Region Group (RGN) Earnings Call Transcript & Summary

Welcome everybody. Good afternoon ladies and gentleman and welcome to Region Group’s 2024 annual general meeting. On behalf of the Board, I extend a warm welcome to all our security holders, proxies and guests participating in today's meeting. I would like to commence by acknowledging the traditional custodians of the land on which we are formally conducting this meeting, the Gadigal people of the Eora Nation. Recognizing that you may be participating in this meeting on land, with other traditional custodians, I pay my respects to the elders past, present of all of those nations. If we experience any technical issues today, a recess or an adjournment may be required, depending on the number of security holders being affected. If this occurs, I shall advise you. My name is Steven Crane, and I'm Chair of the group; and I have been appointed as Chair of this meeting. This afternoon, we are simultaneously holding meetings of Region Management Trust and Region Retail Trust. And for the rest of this meeting, I will refer to the business of each trust conducted as one meeting. I'd like to introduce Region's independent directors and senior management who are joining me here today: my fellow independent directors, Beth Laughton, Angus James, Michael Herring, Antoinette Mills -- Milis. Sorry. And Belinda Robson, who is an independent director, sends her sincere apologies. She's unable to join today's meeting. Anthony Mellowes is our Executive Director and Chief Executive Officer. Erica Rees is our Chief Legal and Investment Officer and company Secretary. And also in attendance is Yvonne van Wijk from the group's auditors, Deloitte Touche Tohmatsu, Yvonne. We also have representatives from the group's registry, Link Market Services, joining us today. And Link will be moderating the webcast platform. I've been informed by our company Secretary that a quorum is present, and I declare the meeting open. The agenda of the meeting for today is as follows: I'll have my address as Chair; the CEO's address; the formal business of the meeting, which includes the resolutions of the meeting; and general business/questions. My presentation today will cover the following: Region's financial performance; key priorities and outlook; financial, value creation and growth opportunities; and governance matters. We are committed to delivering defensive, resilient cash flows to support secure, growing long-term distributions to our security holders. This hasn't really changed. Region's adjusted funds from operation or AFFO was $0.136 per security, which is a 1 -- 11.1% decrease compared to $0.153 per security in financial year '23. The decrease in AFFO per security is primarily due to the increase in our weighted average cost of debt from 3.4% to 4.3%. I think an increasing interest rates environment that we had in that year is well documented. Notwithstanding the macroeconomic conditions of continued rising inflation, Region was able to achieve 3% comparable net operating income growth. And distributions to security holders totaled $159.2 million or $0.137 per security. At the end of financial year '23, Region identified approximately $200 million of noncore retail shopping centers for potential divestment. And since then, Region has successfully sold 8 centers for $177 million at an average passing yield of 5.3%, with a further divestment contracted that is scheduled to settle December this year. Completing our disposal -- this now completes our disposal program. The proceeds of the divestments were reinvested into higher-yielding opportunities, which I'll touch on in more detail later on. Despite a quieter period for acquisitions, Region remains ambitious to grow the portfolio. Our shopping centers form an essential part of daily life for many Australians. And in May, we were pleased to acquire Cooleman Court, which has extended our reach into the Canberra community for the first time. And as one very diligent unitholder pointed out, Cooleman, okay, it's in Canberra; is east of [indiscernible], not west of [indiscernible], which we say in the annual report, so congratulations. We put that there for somebody to find [indiscernible]. The neighborhood center is anchored by Woolworths and ALDI supermarkets, with Woolworths currently upgrading, expanding its store. Over the year, our portfolio weighted average capitalization rate softened from 5.85% to 6.07%, which drove a like-for-like fair value loss on the revaluation of our investment properties of 17.4 -- $74.4 million. Despite the revaluation loss and accounting for divestments, Region recorded an accounting profit of $17.3 million. Whilst increased cost of debt and inflation has impacted the group more recently, Region has delivered a 206% total shareholder return since its inception in 2012. This performance is in line with the index. I'll now turn to our key priorities and outlook. At the heart of our strategy is our customers. This means the places we create will deliver both a practical and positive experience, as we work to be the first choice for essentials at a place nearby. We know that, through delivering customer value, we deliver security holder value. In our pursuit of delivering strategic pillars, we aim to ensure defensive, resilient cash flows to support secure and growing long-term distributions to security holders. And hopefully, the worst of the interest rate environment is behind us, but you never know. Our operational priority is to generate sustainable net operating income from our core assets. We will do this by securing rental growth from our specialty and mini major tenants; leveraging our scale to maintain controllable expenses; working with our supermarket tenants to strengthen their offering and generate turnover rent; investing into our existing assets to enhance the customer experience and drive tenant sales, and Anthony will certainly talk more about that later; continuing on our path towards net zero scope 1 and 2 by financial year '30. Our balance sheet is strong and positioned for growth. At the 30th of June 2024, our gearing was 32.9% and we had $262.4 million of cash and undrawn facilities available. Following the refinance of 2 bank facilities in financial year '24, we are pleased to note that we have no debt expiring until financial year '27. At June 2024, 94% of our debt was hedged. And we have increased our hedging to 96% in 2025 to further mitigate our earnings from the potential for increasing interest rates. As I previously mentioned, Region has nearly completed a capital recycling program of $177 million worth of properties divested to date, with one remaining property divestment to be settled in December. The proceeds from these divestments have been and will continue to be reinvested into strategic opportunities such as acquisitions, developments, partnering with our supermarkets, sustainability and reinvesting in our existing portfolio. This year, construction continued on the 11,000 square meter expansion of Delacombe Town Centre in Ballarat, Victoria, which will deliver a large-format retail precinct to complement the existing sub-regional shopping center. The project is estimated to -- completed in December '24. I think it will be -- at the completion, it will be one of our largest assets. Region is committed to investing with our supermarkets to drive sales growth and turnover rent. At the end of financial year '24, we have 78 direct-to-boot and e-commerce facilities across our portfolio, with a further 6 currently being commissioned. Finally, our center repositioning project is underway. These projects align to our purpose, supporting better communities through life's essentials, by focusing on the right tenant mix, category curation, space optimization and importantly our customer experience, to drive asset values higher. The Board remains committed to our key objective, which is to deliver secure and sustainable earnings and distributions which grow over time. And importantly, we believe we have the right management team to deliver that outcome to security holders. As [ I ] foreshadowed at the 2022 AGM, Belinda Robson will not be standing for reelection at next year's AGM, having joined the Board at the time of our listing in 2012. The Board has commenced a search for a new director, which is very well progressed, and we expect to be able to make an announcement shortly on that appointment. And finally, on behalf of your Board and management team, I thank you all for your continuing support. And I'll now hand over to Anthony to give you more detail. Thank you.

