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

Good morning, everybody. [Foreign Language] My name is Dean Bracewell, I'm the Chair of the Board of Directors of Property for Industry Limited. Welcome to the 32nd Annual Meeting of PFI, and thank you for your attendance. I'm pleased to welcome you all today, whether you're joining us here in person or online via the virtual meeting platform. Firstly, mobile phones on silent, please. And in the case of an emergency, please follow the green exit emergency doors out here, I guess, out of the building. The assembly areas are located on Quay Street and the corner of Customs and Albert Street, depending on which exit is chosen. I record that the notice of meeting was sent to shareholders on Monday, 15 September 2025, and we have a quorum present. So let's get underway. In order for this hybrid meeting to run smoothly, I'd like to confirm how questions and answers and voting will work. First, let's deal with the procedure around questions and answers. I confirm that any shareholder or appointed proxy is eligible to ask questions. For those of you attending the meeting virtually, if you would like to submit a question, the Q&A is always open. So please feel free to submit questions throughout the meeting, and these will be addressed at the relevant time. There will be time allocated for in-person attendees to ask questions during the course of the meeting. We will try to get to as many of the questions as possible, but not all questions may be able to be answered during the meeting. In this case, questions will be followed up after the meeting. The second key procedure is voting. We will open the poll for virtual attendees now to give you plenty of time to vote. If you are eligible to vote at this meeting, you'll be able to cast your vote under the Vote tab. Once voting has opened, you can submit your vote for each resolution. You can change your vote up until the time I declare voting closed. I now declare that voting is open on all items of business. I will give you a warning before I move to close voting. Should you require any assistance with asking questions or voting, you can type your query into the Q&A tab at any time and one of the Computershare team will assist you. Alternatively, you can call Computershare on 0800-650-034 and ask to speak to one of the administrators supporting the PFI Annual Meeting. I'll explain procedures for voting in-person later in the meeting. Our agenda. I'll start with a few remarks before handing over to our CEO, Simon Woodhams. You'll then have the opportunity to ask questions or to make comments about the materials presented and the financial statements and auditor's report. Then as you have seen in the Notice of Meeting, we have five resolutions we would like you to approve. These resolutions will consider the re-election of Angela Bull, Carolyn Steele and myself, proposed changes to director remuneration following an independent review by Ernst & Young and the fixing of the remuneration of PwC as auditor for the ensuing year. Prior to voting, you will hear from each of the three directors seeking re-election, and you will also have another opportunity to ask questions on each of the resolutions. Following the resolutions, we will finish with a further opportunity for questions and answers when we get to general business. Finally, those who are here in person are welcome to join us for light refreshments and a more informal chat with the Board and management after the meeting. Before we get into the substance of today's presentation, I would like to point out that during the course of our presentations, our FY '20 (sic) [ FY '25 ] results have been compared to the unaudited results for the 12-month period from 1 July 2023 to 30 June 2024, which we will refer to as a prior comparable period, or PCP, which comprises the periods H2 2023 and FP 2024, unless otherwise noted. This differs from the financial statements, which present FP '24 as a comparative period for FY '25 in accordance with the applicable accounting standards. Let me start with some introductions. With me in the room today are Simon Woodhams, our Chief Executive Officer; Angela Bull, Independent Director; Carolyn Steele, Independent Director; David Thomson, Independent Director; Anthony Beverley, Independent Director; Jeremy Simpson, Independent Director; and finally, Craig Peirce, Chief Finance and Operating Officer. We also have several other members of the PFI and the team here in the room -- other members of the PFI team in the room here with us and welcome representatives from our auditors, PwC; our external legal counsel, Chapman Tripp; our Bond Supervisor, Public Trust and our share registrar, Computershare, to the meeting today. We've signaled for some time and more recently formally announced to the market that Anthony Beverley will be retiring as a director at the conclusion of this meeting. Today, my fellow directors and I would like to recognize Anthony's exceptional contribution as a Director of PFI for more than 2 decades. Since his appointment as a director in 2001, Anthony has played a pivotal role in positioning PFIs for sustained growth while steering the company through a number of quite different economic cycles. On a personal level, I've greatly valued Anthony's wisdom and experience, particularly following the transfer of the position of Chair from Anthony to myself in 2023. On behalf of the Board, I wish to place on record our acknowledgment of Anthony's key role in shaping PFI's growth story over the last 24 years. I'd also like to note that the Board has determined earlier today that Angela Bull will be filling the vacancy left by Anthony on the Audit and Risk Committee, and this appointment will take effect from the close of today's meeting. Anthony, before you sign off from the Board today, would you like to say a few words?

Just [indiscernible] chair.

Thank you. Huge cheers. I think you should come up here. And I will stand aside.

