Property For Industry Limited (PFI) Earnings Call Transcript & Summary

So ladies and gentlemen, it's just gone past 11, so I'd like to call a meeting to order. Good morning. My name is Anthony Beverley, and I'm the Chairman of the Board of Directors of Property For Industry. Welcome to the 27th Annual Meeting of PFI. We have a quorum present so let's get underway. This year, actually, we are holding our first ever hybrid meeting, meaning that we have participants here in person and attended virtually. [Operator Instructions] And in case of emergency, please follow the instructions of the Eden Park staff. The nearest exit is back down the entry to Gate G that you would have entered from, and the assembly point is on Reimers Ave. In order for this hybrid meeting to run smoothly, I'd just like to confirm how questions and answers and how voting will work. First, let's deal with the procedure around questions and answers. Any shareholder or appointed proxy is eligible to ask questions. If an eligible online attendee would like to ask a question, you can press the speech bubble icon and then type and submit your question. It will be sent to the Board for an answer. There will be time allocated for in-person attendees to ask questions during the course of the meeting, and we will try to get to get to as many of the questions as possible, but of course, not all questions may be able to be answered in the meeting. And in this case, we will follow up after the meeting. The second procedure is voting. We will open the poll for virtual attendees now, to give you plenty of time to vote. The polling icon will appear on your screen, and from here, the resolution and voting choices will be displayed. To vote, simply select your voting choice from the options shown on the screen. You can change your vote at any time up until when the poll is closed. Prior to the poll closing, simply select another voting choice to change a vote, and I'll explain procedures for voting in person later in the meeting. Here is our agenda for the day. I will start with a short presentation and then ask our CEO, Simon Woodhams, to do likewise. You will then have the opportunity to ask questions or to make comments about those presentations, or about the financial statements and the auditor's report. Then as you have seen in the notice of meeting, we have 4 resolutions we would like you to approve. Following those resolutions, we will finish with a further opportunity for questions and answers when we get to general business. Those who are here in person are welcome to join us, of course, after the meeting for refreshments and a more informal chat with the Board and the management team, and please do that. Okay. Let me start by introducing the team and the Board. Craig Peirce, Chief Finance and Operating Officer; Simon Woodhams, Chief Executive Officer; David Thomson, Independent Director; Greg Reidy, Non-Executive Director; Dean Bracewell, Independent Director; and Susan Peterson, Independent Director. So ladies and gentlemen, in terms of PFI, I am happy to note that the industrial property sector has continued to build momentum as a place for investment. In recent years, the sector has emerged as something of a favorite for those looking for reliable income, providing consistent returns for investors that outperform the lower returns that they would now get from areas they have traditionally invested in such as fixed interest and cash. In fact, for many investors, property has become one of the closest things that they can find to an investment with a fixed income stream characteristics like fixed interest. And whilst, of course, we can't predict the future, changes in the residential market could accentuate this trend as more people look to avoid a range of tough new regulations. These trends have, in turn, drawn more participants to the sector, eager to make the most of the environment. PFI has, of course, recognized the characteristics and opportunities of industrial property for many years. As an experienced and successful sector investor and a participant, we back ourselves to find the right opportunities, deploying our balance sheet and securing returns to ensure our investors continue to receive the reliable income from dividends that they look to us for. The COVID environment has affected everyone in one way or another. While we have faced on a range of challenges, I am happy to report an improvement in our earnings and dividends for the last financial year. Funds from operations increased 6.6% to $9.67 per share. Adjusted funds from operations increased 3.1% to $8.03 per share, and we increased our dividend 1.3% to $7.70 per share. Looking forward, results for the year-to-date, combined with the positive impact of the recent acquisition, which Simon will talk about shortly, means the Board expects to clear cash dividends of at least $7.90 per share for the 2021 financial year, an increase on 2020 of 2.6%. Paying dividends of $7.90 per share is currently expected to result in a dividend payout ratio below 80% of forecast fund