officer. I'll start this morning with a brief overview of our results and strategy. Michael will then provide an update on our property portfolio, followed by Dion who will give a more detailed review of our financials. And finally, I'll provide a summary and outlook. We will then be happy to answer any questions you may have. Turning to Slide 4. Our goal remains to provide security holders with sustainable income returns and capital appreciation over the longer term. Despite challenging property markets, we managed to achieve some great office leasing deals, which increased our office occupancy, a really strong endorsement in the quality of our office portfolio. We were very pleased to sell an industrial property well above book value. We also divested an office asset in Sydney via our funds management business on favorable terms for investors and extended the term of several other externally managed funds. Our disciplined approach to capital management is reflected in our active hedging program and the prudent management of the group's interest rate risk. Turning to Slide 5 and the first half overview. Our WALE remains very strong and we have seen an uptick in portfolio occupancy driven by our leasing success. FFO is lower, predominantly driven by property divestments and lower lease surrender payments received relative to the first half in financial year '23. As a result of higher interest rates and the consequential impact on capitalization and discount rates, the Group's property portfolio value decreased by around 4% on a like-for-like basis from the 30th of June 2023. This was a primary driver of the lower NTA. Turning to Slide 6. Flight to quality is a key theme across all office markets. Occupiers want their people back in the office, collaborating and innovating so they are seeking flexible, amenity-rich quality workspaces. It remains a relatively tight labor market, so the competition to attract and retain quality people is real. They also want to meet their ESG requirements due to both regulatory demands and the social expectations of their clients, customers and people. This is exemplified in our ability to attract high-caliber government tenants across the portfolio over recent years where the ESG benchmark for their occupancy is very high. Over many years, our strategy has been to acquire and hold the best assets in the right markets with the strongest ESG credentials. As a result of this strategy, our A-grade assets continue to outperform lower-grade assets across all markets in terms of net absorption and vacancy. Turning to supply on Slide 7. Over the next few years, we believe new office completions will moderate as higher cap rates and elevated construction costs impact development feasibilities. We've already seen several major A-REITs defer new office developments until the next cycle and we are also likely to see the withdrawal of older buildings as they are repurposed for residential or other uses. This is consistent with previous cycles as current vacancy rates are not conducive for new developments. In GOZ markets, there is less supply forecasted versus other markets and in particular, some of our larger markets, like the Brisbane Fringe have very little supply coming on stream over the next 2 to 3 years. This is all positive for office vacancy rates over the medium term. Turning to the industrial sector on Slide 8. The strong rent growth in the industrial markets continued in the first half, but at a slower rate. There still remains a shortage of modern warehouses across all markets and e-commerce continues to grow. Large-scale speculative development is expected to trend down, reflecting developers' lower appetite for risk. Population growth remains a key driver of industrial space requirements and will underpin growth going forward. The national vacancy rate is still very low at 1.1% and well below equilibrium. Moving to Slide 9 on funds management, a long-term growth platform for the group. We are actively bidding on countercyclical and income-focused assets and anticipate the transaction market to improve throughout 2024. We completed the sale of Taylors House in Waterloo for AUD 87 million in January 2024 as the fund came to the end of its term. The fund achieved a good IRR of around 11% per annum over the 7-year term. We also extended the term of several funds representing around 25% of total fund. We will continue to target sustainable and accretive growth in fund through the cycle. I'll now hand over to Michael for an update on the portfolio.