Ladies and gentlemen, it is a very significant day for me actually. As Dean mentioned, I've been on the Board for 24 years, and that's sounds as grand as it is alarming, I think. And I've been trying to convince the directors this morning that no doubt the share price is going to close lower tonight. But I'm not getting many takers on that, but it's definitely one of those things you just don't check. Yes. So look, 24 years, but I must say I don't quite see it as 24 years. I only see probably half of those years as being truly a director. I was appointed to the Board in 2001 by the then manager, AMP Capital as its appointee, and the Board then was chaired by [ Alan Lockey, ] if you recall. And [ Alan ] and the other directors were kind enough to let me stay in the room and just sit in the corner, but I kept my head pulled in for about 10 years as a manager appointee not really in fairness having too much to say because it was really governed by a very fiercely independent Board. 2011, I left AMP Capital, but AMP asked me to stay on as its nominee for a while. So I did that for a couple of years. And then AMP sold the management company. And the Board, for some reason, said you better stick on as an independent director, which I did. And then as Peter stepped down in 2018, I took over the Chair role and Dean has taken it over since 2023, as you heard. But just briefly, it's been an absolute privilege to be part of this business and machine. I've been involved in a number of property entities and infrastructure entities in retirement village, and I genuinely believe that PFI is best-in-class. And the magic of PFI actually is pretty simple. It's in a sector that has always been, but has become incredibly preferred as a performance property sector. And in the early days, it was always retail and industrial that had the best returns and the least volatility when times got tough. That's now the industrial sector. Retail is in real trouble really, I believe. But really, that sector is where we want to be and PFI has got a magic dominant position in that, and it really has set the company well. But simple business run well. But critically, it's always been governed and managed well. And what I mean by that is, I was really quite actively involved through the '90s, showing my age here actually, through the '90s and to where we are today. And the resurgence of property investment entities, listed entities after the terrible events of the 1980s and the crash and where the properties companies got to. As those entities reemerged, property for industry was the only entity really that was set up with a proper governance structure and that it hadn't -- it was a company with an independent Board versus the other structures were pretty well all trust structures where you had a management entity that had a Board that was both the Board of the manager and the Board of the underlying investment vehicle. And it was a natural conflict. And while behavior was generally pretty good between them, the market really didn't like it, and there was a natural conflict. And I must say I was in the dark side of that because I was project manager and first CEO of what is now Precinct Properties, and we had that model. So I've lived both sides. But PFI has absolutely benefited from having from the outset an independent governance Board. It simply was interested in shareholders. It had no other mandate, whereas the other entities had this dual purpose where they had to grow the manager and had to try and balance that thing. So PFI has always had a really great governance structure and has had a single focus, as I say, on shareholder returns. And that's proven to be really worthwhile over the years. But look, today, we're in fantastic shape. The Board is as strong as it's ever been. The management team is absolutely the best-in-class. And so the company is really well set. And I'd just like to thank the Board and the management team for the great companionship and the support they've given me. I thank the shareholders for the support and the tolerance they've given me over the years and wish the company absolute very best going forward. Thank you.

Thanks very much, Ant. Okay. Turning now to my comments on PFI's performance and the outlook for the year ahead. We entered the financial year anticipating that we'll be operating in challenging conditions given the mood in the economy. While those predictions turned out to be largely correct, the Board has been very pleased with PFI's performance and the delivery of a strong result, which reflects our strategic positioning and the resilience of our core industrial portfolio. I'll leave Simon to step through our FY '25 results in more detail in a moment. But at a headline level, we were delighted to have grown our earnings to enable an increase in FY '25 cash dividends to $0.086 per share, which was an increase of $0.003 per share or around 3.6% on our annualized FP '24 dividends. This result is reflective of the Board's conviction that investing in industrial property and managing that investment with a clear strategy and prudent risk settings can deliver reliable growth for investors through a variety of market conditions. We recognize that many New Zealand businesses, including some of our tenants have been operating in a challenging environment in the last couple of years. However, industrial property is an asset class that has consistently proven its ability to weather difficult economic conditions. For PFI, that has meant that we've been able to deliver an annual -- an average annual total return, meaning the change in share price combined with all dividends reinvested of around 9.35% since our inception in 1994. Since 2012, we've also recorded average dividend growth in excess of 2% per annum. These strong and consistent levels of growth have arisen from having the hard work in industrial sector at the core of what we do. PFI has and continues to invest in high-quality industrial buildings located in the most in-demand locations. These assets are well leased, well maintained and attract strong tenant demand. The result is a portfolio that is running at 99.9% occupancy and has achieved consistent rental growth over a long period of time. More importantly, the Board and management team is optimistic about the year ahead and our ability to continue delivering for investors. In particular, in recent months, we have observed the valuation cycle turning and floating interest rates nearing projected cycle lows, which suggests that the operating environment has become increasingly supportive. For PFI, our focus during the next 12 to 24 months is on continuing to elevate the strength of our existing portfolio to deliver high returns over the longer term. While we've made good progress over the last 12 months in closing the under-renting gap in PFI's existing portfolio, opportunities still exist to capture significant growth as scheduled market rent reviews take place with our tenants. Against the backdrop of very low lease expiries in FY '26, we are well placed to secure strong results on these rent reviews. In addition to our stabilized portfolio, where we've continued to progress sustainability initiatives, development projects such as the multistage Springs Road project and the upcoming Spedding Road project represent strategic opportunities for PFI to develop high-quality 5 Green Star rated industrial estates and highly desirable industrial precincts. By continuing to regenerate in a sensible and measured way, we are setting PFI up to meet the needs of industrial tenants, both now and in the future. Shareholder return has always been core to PFI's purpose and steady growth in dividends is a key part of that and is central to how we measure our success to you, our shareholders. Many of you will be aware that in early August, we guided to expected cash dividends of at least $0.089 per share in FY '26, which would represent an increase of at least $0.003 per share or 3.5% on FY '25 dividends. This guidance reflects the confidence that the Board has in our strategy and the ability of our talented management team to execute that strategy for the benefit of our shareholders. I'll now hand over to Simon and look forward to rejoining you later in the meeting for further discussion and agenda items.

