Kiwi Property Group Limited (KPG) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining us for the Kiwi Property Annual Meeting of Shareholders for 2024, either in-person here at Eden Park, where we're enjoying the beautiful weather or online via the link virtual meeting platform. My name is Simon Shakesheff. This is my first annual meeting as Chair of the Kiwi Property Board, and it's my pleasure to be with you here today. I'm pleased to advise there is a quorum present, and I declare this meeting open. Before we start proceedings, I'll cover a few housekeeping matters. Firstly, please put your mobile phone on silent. Toilet facilities are in the lobby near the rear entrance to the room. If a fire alarm goes off, please follow staff in an orderly fashion down the stairs and congregate in the carpark at the front of the building. If you're participating in the meeting online and encounter any issues, please refer to the virtual meeting online portal guide or you can phone the link help line on 080-200-220. And with that, let's get things underway. I'll start today's meeting by introducing my colleagues on the Board. Mary Jane Daly, Mary Jane was appointed to our Board in September 2014. She is an Auckland-based Professional Director with a Strong background in banking and finance. Mary-Jane is the Chair of our Audit and Risk Committee. Carlie Eve. Carlie is an Auckland-based professional director. She joined our Board in May 2023 following a successful finance and funds management career. Carlie is a member of our Audit and Risk Committee. Chris Aiken. Chris is an Auckland-based professional director who joined our Board in June 2021 and stands for reelection today. He has significant property experience in spanning both public and private sectors. Chris is the Chair of our ESG Committee and a member of the Remuneration and Nomination Committee. Peter Alexander. He's an Auckland-based professional director who joined our Board last May. He has extensive property experience and has held executive roles at several large listed New Zealand companies. Peter is a member of our ESG Committee. And Kevin Kenrick. Kevin is an Auckland-based professional director who joined in May and stands for election today. He's currently a Director of BNZ and the former CEO of TVNZ and House of Travel. He has significant experience leading the strategic transformation of prominent businesses across multiple sectors from travel to media. In accordance with the NZD rules, the Board has determined that all directors are independent. The notice of meeting also contains further information on director independence. Also joining us today are Clive Mackenzie, our Chief Executive Officer; and Steve Penney, our Chief Financial Officer. I warmly welcome the team our registrar, Link Market Services. They will help conduct the meeting by the voting on the formal business later in the meeting and act as scrutineer. Finally, I'd like to welcome Josh Burgess and Bryce Henderson from Deloitte, our group's auditor for the 2024 financial year. So moving to the agenda. I'm going to start with a brief address and then invite Clive to provide an update on the company's fund performance for the year ended 31st of March 2024 or we might refer to it as FY '24. After this presentation, we'll then take questions and conduct the formal business for today, being 3 resolutions; to reelect Chris to the Board, to elect Kevin to the Board, and to fix the auditor's remuneration. The next slide shows how to ask question. So shareholders present at today's meeting can ask questions as can those participate through the virtual meeting website. If you're online, you may submit a question at any time by clicking on the Ask a Question box at the top or bottom of the online portal, which is on the screen now. We will answer general questions to the business update and performance overview and then specific questions relating to each resolution before voting on them. I encourage shareholders who are attending online to send their questions through as soon as possible. This will allow us to answer these questions at the appropriate point in the meeting. As this is a shareholders' meeting, only shareholders or appointed proxies can ask a question. So you'll be prompted to input your shareholder or proxy number before completing the online process. So now turning to a business update. The last few years have been challenging, not just for our company but for the property sector as a whole. We've continued with the impact of COVID-19 and the disruption that's followed, including high interest rates and low consumer confidence. Factors such as these have contributed to the weak economy seen in New Zealand in recent years, including GDP growth of just 0.2% or 0.1% in the March 2024 quarter. These factors have placed downward pressure on the share price of New Zealand's listed real estate companies. As a result, Kiwi Property stock is currently trading at a significant discount to our net asset backing. This is disappointing, and I have no doubt you feel the same. Unfortunately, we don't determine how our stock trades. What we can do though is manage the business as efficiently as possible and deliver on the substantial opportunities that are inherent within our asset base. While there's still work to be done, we made good progress on both these fronts in FY '24, achieving a solid underlying operating performance while simultaneously reshaping our portfolio and strengthening our balance sheet. In addition, we made important headway on our strategic evolution from being a retail and office landlord to the creator of connected communities at key transport nodes, positioning the business for future growth. We do have a clear strategy for creating value. Kiwi aims to drive superior returns for investors over time through the