Thanks a lot, Steve. And good afternoon, ladies and gentlemen. My name is Anthony Mellowes, and I'm the Chief Executive Officer of Region Group. I'd like to run through some of our key achievements for FY '24 and an update on our outlook for FY '25. As Steve mentioned, we did deliver funds from operations of $0.154 per security, which was a decrease of 9% on the prior financial year. Our distribution paid to security holders was $0.137 per security. This represented a payout of 101% of our adjusted funds from operation. And with portfolio valuation stabilizing during the second half of the year, we were able to achieve a statutory net profit after-tax of $17.3 million, as compared to the statutory loss after-tax of $124 million in the prior year. Our operational performance was very strong during the year, with our occupancy increasing to 98.1%. A record number of leasing deals was achieved at 4% average uplifts, also into a really resilient nondiscretionary specialty sales group of tenants. Our pro forma gearing was 32.3%, which is at the lower end of our target range of 30% to 40%. And our weighted average cost of debt was 4.3%. As Steve mentioned, we have completed our $200 million disposal program. And we just need to settle on a last one, which was contracted quite recently. With respect to the portfolio overview. As of the 30th of June, our portfolio comprised 13 sub-regional and 79 neighborhood retail properties, which are located in all states and territories across Australia. We also manage, at the moment, an additional 7 neighborhood retail properties for our Metro 1 fund, which is a JV with a global institutional investor, which is GIC from Singapore. Since the 30th of June, we have completed the divestments of the 3 centers which formed part of the capital recycling program, bringing our total portfolio to 96 properties under management. Nearly half of Region's income is from anchor tenants such as Woolworths, Coles, Kmart, BIG W, ALDI, Bunnings. These are long leases with an average weighted expiry of more than 7 years, which contributes to rental income security. In recognition of the importance of our anchor tenant to Region's business, we continue to partner with Woolworths and Coles, particularly at the moment facilitating direct-to-boot or click-and-collect convenience opportunities. Online sales are included in 97% of our supermarket turnover rent calculations, and as these total supermarket sales grow, we will be also positioned for future rental growth. Our operational performance as of the 30th of June. The portfolio of these convenience-based retail centers has proved really resilient with its high-quality mix of supermarket anchored retail partners and our focus on nondiscretionary retail specialties. In FY '24, our comparable moving annual turnover sales growth was 2.5%. And our supermarkets continued to perform well with sales growth of 3%, which is in line with the long-term averages for the sector. We have 50 anchor tenant leases in turnover rent, with an additional 24 anchor tenant leases within 10% of thresholds. We've also strategically benefited from our focus on nondiscretionary specialty tenants. This means that our shopping centers offer goods and services that are fundamental to the everyday lives of our customers regardless of the economic conditions. This is day-to-day everyday spend. We focus on having the right tenant mix for everyday essentials. This means we have specialty tenants such as food, which -- fast food, restaurants, butchers, bakers et cetera; hairdressers; gyms; post office; pharmacies; and health care offerings to complement your shop at the supermarket. By incorporating these tenants into the portfolio, we ensure a steady stream of foot traffic and stable revenue, as these business are less susceptible to economic downturns compared to the more vulnerable discretionary retailers. This diversification helps mitigate our risk and provides a solid foundation for our consistent performance. This was evident this year. And the sales figures reinforced the resilience of our nondiscretionary specialty tenants despite the fluctuating market conditions. This year, these nondiscretionary sales grew by 4.1% from our nondiscretionary specialty category. Our tenant health remained strong, with our occupancy costs stable at 8.8% and our arrears at 1% of billings as of the 30th of June. A combination of these factors has assisted our leasing team in achieving the strong results. All of our leasing is done in house, and during the year, we completed a record 552 leasing deals. We retained 83% of our tenants upon expiry during the year, and we achieved an average uplift of 5.2% on renewal deals. The total average (sic) [ total average uplift ] across all specialty leasing deals was 4%. And specialty vacancy rates also improved from 5% down to 4.7%, which is our lowest specialty vacancy rate since FY '16. With respect to sustainability. During the year, we did reevaluate our sustainability strategy to prioritize the longer-term resilience of Region and its sustainable future. As a result, we've reaffirmed our emphasis on the following pillars, which is climate; nature; essentially local; diversity and inclusion; and health, safety and well-being. And we've also introduced the additional pillars of procurement, transparency and accountability. Each of these pillars demonstrate Region's values and commitment to deliver positive change. At Region, we accept that climate change is happening and as -- and is influenced by human activity. We recognize the need to play our part in reducing carbon emissions and energy use, to help reduce the climate risks to our centers and to the local communities. We have made significant progress towards our sustainability goals and targets as we continue to support Australian communities by providing access to fast and easy essentials at a place nearby. To date, Region has solar panels installed and operational at 29 centers, totaling 16 megawatts across the portfolio, with an additional 8 sites currently under construction. During the period, we've also confirmed our net zero scope 1 and 2 greenhouse gas emission strategy beyond FY '26 and thereby reconfirming our plan to achieve the net zero scope 1 and 2 greenhouse gas emissions by FY '30, but we think we'll do it a lot earlier than that. The commitment is '30, but we'll do it sooner. To emphasize the importance of the renewable energy sources for our business, we've included an emissions reduction target in the FY '24 and FY '25 executive short-term incentive plans. We are essentially local, and together, we build thriving communities. With shopping centers across all states and territories, our performance is significantly influenced by the economic sustainability of our communities. Our goal is to be a trusted and positive contributor to the communities that we operate in, to support the prosperity and create long-term value for all of our stakeholders. In FY '24, we held 844 stronger community events at our centers, an increase from 555 in the prior year. These initiatives address local community needs and support the biggest social and environment issues facing Australian communities. We're also pleased to announce the renewal of our partnership at a corporate level with The Smith Family for an additional 3 years. And since our collaboration began in 2020, we've invested over $360,000 to support the education of young Australians facing disadvantage. This ongoing partnership underscores our dedication to creating meaningful change and fostering opportunities for a brighter future within the communities that we serve. With respect to diversity and inclusion, our shopping centers serve Australians of every background. And it is important to Region that this diversity is reflected in our workforce. This year, we remained a gender-diverse workforce at our centers and also at the Board level as well. We're committed and open regarding our climate responsibilities. With the introduction of sustainability reporting standards and the mandatory reporting requirements, it's imperative to provide a -- clear and comprehensive disclosures related to our climate risks and opportunities. Embracing transparency ensures stakeholders have access to accurate information. We plan to fully align with the Australian sustainability reporting standards by FY '27 while focusing on government, financial impacts and uplifting controls in relation to the climate risks and opportunities in FY '25. In terms of our key priorities and outlook. Our strategy of delivering defensive, resilient cash flows to support those secure and growing long-term distributions has remained unchanged since our listing on the ASX in 2012. The outlook for neighborhood nondiscretionary retail is particularly promising, bolstered by several key factors which are shaping the Australian market. Firstly, Australia's growing population is driving an increase in demand for essential goods and services. As more people move to regional areas and suburban neighborhoods, the need for convenient access to those nondiscretionary items such as grocery, health care and everyday necessities intensifies. Secondly, the current landscape of increased construction costs is constraining the supply of new retail space. As a result, the limited new supply of retail space enhances the value and appeal of existing centers. Together, these factors contribute to a robust outlook for neighborhood and nondiscretionary retail. The combination of population growth and constrained new supply ensures that existing retail centers are really well positioned to benefit from that sustained demand and potentially higher occupancy rates. Our priority is to continue to deliver those -- that comparable net operating income while serving local communities for their everyday needs. The first tranche of our center repositioning projects is underway, where we plan to spend $35 million across 3 centers. In FY '25, we'll continue to reinvest in our centers through these projects, which align with our purpose, supporting better communities through life's essentials, by focusing on the right tenancy mix, category curation and space and the customer experience optimization to drive value, as Steve also mentioned. Our balance sheet is strong and positioned for growth, with gearing at the lower end of our range and interest rate headwinds limited in FY '25. Over the next year, we're going to continue to maintain a disciplined approach to acquisitions and any other transactions. A couple of months ago now, we were really pleased to announce the establishment of our Metro Fund 2 with GIC, which is a global institutional investor. This transaction will double our funds under management to almost $700 million. And our focus during FY '25 is to stabilize this new fund within our -- with our joint venture partner. Finally, we're going to continue to invest in our centers and with our anchor tenants, predominantly Woolworths and Coles, to provide the best offering to those local communities that we serve. Thank you for your time this afternoon. I'll now hand back to Steve.