Thanks, Dean. Good morning, everyone. I think this is the first time we had to stand up here with glasses. So it sort of shows that up not quite 24 years in the seat, Ant, but I have been around for a little while now. Once again, thanks for coming along, everyone. It's great to have people in a room. We do enjoy as a Board and a management team the opportunity to talk through people what we've been doing over the last 12 months and to those online. So welcome. I'm going to talk you through the highlights of FY '25 and touch on some of the work we've done in the sustainability space and then give you a brief overview of some of the key development projects that we're working on as a team. So if we just jump through the next slide, echoing Dean's earlier comments, we're very pleased with the company's performance over the last 12 months through the June 30. We've created a strong platform that we believe we can continue delivering shareholder returns off the back of. We reviewed around $73.2 million of rent during the period. And those reviews delivered an average annualized uplift of 5.3%. In addition, around $8 million of rent was leased during the period at an average of 20.1% above the previous contract rents. And we also secured really high levels of early renewals, and that meant for the FY '26 period, we only had 1.6% of contract rent due to expire. So the company is in a really good spot. This all contributed to a strong financial performance where we reported profit after the tax of $106 million. This was up from $152 million on the prior comparable period, incorporating fair value gains on the properties of $70.7 million as compared to losses of $90 million on the previous period. The independent valuations contributed to our portfolio now being valued at $2.17 billion, and that was up about 3.4% from the prior year. Net rental income of $108 million was up around 12.7%, while adjusted funds from operations or AFFO, as we talk about, the earnings were $0.0959 per share. And again, that was up around 8.1% on the prior period. Finally, we paid cash dividends for the period of $0.086, as Dean said, and this was up 3.6% on the annualized FP '24 cash dividends. And this equates to a rolling 3-year AFFO dividend payout ratio of 91%, which is at the lower end of the parameters the Board has set for dividend policy. So very pleasing. Throughout the period, we took further steps to improve the key portfolio metrics, and you can see them set out here on the slide. We continue to own 91 properties, which is leased to 126 tenants. That was consistent with the prior period. And while we're always on the lookout for properties that will enhance the portfolio at attractive values, we found during the year the opportunities that would generate sufficient returns with few and far between. Instead, we focused on investing our capital into projects that we control, which was a better use of that capital. This slide shows that contract rent increased around 12.6% to $112.3 million, driven by strong leasing, rent reviews and the completion of several development projects. However, it's perhaps the occupancy and the weighted average lease term or WALT as we talk about, that we're most proud of. As Dean mentioned earlier, it's no secret that economic conditions over the last 12 months have been tough, particularly in the Auckland region. But despite these conditions, we increased the occupancy from 98.6% to 99.9%, so effectively, in our view, 100% occupied. And we extended the weighted average lease term from 5.07 years out to just a shade under 5.5 years. These metrics demonstrate that PFI has performed strongly in attracting and retaining high-quality tenants who are often been happy to renew early. Sustainability has continued to be core to our activities during the period, and we're pleased with our progress against our sustainability strategy. Highlights for the year included achieving 5 Green Star ratings for the completed new buildings at our Bowden Road Estate and Springs Road developments, being recognized in the sustainable property category at the Property Council Awards with an excellence award for Bowden State and a merit award for the Fisher & Paykel Appliances building at Springs Road, commencing construction at Stage 2 of Springs Road, which is also targeting a 5 Green Star rating, and I'll talk about this development shortly. Installing solar at a further three buildings and achieving our solar installation target. Achieving Green Star Energy and Water pathway performance certification on a portfolio of four buildings for the first time. Green Star Performance is a sustainability rating tool we use for existing buildings as opposed to the new buildings that we're developing. And finally, achieving our target to have power metering and monitoring installed at 90% of our properties. With progress made during the year, we met the solar and metering targets that we set back in 2022. So we completed a scheduled refresh of our sustainability strategy, and we set several new targets towards the end of the financial year. Our targets are now set out on the slide, and these will help to guide us in the coming years. The current targets now include continuing targeting 5 Green Star ratings on all new significant buildings, aiming to double our solar capacity across the portfolio in the next 2 years and a new target to increase the LED lighting in our portfolio with a view to increasing the energy efficiency of our core portfolio. In summary, we're committed to continued progress in the sustainability space and recognize that this is an area that's critical in our ongoing ability to not only attract, but also retain high-quality tenants. From a capital management point of view, we went back to the bond markets for the first time since 2018 with a $150 million retail bond offer that was very well received and significantly oversubscribed. At year-end, our gearing sat at around 33% with almost $320 million of available headroom from -- sorry, existing facilities provided by a syndicate of supportive lenders. Our weighted average cost of debt has also dropped significantly over the last 12 months, and that's in line with more favorable interest rate conditions. So again, in summary, our balance sheet and funding arrangements leave us well placed to continue to execute on our strategy. So those are the highlights over the past year. And for the remainder of the presentation, I'm going to shift the focus to our key development projects that continue to be a core focus for the PFI team. So we currently have -- just on the next slide, currently have three exciting developments at various stages of planning and execution. We've deliberately staggered our development pipeline so that developments make up around 5% to 15% of our portfolio at any one time and that they can be delivered in a way that appropriately balances commercial drivers with