ownership, development and management of a quality real estate portfolio. We're guided by our 4-pillar business strategy shown on this slide. The first strategic pillar is to lead the market on retail-led mixed-use. We believe that by aggregating a range of property types at Sylvia Park, LynnMall, The Base and ultimately Drury, we'll create a competitive point of difference, drive more robust valuations and generate superior returns. Secondly, we'll grow with diverse capital sources. By recycling capital and partnering with a broad set of investors, will help grow our assets under management and reposition the business for higher quality, lower risk earnings. Thirdly, we enable the success of our customers and partners by creating and curating market-leading property assets and strategic long-term relationships. And finally, the fourth pillar of our strategy is to build a future-fit business. We'll do this by driving operational excellence, harnessing the power of digital, delivering on sustainability and building a high-performance culture. Let me take you through some examples of our strategy in action. On the 11th of June, Prime Minister, Christopher Luxon opened our Resido residential development at Sylvia Park, taking the asset a step closer to becoming a world-class retail-led mixed-use precinct. The 295 apartment Resido Complex is the largest build-to-rent development in New Zealand. It offers tenants a compelling mix of secure tenures, superb amenities and a convenient location next to the shopping, dining and transport options at Sylvia Park. We believe that New Zealand strong net in migration and rising demand for rental accommodation are conducive to a bright future for build-to-rent, and we're proud to be at the forefront of these new asset class. Leasing of Resido is now underway with good initial interest. Around 17% of apartments have now been leased either directly or as part of our deal with Australian flexible accommodation provider, Urban Rest. While it's still early, we're satisfied with the progress thus far and aim to have Resido let within the next 12 to 18 months. Sylvia Park, the opening of Resido being residential accommodation to Sylvia Park for the first time and marks the culmination of phase 1 of the asset's transformation from a shopping mall to a connected community. The precinct began this journey several years ago with the opening of ANZ Raranga. Since then, we've added 20,000 square meters of GAlleria retail, the Sylvia Lane dining precinct, and the second office building at 3 Te Kehu Way. That building is now 96% leased, with ASB recently signing an agreement to rent over 1,700 square meters of floor space. The bank joins other blue-chip corporates, such as ANZ and IAG, which also have a significant presence at Sylvia Park. This reflects the quality of tenants seeking commercial space in the precinct, attracted by its amenities, location and sustainability credentials. We've achieved considerable progress at Sylvia Park over recent years but as the master plan shows, there's an exciting road ahead, including the scheduled opening of New Zealand's first IKEA store from late 2026. As we continue to progress Sylvia Park, we'll focus on the achieving the highest and best use for each square meter of our strategic landholding as we grow and diversify the revenue from the site and drive further valuation uplift. At Kiwi Property, we've never been afraid to invest in transformative opportunities. In fact, we pride ourselves on planning for tomorrow without losing sight of where things are at and what's needed. Right now, Sylvia Park is one of those opportunities. We believe it will continue going from strength to supporting improved performance and shareholder returns. Turning to Drury. Resido isn't our only development highlight from FY '24. We've also made good progress at Drury and stage 1 earthworks are now complete. We're currently in advanced negotiations with several local and international large format retail regarding potential site sales, and we hope to be able to announce more on those transactions soon. Our objective is to sell off the large-format retail and superlot sites and use the proceeds to fund the infrastructure for Drury stage 2. We are already attracting high degree of interest from potential tenants who recognize Drury's significant potential. We are looking forward to capitalizing on that interest and in the process unlocking returns for the business and for our shareholders. The development is forecast to deliver an internal rate of return of between 15% and 20% on stage 1 land development and 8% to 12% as we move into the creation of the Town Center at stage 2. We estimate that between FY '26 and '29, Drury will increase adjusted funds from operations by between $0.05 and $0.06 per share per annum. Recycling capital. On the 16th of May this year, we announced the conditional sale of the Vero Center in Auckland to a Hong Kong, China-based institutional investor for $458 million. The transaction represents a 1.9% discount to the building's September 2023 valuation, a good outcome in the current office market. The Vero Center has been a cornerstone of CBD office portfolio for around 20 years. But given our focus on creating retail-led mixed-use centers, it's no longer core to our strategy. The transaction is subject to overseas investment office approval but assuming the deal settles, the proceeds will be used to repay bank debt, reducing our pro forma gearing by approximately 10 percentage points to around 27%, comfortably within our self-imposed gearing range. This additional headroom unlocks plenty of options for the company and will enable us to consider strategic opportunities to grow earnings. I'll now hand over to Clive to discuss FY '24 business performance and some of the highlights of the past year. Thanks, Clive.