Thanks, Anthony. Ladies and gentlemen, the resolutions for consideration today may only be voted on by security holders and proxy holders and security holder company representatives. Security holders participating in person or online will have the opportunity to ask questions or make comments on each matter put to the security holders. We do not have any security holders registered to ask questions by phone. I have been informed that the notice of meeting was sent or made available online to all registered members within the notice period required. I now table the notice of meeting, and unless there are any objections, I'll take the notice convening this meeting as read. I remind that we are simultaneously holding the meetings of Region Management Trust and Region Retail Trust. And although only one resolution will display on the presentation slides and you will be asked to vote only once on each resolution, your vote will be taken as a vote for each trust. Voting on the resolutions will be conducted by way of poll. In accordance with the Corporations Act, as Chair of this meeting, I demand a poll on each resolution to be considered in this meeting. And for those security holders participating in the online portal: You will need to register your vote by clicking on the "get a voting card" button at the bottom of your screen. Once you have registered, your voting card will appear with all the resolutions to be voted on at the meeting. And you may need to use the scroll bar on the right-hand side of the voting card to view all the resolutions. Following the voting, general business questions will be taken. [Operator Instructions] Voting will close 5 minutes after the close of this meeting. Security holders attending the meeting here today may vote using the voting cards provided from Link registration desk. Members who are entitled to vote should have received a yellow voting card. And members who have voted before the meeting should have a blue admission card. Those in possession of either a yellow or a blue card are welcome to ask questions, while those with a red visitor card are requested to only observe during the meeting. If you have not received the correct card, please go to the registration deck -- desk, where a Link Market Services representative will assist you. I will endeavor to give all members who wish to ask questions or make a comment a reasonable opportunity to do so. I ask that you please keep your questions or comments related to the matter at hand and as succinct as possible, to allow all participants an opportunity to ask questions, which I would ask to be limited to 2 per participant, please. If you wish to ask a question, please come to the microphone at the front of the room, which is on this -- on my left here. Before asking your question, please identify yourself and confirm that you are a security holder or a duly appointed proxy for a security holder by displaying your voting card. General business questions received from security holders prior to the meeting will be addressed during the general business questions period. We have -- just to be clear: Through our addresses, we've tried to actually answer the questions that we got ahead of the meeting, so hopefully, for most people, those have already been answered. Each resolution as set out in the notice of meeting is an ordinary resolution and, as such, to pass, must be approved by a simple majority of the votes cast by security holders entitled to vote and voting on the resolutions. I demand a poll on all resolutions, as I said. And you should record your vote by selecting for, against or abstain squares for the relevant resolution shown on the paper -- on your voting card when I put each motion to vote. Voting cards will then be collected at the end of the meeting, and the votes tallied. We will announce the results of the vote to the ASX following the end of the meeting. If you have any -- if you have to leave before all resolutions are voted on, you may provide your completed yellow voting cards to a Link representative on your way out. I will now open the poll. I appoint Link Market Services as scrutineer for the poll. And in accordance with the Corporations Act, each member will have one vote for each dollar value of the total Region shares held by them. Link have the details of this value per security. I've been advised by Link that all proxies received have been checked. And those that have been found to be properly completed, I declare valid for voting at this meeting. I will disclose proxy votes on the screen prior to the vote being taken for that resolution. These figures will be as at closing time for receipt of proxies, which was 2:00 p.m. on Friday, the 11th of October. That is last Friday. These figures may change if a security holder who previously submitted a proxy has joined the meeting today and revoked their proxy. We will disregard any votes cast on the relevant resolution by those persons set out in the voting exclusion section of the procedural notes section to the notice of meeting. I remind the meeting that the Chair will vote any undirected proxy votes in favor of all resolutions. All voting by the Chair is subject to the voting exclusions detailed in the notice of meeting. The first item of notified business is to consider the annual financial report, directors' report and auditor's report for Region Group for the financial year ended 30th of June 2024. There is no resolution in respect of this item of business, but if there are any questions or comments on the annual report, you may submit them now. For this item and for all those that follow, may I request you take the time to identify yourself before asking your question. And in the case where you are a proxy holder, please identify on whose behalf you are holding the proxy. Are there any questions or comments on the management of the group or the financial statements or reports? Yes, a question over here...