appropriate risk settings. Working through the slide on the screen. During FY '25, we are pleased to complete the final stage of Bowden Road, and we now have a 5 Green Star rated core asset that is leased to high-quality tenants in Tokyo Food and Daikin Air Conditioning. We've also completed Stage 1 of our development at Springs Road and are well underway with Stage 2 of that project. We're also actively progressing planning on several development opportunities at Spedding Road in Whenuapai, Northwest Auckland and Harris Road out in East Tamaki. So in the last couple of years, we have provided shareholders with frequent updates on our multistage project at Springs Road. We're delighted to continue with the progress that has been made. We're just waiting for the slide to jump over. Here you go. In October 2024, the first stage was completed and successfully delivered. And that -- following that, a 15-year lease to Fisher & Paykel Appliances commenced. And part 2 of the stage has been pre-let to MiTek on a 12-year lease with construction well underway, and we're tracking both ahead of program and under budget, which is very pleasing. On the screen now, you can see some of the renders for the plans at Stage 2 of Springs Road along with some of the key development metrics. The balance of the site being Stage 3 could see the development of a warehouse of around 17,500 square meters with timing on that development likely to be tenant led, and we'll continue to keep you updated on that as our plans firm up. Turning to the Spedding Road. Titles for 5.8 hectares of greenfield land at the site are expected to be delivered before Christmas. This property provides us with an opportunity to invest up to $130 million into a new industrial estate in a part of Auckland, where we believe that's been severely undersupplied in both industrially zoned land and industrial buildings of quality and scale. Assuming we receive titles in the anticipated time frames, we expect to take advantage of the favorable construction market to start the first stage of construction in the first quarter of the 2026 calendar year. We'll also be working in parallel to achieve some tenant commitment here. We've set out some of the key development metrics for Stage 1 on this slide. As can be seen from the render, the flexible multiunit layout is designed to appeal to a broad range of occupiers, particularly those that are seeking smaller, high-quality warehouse space. And consistent with our sustainability strategy, we'll be looking to achieve a 5 Green Star rating on this property. We've been the long-standing owner of a property at 92 to 98 Harris Road out in East Tamaki, over which the lease was surrendered post balance date and around 3 years early by the tenant in return for a significant surrender fee of about $5 million. Alongside the receipt of these funds, this has unlocked an accelerated access to a site that we've long earmarked as a future development opportunity. 92 to 98 Harris Road is a prime 2.63 hectare site, which currently only has 27% site coverage, along with some obsolete buildings, as you can see on the aerial photo there. And this, from our point of view, helps to make it a very attractive redevelopment opportunity. While we're still working through design and feasibility options, early concepts suggest it could support a 14,500 square meter warehouse. Again, we'll be targeting a 5 Green Star rating at this site. For now, the site will be cleared and secured, and we'll continue to progress plans in parallel. So in summary, each of these development opportunities position us for sustained growth and value creation in the coming years, and the team and I really look forward to sharing further progress updates with you in future meetings. So while the focus of today's meeting is to reflect on PFI's performance over the last 12 months, I thought I'd just take a quick opportunity to bring up-to-date what's happened in the last 3 months. As at 30 September, our portfolio remains 99.9% occupied, and the WALT has remained stable at 5.23 years. And our cash collections have remained very healthy over the first 3 months of the year. As I signaled earlier in the presentation, we have very low levels of lease expiry in FY '26, which has meant there's been reasonably low levels of new leasing activity in the last 3 months. However, other notable highlights and milestones in the last 3 months have included the continued progress of Stage 2 at Springs Road, with some recent images on the building pre-lease to MiTek currently on the slide. The settlement of a bolt-on acquisition at Norris Ave, Te Rapa down in Hamilton, which is now leased to the same tenant who occupies PFI's adjacent property on the Te Rapa Road. This bolt-on acquisition provides greater scale and optionality to us in a desirable location within the Golden Triangle. We were also pleased to release our third climate-related disclosures to the market in September, which is also the first time that part of our greenhouse gas emissions have been subject to an external assurance process. While this was a very detailed and intensive process, the Board and management found the process helpful and that it continues to shape and refine our sustainability strategy. So in conclusion, I want to reiterate our commitment to delivering for you, our shareholders and other stakeholders in the room. As Dean mentioned earlier, the Board has set dividend guidance for FY '26 at $0.089 per share. This equates to an increase of at least 3.5% on the FY '25 dividends, which is entirely consistent with our strategy of delivering higher returns to shareholders over the long term. With a strong portfolio now valued in excess of $2.17 billion and clear growth opportunities ahead, we're very well positioned to deliver high returns to our shareholders. Just before I hand back to you, Dean, I would also like to acknowledge Ant's retirement from the Board. Ant -- we had a nice meal with Ant last night on the Board. Ant was my first chair, and they say you never forget your first chair. So I am -- always enjoy the conversations I have with Ant. I generally ring him -- used to ring him on a Friday and he would be on a digger somewhere or shooting something called chopping a tree down. So it was nice to have that out of Auckland balance on the Board. So Ant, enjoy, I'm not going to say retirement, but enjoy your retirement from the Board. It's been a pleasure. And then finally, I just want to say thank you to the shareholders and the stakeholders, but particularly shareholders who supported us, some of you for a very long time. I know there's one or two in there that were -- came on board on the DPF days back in the early 2000s, but there's still some original PFI shareholders. So we appreciate your support. And now as a management and a Board, we look forward to continuing to repay that support as we go forward. Thank you.