Thanks, Simon, kia ora everyone. It's great to connect with our shareholders face-to-face once again, and thank you for joining us today. And to everyone viewing this event online, we appreciate you logging on. As Simon mentioned, Kiwi Property delivered a robust operating performance in FY '24, while taking significant steps towards our ambition of becoming New Zealand's leading creator and curator of retail-led mixed-use communities. Let's look at some of our key financial and operational highlights from FY '24. Over recent periods, we've continued to rebalance our portfolio towards assets that we expect to be more resilient and perform better over time. While the divestment of Northland's Westgate Lifestyle and 44 of The Terrace saw Kiwi Property's total earnings decreased from the same time last year, when viewed on a like-for-like basis to account for the impact of the asset sales and the prior year's release of COVID-19 accruals, net rental increased -- net rental income increased by 5.8% or $10.2 million. Operating profit before tax decreased by $5 million or 4.4% on a like-for-like basis and adjusted funds from operations was down $1.5 million or 1.5%. The relative resilience of our valuations contributed to an improvement in our after-tax performance resulting in a net loss after tax of $2.1 million in FY '24, materially better than the FY '23 figure. While our capital recycling program has caused a decrease in income by selling our noncore assets and reinvesting the proceeds into new opportunities, we will help create a high-quality asset base and improve long-term returns for our shareholders. I'd now like to turn your attention to some of the additional driver of our FY '24 results. Beginning with the sales performance of our assets. Retail spending has cooled in New Zealand over recent months. With figures released by Stats NZ showing that electronic card transactions were down 3% in March 2024, compared to the same time the year before. Despite this general contraction, tenant sales across our property portfolio increased 1.4% in FY '24, reaching $2.1 billion, with pedestrian counts up 2.3 million and a continued rebound post COVID-19. The opening of new stores, such as JB Hi-Fi and MECCA at The Base saw sales increase 4.1% at that center, while LynnMall sales 1.8%, fueled by the arrival of JD Sports and the center's 60th anniversary marketing campaign. Sales at the Sylvia Park Precinct were flat on the year before, following significant growth over recent periods but remain well ahead of pre-COVID figures. While customers' wallets are under pressure on the current financial climate and retail sales have moderated over recent months, we believe that our leading portfolio of retail-led mixed-use assets is well placed to bounce back strongly as the cost of living pressure subsides. While we're pleased to have made progress on several of our long-term initiatives, such as the opening of Resido that Simon mentioned earlier, we're equally committed to maximizing the day-to-day operational performance of our assets, including driving rental growth. As you can see on this slide, we completed almost 590 leasing transactions in FY '24, achieving a 4.4% increase in total leasing spreads. New leases were particularly strong, delivering a 5.3% uplift overall with office up an impressive 18.7%, driven by new deals at the Vero Center where the departure of Bvlgari has enabled us to bring new tenants on more favorable current market rents. These figures demonstrate that flat to quality in the office market and the rise of hub-and-spoke office locations such as Sylvia Park. Tenants are demanding premium buildings with great amenities and excellent locations. We're well placed to meet these requirements, putting us in an excellent position to drive further rental growth over the coming years. Reducing corporate cost was a priority for the business in FY '24. Over the past couple of years, we faced increased overheads related to the rollout of our new enterprise Yardi IT system. However, with the project complete, those costs will begin to normalize. The productivity benefits flowing from the Yardi rollout, coupled with a range of other HR initiatives, have enabled us to deliver a headcount reduction of 9% in FY '24. Through a combination of technology and continuous business improvement, we believe there is scope for further efficiency gains, enabling us to achieve even more with less. The total financial benefit of our cost-saving measures is expected from FY '25, including a $2.9 million decrease in people-related costs through lower-wage expenses and the removal of life insurance and employee share benefits. Our aim is to reduce management expenses as a percentage of net rental income by at least 3 percentage points, taking us below FY '22 levels the last year before we incurred Yardi costs. Cost savings weren't the only area where we made headway in FY '24. We also achieved several milestones on our sustainability strategy during the year, including earning important sustainability ratings. Our new 3 Te Kehu Way office building was awarded the country's first 6-Green Star Design and As Built rating, highlighting its outstanding environmental credentials. With this recognition, our entire office portfolio now has a minimum NABERSNZ rating of 4 stars, highlighting the sustainability performance of our commercial assets. With tenants increasingly requiring higher neighbor's NZ scores on of their office premises, we're well positioned to take advantage of this demand. In the retail space, Sylvia Park was awarded a 6-star NABERS indicative pilot energy rating in November. As NABERS ratings aren't currently available for shopping centers in this country, we've been working with partners in Australia to bring this to fruition and are proud to be leading the charge for retail landlords in New Zealand. And finally, we increased Sylvia Park's on-site renewable energy capacity with the addition of a new solar array that enabled us to generate over 1.3 million kilowatt hours of power across the precinct in FY '24, providing enough electricity power 50% of the entire shopping centers common areas. That concludes my review of FY '24. As we look ahead to FY '25, the management team and I have 4 key priorities. First, we'll proceed with leasing up Resido, aiming to have the building tenanted within 12 to 18 months and demonstrating the potential of build-to-rent in the New Zealand market. Secondly, we'll strive to complete the Vero Center transaction and in the process, deliver the funds to pay down debt, reduce our gearing and create the headroom to pursue accretive new opportunities. Thirdly, we look to sell LFR sites at Drury, unlocking the proceeds to accelerate the development of stage 2 and the returns that go with it. And finally, we'll drive operational excellence across our high-quality asset portfolio focusing on cost control and growing rents and driving sales. By doing these things, we will encourage income growth, build further balance sheet resilience and help encourage a lift in the Kiwi Property share price. Kiwi property has come a long way over recent years. And while our strategic transformation has taken time, I'm confident the steps we have taken will deliver results for the business and our shareholders in the years to come. I'll now hand back to Simon. Thank you.