Thank you, Tim, and good morning all. Before I speak to the slides, I just wanted to acknowledge that this is expected to be the last set of results that you'll be presenting and to thank you from me and the team for your leadership and guidance over the last 14 years. You've been instrumental in driving the growth and success of Growthpoint from what was initially 5 people running a AUD 650 million industrial fund to today where Growthpoint is a diversified business, managing AUD 6.3 billion of funds under management and with offices in Melbourne, Sydney and Brisbane. Your unflappable style and positive leadership have left an indelible mark on this business, and I wish you all the best for what lies ahead. Moving on to the portfolio leasing over the half. Our office leasing has been very positive, and we've had excellent demand for our assets, particularly in the Brisbane market, where we've undertaken 60% of our leasing for the half. Underpinned by the quality of our assets and the continued dedication of our asset management team, we've actively leased over 6% of our office portfolio by income, representing 23,000 square meters of space leased. Of the 23 leasing deals signed, 7 were renewals and 16 were new leases. Over 50% of the leasing deals signed during the period were government tenants. As can be seen on the slide above, tenants are committing to long-term leases at our properties with the average lease term of our leasing over the half of 7.4 years. In 2024, we've continued this positive momentum and have signed leases or signed Heads of Agreement from an additional 1.5% of total portfolio income. Turning to a snapshot of our portfolio on Slide 12. Our balance sheet portfolio comprises a high-quality modern office portfolio, which represents approximately 2/3 of our assets. The remaining third of our portfolio is our high-caliber industrial logistics portfolio, where our near-term lease expiries are 15% under-let the most -- under-rented against our most recent market valuation rent. As flagged on the previous slide, we worked hard across the lease across the portfolio, increasing occupancy to 95%, up from 93% 6 months prior. A key transactional highlight during the period was the sale of 1-3 Pope Court, Beverly, South Australia to an entity associated with the sitting -- one of the sitting tenants. Group achieved a sale price of AUD 35 million, approximately 15% above the 30 June '23 book value and well above the original 2015 acquisition price of AUD 20.8 million. Proceeds from the sale have been used to repay debt. On Slide 13, we highlight the key office and industrial portfolio metrics. Increased interest rates and elevated long-term bond yields have resulted in continued low levels of transaction activity and have negatively impacted the group's valuations at the half. We've witnessed approximately 30 basis points of cap rate expansion exhibited across the portfolio. The portfolio's value decreased by AUD 182.1 million over the half. A majority of the decline was contained within the office portfolio, whilst we saw a slight decline in the industrial portfolio valuation, with the 30 basis points of yield expansion being largely offset by strong market rental growth. It is important to address the peak to now movement in valuations through the current cycle. Since June 2022, which was the peak of the current market valuation cycle, the value of the group's portfolio has decreased by 10% on a like-for-like basis. The group's office portfolio has borne the brunt of this movement, decreasing by 14.2% whilst our industrial portfolio valuation has proved more resilient, decreasing by 1.9% with the 100 basis point of yield expansion being predominantly offset by market rental growth. On Slide 14, our portfolio is exemplified by secure, high-quality tenants with long leases and positive industry fundamentals. 40% of our office portfolio income is derived from government tenants. Our high-quality energy-efficient buildings are attractive to government tenants with this cohort having a long 9.6-year weighted average lease term. Our industrial portfolio was supported by major high-quality Australian corporates such as Woolworths, Australia Post and Linfox. The defensive characteristics of the group's portfolio are illustrated again on Slide 15. The portfolio of WALE remains healthy at 5.8 years with our recent leasing discussed earlier, helping to offset the effluxion of time. We've retained one of the longest office-weighted average lease expiries in the REIT sector at 6.2 years. GOZ is positively exposed to industrial rent reversion over the short to medium term. 40% of our industrial leases are expiring between financial years '24 and '26 and these leases are currently 15% under-rented versus our valuation market rents. Our asset management team has had a strong track record in outperforming these expectations. Our current vacancy profile and upcoming lease expiries in financial year '24 and '25 are predominantly in markets that have experienced positive net absorption in 2023 or in markets with lower levels of vacancy. This provides us with a high degree of confidence in leasing out this space expeditiously. Our largest office vacancy at 5 Murray Rose Avenue, Sydney Olympic Park is receiving good interest and we have leased around 15% of this space to date. Growthpoint continues to focus heavily on managing leasing expiries, and we're confident in our ability to navigate the current challenges within the office market. Switching now to sustainability on Slide 16. Our portfolio continues to achieve a high average NABERS Energy rating of 5.2 stars and pleasingly, we have increased our GRESB score by 3 points to 84 and remain a sector leader in our space. We continue to increase our onsite solar rollout with 6 additional installations progressing over the half. 20% of our office assets are fully electric, and we're exploring electrification pathways for the balance of the office portfolio. I'll now hand over to Dion for the financial overview.