from operations, and 95% of forecast adjusted funds from operations, resulting in a higher ratio of dividend coverage than that which is required by our dividend policy. Accordingly, the Board is currently reviewing both the dividend policy and total cash dividends forecast for the '21 year, and an update will be provided to shareholders on the outcome of that review in due course. So our portfolio benefited from rising industrial property values driven by strong interest in the sector. This healthy appetite for investment was brought about by low interest rates, a lack of attractive investment alternatives in New Zealand's relative normality, following our success to date in dealing with the pandemic and preventing waves of disruption. Overall, property values across our portfolio were up around 5% on 2020. That revaluation of our portfolio means our property assets were valued at $1.632 billion at the end of last year. And based on recent transactions, further growth in the value can be expected at the half year if current conditions persist. Rental streams, too, were healthy at year-end with 90,500 square meter space leased last year for an average term of 7.5 years and a total rent of $12.4 million. Our track record actually, is an asset in itself in this environment because it literally opens the doors for us. The $1.632 billion portfolio valuation I mentioned makes us a major player in the sector, with a scale of operation that enables us to pursue larger opportunities in the market. Our 2 acquisitions on Rosebank Road and recent acquisition in Wiri are all examples of larger transactions that we were able to pursue because we have the track record, and importantly, the balance sheet to make it happen. The flip side of the elevated interest in industrial property plays out in our acquisition plans too, of course. We need to be very careful not to pay too much in what, in places, feels like a very overheated market. That's about using our experience, our expertise -- excuse me, and focus to our advantage. The Board has been careful to work with management in making major decisions this year around what we invest in. Not everything we have looked at is right for us, of course. Not every tender is one we will finally participate in or win, and that's okay. We are prepared to wait for good opportunities, whilst continuing to invest in our own portfolio. This year, for example, we made robust investments in our properties at 59 Dalgety Drive in Wiri and 314 Nielson Street in Onehunga/Penrose. Being a professional landlord to business is about making the most of the relationships we have, taking a long-term view and fostering those relationships with integrity and commitment. Certainly, in the early days of COVID, the outlook looked very grim. And the team worked very hard with our tenants to see them right through the full range of challenges they faced. The proof that we manage these relationships well is in our high levels of tenant retention, which at year-end, translated into occupancy and our weighted average lease term holding steady and contract rent actually increasing. 2020 was full of testing times for every business, and our results would suggest we negotiated a number of the unknowns fairly well. By the end of 2020, we had recorded total shareholder returns for the year in excess of 23%, making us one of the top performing New Zealand-listed property vehicles. My final observation before I ask Simon Woodhams to comment on the year and outline where he sees PFI hitting, would be that we continue to look for opportunities to balance our commercial imperatives with our broader responsibilities. Last year, we continued to focus on our strategic Environmental, Social and Governance, or what we call ESG framework, and I'm happy to report that we have made important advances on this front. We established a Health, Safety and Well-being framework to formalize accountability for our already strong health and safety culture. We also committed $2 million to emissions reduction initiatives over the next 3 years, offset a range of our own emissions and submitted to the Carbon Disclosure Project for the first time. And also carried out a risk assessment in line with the Task Force on Climate-related Financial Disclosures, or TCFD recommendations. Looking at everything we do through this extra lens has yielded new insights and enabled us to take a more sophisticated and considered approach to factors that, in the long term, will almost certainly influence value. Organizing and managing the company with ESG as one of our key priorities, is not only the right thing to do, but is increasingly demanded by investors and tenants both here in New Zealand and around the world. We expect to apply this approach more and more in the years ahead. So ladies and gentlemen, PFI is a company that continues to look forward. We pride ourselves on being stable, responsible and are making decisions that stand the test of time. I would now like to hand over to Simon, who will discuss our plans for PFI in the years ahead.