Thank you, Clive. And apologies, everyone. We've got a little bit of an echo going, so do bear with us. Kiwi Property paid a quarterly dividend of $0.01425 per share for the fourth quarter of FY '24, taking the full year dividend to $0.057 per share. Recent government changes removing our ability to claim tax depreciation on commercial buildings will reduce adjusted funds from operations by around 5%. Unfortunately, we have been unable to offset this in past and as a result, have reduced the forecast dividend for FY '25 to $0.054 per share. We remain committed to delivering dividend growth from FY '26, however, fueled by the additional earnings from Resido, our fully leased 3 Te Kehu Way and Drury land sales, amongst other things. As always, dividend guidance and payments are contingent on the company's performance barring material adverse events or unforeseen circumstances. Looking ahead, we believe Kiwi Property has the potential to benefit from several of the social and economic trends currently facing New Zealand. The shortage of housing fueled by record migration and declining building consents is driving demand for quality rental accommodation, creating opportunities for BTR. In parallel, limited online shopping penetration and a relatively small amount of new retail space under construction looks set to benefit established retail destinations such as Sylvia Park, LynnMall and The Base. Ladies and gentlemen, that concludes our overview of the company's earnings for FY '24. So questions.

Before moving formal business of the day, we'll happily answer questions. We ask that you limit your questions to the company's activities at this time. You'll be able to ask questions about the formal business shortly. As this is a shareholder meeting only, only shareholders or appointed proxies can ask a question or vote. When I ask for questions, can shareholders present in the room, please wait until a microphone is provided to you, I think there's two microphones doing the rounds, two or one, and then clearly state your name before asking the question. I'll take questions from those present in the meeting before moving to questions from shareholders online. Are there questions now from shareholders?