Yes. [ Charlie Kingston, ] a proxy for [ Ocean Capital ]. Just a question regarding the longer-term performance of Region. In 2018, I think distributions per share was around about $0.14. 2019, it was $0.147. Similar numbers for the AFFO per share. You've just guided, I think, it's $0.137 on both metrics, so it's clearly going backwards over a very long term. And throughout that period, I think you bought about $1 billion of assets; and that's net of all the recycling. You spent a lot of money on CapEx. All those acquisitions, including the recent one, you've said, were accretive at the time, but clearly they haven't been, given that the per share metrics have gone backwards. And Anthony, I think you always like to tell the market that you don't need to grow for growth's sake given you're internally managed, which is why we like Region, unlike some of your externally managed peers, but clearly you have grown a lot. And it hasn't delivered on a per share metric. It's actually gone backwards. I know that debt costs have gone up marginally. And you've raised some money. I think it was in 2020, but on your specialty rents, they're a lot higher than 2019. Your MAT has gone up a lot, so I'd just appreciate if you could explain why, on those 2 critical per share metrics, despite buying over $1 billion in new assets and growing, those 2 critical metrics have actually gone backwards. Because going forward, again, you've started buying again. You've got -- you, Mr. Chair, you said you want to keep growing the vehicle, but the growth hasn't worked over 5 or 6 years, so I'd just appreciate your thoughts why it's going to...

Well, I think, first of all, our -- I think our last year number was $0.154, I think, before this year. And so we have been growing fairly well up till there, I think. Our growth is never -- like we're a very steady grower rather than an aggressive grower. And then as is well publicized and, I think, we've tried to make very clear in our commentary, debt costs rose quite dramatically in the last 12 months. That was the principal cause of us going backwards during this year. And there were other costs that were -- as a lot of people would be aware, there's been a lot of services inflation in the economy. Forget -- it's like goods inflation, but this is services inflation. So those factors, but primarily the interest rate costs have been a major factor in what's happened. But Anthony, do you want to make some other comments?

Yes, on -- so there's a couple of other thing. For the $1 billion, we have also raised capital -- for the $1 billion of acquisitions, we raised capital with that, so it's not we just bought $1 billion and not raised any capital. So that offsets there a little bit. Then obviously we were hit with COVID. And the property -- retail property industry had a code of conduct that we had to give rebates, et cetera, to tenants, so that actually occurred during sort of '20 and '21. There was a rebound in '22 and then it's basically been the interest rates there. We feel, from here going forward, that interest rates, as Steve mentioned earlier -- weighted average cost of debt was 3.4%. We had one of the lowest costs of debt in the sector, which everyone said we've done a great job on. Unfortunately, when interest rates rise, you've then got further to go. And so we were coming -- we've got to catch up even more. And that went up to 4.3% weighted average cost last year. I think we're forecasting...

[ Speak in the ] microphone, please. [ We can't hear you ].

Sorry. Here we go. Then we've got -- interest rates have gone up from 3.4% to 4.3% in this last year. Next year, we're forecasting it to go up to about 4.4%, 4.5%, but we feel that we are back to growth after basically the 2 issues of COVID and then the interest rate increases. Arguably, we could have had much higher hedging for a lot longer at the bottom of the market, but not a lot of people do that either, so I think, from here out, we are [ bound ] back to growth. And we don't buy centers for the sake of buying centers. The Cooleman Court asset that we just bought, that is accretive for us. It's we bought that at 6.75% cap rate. Although, it was announced at 5.75%, but when we strip out the costs that Mirvac had in there, it actually is 6.75% for us. So it is accretive, but we are being very disciplined and selective about what we do by. There's a lot on the market to buy, but we're not buying for the sake of buying.

Yes, but all that $1 billion was [ net of the sales that ] you made. I think you're buying a lot of assets in the 5% sort of cap rate mark, which every time you bought an asset, you said it was accretive, so I would have thought, over that 6-year period, you should be well ahead. Or you would have forecast that, even if debt costs do rise, you should still be making longer-term accretive acquisitions, but it hasn't delivered, for whatever reason. But -- and there may have been 2 years where it's going to be flat based on the guidance, but maybe that's just a comment. And then a second question, just around that again one of the other deals of Region is the low MER, again a lot lower than the externally managed peers, but some have said in the market that a lot of your overhead actually gets attributed to the property level. There's a lot of technology costs that you capitalize that aren't included in that overhead, so 38 basis points may actually be a bit higher. If you adjust for those, I think your property-level costs are around about 35% relative to your rent, which has gone up significantly over recent years. And it's certainly higher than a lot of your listed peers, so just if you could comment on if any of those overheads are getting allocated to the property level or if that 38 basis points is fair and also if that 35% sort of cost-to-rent can come down over the coming years or if that's a new sort of base.

Evan, do you want to -- we'll ask Evan, our CFO, to answer...

Evan Walsh, CFO. So the management cost, the MER we're talking about is actually us managing the business, so it's management team. There is internal members of staff that are allocated to property level, but they are property-related costs. So you've got teams like operations, investment management, asset management and teams that have been external beforehand, so -- and that's entirely in line with all of our peers in terms of how they would allocate those costs. The other thing that's sort of happened over the last couple of years, and Steve alluded to this, is inflation has been higher than what it has been in the past. About 1/3 of our property expenses are related to salary and wages. And we did see some minimum -- some of the minimum increases in salary and wages increase up 7% last year, so we've sort of been going through that. We expect that the property expenses will start to moderate going forward. And the management expense ratio will stay roughly about where it is now.

Okay, thanks, Evan, yes. I think it's been -- there's just no doubt that the last 18 months or [ whether those ] 2 years has been a fairly challenging one. I don't think we've had that situation on our own. It doesn't mean we accept it without question. We have a lot of discussion about costs, about the assets we're buying, the quality of those assets, our weighted cost of capital; and therefore making sure that whatever we buy does appear to be above that. Obviously, a few years ago, with interest rates so low, our weighted average cost of capital was quite a lot lower, so -- and we've always said that we are, in general, subject to having a really strong view to the contrary. We are buyers of assets through the cycle, so we're trying to actually buy and grow the company through the cycle because a lot of our investors don't want to see us as market timers too much. We do -- we obviously do a bit of it because that's our professional duty, but by and large, we're trying to be in the market over the long term because they want to see our business. And I've personally sat with a number of our major investors. And they seem to be pretty comfortable with that strategy, so -- but thanks for the questions. And it's we always need to keep ourselves attuned to the issues out there. Any other questions in the room? Yes, sir?