Thanks, Ant. Good morning, everyone. Great to be back in a room with shareholders after last year. Welcome to the familiar faces that turn up every year, we do appreciate that. Welcome to those attending for the first time. And also, we know there's -- I think there's 16 people who are attending online. So that's a first for us as well. So welcome to those people as well. Over the next few minutes, I'm just going to give a brief update of where our current strategy has brought us to today, and where we see it taking us in the next couple of years. As Ant pointed out, 2020 was a very good year for PFI, all things considered, with the COVID overlay, et cetera. We delivered over 20% as a total return, which we're very pleased with. And as a management team, we're very comfortable with how the company is sitting today, very happy with it. If we rewind back to the 2019 AGM, you may recall that we set out our purpose, vision and strategy and how these 3 pillars were going to guide us going forward. Standing here today in a positive situation that we find ourselves in at the year-end is no coincidence. Rather, it's a direct reflection, we believe, of having those strong pillars in place. So I'm just going to take a little bit of time to review those 3 pillars. So you'll be pleased to know that we very clearly see that our role is generating income for you, the shareholders or the stakeholders in the business, and we do that as being professional landlords to the industrial economy. We do these 2 things well. It should have a positive effect on the wider New Zealand economy. Our vision sets out what success looks like. Our drive is to be best-in-class of what we do, and we assess that against 4 measures that you see here on the slide. Performance and quality sit alongside reputation and scale. Our strategy acknowledges that it requires us to be intentional and proactive as a management team, and to authentically build on what we already have. And I guess the way we look at our strategy, it prevents us from being just a passive investor, relying on a rising market to benefit us. Rather, the emphasis is on deliberately but prudently investing to create shareholder wealth. Investors who have been with us for a long time now have started to see that -- this benefit flow through. But what laying out the purpose, vision and strategic pillars has done is, it's added a framework for us about what we do going forward and set out, in concise terms, not only what we expect from ourselves, but in turn, what you should expect from us. Recently, we've used the strength of our balance sheet to continue to grow dividends and returns to you, and we've done that by recycling property -- sorry, recycling funds away from nonindustrial, noncore property, back into industrial property. And this year, particularly with the contract to sell Carlaw Park, which is in place, we've continued to hone and focus our portfolio into a pure-play industrial property sector vehicle. The direction is reflected in the levels of recent activity. Since the beginning of 2019, we've actually -- since when we announced that new focus, we've actually completed over $430 million worth of property transactions. $275 million has been invested by way of acquisitions or invested into developments, and $158 million is being freed up through divestment. I'm going to talk about some of these recent acquisitions shortly. But before we do, as Ant mentioned earlier in his speech, we expect to see a further material uplift in our property revaluations at the half year during '20, and as a result of this, our loan to value or our gearing ratio will fall well below 30%. It's important to note this, is to continually to invest further into industrial property will lift that gearing ratio, but it's also a key way that we increase our earnings and, therefore, our returns to you to, the shareholders. Naturally, then the question for the Board and the management team should be, what do we invest in to ensure our investors or our shareholders benefit? And this is a question that we continue to ask ourselves. And recently, we spent some time as a Board and a management team sitting down and to answer this question. And to do that, first of all, we looked at the composition of our current portfolio. So the slide on the screen now shows the company's portfolio as at 31 December 2020, so year-end. We've broken it down into a number of categories, 4 main categories or buckets, as we refer to them as -- in the office, with the weighting of each bucket expressed as a percentage. What you can see is 76% of our portfolio is classified as what we call, core generic holdings. So these are generic warehouses that have small offices, good canopies, good yard areas, and they appeal to a very wide range of users. These properties are the backbone of the portfolio for the earnings going forward in the future. The 6% of the portfolio is made up of specialized assets, and these assets that we own like cold stores or the box store facilities that we develop down in Tauranga next door to the port. We typically return -- or receive a higher return from these types of properties as they appeal to a narrower suite of tenants. At year-end, 7% of our portfolio is held as assets for sale. This included a small property down in Christchurch, which we've since sold. Carlaw Park, which is under contract, and we'll sell later on in the year, and also Shed 22 down in Wellington. We always have a small number of properties that we hold for sale, and that's because we're not afraid to sell properties to recycle capital from poorer performing properties back into better returning assets. And finally, 11% of the portfolio is classified as brownfield opportunities or value-add properties. And these are properties that are able to be repositioned or redeveloped by investing further capital into them, usually, at superior returns, and that reflects project risk as you take it on. But the end result is you create more core generic holdings, which will serve the company well into the future. Finally, on the slide along the bottom there, you can see we split the portfolio by geography. As you would expect, we continue to strongly weight towards the Auckland market. 85% of the portfolio is based here. As you would expect, it's the biggest market with the most opportunities. 