Paul Fodor, joint shareholder. Before the meeting, I looked at the annual report, Page 59, the 2.3 note to the accounts on the tax expense, and my particular question before I came was in regard to the removal of the depreciation deduction for building structures with effect from 1st of April 2024. You've just answered one of my questions with mentioning the impact of 5% on the dividend. Now that's for the next financial year. What is the prospect -- I've got several questions. What's the prospect for years after that? I also would like to know how you're talking to the government or if you're talking to the government about the removal of that and whether in the future, there might be an opportunity for them to reverse the imposition of that piece of legislation?

Thanks for the question, and I'll attempt to answer a little bit, and then I'll hand to my colleagues for part of that. So firstly, unfortunately, this is -- it's effectively a government legislative change. At this stage, it's not a one-off effect, it an ongoing impact, but -- and we can't really comment specifically on future years beyond the current guidance. But just to say that it's not a one-off effect, it is an ongoing impact. In terms of legislative -- sorry, the government advocacy, I'll ask Clive to make a comment on that.

Yes, sure. Really good question. We, as part of the Property Council and on our own, are lobbying heavily to government to change that legislation. At the moment, it seems to be falling on deaf ears unfortunately but we will continue to lock on that basis and likewise, the Property Council will also continue to lower you on that basis but we believe it's very unfair treatment for property communities.

May I just follow-up. My concern is the impact not only on the properties themselves but all funds, which invest in property and in KiwiSaver. So I think in terms of this legislation, the government is actually doing the duty on New Zealanders.

Thank you, for your question. I think we'll leave that one there. We won't comment on that one. Thank you. Other questions? In the middle here, sorry.

[ Jim Taylor, ] shareholder. Just on that very point, what's the status of the loss on the Vero building, is that tax deductible?

Steve -- the loss -- do you mean the loss on sale of the Vero building?

Yes.

Well, it's actually not a loss.

Well, you say 1.9% less in book value, sorry.

Yes, sorry, yes. Look, it's a really small difference between the book value and the sales price compared to other transactions in the market. It just reflects that it isn't asset spread for asset sales at the moment. So we are relatively comfortable with proven price for that asset.

Other questions in the room?

Janet [ Poha ], shareholder. Can you comment on the high vacancy or holdover rate of around 25% for the 2 main retail properties?

Sorry, the higher vacancy rate?

Yes. In this report, it says that the lease expiry profile is a vacant holdover of 27% in the Plaza and 23% in Centre Place North. So I presume that's a vacancy rate that is 25%, which is quite high, isn't it?

Yes. That's actually not the vacancy rate. That's a comment referring to vacancy and holdover. I think the physical vacancies are actually very minor. Holdover means effectively that there is an operating tenant in place who has not signed a new lease. But Clive, do you want to comment on those 2 specifically?

Yes, those numbers are reasonably normal. As Simon just outlined, our total vacancies across our portfolio are very low, and in terms of total number of tenancies, they're probably in early 20. So a very small number. But what happens when a lease gets to end, we enter into negotiations with that prospective tenant to sign up a new lease and hopefully get a higher rent. And so those negotiations can take some time, so it's quite normal to have a section of our leases that are on holdover. So there's nothing untoward with that order.