[ Kazim ]. I was the -- one of the very first meeting, I asked whether we had any solar panels on our roofs. And I think you remember that well. Do we have any shopping centers now that don't have solar panels on their roofs?

Yes. We've probably -- we've got about 90 shopping centers. We've got solar panels on roughly 40. So there are still -- there are some that can't have solar panels because they're in...

[ It's in the nature of the building ]...

Yes, but not all will. But there is opportunity still for more. I mean we've got 16 megawatts, as I said in the paper that -- or in my speech earlier. We've got another basically 4 in design and construction, to take it up to sort -- 4 to 6, to take it up to 22. Our target is to get to 25, but we've probably got capacity, if we did it everywhere, of 40, 50 megawatts. But it's got to be commercially viable.

Yes, yes, of course. No, no, I realize that. I think it's very important that we are doing what we are. And I think, at the very first one, I did raise that question. And Mr. Clark, who was at the intercom in the first meeting, he said it was a good idea. And what we started off was tendering, but I believe that you took it in house now. And savings are then passed on to the people under contract or lease or whatever, which I think is a terrific idea, making it more attractive for people to be there. And they're helping the environment as well as helping the business and their own business and our business, which is great. I apologize. I was late. I was across, in the Telstra building -- meeting. And I -- there was a lot -- I had a lot to say there because of the problems there. And it's been going since the first meeting with Sol Trujillo, [ the American ], in your FaceTime. CEO, he was, then. I met him at Stanford about 5 years ago, saw him in the lift. I said, "Sol." And he said, "Yes." And he comes out and said, "Where did we meet?" I said, "We met at -- in Melbourne, at the Telstra meeting. I said, "When you left, the share price was $2. It's now [ $6.70 ]." And he said -- well, the dean of Stanford school was there. He smiled. He didn't know what to say. And he said -- I met another lady in the United States, from Adelaide, that -- she also recognized him and said -- gave him a piece of [ his ] mind, so -- you're doing a good job. And keep it up.

Thank you. Thank you very much.

Thank you.

Okay, any other questions from -- in the room? No. Moderator, do we have any questions on the online portal?

Chair, there are no questions at this time.

Okay, thank you. All right, are there any questions -- this is a time when -- given we're talking about the account, are there any questions or comments relevant to the conduct of the audit or the preparation and content of the auditor's report for the directors or the auditor? And as I've mentioned earlier, we have the auditor here, if there are any questions. Any questions in the room for the auditor?

[indiscernible].

Deloitte...

[indiscernible]...

Yes, yes.

So I mean, given the [ role of the poll ] consultants, I've been very disappointed, I might say. And I hope things have improved within those [ poll ] consultants. And I hope we are not badly or adversely affected by [indiscernible]...

I don't think so.

[ They have some ] strategic advice.

Yes. Well, I think, in the areas that they're responsible for giving us advice, I think we've been well served. So thank you. Are there any questions online?

Chair, there are no questions at this time.

Thank you. All right, so then we'll move to the first item of business, which is resolution -- or the first resolution, which is the adoption of the remuneration report. The resolution is displayed on the screen, and I'll take it as read. Is it -- yes. I hope that it's readable. This resolution is an advisory nonbinding ordinary resolution and does not bind the directors of Region RE Limited. And on behalf of the Board, I would like to take this opportunity to thank the Remuneration Committee Chair, Angus James; and each of his members for all their hard work that they've done. I would now like to hand over to our Remuneration Chair, Angus James, to present the report. Angus?

Thank you, Steve. And good afternoon, everyone. I'm pleased to present the 2024 remuneration report to security holders. The FY '24 remuneration report contains details of executive key management personnel remuneration, including their FY '24 short-term incentive, the FY '21 long-term incentive which vested recently in August '24; and includes summary, a summary, of the key executive's management personnel remuneration changes for FY '25. In respect of the short-term incentive or STIs for FY '24, the Board directed key management executives, I'll just refer to them as executives herein, to continue to focus on adjusted funds from operation per security or AFFOPS and growth in comparable net operating income or comparable NOI. These conditions represented 70% at maximum of the STI opportunity in FY '24. The reason for this focus is that both AFFO and comparable NOI growth was and remains critical to delivering and returning to growth to -- growing shareholders' distributions and security value. In the face of challenging macroeconomic pressures in the form of increased interest rates and rising inflations and their impact on property generally, the executives achieved FY '24 AFFOPS of -- with a 40% weighting, of $0.136, which was below threshold; and comparable NOI growth of -- with a 30% weighting, of 3%, which was in the midst between threshold and maximum. The other 2 STI hurdles, being carbon emission reduction, with 10% weighting, was assessed at maximum, reflecting strong progress towards our net zero carbon emissions for scope 1 and scope 2 greenhouse gas emissions in our operations by FY '30. Individual nonfinancial STI metrics, with 20% weighting, were assessed separately for the CEO and CFO. And the overall STI awarded to the Chief Executive was 43% of maximum and for the Chief Financial Officer was 37% of maximum. In regard to the FY '21 long-term incentive or LTI, which was [ tested ] shortly after FY '23, with performance conditions being relative total security return or relative TSR and growth in AFFO per security. The performance hurdle in relation to TSR tranche, weighted at 60%, was only partially met; and this tranche was awarded at 6.9% of maximum opportunity. The AFFO per security tranche, weighted to 40%, was achieved at maximum; and this tranche was awarded at 100%. After allowing for the different weightings and achievements, the FY '21 LTI tranches, the award was 44.1% of maximum LTI opportunity. These awards vested 1 year after deferral. That is August '24. As you will have seen from the remuneration report, the executives received a 4% increase in their total fixed remuneration from 1 October '23. And nonexecutive directors received a 3% increase from 1 January '24. A market-based review has been recently undertaken to ensure the remuneration framework for executives remains competitive and fit for purpose going into FY '25. The market review indicated that executive KMP remuneration is below primary benchmark of our comparable peer group, and this has been taken into consideration in setting the FY '25 executive KMP remuneration decisions. While the changes to total fixed remuneration for FY '25 will be the subject of the FY '25 remuneration report, we advise, as a result of this benchmarking, the CEO and CFO are forecast to achieve a 10% and 5% increase in total fixed remuneration, respectively, from 1 October '24. For '25, we also made some changes to the STIs and LTIs, which is set out in this year's remuneration report. For the STIs, the main changes are to lower the weighting for AFFO per security and growth [ in the ] comparable NOI conditions from a total of 70% to 50%. This has allowed us to introduce 2 new measures, being capital management and deployment and growth in funds under management, to better align management to the operational focus agreed between the Board and management for FY '25. Capital management and deployment involves maintaining our strong balance sheet while investing in our centers. Growth in funds management is a set management goal to execute a planned expansion in the group's fund management business in FY '25. Both these measures will greatly assist in securing and growing security holder returns in future years by increasing comparable NOI and AFFO per security. For the LTIs, we updated the relative TSR component to -- of the assessed group consisting of Region's primary market competitors, which will allow greater alignment to the -- for the peer group which we compete [ for with ] capital. While with the AFFO component we have lowered the AFFO per security growth threshold to 2% from 3% in FY '24, the lower growth threshold is to allow and to encourage management to focus on center refurbishment and positioning, which will increase -- which will decrease earnings in the short term, in addition to considering the possible impact of interest rates and hedges maturing and the impact of inflation on certain costs necessary for good management of Region's centers. Our policy at Region is to reward executives fairly and for a job well done. We also want to attract and retain a high-caliber executive, so we must be competitive. Therefore, to make sure we recruit and retain the highest-quality talent, we motivate our executives to achieve the best they can through setting targets which are aligned in the best interests of all security holders and then hold the executives to account to ensure they meet those targets. In addition to their base salary, a large component of the total remuneration opportunity is at risk for our executives and represents the maximum they can achieve. If they don't achieve the targets we set, then they will not receive full remuneration opportunity described. We believe this is approach -- this is an appropriate approach to ensure our executives are focused on achieving the short- and long-term goals of Region set by the Board. We believe our remuneration framework aligns shareholders' -- or security holders' interest with those of senior executives to provide security holders with an outcome that is reflective of the current market environment. And we'll not hesitate to adjust the remuneration framework if we feel it no longer is relevant to Region's goals. On behalf of the Remuneration Committee, we look forward to your ongoing support in achieving the best results for security holders in FY '25. Thank you.