15% of the portfolio, though, is contained throughout the country. It's from Tauranga down to the South Island. We think it's important that we have a nationwide footprint as we have many tenants in the portfolio that want to be outside of Auckland, and it allows us to serve them. So it's a good strong part of our strategy. So with that framework in mind, I'm just going to run you through some of the recent acquisition activity that we've undertaken. So on the left-hand side there, in October last year, we announced the acquisition of a property in industrial state at 528 to 558 Rosebank Road. This is a 5.5 hectare site with 9 buildings leased to 5 separate tenants with an average rent roll of $3.4 million in a weighted average lease term across the site of 6 years. The second property there, 670-680. We announced just before Christmas that we had acquired that. Again, this is 4 separate buildings leased to 2 tenants, a $1.7 million rent roll with a weighted average lease term of around 4 years. As we highlighted in the annual report, which hopefully some of you would have read, the second acquisition is actually adjacent to an existing set of properties that we already own, and when you combine those 2 properties together, we actually created an industrial estate, which is 8.5 hectares in size, valued in excess of $110 million. And all this is located just a couple of hundred meters from the North Western motorway. So these first 2 acquisitions, which you can see there, fall clearly into the -- squarely into the core generic part of our portfolio. These are properties in one of our preferred Auckland locations occupied by a mix of tenants with a weighted average lease term of around 5 years across them. And then just under 2 weeks ago, we announced the market acquisition of the third property there, which is 44 Noel Burnside Road in Wiri, and I've got a little bit more detail on the next couple of slides. So Noel Burnside Roads is -- consists of a 17,500 square meter generic warehouse. The property sits within the prime Wiri zone, and it benefits from exceptional transport links via State Highway 20 there. When we settle this property, it'll actually be the largest stand-alone warehouse that we have within the portfolio. So it gives you an idea of what Ant was talking about before, about our ability to look at scale transactions now, which is pretty exciting. The property is leased to ABC Tissue Ltd for an initial 2-year period, with further rights of renewal available to them. The commencement rental, $3.64 million. Because of the shorter lease term in place and the potential for this to be vacant inside 2 years, we're actually treating this as a brownfield opportunity. Some of the shareholders here today may remember a similar transaction we did back in 2015 when we bought 5 individual buildings off Sistema Plastics in Penrose, and they came as short sale-leasebacks in place. And we went through a re-leasing process where we re-leased them, and they formed core generic property that we're now continuing to hold for the long term. So that will be the similar process we take here if ABC Tissue were to leave in 2 years' time, then we will run a re-leasing campaign and lease it back up. We see this property has been very attractive to a wide range of occupiers, but in particular, with the exceptional transport links and the generic nature of the warehouse, we think will be particularly attractive to logistics users. Again, in the recent annual report, we talked about the increase of online shopping as a result of COVID-19. And one of the positive impacts that's having on PFI's logistics users need additional warehouse space. So we think this property will benefit from that continuing trend. Once this is leased up and with a long-term lease, we will then shift it into the core generic holdings. Looking into the future, we see the brownfield opportunities or the add value opportunities has been an increasingly key driver of returns for the company. This has always been something that PFI has done particularly well, whether it's adding a canopy to an existing building, extending a warehouse or laying down a new yard that drives additional rental. In the last 2 years alone, we've invested over $25 million into 4 key projects here in Auckland. And this year, we're currently investing another $9 million into a newly built warehouse out in Dalgety Drive, Wiri. That's currently under construction, and it will be available for lease Q1 next year, 2022. Looking slightly further out, though, PFI has got a number of sites within the portfolio that on expiry of the current lease team allows us to undertake significant redevelopment opportunities. The first one on the slide here is 30-32 Bowden Road in the heart of Mount Wellington. The current tenant utilizes this 4-hectare site as a manufacturing base. They've been on site since the 1960s, so you sort of have a feel for the type of buildings that are on there. And on expiry of their lease, which is in March 2023, an opportunity to demolish what will then be obsolete buildings and to create a significant warehouse development exists, which is exciting. So we're just in the early parts of the design process for this site. But the new facility will benefit from dual road access from Gabador Place and Bowden Road, which linked back through to Carbine Road and Mount Wellington there. And what is a particularly appealing about this site is that it allows us to either have 1 large unit up to 24,000 square meters, or the ability to build a series of smaller units, probably from about 5,000 meters up to 10,000 meters. And the intention is that we're going to use sustainable design features in this development. That's just a very early render of it. It's actually 2 large 12,000-square meter warehouses. We expect that this project will provide the opportunity to invest as much as $50 million into the site, and investing capital into a site like this will allow us to attract a high-use premium tenant, which we can then say we've redeveloped the site from obsolete through to new build, and that will serve us very well into the future. Converting these brownfield opportunities into core generic from our existing portfolio, then allows us to go back out and take on more value-add opportunities in creating a bit of a growth engine for the company going forward. So just looking forward, as the industrial property sector becomes more crowded and competitive, we can't just rely on doing more of the same. We need to stay ahead of the curve, and I firmly believe that we've got the management team, the Board, the portfolio and the balance sheet to make this happen. We're concentrating our efforts on the industrial sector, which is where we can play to our strengths, obviously. And as you can see from the presentation today, we believe that first-class management and continuous improvement of the portfolio, the vital ingredients to delivering growing returns to shareholders, which is what you should expect from us, and we know a lot of you rely on them. The 4 buckets that I've spoken about today are categories being core, generic, specialized assets held for sale, and brownfield opportunities are smart and natural way for us to think about the portfolio as this company continues to grow, and they enable us to act with confidence as pure industrial property specialists. And for that reason, you'll hear us talk about the portfolio in this way going forward. So just before I hand the presentation back to Ant, I'd just like to say thank you to the shareholders and stakeholders who have been with us on this journey for the recent years. And on behalf of the Board and the management team, we look forward to you sticking with us and being part of a successful story going forward. Thanks very much.