Well done, Simon, thank you. There's now an opportunity for questions or comments on the presentations or on the financial statements and auditor's report, which you can find from Page 17 of the annual report. For those of you in person here, if you could raise your hand, we'll get a microphone to you so everyone can hear both in the meeting and online. Can you please start by introducing yourself, your name and whether you're a shareholder or a proxy holder. And if you're a proxy holder, the name of the shareholder you are representing. For virtual attendees, if you wish to ask a question, please select the Q&A tab, type your question in the box and press send to submit. Okay. Any questions in person in the room?

Hello, [ William Kains. ] I'm a shareholder. I noticed the directors own very few shares in the company. Is that a reflection I have no faith in the company?

I think I can easily answer that one. The directors who own shares in the company, be it $1, $1,000 or $20,000 or whatever $100,000 -- whatever it might be, is absolutely a show of faith in the company. That is why they have invested in the company. I myself invest typically a year's -- equivalent of a year's remuneration that I earn as a director in the companies that I am the Boards on. And I'm consistent with that across all businesses that I'm involved in. Thanks for your question. Next?

[ Michael Scharf ], shareholder. How did you manage to get President Mark [indiscernible] for you and PFI...

Well, we've got a special treat for you today. He's here in-person, and he will sign that for you, if you like. He's also known as [ Ewan, ] puts a few buildings up for us, manages a few tenants. Thanks, Michael. Yes?

I'm [ Bruce Parks, ] a shareholder. A very positive presentation. What are the major risks you see going in the future?

Thanks very much for the question, Bruce. What I'll do, I'll pass it over to our Chair of our Audit and Risk Committee to talk about the risks, if you like.

Bruce, nice to see you again. Yes, the major risk, as we put out in our report is economic and market risk, health and safety risk. We're building big buildings. We have big buildings, financial risk. And we also have insurance risk. You'd be aware that insuring $2 billion of property is getting harder and harder to do these days. So we monitor that. And there is one other strategic risk. Thank you. Strategic risk, we are very conscious we've got to get our investments in properties right, not just for today's tenants, but for future tenants, and that's a big push behind our Green Star rating strategy. So I think that covers...

Yes. Thanks very much, Carolyn, and it's a fine question. The reality is, the resilience of this business has been because the company understands its risks and addresses those and mitigates them where they can. But ultimately, we're operating in the market, so we need the right buildings in the right place with the right tenants and the right management team, which we certainly have. Thank you. Next. Is there any questions -- sorry, one more question here in the room.

My name is [indiscernible] a recent new shareholder. So I would like to ask yourself and the Board, how do you see sustainability beyond just carbon emission?

Well, I will start with that. You've just handed the microphone back to our sustainability manager. In fact, would you like to introduce yourself and Sarah and give you a brief overview. Clearly, we're talking about the buildings, where we build them, the environment that we're operating and what have you. But I'll let Sarah answer that for us.

Thank you. Yes, I think the approach we have tried to take is to make it more holistic than just carbon emissions. So I'm -- for those of you who haven't met, Sarah Beale, I am the Head of Sustainability and Operations at PFI.

And Sarah wasn't expecting to be answering the question, right?

So we have spent a lot of time thinking about what does sustainability mean for PFI, and we have gone through a few iterations of our strategy. But each time we do it, we sit down, we think about what are the really material things for the company in terms of our impact. So for PFI, because we are constructing buildings, absolutely carbon emissions is an important thing for us. And similarly, operating buildings, we know that the electricity use will have a lot of impact. So that is naturally where a lot of our focus is placed. But on top of that, we do have other things that we look at. So we understand that when we build and refurbish our buildings, there's material and waste impact. So we need to manage those. And we do that in two ways. We do Green Star buildings, which we've heard a lot about today. That framework includes thinking about what those materials are and how we can manage the waste. When we do our internal framework -- sorry, when we do our refurbishments, we have an internal framework that we work through, which also looks at materials and waste and how we can manage those. And on top of that, we think about people and well-being because we have a number of staff that work for us, a lot of people in our buildings, contractors that work for us. So we have a framework that sits around how we manage the health, safety and well-being for those people. So we've put quite a bit of work into trying to think about all of our material impacts and how we can manage them.

Excellent. Okay. Great question. That's called cutting out the middleman, go straight to the...

Also another question from New Zealand Shareholders' Association around sustainability, it might be useful to say that -- that's okay. But since the PFI has obtained limited assurance of Scope 1 and 2 emissions from PwC in FY 2025. However, Scope 3 emissions remain outside the scope of assurance and other climate disclosures are not yet verified. This leaves investors with only partial confidence in the reliability of the reported data and the NZSA encourages broader assurance coverage in future reporting cycles. Can you please respond?

Love to. So yes, as mentioned, we have assured Scope 1 and 2 emissions so far. There is a question mark over whether we will be required to do further assurance in future years. That's currently being consulted on, and we haven't got guidance at this point as to exactly what we'll need to do. And I guess the thing that we think about is when we're doing these reports, we want to put out really certifiable numbers for you all. So we put a lot of effort into checking all of the numbers. There's a huge process that we go through to ensure that what we put into those reports is correct and backed up with evidence into the rest of it. So we do put a lot of effort into that. And if we do go down the route of getting more assurance, I guess the thing that we have to balance is that additional cost and time for staff, which obviously does have an impact for our shareholders. And so just trying to find that right balance in the event that we do have the additional legislative requirement, which is still up in the air. So something that we will think about very carefully when that moment comes.

Thanks very much, Sarah. And for those of you who want to get a little bit of deeper learning on the sustainability strategy of the company, we've released our climate-related disclosure report to the NZX. It's a good meaty 50 page, I'd read, okay? So it's all there. Okay. Yes, please, Ant, yes, yes.