Thanks, Angus. I would now like to open this item for discussion. Are there any questions or comments in the room? Yes. Would you like to come -- unfortunately, we've just got the one mic.

[indiscernible] you would hear it. [ I'm certainly going to say it would be great if you can just have the points coming up that you're saying in your speech, I mean on the previous year's ], on the screen because it means that you will remember -- if you see it...

Okay. Well, we actually -- we do take note of all of these suggestions, so we will definitely be -- yes, it's okay. So thanks for the suggestion. It makes sense to me, so yes.

[indiscernible].

All right, okay. No problem. Okay, any other questions from the floor? No. I would like -- is there any -- moderator, do we have any questions in the online portal in relation to this?

Chair, we have 2 questions. The first is from investor [ Celestine Akerick ]. Why is the Remuneration Committee so generous to KMPs when ordinary stockholders receive [ poultry ] dividends?

Yes. Look. It's -- I mean I understand. I know it's -- I don't want to be too trite or too clever. Yes, I understand, but we're in the business of making sure the company is well managed and appropriately guided as is possible. And one of the things that [ you ] need to do as part of our responsibility to you as unitholders is to make sure that we have the right management team. To have the right management team, there is just no doubt that we need to make sure that they're fairly remunerated in the market. Now we don't do that every year. We have a sort of a rough policy about every 2 years, that we will go out into the market, do a bit of benchmarking, make sure whether we're still in line with the market or not in line with the market in terms of our remuneration. We use completely independent consultants. They just give us the information. I can assure all unitholders Angus and I both sit with proxy advisers and major shareholders before we get to this meeting and we give them all of the information that we have available to us and explain why we are where we are with remuneration. And generally we've -- I think we're able to, hopefully, explain ourselves. Well, I think we have been. I'm not saying everybody agrees, but I think that's our job. The reason is, if we don't pay people properly, then ultimately, even if it's not the Chief Executive, if -- even if that person accepts the outcome from the Board and it's a suboptimal outcome in the market, that flows down to the other levels of the organization. And that means lower levels of the organization don't get the rewards that they should get because they're not being benchmarked properly. All that means is you lose your good people, and the organization is poorer for it. So look. It's I understand the -- I'd like to think we try and understand the issue from unitholders, but we go through a fairly extensive process. It's not a whim. It's not something that we just concoct. We seek external advice. We don't get a recommendation, but we get the advice from somebody about what the market is paying for these particular jobs. And we do that through our organization and these are the outcomes. And we're -- and by -- I -- we see that information. We are not anywhere near the highest payer in the market, so I just say that we're doing what we think is a good job on behalf of unitholders. Angus, do you want to add anything to that? No, okay, [indiscernible]. We, Angus and I, sit and do this presentation around all the major shareholders, as I said, before we get to this meeting, but okay, any other questions?

I have one more question. This is from investor [ Stephen Mayne ]. Did any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS or ASA, recommend a vote against any of today's resolutions, including on this rem report item?

All right. I've got a feeling -- was there anybody vote against? I don't...

No.

I think all the proxy votes were -- have come in favor of the resolution, yes. And that's why I say we do quite a lot of work ahead of this meeting. So I think the answer is no.

So there was a next part of that, Chair, which reads, "If so, what reasons did they give? And will you disclose the proxy votes before the debate so shareholders can ask questions if there's been any protests?"

Yes, absolutely, yes, sure. We'll show you the vote. That's what I said. We will put up the proxy votes so that people can see them, yes. And they weren't -- as I said, they weren't any proxies against the remuneration report, so I'll just double confirm that, yes. So...

Sorry. One last part, Chair. "Best practice is to now disclose the proxies to the ASX, along with the formal addresses, to offer more timely disclosure to the market. Will you adopt this practice at next year's AGM?"

Sorry. To -- we are going to...

[ To ] disclose the addresses. And will you take on those proxy...

Yes, we can. Yes, we can. We do -- yes. The -- my -- the company Secretary was just telling me we obviously disclosed the addresses because they've already gone to the market. We'll look at the proxy voting ahead of the meeting, yes, but I might now -- we've now got the -- sorry. Is there any other questions? I just...

No further questions, Chair.

Okay. So the proxy statistics, which I was about to present actually, are on the -- shown on the screen. And for those on the phone, I don't know. Can they see that very clearly? Or not. Anyway, it's 96% for. So that's the -- with about...

3.6%...