So if you physically walk around the Center, you won't see vacant shops. They're just operating shops where they have not signed any lease yet. Thank you for the question. Any other questions in the room?

With the move towards BTR and the Drury Town Center, what is the Board's composition of experience in terms of residential rentals and properties?

So that's a very good question. This build-to-rent is effectively a new asset class. In a New Zealand context, it's a very large and substantial part of the institutional property market in a number overseas locations. So if you look in the U.S., for example, build-to-rent is actually one of the largest categories of institutional investment. Similarly in the U.K., it didn't exist about 10 to 12 years ago, but it has grown dramatically. In Australia, again, about 3, 4 years ago, there was no build-to-rent assets but there -- it's expanding quite significantly and there are a number of different operators that are -- have completed developments, and there are substantial number that are underway. In New Zealand, we are certainly a little bit pioneering, this -- the Resido project at Sylvia Park is the largest build-to-rent project that's been completed in New Zealand to date, but we are starting to see a certainly interest and other people starting to do the same process. With regards to the Board's expertise, I might specifically point and I'm going to ask Peter and Chris, just to give a very quick comment on their experience with regards to residential property.

Thanks, Simon. Yes. So I've been in the property sector for over 30 years in New Zealand and have been involved in development of a number of residential properties in subdivision, houses, student accommodation and retirement villages. So I have that sort of experience on development of residential property.

My experience is very similar to Peter. So all of that, plus I've been involved in the development of vertical apartments, both here and Australia delivered about 3,000 apartments and apartment and apartment complexes such as the sort that we are currently building.

And I might just add on one of my other roles on the board of Cbus Property in Australia, we're a fairly large-scale apartment development business over there and have developed thousands of residential properties over the last decade or so. But again, thank you for the question. Other questions in the room?

[indiscernible] shareholder. I know it's only 2 weeks and 2 days since the 11th, you're 17% leased, where are you now?

Sorry, we are at 17% around about now. So the project launched 2 weeks ago. There's a lot of interest in Resido. There are a number of tours basically happening all the time, and we have reached 17%. When we benchmark ourselves against a number of the large-scale build-to-rent projects in Australia, our expectation is to get towards the 95% occupancy level. It will probably take 12 to 18 months. It's not an instant process. It takes some time to get there. So that's -- if we can meet or exceed that, we will be happy. We might go to Trevor to see whether there are any questions from shareholders online.

Yes, there is one question from shareholders online. Question is, how has Resido been marketed and will there be help desk in Sylvia Park to provide answers to questions and promote Resido on site?

Clive, I think I'll hand that one to you.

Yes. Thank you. So we're marketing it through a number of channels. Primarily through Trade Me, we have our own website. We're doing our own advertising on billboards around and in the mall as well, we're fortunate enough to be able to own those digital media platforms within the mall, and we've been able to access those as well as third-party billboards as well that message up. We've also done quite a big job in terms of getting out and talking to the market. You would have seen a fair number of press releases and press statements, which were all free, fortunately. So we've had some great media coverage around that. And it is definitely on the cards to consider having a desk -- a man desk with information on Resido in the mall. We're looking at all the different avenues at the moment, seem it's working and then trying other things as well. So as Simon mentioned, we are on a learning curve. So we're trying all the different platforms to see which works best for us as we carry on our journey.

And I'll just add to that. So Resido formally finished only a couple of weeks ago. We're very happy with the quality finished product, and I would encourage everyone to, if you haven't seen it, on the Kiwi Property website to go online or if you're visiting Sylvia Park, you can't miss it, but it's really -- we're very happy with the quality and the way that the project has landed. Trevor, are there questions online?

Yes, the next question is can the extent of the discount to the asset value per share, has the Board given any thought to instituting a share repurchase program? And share cancelation would lead to an increase in the net asset value for the remaining shares on issue?