Good work, Simon. Thank you very much. So ladies and gentlemen, there's now an opportunity for questions or comments on the presentations, or on the financial statements and orders of report, which you will find from Page 68 of the Annual Report. For those here in person, if you raise your hand, we'll get a microphone to you so that everyone can hear. Can you start, please, by introducing yourself, whether you're a shareholder or a proxy holder; and if a proxy holder, the name of the shareholder that you represent. For virtual attendees, press the speech bubble icon on your device and then type and submit your question. Are there questions on the presentations or the financial statements or auditor's report?

I'm Bruce Parks, proxy holder for Shareholder Association in [ Brisbane ]. This year, 1 resolution recognizes the role of the chairs of the Board subcommittees. Could those chairs give us a brief outline on what the major issues that we rest this year?

That's a really good question actually, Bruce. There's absolutely no doubt that the committees are doing more and more of the grunt work of the Board at a detailed level. We have 3 main committees. We have an Audit Risk Committee, of course, which Susan heads up. We have our Nominations and Remuneration Committee, which Dean heads up, and we have a Treasury Committee, which David heads up. So perhaps would you like to address those, please?

Are we all on? Are you all on? Thanks, Bruce, for your question. So my name is Susan Peterson. Good morning to you all. I chair the Audit and Risk Committee. And I think as you can imagine, in a COVID year, it's been quite a busy time. The world we see right now is nowhere near what we expected at the time we all ended up in lockdown. So If I take us back to that moment, the Audit and Risk Committee was principally focused on scenario planning. What happens if we have a lot of our tenants unable to pay our rent? What happens when our -- if our revenue was to fall materially? And then how would we ensure that we've got a strong balance sheet? And you can imagine, you're playing for a variety of scenarios that thankfully actually never played out for us. But you sure as heck, you've got to have a good plan for all of them if it progressively got materially worse. So the next piece then was, well, okay, now what happens when we come to our reporting piece? We've got some big audit issues that we've never seen or have to consider before. First one was material uncertainty in the evaluation of your portfolio. So to try and work with valuers who are obviously keen to make sure they put carve outs into all of the evaluations and the responsibility squarely on our shoulders to try and work out how you then report a 6 monthly on that basis. Can I say to you, we spent a considerable amount of time making sure those disclosures were as fulsome and helpful to the shareholders that we possibly could make. The next piece, too, is you'll remember the -- we had the NZX coming out with saying we're expecting in the [ end of May ], all the directors to provide good disclosure through this period of time to try and give certainty in a period of, frankly, complete uncertainty. So we spent a lot of time thinking about watching our peer companies coming out with statements, checking our own logic about what we knew at that moment, and working out on a very dynamic way, what should we and could we convey to the shareholders. And you'll see we put out some information, but our confidence and the planning we're putting behind the scenes meant we didn't have to say too much which injected too much uncertainty, we were of course, pretty comfortable we had most grounds covered. The other big thing this year has been, obviously, we talked about it in the presentation, around ESG and is getting ready for the compulsory climate disclosures and you'll see in the annual report our step change for Property for Industry in terms of how we've communicated that. What's interesting is over the last 18 months, we started with climate being something that was important to us as humans and as communities and as investors and, frankly, just common decency. It is now pricing capital across the globe, and our banking and funding facilities will demand that we provide a robust process there that allows us to get to the pricing of capital that you, shareholders would expect us to achieve, given the importance of this company on exchange. So we treat it as an absolute nonnegotiable. What it means practically is an Audit and Risk Committee is required to head more meetings, it is required to understand all of the climate risk disclosures that you've seen in the annual report, and it's also very clearly and plainly on us, a responsibility for how we're going to progressively move forward to deliver against those disclosures. So -- and of course, there's the BAU, Bruce. And BAU was making sure we can actually keep the quarterly dividends kind of going, reporting as we go and making sure we're communicating to the market. So I would probably conclude by saying, it's probably the busiest year you've seen governance across any series of Boards this last year. But I'm personally very proud of how all the New Zealand crews have pulled together to make sure we got through it sensibly, and I'm pretty proud of where we stand today. So thank you.

Thanks, Susan. You've been quite busy. Okay. So I chair the Remuneration and Nominations Committee or the people committee of PFI. In the last year, one of the key things we've been working on -- well, one of the primary thing right from the outset was, following the event of COVID that we had to deal, was working from home. Our people were no longer in offices, they were dispersed around the city, and our team had to establish working-from-home protocols, which they did very well. Hand-in-hand with that was the well-being and care of our team, and the Board was certainly supportive, and it was great to see the work that went in by management to ensure the well-being and the connectedness of the people who were used to seeing each other every day. So some nice initiatives there. We looked at the Board composition, which is obviously -- we were struck with a completely different environment this time last year than what we were -- what we realized we were going into, maybe in December when we're writing budgets for the company. And so we looked at the Board composition and where we match it for, what we're having to deal with and might talk about this a little bit later. But we did prevail as a Board upon Ant, and said that we would support his tenure longer than what he might have otherwise thought at this meeting last year. He suggested he might move on within 12-or-so months. We felt it was important to keep this Board together and to have that depth of experience to work through these times. So there's quite a bit of time spent on the skills around this table and the composition of the Board. Then you've got all the normal matters, succession development, remuneration. The remuneration has led to us recommending an increase of fees today. Effectively, we looked at where the business was positioned and what we wanted to do -- where we wanted to be positioned in a remuneration, both for our executive, our staff and for the Board, and that is at the median point. We didn't want to be at the top end or at the bottom end, but we established a clear program, which would get us to the median point, which has resulted in an increase we are asking for today. And then we looked, naturally, at diversity inclusion and what are we doing in diversity inclusion. Despite what you might see in front of you, which is not obvious to you, you have a visually a very diverse Board. You do have people from different walks of life around this table. So you've got great property experience, you've got industry experience, you've got professional services experience, and you've got a real broad commercial experience along with financial. So the Board is pretty well served. So those were sort of the things we were working on last year. Thanks, Bruce.

Thanks very much. I'll just speak very briefly. I chair the Treasury Committee, and we get together approximately every 6 weeks throughout the year. In advance of meeting, we received a report from the company that's been prepared with some inputs from Bancorp. And the committee, when it does come together, we always have a member of the Bancorp team meeting with us. Our focus is very much on what is happening in global markets. We're looking at what's coming out of the States, in Europe, focusing on things that are going on in Australasia and New Zealand and obviously, very focused on anything that can impact on the economy and in particular, on interest rates. The Treasury Committee's role is really to guide the Board on the hedging profile and the swap arrangements that PFI is entering into. We obviously have several hundred million dollars worth of debt, and it can't just sit all at floating. We've got some hedging parameters within our policies. And really, the treasury committee's function is to manage the debt profile of the business on an ongoing basis and to look for good opportunities to put in place, sensible swap arrangements. So that's really the role that it's approximately every 6 weeks, occasionally, more regularly. Thank you.

Good stuff. Well, Bruce, that was our very first question.

I may have a second question but it's a quick one.

Okay.

How are your tenants reacting to your ESG journey? Are they going with you or...

Simon, you probably best to...