It's a really good question. And one of the challenges, so Sarah has really taken that from a company's point of view with a compliance hat on, and we do our very best to report information that's going to be helpful, your question really. The industry is really struggling, isn't it? The world is really struggling to get all this right because what's most important to the world is what we're doing proactively to try and make our business prosper, but in a way that works for the same but for the world that we live in and operate in. And you've got a business that's got an imperative to grow and perform for shareholders and you've got to manage your emissions down. And the world just is not getting that right in terms of how you measure and bring companies to account. So there's a compliance framework, but there's also an imperative in terms of your behavior and your commercial outcome framework. You've got to be out for the states moving backwards on renewable energy, that sort of stuff. So the world is really struggling. But we do our very best to try and get that right and report. Some of it's compliance, which really doesn't help the punter understand how well is this company actually doing in a growth environment, intensity measure stuff. So there's a reporting requirement, which we're really right on top of, but the world has got to get better and better at this stuff, and it's really struggling.

Thanks, Ant, for adding to that. Okay. [ Joe, ] just check, do we have any questions online?

Yes, sure. We've got another couple that you might like to answer, Dean.

Well, I will decide who answers. Thanks, Craig.

Ricky from the NZ Shareholders' Association has been quite active actually. We've got another two from Ricky. This one reads, the company does not participate in the IOD's future director program designed to develop and mentor the next generation of directors. NZSA expects NZX 50 companies to participate as part of the responsibility to develop and mentor the next generation of directors. Will there be any change in PFI's approach going forward?

Well, we'll note the Shareholders' Association's concern and question. And we do listen to the New Zealand Shareholders' Association. We respect their opinions. We respect their direction. At an appropriate time for the company, we may well consider, but it's not on our current work plan to bring another director onto the Board, be it a -- sorry, a future director onto the Board. But in time, we may well do so. So we'll see.

Great. And then as a further governance question, Ricky also asked, the annual report includes a collective skills matrix. NZSA prefers the matrix to attribute skill sets to individual directors to demonstrate how they contribute to the governance of the company. Can you comment?

Yes. It's an interesting one, this one. What the NZSA is asking is we put each director's name down with their own particular skills, whereas at the moment, we bundle the director skills and just present them to you. We back that up with the bios of each director, which is on the company website. So it's not a long bow to draw to look at the skills are in the matrix and read about the director if you're so interested to understand the skills and experience they do bring to the Board. We also put ourselves up for election and talk to those skills and experience. So we know what the NZSA has to say. We also have other shareholders who prefer it bundled. So for the time being, we've stuck with the status quo. Once again, these things are under constant review. We'll see what happens in years to come. Thank you.

There's nothing more online.

Okay. Any further questions in the room? One over here.

[indiscernible] I am a Shareholder. You've got an accumulation of properties in Neilson Street. Do you really see that you've got all of the properties there to develop further? Or are you really thinking in terms of adding to it before you start developing that?

Yes. Neilson Street, what a wonderful part of town, heavy industrial right in the lane for PFI. And I'm going to hand it to Simon to respond to your question.

Yes. For those who've tracked PFI over the last 5 years, we have been accumulating properties in and around Neilson Street. There's probably one last property that fits the jigsaw puzzle. I think in total, we've got nearly 6.5 hectares there, maybe 1 more to go. The properties we've brought allow us -- there's one right down the back, which is currently leased by Fletcher's, and they'll be finishing up on site in late 2027. So we've always had a view of redeveloping that site down the back in '27, '28. So the properties we bought in the last couple of years have allowed us to control easements and access in and off the site. So we're in a position where we can start redevelopment without whether we pick up the last one or not. But it's been a project of ours, not only Neilson Street, you would have seen in recent years, bolt-on acquisitions has been something that we've been focusing on. So it's -- yes, that's what we've been working on.

Thanks, Simon. Any other questions in the room? One more over here.

I am a shareholder [indiscernible] and when I see the last 5 years performance, it seems that the company has done very good because like the assets are almost same. So my question to anyone who is on the Board for more than 5 years that, was that expected in 2021, like whatever the company plans are, have the market help you in achieving those company plans and objectives? And what is your goal for the next 5 years? Because I think it's a dividend yield-based company for an investor. So for a retail investor, it's just the dividend yield that we will target, buy the shares from [indiscernible] the dividend yield. So what's the plan for the next 5 years? Will the dividend yield will be better than the bank equity or like that?

Okay. I might just hand it to our Chief Finance and Operating Officer to respond to that question. Did you pick that up, Craig?

Yes, that's fine. Thanks for your question. I guess when it comes to dividend yield, we always give out a sort of 1-year ahead forecast. So we don't tend to give a 5-year forecast. As has been mentioned in this presentation, last year, we went up around 3.5%. This year, we're forecasting another 3.5%. And I think if you look at the track record that we've had over the sort of last decade or more and the sort of recent activity, that's, I guess, what we're trying to signal towards is a company that's growing its dividend regularly at about that quantum. So yes, I think you could infer from that, that's what we're looking for, but we don't give formal guidance around 5-year plans or anything like that. I think the other part of your question was around we were a couple of billion. We've been 5 years long and you're sort of back to a couple of billion. Obviously, 5 years ago, we sort of came through that period, came through the COVID sort of times and everything like that. So portfolio went up quite a lot in value and went down a little bit in value over that time. We also sold a few assets, bought a few assets, these sorts of things. So again, we don't sort of, I suppose, forecast or publish a view about where we're trying to go in terms of asset value. But what I would say is we have a pipeline of development opportunities. It's around $350 million. So if we were to simply complete all of those opportunities and keep everything else the same, we would be roughly $2.5 billion at that point. So yes, the company plans to keep on trying to grow both its dividend and asset base whilst trying to maintain the appropriate risk settings. So when we think about risk, I guess the main one is around gearing, keeping that gearing under control for the benefit of all.