Thanks, Trevor. So with regards to share buyback, our gearing at the moment, we have a self-imposed gearing target range of 25% to 35% of debt to the value of our assets. At the moment, we are at the top of that range. So we aren't right here today. We don't think it's a valid thing do to look at buying back our own shares with our gearing -- at the upper end of our gearing target. I would say part of the rationale for our sale of the Vero Center, which, as mentioned, we're partway through that process, is simply 2 things: The discount to our share price at which we are -- to our asset backing at which our shares are trading; and secondly, to ensure that we can move back to the lower end of that target gearing range. The sale -- as we mentioned, the proposed sale of the Vero is that only a 1.9% discount to its current carrying value. which, in a way, is, assuming that transaction can reach conclusion would be a real indication of the validity of our asset backing, which Steve remind me, it's about $1.18, I think, at the moment.

Yes, $1.17.

$1.17, thank you. Trevor?

The next question is what percentage of the Resido apartments are furnished?

Clive?

Yes. So the urban rest apartments are all 100% furnished. We have some furniture packs coming, which will be available for residents to start utilizing or renting from the end of July. If we look to the Australian market for a lead on what that likely looks like, they started off at about 20% furnished and are up now around 40% furnished. If we look to the U.K. market there and then that 80% to 90% furnished. So we're starting very low. We'll probably start with about 10% over and above Urban Rest and see where the market takes us, and we can always add more furniture as we go forward here.

Other questions, Trevor?

There are no further questions.

Thank you. We'll just go back to the room. Is there any further questions from shareholders in the room? No. Okay, we'll move on to the formal business. So thank you. We have 3 resolutions to consider today. Voting on each resolution will be by poll. Each person voting at this annual meeting and each shareholder who has cast a vote by proxy has one vote for each share held. I'll put each resolution to the meeting and provide an opportunity for you to ask questions concerning that resolution individually. I ask that keep the questions strictly to the resolution. In respect to proxies received, if as Chair of the meeting, I have been appointed to act as proxy and I'm not directed on how to vote in respect to the resolution, I will vote in favor of all resolutions. For shareholders joining us today, you should have had a voting card given to you when you registered, one of these. Please raise your hand if you do not have a voting card and someone will assist you if you can do that. So please mark your voting intention for each resolution and the voting cards will be collected after the meeting. So turning to how to vote. Shareholders joining online using the electronic voting card received once online registration is validated. To vote, you will need to click Get Voting Card, there's a section there within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking For, Against or Abstain on the voting card. Once you've made this selection, please click Submit Vote on the bottom of the card to lodge your vote. Please refer to the virtual meeting online portal guide or use the help line specified if you require assistance. Note that voting will remain open until 5 minutes after the conclusion of the meeting. The results of the votes will be declared and announced via the NZX. So turning to the resolutions. Moving to resolutions 1, 2 and 3. These are all ordinary resolutions. In accordance with the company's constitution and the NZX listing rules, Chris Aiken and Kevin Kenrick will retire at this meeting. However, Chris offers himself for reelection, and Kevin offers himself for election. The Board has determined that Chris Aiken and Kevin Kenrick will be independent directors for the purposes of the NZX listing rules, if reelected, or elected. I will now ask Chris to provide a brief bio and comments supporting his reelection.

Thank you, Simon. I'm Chris Aiken and I've been serving as one of your directors since June 2021. I'm currently the Chair of the ESG Committee and a member of the Remuneration and Nominations Committees. I've got property experience in both public and private sector going back for some 30 years, currently, also a Board member of the Waikato Development firm Adare Limited and past Director of Metlifecare , Piritahi and Appserv a Data Center and application service provider. I was a former Chief Executive of HLC, which was responsible for developing large urban residential communities, including Hobsonville Point. I'd like to acknowledge your support for my first term. If reelected, I'll continue to focus on development and investment capital allocation decisions and opportunities, which will be critical to Kiwi Property as we work to lift our total shareholder returns. Opportunities will present themselves in this part of the cycle, and I believe my investment in site will be helpful in unlocking further value for the business. I also look forward to continue to serve on the ESG and Remuneration and Nomination Subcommittees. It's my pleasure and I'll pass on to Kevin.