Yes, I can answer that. It's an interesting question I actually had it asked by a couple of people on the way in. The ESG journey is something that in the last, particularly 24 months has gathered a lot of steam. And a good example is if you go back 2 years ago, none of our tenants talked about ESG at all, whereas literally last week, we've signed -- or we've agreed a renewal with a large tenant who pays us in excess of $1 million. And part of that renewal is that they're a global tenant and they've had it either come out of Sweden, saying that any new lease deals that we do has to take into account green initiatives. So we've committed on this particular site. I'd like to tell you later, is around rain harvesting, looking at solar power, installing EV charging stations. So it's starting to come, is how I would put it. If you looked 2 years ago, not a lot has been done at a tenant level, but very much so now. So not only that, we've got 2 others who have approached us about, again, solar on some of our buildings. So it's something we're putting a lot of work into. Sarah Bell, who's sitting there on the back there. Oh, she's waving down there. She would love to have a chat to any of the shareholders who have got questions on that, it's a big passion of hers. And it's one of the reasons we've brought her on. So yes, it's definitely moving towards that. So it'd be interesting to see in the next 24 months how far we advance.

Great stuff. Do you have any more, Bruce? It's quite interesting, Simon, isn't it? Because part of the journey is groups like us, also looking at -- actually to understand, well, what is their impact on the environment as an operating business? And secondly, what can we really do about it? And for us, there's an [indiscernible], we have a portfolio which we control and manage. There's a whole lot of businesses inside that are -- traditionally some of them are quite high emitters and they run [indiscernible] businesses, and that sort of stuff. So the world sort of really accelerating its interest in that area, and I think for you to say, sort of grappling about, actually, okay, what does it mean and what can we do practically? And cost effectively, is good economics going to work to make this work? So it's a really burgeoning area. Any other questions on the presentations, financial statements or auditor's report? Okay. Well, look, thank you very much for your questions. We'll now move to the resolutions. Craig advises me that 354 shareholders representing 149,345,645 shares or 29.72% of the company's shares on issue are represented by proxies. Voting for the resolutions will be conducted by poll. And for the purpose of the poll, I appoint the company's registrar, Computershare, to carry out the poll. The procedure for the conduct of the poll for in-person attendees will be as follows: voting papers have been provided with the Notice of Meeting. Pens required will be distributed now. Please put up your hand if you need a pen. If you do not have a voting paper, please see a Computershare representative at the registration desk who will provide you with a voting paper. Indicate your vote, for, against or abstain, by placing a tick in the appropriate box. If you are here as a proxy for a shareholder who has not marked 'proxy discretion' on the proxy form, your vote will be automatically counted in accordance with the voting directions given by your appointer. But please sign the voting paper provided when you arrived at the meeting. Where you are a proxy holder and you have been granted a discretion -- excuse me. Let me start again. Where you are a proxy holder and you have been granted a discretion on how to vote the resolution, please use the voting paper provided when you arrived at the meeting. After recording your vote, please remember to sign your voting paper and place the voting paper in the box that provided at the back of the room, where there will be -- where they will be collected by Computershare staff. For virtual attendees, the poll is open to vote now. The resolutions and voting choices are displayed on your screens and to vote, simply select your voting choice from the options shown on the screen. You can change your vote at any time up until when the poll is closed. To change your vote, simply select another voting choice. Having collected the votes that will be taken to a separate room for counting, the results of the poll will be announced by NZX as soon as they are available. Please note that the Board recommends that you vote in favor of each of the 4 ordinary resolutions. Just before we get to the resolutions, I'd like to note that at last year's meeting, I advised that I was intending to step down from the Board in the next 12 or so months. Subsequent to that meeting, as Dean mentioned, and in light of our increasingly uncertain operating environment under the COVID pandemic, my Board colleagues thought that it was in the company's interest that I remain on the Board through these uncertain and unique times, and I agreed to that. Board succession, including my tenure, will continue to be actively considered by the Board, but for the time being, the status quo remains. So turning to the resolutions. The first resolution is that David Thomson, who retires and is eligible for election, be elected as a Director of the company. The Board considers David will be an Independent Director if reelected, and supports his reelection. David has been a Director of PFI since 2018. He is a senior partner in law firm Buddle Findlay, where he runs a broad corporate and commercial law practice. There was a profile of David in the Notice of Meeting. David, would you care to say...