Thanks, Michael. Starting on Slide 18 and a review of our financial results for the half. As forecast, FFO reduced compared to the same period last year. On the revenue line, net property income was impacted by lower surrender fees received in first half '24 relative to the prior half year where material surrender fees were received. If we exclude surrender fees, like-for-like net property income was flat. The divestment of an office property at 333 Ann Street in Queensland back at the start of calendar 2023 and Pope Court during this half also reduced NPI. Increased operating expenses include the cost of operating the funds management business for a full half, along with general cost inflation. Higher finance costs were impacted by the rising cost of debt, which now appears to be stabilizing based on the market expectation that the cash rate has peaked. On Slide 19, we break down the components of the movements in FFO and NTA from the comparative periods. Regarding FFO, one can clearly see that it is the relative reduction in surrender fees that is the key driver of the result with increased borrowing costs the other factor. Increases in borrowing costs are anticipated to subside in the future as the market currently no longer forecasts increases in the cash rate and cheaper fixed debt rolling off makes up a smaller portion of overall debt costs going forward. Turning to Slide 20. Gearing increased from 37.2% at 30 June to 38.4%, remaining below the midpoint of the group's target range. The increase in the last half primarily relates to changes in portfolio valuations, offset by the sale of Pope Court. We also have ample headroom to our bank covenants of LVR of 60% and ICR greater than 1.6x. Unlike many others, we have no development pipelines and funds, thereby reducing external funding requirements. It also means we have little pressure to dispose of assets unless we see good value for security holders in doing so. On Slide 21, our capital position remains solid with high levels of hedging. Our weighted average cost of debt as of 31 December was 4.7% versus 4.3% at the same time last year and reflects the rapid increase in the cash rate since May 2022. The group entered into a total amount of AUD 200 million of interest rate hedging during the half with a weighted average terms of expiry of 3.6 years. We have no debt maturing until March 2025 and retain ample undrawn facilities of around AUD 300 million to cover FY '25 maturities. In December, we extended AUD 150 million of facilities from 2 lenders from December '24 out to February 2028 on comparable margins. Post 31 December, we also extended 2 lots of AUD 50 million tranches due to mature in FY '25 and FY '27 out to now mature in FY '32 on similar margins. This displays the stronger relationship we maintain with our lending group and the faith they have in our operating model. Finally, I'd like to take this chance to echo Michael's words regarding Tim and his wonderful stewardship of Growthpoint over many years. You've been a fantastic leader for our business and I've personally learned a lot working alongside you over the journey. With that, I'll hand back to you to wrap up.

Thank you, Dion, and thank you, Michael. Turning to Slide 23 and the macro environment. Inflation, while still high and outside the RBA's 2% to 3% target range, has moderated, and this is reflected in interest rates, which appear to have peaked. Lower interest rate forecasts by the market will be positive for A-REITs and GOZ alike via a lower cost of debt and lower discount rates supporting A-REIT and direct property valuations. Population growth remains strong in these underpinning continued growth in the Australian economy, which is a positive for industrial, office and retail real estate. Turning to the current security price discount to NTA on Slide 24. Although we've seen a bounce in A-REIT prices recently, there still remains a large discount to NTA, especially for those REITs with office exposure. From the 30th of June 2022 to the 31st of December 2023, our property portfolio has declined about 10%. The majority of this decrease has come from the office portfolio, which has fallen by around 14% which Michael highlighted. The discount to NTA at the 31st of December 2023 implies a further 23% reduction in the GOZ portfolio. We believe that the defensive characteristics of the office portfolio being long WALE, strong occupancy and high-quality tenants and a positive industrial property market with growing rents are being overlooked and the risk-reward proposition is compelling. Turning to the market outlook on Slide 25. The macro environment has stabilized, but physical markets are yet to follow. However, there are signs that things may turn during 2024. As a result, we expect to see our interest rate expense stabilize and increased opportunities to grow FUM. Population growth remains a key driver of the Australian economy, which is good for our assets. Office construction activity is slowing, but we may not see the impacts of lower supply immediately. However, the current vacancy rates, coupled with higher construction and finance costs are deterring new construction activity, which should bode well for future office vacancy rates. In the last half and into 2024, we have seen positive leasing inquiry within our office portfolio. We also see the flight to quality in tenants' leasing decisions and expect secondary office assets to struggle in a competitive environment. GOZ is positively exposed to industrial rent reversion over the medium term with 40% of industrial leases by income expiring between financial year '24 and financial year '26 with current renting -- under-renting, sorry, of around 15%. Turning to financial year '24 guidance on Slide 26. Today, we reaffirm our FFO and distribution guidance. At current pricing, the financial year '24 distribution yield is over 8%. We are pleased where the portfolio and business is positioned as we move through the cycle. Thank you very much for your participation today and to the Growthpoint team for their hard work and dedication in the first half of '24. As this is my last results presentation, I would like to take the opportunity to thank the Growthpoint team and Board, market participants and all of Growthpoint stakeholders for their support of myself and the business over the last 14 years. It has been a great honor and privilege for me to lead the company. We'll now open up the lines and are ready to take questions.