Yes, 3.6%. I just couldn't see it from here. Sorry. 3.6% against, yes. So that's the proxies. So as I say, we will -- you'll be voting on that. We won't vote on it now, but they are the proxies received prior to this meeting today, up until last Friday. Yes?

[ I'm a shareholder of -- these figures have not been ] shown to us -- so that we can decide [indiscernible] rather than [ being intimidated ] and [indiscernible] they already been done...

Yes. Well, look. I've been a Chair for a while. And that's been my view, that if I put that up, to start with, you will go, "Well, my vote doesn't count."

[indiscernible].

Yes, yes, exactly, so I've always -- that's why they are after we have the discussion, okay?

So -- I agree...

Because I have seen companies that put them up before, okay?

Yes...

That's right, so I purposely don't do that. Okay. All right, then. If there's no other questions in the room or elsewhere, then we'll move on to resolution 2, which is, in the notice of meeting, the reelection of Beth Laughton as an independent director. The resolution is displayed on the screen and taken as read. I would like to invite Beth to make a few comments. Beth?

Good afternoon, ladies and...

Beth, you might just move that forward a bit. I just noted there was some...

Can everyone hear me?

Yes, much better.

That's better now.

We can hear you, yes.

Good afternoon, everyone. I'm very pleased to be here today at the AGM and to seek your endorsement of my election as an independent nonexecutive director of Region. Since my appointment to the Region Board in 2018 and as I'm a member of the Nomination and the Remuneration Committees and as Chair of the Audit, Risk Management and Compliance Committee, I've endeavored to bring to the group my insights from my numerous years of experience. My executive experience spans over 25 years in accounting, finance and equity capital markets; and as a nonexecutive director in the funds management, real estate and retail industry sectors. I was a nonexecutive director of the Australand Property Group for 2 years until it was taken over in 2014; and was an independent nonexecutive director of the GPT Funds Management Limited, which was -- is the responsible entity for the GPT wholesale office trust and GPT wholesale shopping center trust, for 8 years. I retired from that board last year. I'm currently a nonexecutive director of JB Hi-Fi Limited, which I'm sure you've heard of, but it's a leading multichannel specialty retailer in Australasia operating the well-known JB Hi-Fi and The Good Guys brands. At JB Hi-Fi and also when I was on the GPT Funds Management board, I chaired the Audit, Compliance and Risk Management Committee, as I do here. I have considerable expertise in risk management, compliance, corporate governance, sustainability and remuneration; as well as board oversight of property investment and operations, funds management and Australian retail. I believe I've made a meaningful contribution to the governance and performance of Region since my appointment to the Board and intended -- to continue working with my fellow directors and management to deliver the ongoing performance of Region. In particular, as Chair of the Audit, Risk and Compliance Committee, that committee which has responsibility for the oversight of sustainability at Region, I will lead the committee in overseeing Region's transition to enhanced reporting under the new climate reporting standard. I appreciate your support for my election. And thank you.

Thanks, Beth. I now open this item for discussion. Are there any questions or comments from the room, to start with? Yes?

Yes. Beth, just a -- I suppose, a follow-up to my previous questions. And to be honest: It does peeve me a little bit when, I mean, a lot of the REITs sort of say that, "The cost of debt is going up. And therefore, our income is going down," because it is an active choice. You as a Board, you said you don't time the market, but you have bought $1 billion worth of assets, so you are investing when rates were very low and supposedly accretive. But you look at the best-performing REIT in the market. And yes, Goodman, they've had an industrial tailwind, but they also chose to have very low levels of gearing, which has been a big contributor to their success and has allowed them to now be in a great position. But more specifically just to Beth. Can you just give us an insight into what happens when those property acquisitions were made around the Board table? What was your input? And I know you're not trying to time the market. And nobody has a crystal ball and thinks, "Well, debt costs are far too low. They're going to go up," but clearly the acquisitions that you've made haven't delivered for shareholders, so around the Board, I'd just appreciate how it all works and your input. Were you sort of pushing back, saying, "Debt costs are very low. I don't think we should be buying these assets?" Just it would be great to hear your thoughts around what has happened. And going forward, do you want to grow? What sort of metrics do you look at if Anthony comes and said, "We've got a property at a 6% cap. It's going to cost us 5% debt. It's accretive," but if you adjust for the stamp duty and various other upfront costs, maybe it's not accretive, et cetera? But just great to hear your -- given your property experience as a funds manager or -- what your sort of level of [indiscernible] acquisitions and how to manage the trust going forward.

Well, just to -- want to make one comment, first of all, is that, first of all, we are directors. We're not management. So that's the first thing, but I think, within that context, if you -- I think, if -- Beth, do you want to say anything...

Yes. Look. I just thought I'd sort of maybe just give you a quick outline of the process, for a start. We have a management team that looks for acquisitions, and they also identify whether we should be divesting. We have a very strong finance and treasury team that's very focused on cost of capital. And we have an investment committee which is made up of a couple of nonexecutive directors and a couple of -- I mean, well, the CFO and the CEO. And all the members of the Board are also invited to attend those -- that committee meeting, where we have the opportunity of having a look at, in detail, each of the acquisition opportunities. Clearly we look for the best returns we possibly can, but we're also mindful that this is a long-term asset class. And we're also mindful that there has been -- we did -- all REITs had a great opportunity for a period of time with very low interest rates. We are now back into a more normal interest rate environment. And as a consequence of that, we are being very mindful of trying to ensure that, what we do buy, we're buying at a return which is going to be sustainable in the future; that in addition to our changed approach to capital expenditure, which is aimed at improving the income from each of our assets that we're going to spend more money on than we have in the past. So in terms of my particular focus. Obviously I have a very strong finance background. I think you'll find that, from the management, they will be more than happy to tell you that I do challenge and question all the assumptions that they put into any of these investment papers. And clearly from a -- on the sustainability investments that we're making, that clearly also flows through into the Audit and Risk Committee and sustainability oversight that we have there, so I'm quite comfortable that I make the right -- ask the right questions and challenge, but in terms of the long-term investment strategy that we have, I'm very supportive of it. Clearly I'm personally disappointed that we haven't been able to provide guidance this year, which is I think what you're looking for, but that is, I think, well explained. We've explained it in the investor presentation that we released at the time of the results. And I'm hopeful that we've been able to give you good insights as to what we -- why we've -- we are in that position now, but we -- but it's we want to achieve better results. There's no question, but we need to be realistic with investors and tell them what we think is going to happen in the near term.

Any other questions on this [ nomination ]? On the phone line?

Chair, there are no questions at this time.