Thanks very much, Ant, and good morning, everyone. Thank you for the opportunity to present my brief credentials for reelection as an independent director. As the papers mentioned, I've been on the PFI Board since February 2018. And throughout that time, I've been a member of the Audit and Risk Committee with Susan, and also met the chairing of the Treasury Committee as mentioned. If reappointed today, this directorship will remain my sole focus outside of my legal practice. And at some point, over the next couple of years, I'm hoping to identify one more directorship. I've been practicing as a corporate and commercial lawyer for around 28 years, including the last 19 years as a partner of a national law firm. And in addition to my law degree, I hold a Bachelor of Commerce, and I majored in accounting and business finance. My legal and commercial experience over the years has been very broad. I've been involved with a wide range of mergers and acquisitions, joint ventures, infrastructure projects and large commercial contracts covering a wide range of sectors. I've worked in New Zealand and in London. And my clients currently include large public sector organizations, universities, councils, crown companies and also a number of international and local private businesses. The current PFI Board comprises a group with a wide range of different skill sets and perspectives, as Ant mentioned. And from my perspective, the Board works incredibly constructively together for the benefit of shareholders. In terms of skills that I can bring personally, my focus over many years has been on helping clients to get things done, helping clients to create value, being strategic, finding and exploiting commercial opportunities. I have a background in corporate work, including quite a lot of work in terms of governance. I've worked with a lot of Boards over the years, and I feel that I've got something to add on the governance front. I bring a truly independent perspective to the issues that are discussed around the PFI Board table. And in terms of diversity of skills and thinking, as mentioned, my way of thinking really reflects experiences and the skills that I've developed through 30 years as a -- close to 30 years as a lawyer. I'm really proud of how PFI has grown over the past 3 years that I've been on the board. In terms of performance during that 3-year period, the share price has increased from around $1.67 to somewhere around $2.95 today, with the portfolio growing in size by more than $300 million. Perhaps more importantly, we've pursued the strategy to return to the pure-play industrial property vehicle, and we've grown the dividends by 6% during that period, while also transitioning to the dividend policy that ensures that dividends payments are reflecting cash flow from sustainable rental activity alone. I'm very committed to PFI and to the creation of value for you as PFI shareholders. I believe the strategy that we've been progressing for the last 2 or 3 years is very sound and that PFI is currently in great shape. In this market, we obviously need to remain smart and very focused on where we find opportunities for growth. And we need to be very careful watching the fundamentals of each and every deal that we consider for the company. If reappointed, it will be a pleasure to continue working with Ant and with the remaining -- the rest of the Board members and to assist the management team while we work through the issues that confront PFI as it continues to grow. I hope to be part of PFI's future. Thanks very much.

Good stuff. Thank you, David. The resolution is that David Thomson, who retires and is eligible for election, be elected as a Director of the company. Is there any discussion on the resolution? Please mark your voting papers for Resolution 1, or for virtual attendees, select your voting choice from the options shown on screen. [Voting]

The second resolution is that Gregory Reidy, who retires and is eligible for election, be elected as a Director of the company. The Board considers Greg will be a nonexecutive director if reelected and supports his reelection. Greg has been a Director of PFI since 2012. He has a background in property investment, funds management and development with more than 25 years' experience. There is a profile of Greg in the Notice of Meeting. Greg, would you like to say on...

Thanks, Ant. It's been a while since I stood up here, probably about 3 years, actually. And I think that's when that photo was taken. So fortunately, I'm good-looking, so that's good. So no problems there. So a few things have changed. Firstly, I carry glasses everywhere. But more importantly, my involvement started with PFI in 2011. And clearly, over that last decade, there's been a heap of change. That's gone from a merger with Direct Property Fund, internalization of management, a huge amount of acquisitions and sales managed by the management team and immense amount of leasing transactions, which are a phenomenal win. I don't know whether it ever counted it, but it's a huge amount of work by the management team. Overlaid with that, clearly, in the last period, we've been dealing with COVID-19, which has become a term we've all got very used to, constant global market change due -- Donald Trump created a bit of that, and change in government policy and the government is pretty busy at the moment doing that at the moment. Despite all those changes, I'm incredibly proud of the way that PFI has stuck to its guns and its strategy, and that's been to create robust returns for shareholders as its #1 priority through the ownership of quality property investment. So in terms of me personally, I'm a property person. I started my career in property, and I have no intention of changing because I love property. So I feel that I can add some value to the Board purely because clearly, PFI is a property owner. So I look forward to helping the Board and the management team with that property focus. Finally, I don't take being a director lightly. I don't think anyone on the Board does. We all have other business interests that take a good deal of our time. And being a Director of PFI or any company is no 9 to 5 job, and it has been busy in the last 12 months, and I suspect it's going to continually get busier and busier. But my motivation for being a Director is working with a great company, which is what PFI is, and working with really good people on the Board and the management team, to basically work for you to provide the returns that you require. And so, I look forward to working beyond this day, provided you give me the nod, and look forward to a cup of tea afterwards, and thanks for your time. Thank you.

Thanks very much, Greg. The resolution is that Gregory Reidy, who retires and is eligible for election, be elected as a director of the company. Is there any discussion on the resolution? Please mark your voting papers for Resolution 2 or for virtual attendees, select your voting choice from the options shown on the screen. [Voting]

The third resolution is that the directors are authorized to fix the fees and expenses of the auditors, PricewaterhouseCoopers Auckland. Is there any discussion on this resolution? Again, please mark your voting papers for Resolution 3 or for virtual attendees, select your voting choice from the options shown on the screen. [Voting]

The fourth resolution is that the directors be authorized to fix the remuneration of the directors of the company from the close of this meeting, as per the table shown in the explanatory notes of the Notice of Meeting. In setting the proposed rates, the Board commissioned an independent benchmarking review of the current level of directors' fees by strategic pay. A summary of the strategic pay report together with its attestation of independence has been made available to all shareholders on PFI's website. In requesting this review and setting the proposed directors' fees to be put to shareholders, the Board has also considered the growth of the company with contract rent growing 9.5% and assets growing 24.1% over the past 2 years. PFI's robust performance through the recent period of economic uncertainty, changes in the workload and expectations of directors since the review, and the need to attract and retain directors of a strong caliber. The proposed structure and rates are set out in the Notice of Meeting, and if Resolution 4 is approved by shareholders today, the rates will apply from the close of the meeting. Going forward, the rates would continue to be reviewed every second year by the Board, in advance of the annual meeting with any adjustment put to shareholders for approval. The fourth resolution, that the directors be authorized to fix the remuneration of the directors of the company from the close of this meeting as to the table shown in the explanatory notes. Is there any discussion on the resolution? Bruce?