[Operator Instructions] Our first question is from Caleb Wheatley with Macquarie.

Tim, congratulations on your tenure at Growthpoint. All the best with the future. A couple of questions for me. First one is just on the FFO guidance as we look into the second half. It seems like you're entering this period with a higher occupancy across the portfolio and you are circa 80% hedged from an interest expense point of view, still pointing to a 12% decline in FFO half-on-half. How should we think about some of the other moving pieces as we go into second half, please?

Yes. Thanks, Caleb. It's Dion here. I'll take that one. Look, really, the key difference between first half and second half is in the first half, we have had, as we announced in December, a surrender at one of our properties in South Australia and then there is a new lease that starts at that property in 1 July. So it's been fully covered. But the surrender is covering us for that second half loss of income. So that's one of the real main SKUs. There is still some leasing up to do in the second half, of course, as well, and we're always looking at interest rates. The main difference between the halves is that surrender versus the new lease.

Okay. That's helpful. Second question, maybe just digging into the office expiry profile a little bit more. So it doesn't look like there was any expiry over the first half and circa 5% to come in second half. Can you just speak to if there are any material expiries in that 5% and sort of an update on leasing discussions on that space, please?

Yes. Thanks, Caleb. It's Michael here. So the most prominent lease expiry is towards the back end of the half. So one of them is falling on the final day of the half being Peabody Energy who are now building in South Brisbane. They will be vacating the property and we are actively entertaining inquiry for that 5,600 meters at the moment and [indiscernible] got some positive momentum there. That's the majority of the sort of major expiries. There's a couple of other ones, which are single floors, but that's the most prominent one and as I said, it falls right at the end of the half.

Okay. Great. And then just on the incentives as well in office, so it's good to get occupancy up over the first half, but it does look like the incentives provided have increased from 24% in FY '23 to 34% in first half. Just wondering what the particular drivers of that were.

I mean, principally, it's just doing market level incentives in the markets you're in. So there's a slide later in our presentation where you look at where incentives sit across most markets in the office sector and our average incentive across 34% is considerably less than those market level incentives but still increased on what it was in the prior period.

Yes. Sure. Do you have a sense on a net effective basis where the office portfolio is relative to market?

I mean we've got -- I've got a sense of where it sits versus market rents. Overall, it's about 5% over let at the moment. Yes.

Okay. Great. That's all for me. And congratulations again, Tim.

Thank you, Caleb.

Our next question is from Howard Penny with Citi.

Congratulations, Tim, on a great tenure and good luck with the next exciting adventures I'm sure you're looking at. In terms of buybacks, so Growthpoint Australia looked at buybacks last year with the large discount to NTA. Is it something that you'd consider again in the next sort of 1 or 2 years potentially to unlock some of that value that you highlight at the end of the presentation?

Thanks, Howard. Yes, look we announced a buyback for 2.5% of securities. We completed that buyback in March last year. We haven't announced another buyback since then. The thinking behind that really where we're looking at, do we see pricing as well below NTA? Certainly. Could that be attractive? Yes. But we also keep 1 eye on gearing and also liquidity given that we have a major shareholder that owns over 63% of the securities. So those were the reasons we limited that to 2.5% at the time. It's never [ say never ], but we don't have one active at the moment.

Sure, Dion. And just a second question from me. Just looking at your current weighted average cost of debt versus your marginal cost of debt, and I noticed it was highlighted that you are predominantly hedged in the next year. But would you maybe just point out how that will evolve over the next 2 years or so?

Yes. Thanks, Howard. Look, we do see -- well, we think cash rates for a start are peaking and most analysts out there or market commentators have them starting to reduce into the end of calendar year '24. When and by how much? Well, that's a million-dollar question. I'll leave that to the forecasters. So our floating rate debt should start to at least plateau or reduce as the year goes on. In terms of fixed debts rolling off, there are some cheaper fixed debt rolling off in FY '25, not really any more than '24. One small, very small hedge rolled off. That will bring up overall cost of debt, but it becomes a smaller and smaller impact to our overall proportion now. And then the debt costs beyond that are really swaps that we've entered into at market value. So beyond that, we really see it plateauing. So a slight uptick in FY '25 most likely, depending on how much the cash rate may fall, but after that, it's very stable. So we can very much see it is peaking.