Well described and answered. Thanks very much. Thank you. Okay. Any last questions in the room? There appears to be none. Any further questions online? Okay. Great. We'll now move to the resolutions to be voted on today. I've been advised that 315 shareholders representing 159 million -- I'll better say, 159,468,779 shares or 31.75% of the company's shares on issue are represented by proxies. Voting for the resolutions will be conducted by poll. For the purposes 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 where required will be distributed now. Please put your hand up and let the Computershare team know if you require one. If you do not have a voting paper, please see a Computershare representative at the registration desk, who will provide you with the 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 their 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 on how to vote the resolution, please use the voting paper provided when you arrived at the meeting. After receiving -- after recording your vote, please remember to sign your voting paper, which would be collected by the Computershare team. Having collected the votes, they will be taken to a separate room for counting. The results of the poll will be announced via NZX as soon as they are available. Please note that the Board recommends that you vote in favor of each of the five ordinary resolutions. Turning to the resolutions. The first resolution is that Angela Bull, who retires and is eligible for election, be elected as a director of the company. The Board considers Angela is and will continue to be an independent director, if elected, and supports her election. Angela was appointed as a Director of PFI in February 2023. She is an experienced director and executive in property investment and commercial developments. Angela is also a qualified lawyer with significant expertise in environment and property law. There is a profile of Angela in the Notice of Meeting. Angela, would you like to say a few words?

Thank you, Dean. [Foreign Language] Good morning. Just ladies and gentlemen and shareholders, thank you for the opportunity to speak with you today as I seek re-election. I joined the PFI Board, as you've heard in February 2023 because I was really excited about the quality of the portfolio of assets and the strength of the management team. And as you've heard already this morning, this is a portfolio now running at 99.9% occupancy and has achieved consistent rental growth. It's a company to be proud of and one that we now talk about as being best-in-class. My background is in commercial property and law and after a number of years in the law firm environment, I was the General Manager of Property at Foodstuffs North Island for 10 years, responsible for buying land and building supermarkets. From 2016 to 2023, I was the Chief Executive of Tramco Group, which is a privately held company managing three substantial land portfolios and predominantly in Auckland and then across the North Island. Since the beginning of 2023, I have focused full time on governance, and I'm now a professional company director. I've been very mindful of joining businesses where I believe I have the skill set, passion and time commitment available to add value. I work hard at my governance career, and I ensure I've got the necessary time for preparation, professional development and attendance in all of my Board roles. I now have a complete portfolio as a director with three listed companies, including PFI and three private companies. I've had a career of adding value to business through property development, commercial solutions and working for results focused businesses of scale. This has really resonated for me during my time on the Board at PFI, where the wider industrial property context has had its share of challenges over the last 3 years, a reflection of the wider economy, but PFI has demonstrated throughout its resilience and strategic focus. By balancing development with a long-term focus on existing tenants and commercial metrics, we have seen reliable growth for shareholders and a high-quality property portfolio. I believe I can contribute to the Board and add value for you in continuing to deliver all of these things well. Thank you for your support.

Hold on. Thanks very much, Angela. The resolution is that Angela Bull, who retires and is eligible for election, be elected as a director of the company. Is there any discussion on this resolution? Anything online, Craig? Please mark your voting papers for Resolution 1 or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. Thank you. The second resolution is that Carolyn Steele, who retires and is eligible for election, be elected as a director of the company. The Board considers Carolyn is and will continue to be an independent director, if elected, and supports her election. Carolyn was appointed as a Director of PFI in August 2022. She has a background in investment management, capital markets and mergers and acquisitions and currently chairs PFI's Audit and Risk Committee. There is a profile of Carolyn in the Notice of Meeting. Carolyn, would you like to say a few words for us?

Thank you, Dean. [Foreign Language] Greetings, greetings to all the people and to the many chiefs gathered here today. It's my pleasure to stand for re-election to the PFI Board. I stood in this very spot about 2.5 years ago, and I noted PFI had a great team and a great portfolio. And I continue to believe that these two aspects will drive superior shareholder returns for PFI shareholders. So what do I bring to this team? Well, as Dean noted, my background is in finance, investment management and capital markets. My background includes a Bachelor of Management Studies. My qualifications include a Bachelor of Management Studies with first-class honors. And my professional background includes 10 years investment banking, where I worked on capital structure mandates and M&A transactions for large New Zealand and Australasian companies. I've also worked in investment management, where I've been responsible for acquiring and overseeing large Australasian companies. So these roles required me to exercise a really high level of financial and commercial judgment. And I think it's this judgment that stands me in good stead as a professional director over the last 9 years. So my current Board roles as well as PFI include ASX-listed Vulcan Steel, Oriens Capital, WEL Networks and also the ANZ Bank of the New Zealand branch. So in summary, I think my skills and experience suit PFI as a very large assets business, and I kindly ask that you support my election. And if successful today, I look forward to contributing to PFI's ambition to grow and to create value through active portfolio management, through really smart investment in development and through enhancing our operational performance. [Foreign Language] Back to Dean.

Thank you, Carolyn. The resolution is that Carolyn Steele, who retires and is eligible for election, be elected as a director of the company. Is there any discussion on this resolution? Craig, anything online?

Nothing online Dean.

Thank you very much. Please mark your voting papers for Resolution 2 or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. As the next resolution is in respect of my re-election, I would like to call upon our People Committee Chair, David Thomson, to chair this part of the meeting.