Thank you. We're in favor of the resolution. Just a couple of comments. The abnormal work required seems to be unnecessary. You got through COVID without using that, and probably explaining what had gone worse could be very hard. The second thing is, is the mentioning of the Treasury subcommittee, who are obviously working very hard, and are they recognized anyway?

Taking your first point, Bruce. The -- in the Board's view, the provision for an hourly -- and it's an hourly rate proposal, is for what we think to be very extraordinary circumstances where the Board is called on to do way beyond the normal extension of Board activities that you might expect from a busy time. And it's quite common in the market now to provide an allowance for that. And it's really -- in PFI's case, it's never been used. The only time it's ever been used prior to the hourly rate convention is for a one-off transaction. I think it was around internalization some years ago where one of the directors asked to do some specific detailed consultancy work to get through that. But it's never been used and the Board sees that it would apply in very extraordinary circumstances. But it's quite important to have it because if those extraordinary circumstances arise, the company and particularly the shareholders, need the Board's focus and say, there was a takeover or a merger, or some transaction or proposal or event, that really required the Board to be fully immersed and this can be months of immersion, seriously to deal with the takeover, it recognizes that directors have other responsibilities and rewards for the time spent. And the rate is set out in the Notice of Meeting. We think the circumstances which would arise we can't predict those, but they would be quite extraordinary. So they're not like a COVID where you say, look, see, Board work goes up and down. Sometimes it's extreme up and down. That doesn't fall into scope for a special payment. That would be BAU, even though it's an extension of the time commitment. It was very busy, actually, during that time. So that's how we see it, Bruce, we think actually, it's really -- it is important to have it there, and hence, why we proposed it. The second part of your question was around the Treasury committee. And I think Dean, perhaps we better take that on notice just in terms of -- at the moment, it's been a committee that has traditionally had a lower workload than the other 2, David? And that's why it really hasn't had a special fee and we get good input from consultants for the duration of the meetings and before, and in terms of implementation as well. So really reflect the fact that it has been a lower workload. David, did you want to...

Bruce, I'll just add to that. I said on the Audit and Risk Committee and the Treasury Committee and the -- there's a lot more work involved in the Audit and Risk -- sorry in the Noms and Remuneration Committee. The Treasury Committee, yes, we meet every 6 weeks. We do get papers, we review all those. But it's at a slightly lower level in terms of -- so I think that's why it's not sitting as part of that framework at the moment.

Yes. Is there any other discussion on the resolution? So if there's no other discussion, I'll ask you to please mark your voting papers for Resolution 4 or for virtual attendees, select your voting choice from the options shown on the screen. We will just give shareholders a moment to finalize voting, and then I'll close the poll. [Voting]

Okay. Thank you. The poll is now closed. We now come to general business. If there's something that you wish to put to the meeting, could you please raise your hand and we'll get a microphone to you so everyone can hear. A reminder, please to state your name and whether you are a shareholder or proxy holder. If you're attending virtually, press the speech bubble icon on your computer, tablet or mobile, and then type and submit your question. As mentioned earlier, we'll try to get as many of the questions as possible, but not all the questions may be able to be answered here today. And in this case, questions will be followed after the meeting. I'll open the floor to questions. So just to note, Craig has asked us just to note, that we've had no questions remotely by virtual attendees. Okay. Look, if there are no questions from shareholders today, I'd like to thank you for your continued support for PFI and for your attendance today, particularly. We would welcome any feedback on this format, remembering it's an in-person and virtual format, so we're keen to see how our shareholders -- what shareholders think of that. And that ends the formal part of the meeting, and I declare the meeting closed. I would like, before I stand down, to just acknowledge the absolutely fantastic work done by the broad PFI team comprising the management team, it's a small, incredibly collaborative and committed team, and by the Board. And I'm probably showing my age, but this -- the COVID situation was the fifth downturn that I've been part of in my career. And going into it, It was absolutely scary in terms of what was potentially ahead of us. We look through the GSE, where people were talking about depression and that sort of stuff, and some of the other property cycles which we're in as extreme. But the outlook for New Zealand, the world and our industry, in our industry where people actually could be dramatically affected by a shutdown of the economy. It was really scary, and it was a big workload for the Board and the management team, and I'd just like to acknowledge the absolute fantastic work done by the Board and particularly by Simon and his team, small mobile team, fantastic. So well done, and the Board really appreciates your help. Thank you. I would note, please join us for light refreshments after the event. Put the voting in the box as you go, please, if you would. And again, please join us for light refreshments after.