Perfect. And just -- I know you have commented on this already, but just your confidence in re-leasing that 1-year lease expiry profile and maybe recovering some of the current vacancy.

Yes, I mean, we're very confident. We've got really strong momentum as we mentioned a number of times during the presentation. I think what's important to sort of recognize is the build-in momentum that we've seen across our portfolio over the last 4 halves. And really we've increased our sort of leasing volumes in the office space from 9,000 back 4 periods ago to 13,000 to 19,000 and now to 23,000 square meters. So it's positive momentum and I'd say looking across our portfolio and the levels of inquiry we've got in the office space since December last year, we've had more inquiry than we've seen in the prior sort of 18 months. We think that tenants are generally making their decisions now about where they want to be and the term. And you'll see that in our weighted average for the lease expiry, the new leases that we've done in 7.4 years. So it is -- it appears that most groups now know how they want to work for the period ahead. They're committing to modern office buildings so they can attract their people back in and they want their people back in. So yes, we're confident we've got great assets. They're in the right markets. I think the other important feature of our portfolio is we're not exposed to a number of office leasing markets, which are in a really poor state at the moment, whether that be the Docklands, Saint Kilda Road, North Sydney and others where you've got high, high levels of vacancy. Most of our exposure is into markets where you're seeing strong levels of net absorption at the moment, like Brisbane Fringe, et cetera. So yes, we're confident. We've just got to get on with it and do what we do each period and work really hard and get it leased.

Our next question is from Richard Jones with JPMorgan.

Got a few questions. Tim, are you in a position to give an update on the CEO search?

Yes, I can. It might be a limited update. But the Board are overseeing that process and it's ongoing. There's been interviews with potential candidates and I think the Board will be announcing a decision or what have you in due course. I gave a 12 months' notice. The process is going as the Board planned and we'll await an announcement in due course.

Okay. Surrender payment in the first half [ that you ] called out, is that [ an error ] of about AUD 5 million, is it?

A little less, closer to AUD 4 million. Yes, there's about AUD 19.3 million in that prior period and we're showing net AUD 15 million. So it's about a AUD 4 million difference.

Okay. And just in terms of -- probably for Michael, just Peabody Energy, just, can you call out what the lease -- what the current rental is and how that compares to market?

Yes, it is -- obviously, they've been in place for now 10 years. I think their standard rent review is 3.5%. So it is a bit over rented. But as a tenant, they shrunk quite considerably within the building. They were subleasing space to other groups and as I said earlier, we've got strong demand on that. It's quite unique in South Brisbane to have a 5,000 square meter standalone office building. It's one of the few actually in Brisbane. And given where we can pitch our rents for it, close to sort of AUD 700 a meter versus what it would cost to economic rents to build something for a standalone building, and the ability to build a standalone building of 5,000 meters. We're pretty confident we'll find many groups that are interested in either part or whole-building basis.

Okay. And back to you, Tim, is there any assets that are being actively marketed for sale across the portfolio at the moment?

Not at this point, no.

Okay. And just a final one, just on the funds management business, do you have undrawn equity commitments in the business or will you need to raise money for the acquisitions that you flag on Slide 9?

Yes. No, there's no uncommitted equity that we could draw upon within the funds. So if we were to find some quality investments, we'd seek to raise capital from high net worth individuals or offshore, onshore investors and domestic institutions.

And just any color on demand that you're seeing from capital.

Yes. It's quite strong. I mean, it's strong there. People are obviously waiting and looking at values and when the cycle will cease and also interest rates as well. So I think there's a growing appetite. There's certainly capital. There is plenty of capital around. It's a matter of finding the right investment, the right position of that investment in the market and the attractiveness of return. So I think we see the market freeing up this year. We see a bit more liquidity coming into the market, more properties trading. And you'll see some of that capital moving to buy property in 2024. Good stuff. Tim, all the best for your future. Cheers. Great. Thank you.

Our next question is from Edward Day with Moelis Australia.