Thank you, Dean. The third resolution is that Dean Bracewell, who retires and is eligible for election, be elected as a director of the company. The Board considers that Dean is and will continue to be an independent director, if elected, and supports his re-election. Dean was Managing Director of Freightways Limited between 1999 and 2017. And since that time, he's established a strong governance career. Dean has been a Director of PFI since November 2019, and he currently chairs our Board. There's a profile of Dean in the Notice of Meeting. Dean, would you like to say a few words?

Okay. Thanks, David [Foreign Language] As David mentioned, I spent my career at Freightways, primarily in the transport and logistics sector. At Freightways, we lease many industrial buildings throughout New Zealand. We own some key -- throughout New Zealand and Australia, we own key strategic sites, and we develop some of our own buildings. I've spent a good deal of my working life in and around industrial areas of New Zealand visiting customers and doing business. I've worked in the same suburbs, in the same streets and often in the same buildings that PFI operates in. In addition to PFI, I also sit on the Boards of Air New Zealand, Port of Tauranga, Northport Group and the Halberg Foundation. I chair the Health and Safety Committees of Air New Zealand and Port of Tauranga, and I am a member of their respective people committees. The companies I'm involved with are ones where I have some affinity and interest. During my tenure at PFI, I've endeavored to bring the benefit of my knowledge and experience from the logistics and transport sectors in addition to the commercial realities of running a sizable business. I joined the PFI Board around 5 years ago with the expectation I was joining a high-quality company and team. I like it when a plan goes well, and this one certainly has. The business has shown real resilience as events in the broader market, including COVID, New Zealand's long-running recessionary environment where we're trying to drag ourselves out of and big swings in interest rates contributed to challenging marketing conditions. The resilience shown by this business over many years is a credit to this management team and to directors past and present. With regards to this Board of Directors, shareholders can rest assured they have high-quality representation compatible with the quality of this business. I've thoroughly enjoyed my time on the PFI Board. I seek your support today to continue as a Director of PFI for a further term. [Foreign Language] Thank you.

Thanks very much, Dean. So the resolution is that Dean Bracewell, who retires and is eligible for election, be elected as a director of the company. Is there any discussion? Anything online, Craig? Please mark your voting papers for Resolution 3, or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. And I'll now ask Dean to resume chairing the meeting. Thank you.

Thanks, David, and thanks, shareholders, for your support. The fourth resolution is that the directors are authorized to fix the fees and expenses of the auditors, PricewaterhouseCoopers. Is there any discussion from the room on this resolution? Craig, anything online? Please mark your voting papers for Resolution 4 or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. Resolution #5. The fifth and final resolution is that the directors are 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 review of the current level of director fees by Ernst & Young. A summary of Ernst & Young's report has been made available to shareholders on PFI's website. In requesting this review and setting the proposed directors' fees to be put to shareholders, the Board has also taken into account the increasing complexity, time commitments and responsibilities required of its directors at a Board and committee level, together with the performance of the company. The proposed rates are set out in the Notice of Meeting. And if Resolution 5 is approved by shareholders today, the set rates will apply from the close of this meeting. The fifth 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. Is there any discussion firstly in the room? Thank you. Craig, is there any discussion online?

No, Dean.

Okay. Please mark your voting papers for Resolution 5, or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. We will just give you all a moment to finalize voting, and then I will close the poll. [Voting]

All good? Okay. The poll is now closed. Thank you. Computershare will now collect the voting papers from shareholders in the room. The results of this vote will be released by PFI to NZX later today. Thank you.

We will now open up questions on general business from shareholders and proxies if there are any. If there is something you wish to put to the meeting, please raise your hand, and we'll get one of the microphones to you. A reminder to please state your name and whether you are a shareholder or proxy holder. If you are attending virtually, press the Q&A tab on your computer, tablet or mobile and then type and press send to submit your question. As mentioned earlier, we'll try to get to as many of the questions as possible, but not all questions may be able to be answered. In this case, questions will be followed up after the meeting, if we run out of time to address all questions -- sorry, that's all good. Any questions from the room? Yes, at the back, just microphone right beside you there.

[ John here, ] I am a shareholder. Why have we moved from Eden Park to downtown?

We were here last year, John. Wow, we were here. It's okay. It's okay. But....

I've been to everyone except last year.

Yes. I know we were here last year as well, John. But look, it's just come down to size and dollars, okay? Eden Park comes with a big bill. And whilst it's convenient for parking and all that sort of stuff, we know, we're just trying to keep this thing practical because it all goes to cost at the end of the day and impact shareholders' returns. Yes.

Okay.

Yes. Do we have any other general questions in the room? Anything online? Well, that's the case. Oh, we have one more question here. Good for you.

So I see that company is doing a bit of a borrowing also. So the question I think is for the finance field. So like I see there are some derivatives hedge for interest rates. So why -- my first impression is that company has a very good reputation because clients are from across the industry, people are preferring to take a lease with PFI. So how about exploring the borrowing in U.S. dollars because it might be cheaper, all I think -- or are all our bonds in New Zealand dollars only?

Yes, all of our borrowings are in New Zealand dollars. So that's, I guess, takes the currency risk out of things. You obviously could borrow in U.S. dollars and then take on currency hedging and these sort of things like that. But our preference is to keep it simple and borrow in New Zealand dollars. There's plentiful supply of New Zealand dollars available to us as a business. We get very competitive finance from a range of lenders, and we're very comfortable with that approach.

Thanks very much, Craig. Any other general questions in the room? All right. Well, I think we should all have a cup of tea. Okay. Thank you for your continued support of PFI and for your attendance today. That ends the formal part of the meeting, and I declare the meeting closed. For those here in the room, please feel free to join us for light refreshments and further chat. Thanks very much, cheers.