Good afternoon. My name is Kevin Kenrick. I'm an Auckland-based professional director. With significant governance and managerial leadership experience across finance, telecommunications, travel and media industries. From this experience, I've developed a understanding of retail marketing and distribution and a proven track record of leading successful strategic business transformations. I'm currently a Director of BNZ and I was previously the Chief Executive of TVNZ and House of Travel. I believe my skills and experience will benefit Kiwi Property and the Board as we aim to continue improving the company's performance, and deliver growth in shareholders if elected. I'll now pass back to you, Simon.

Thank you. Thanks, Chris, and thanks, Kevin. The Board is committed to ensuring that it possesses appropriate mix of skills, knowledge, experience and diversity to discharge its roles and responsibilities. The Board supports the reelection of Chris and the election of Kevin as it considers they have the expertise to contribute to the overall skill set required by the Board. The Board, other than Chris and Kevin in respect of their owned positions, recommends that you vote in favor of the resolutions. So I'll now read Resolution 1, that Chris Aiken be reelected as a Director of the company. Are there any questions from shareholders on this resolution? Any questions in the room? Trevor, any questions online?

There are none.

Okay. If there are no further questions, we will proceed. So thank you for the resolution to be passed, it must be approved by a simple majority of votes of those Shareholders who are appointed proxies entitled to vote and voting on the resolution. I will now put the motion. Please now select either For, Against or Abstain for resolution 1 on the voting card. And we'll just pause for a moment. And Trevor, I will look to you to give me the nod for when we want to move on. [Voting]

All good? Thank you. Resolution 2, I'll read Resolution 2, that Kevin Kenrick be elected as the Director of the company. Are there any questions from shareholders on this resolution? Firstly from the room?

Yes, Mr. Kenrick, are you a shareholder or do you anticipate becoming a shareholder, you need to make that commitment.

Yes. I am a shareholder, and I'm excited to join you as well.

Other questions? Trevor, any questions online?

Just one question. It's the same question that's been answered already.

Thank you. We'll move on for this resolution to be passed, it must be approved by a simple majority of votes of those shareholders or appointed proxies entitled to vote and voting on the resolution. I will now put the motion. Please now select either For, Against or Abstain for Resolution 1 on the voting card. And we'll just pause for a moment there. [Voting]

All right. We'll move on to Resolution 3, concerning the auditor's remuneration. This resolution is sought to authorize the directors to fix the remuneration of Deloitte Limited as the group's auditor under Section 207 SA of the Companies Act 1993. During FY '24, Deloitte was paid $388,000 for audit and assurance-related services. The Board recommends that you vote in favor of this ordinary resolution. I'll now read Resolution 3 that the directors be authorized to fix the auditor's remuneration. Are there any questions from shareholders on this resolution? Trevor, any online?

There are none.

So I'll read the Resolution 3. Sorry, we'll move on. Thank you for that. So for this resolution to be passed, it must be by a simple majority of votes of shareholders or appointed proxies entitled to vote and voting on the resolution. I will now put the motion that the directors of the company be authorized to fix the auditor's remuneration. Please now select either For, Against or Abstain for Resolution 3 on the voting card. [Voting]

Thank you, everyone. That completes voting on the resolutions. At this time, I'd like to advise the outcome of the proxy votes that were lodged for each resolution. I'm not going to read the proxy results for each resolution, but they're shown on the screen now. The registrar, Link Market Services, will now move through the room to collect your voting cards. For those shareholders online, you can now submit your vote. Voting will be open until 5 minutes after the conclusion of the meeting. Link will count all votes and complete their duties as scrutineer for the poll. We'll announce the voting results to the NZX once this process has been completed. Well, that concludes today's formal proceedings. As you've heard, Kiwi Property delivered a solid underlying operational results in FY '24 and made good progress on several of our major strategic initiatives. While we're operating in a challenging market, as always we remain committed to driving the performance of the business and delivering returns for our shareholders. Thank you for your attendance, your participation today and your support of Kiwi Property. I'll now draw this meeting to a close. A copy of this presentation and our speeches are available on our website and the NZX. Thank you.