Tim, congratulations on delivering your last result. Just further on your comments about [indiscernible], any sectors in particular that you're focusing on?

Yes, I'm happy to take that. So we're really concentrating on 3 particular sectors at the moment. Industrial, there's a weight of capital there that [ wants ] to be placed into industrial real estate. So we're focusing on our energy in that and obviously we have a high level of expertise in that sector. We're looking at deep value office as well. So from a countercyclical basis, we think there's going to be some good buying in that space, buying the right offices, institutional-grade buildings and then making the most out of them and writing the valuation up because we think that there's going to be some good buying. And then we're also looking at everyday needs retail. So those are 3 sort of concentrations of the group. That's where we're focusing right now.

Okay. And then, sorry if I missed it, but just in terms of leasing activity at 5 Murray Rose, can you provide a bit of an update there? And also give an indication of how much capital you've injected into that in terms of whether you've been cutting up floors or the like?

Yes, sure. So we've leased 15% so far. So we have split one floor for that group. So if we just take ourselves back, obviously, we had a tenant in place until April 2024. So we captured the vast majority of that income and obviously that hit our prior period. But we are now ahead of where we would have been had we let that lease run. We've spent between sort of AUD 3 million and AUD 4 million on the building, which essentially was [ delining ] the building. We've a got a high-quality fit-out throughout. Looks great. It's obviously a highly energy green prudential property, 6 star NABERS rating. And we've got some good inquiry on it. I think I mentioned on the previous period call, we were quite close to having 1 occupier take out the whole thing, but unfortunately that fell over by the last result. So we've been concentrating on doing multiple floor and single floor and half floor deals and yes, we've got good momentum as well.

And then just one final one. On your comments around being 15% under rented, that -- I think you said that was the valuer's assessment. Is that in line with your internal assessment?

I think we'd always like to outperform the valuer's assessment. And that's on the next sort of 3 years, sort of 2.5 years out. So about 40% of our industrial portfolio comes up over that period of time. And in fact, even in the next 18 months, we've got reasonable amount coming up and that against valuation rents is 20% under rented. So there's some -- yes, there's a positive momentum going in there as well, which we're very enthusiastic about.

Our next question is from Carlos Cocaro with Renaissance Asset Management.

Congratulations, Tim. All the best for the future.

Thank you.

Most of my questions have actually been asked, but there's 1 or 2 small ones. First of all, in terms of guidance for the second half, are you assuming any further lease-up of the current vacancy, including Murray Rose?

Carlos, Dion here. Yes, look, there is some leasing. It's not particularly material. It's more weighted towards the back end. It doesn't have a large impact on guidance. But there is some leasing opportunity.

Okay. And the last one, so, in terms of gearing, your attitude to gearing, you said -- I think, Tim, you said that there's no assets at the moment being considered for sale, but like, obviously, you did sell 1 asset during the half. Are you averse to selling assets at the moment? Or is it that you want the market to be a little bit better before you do sell assets? And where do you want gearing to land, I guess?

We're not averse to selling. If someone's going to pay us a really high price such as the 15% premium we got on the last sale. We're working our properties pretty hard. We think there's upside. We think there's upside in the office leasing up. We think there's upside in the industrial reversion. And we think there'll be a better market later in the year as interest rates fall. So there's probably a propensity to if we needed to sell we'd sell later. But we don't need to sell. So we're really concentrating on maximizing the income of the portfolio rather than selling assets.

And we do. We do review our assets regularly. We have traded probably close to AUD 300 million of assets over the last 3 years. [Audio Gap] consistently. So, as Tim mentioned, we're not under any pressure to sell. [Audio Gap] and we're quite comfortable doing that.

And we have reached the end of our question-and-answer session. I would like to turn the conference back over to Mr. Collyer for closing comments.

Thank you very much. I think, as you've seen from our presentation and our Q&A session, we are pleased to be positioned where we are. We think the office portfolio has strong leasing momentum. We have good quality properties that are attractive to good quality tenants. And our leasing is strong in the office sector. The industrial sector is very strong, and we see rent reversions coming through. And we believe our fund management business is well poised to take the opportunities that will present in the market. And we believe there will be more opportunities in the market this year. So we're confident where the business is based at this point in time. Okay. Thank you.

This concludes today's conference. You may disconnect at this time and thank you for your participation.