All right, I've put up the proxies. You can see the proxies on the screen there. And we'll move on to, I think -- sorry.

[indiscernible].

Yes. The directors -- I should say the directors, Ms. Laughton abstaining, unanimously recommend that security holders vote in favor of this resolution. And I'll now move to the next item of business. And this is resolution 3 on your notice of meeting, the reelection of Angus James as an independent director. The resolution is displayed on the screen and is taken as read. I would like to invite Angus to make a few comments.

Thanks. Are we on? Yes, all right. Okay, thanks, Steve. Good afternoon again. I think I've already introduced myself. And I just look forward to your support today to continuing to represent you on the Board of Region. I joined the Board in December '21. To recap my experiences: sort of 40 years of accounting, investment banking, funds management, lately with my own advisory and funds management business, Aquasia. Prior to that, I was the -- prior to jointly founding Aquasia in 2009, I was the CEO of ABN AMRO Australia and New Zealand; and a member of its -- of ABN AMRO's Asian management team which oversaw wholesale and retailing, banking activities and funds management operations in 17 countries in the Asia Pacific. Throughout my career, I've been an adviser to boards and senior management of ASX 100 companies and to governments in the areas of mergers, acquisitions, equity-debt and treasury issuance and products. And as the CEO Australia for ABN AMRO, I was -- had experience in managing over 700 people in the investment banking and also looking at and understanding complex financial risk. Over the last 20 years, I've served on the boards of the Business Council of Australia, the Australian Financial Markets Association and the federal government's Australian Curriculum, Assessment and Reporting Authority. I'm a past Deputy Chairman of the Australian Chamber Orchestra; and Chair of Australian Schools Plus, a not-for-profit which sources philanthropic funds to support schools in disadvantaged areas. At Region, I am Chair of the Remuneration Committee and sit on the Audit and Risk and Investment Committees. In the time I've served as a director, I believe I bought to Region my insights from many years experience in acquisitions, disposals, debt, equity, capital markets, funds management, et cetera; and have sought to play a role in developing the company under Steve and Anthony's leadership. And on your behalf, I remain ambitious for us as an organization and believe we have substantial opportunities and the right strategic direction to grow over time. I look forward to your support today and to continuing to work with my fellow directors and the Region management team on the performance of Region's business. Thank you for your consideration.

Thank you. Thanks, Angus. Any -- open for discussion. Any questions in the room?

[indiscernible] left out, but -- I better ask a question but just maybe M&A experience. And I suppose there's a bit of distress in the market, with Elanor the retail space. Are you seeing any M&A opportunities? How much of a focus is that for you and the Board? I don't think Region has ever done any M&A, but [ I think it would probably trade at one of the tighter ] discounts to NTA. So [indiscernible] okay, but -- maybe it will be accretive, but I'm sure you can justify it. But yes, are there any insights for M&A and funds management? I suppose Region -- I'm not sure how long you've been trying to build up that side of the business, but I don't think it's made all that much of an impact [ for ] profitability, contributing to distributions, et cetera. But what are your insights there? How can we make that a more meaningful part of the business? [ A lot of ] money has been made out of funds management and the capital-light approach. I think GPT and others are now pursuing that model. But a 2-part question: M&A, any opportunities for Region? And, I suppose, why? Has the funds management business for Region fired yet? But what are plans going forward?

Well, I think again I just -- I think there are -- like funds management is -- we were originally created as an asset owner. That's how we were created. That's what we've done. That was our reason for being. And in fact, that's why a lot of both major and small shareholders like our business. It's a very stable business and it's a very easy-to-understand business in that sense. And I think Angus's role is really -- and I can say he plays a very active role, by the way, on the Board and questioning all of the investment decisions, any of those decisions that we undertake; and provides good challenge to management, but I think that's a question I'd rather -- Anthony, I think you should maybe just make a couple of comments on that question.

Yes. Happy to. I mean we are an owner, first and foremost, and that's what we want to be.

[indiscernible].

[indiscernible].

Yes, okay. We are an owner of assets of neighborhoods and sub-regional in the nondiscretionary space. That's what we are and that's what we have been and that's what we will continue to be. With respect to funds management, we have been in funds management and dabbled in it for some 8 years now. We used to have SURF 1, 2 and 3, which was unlisted retail funds. And basically we did a great job with that and got out of it. We didn't see a lot more future in that. And it was the returns just weren't there for us. We then decided we like funds management, but it's always going to play a very tertiary role in it, not even a secondary role for our earnings. And there were some institutional investors such as GIC, who is one of the largest institutional investors in the world, and they decided to partner with us. So we like working with them. It's never going to be -- get up to 30%, 40%, 50%, 60%, 70% of our income. It will just be there on the side. And it's complementary to what we actually do, which is owning and managing these types of shopping centers. That's predominantly what we are. You get into a whole lot of conflicts when you get into funds management, so you've got to be very careful how you manage those. And that's where we got to with the SURF funds, and so that's why we're happy with GIC at the moment. We have been approached by a number of people for different types of funds, but it hasn't -- it's been outside of where we have expertise, so we're happy with where we are at the moment. Predominantly, we like to own everything, keep it as simple. I think we get a premium for that versus some of our other peers.

M&A...

M&A. Sorry. Yes. Look. There's a fair bit of activity going at the moment on M&A, but it's not in our sector. So [ CQR ], who used to be in our sector, are now chasing pubs. We like being straight in the nondiscretionary retail sector. Elanor, at the moment, they're going through some issues. Obviously they haven't published their accounts. They're in a trading halt, but we don't -- they own wildlife parks, hotels, pubs, all sorts of different stuff and a couple of shopping centers. We're not all that interested in there. We are the only pure-play nondiscretionary retail-focused owner -- or REIT at the moment, so for us to go M&A would probably mean we have to move into a different sector. Our sector is -- we believe, has enough opportunity to grow without doing the high-risk M&A.

Thank you. Any questions online?

Chair, there are no questions at this time.

Okay, well, the voting statistics for this resolution are shown on the screen. And I'll put this motion to the vote. The directors, Mr. James abstaining, unanimously recommend security holders vote in favor of this resolution. And I'll now move to the next item of business. Resolution 4 is displayed on the screen, and I'll take it as read. And this is in relation to the issue of short-term incentive rights under the executive incentive plan to the Chief Executive Officer, Anthony Mellowes. I now open this item for discussion. Are there any questions or comments in the room? Yes?

[indiscernible] in last 15 months, I've changed my lifestyle. I moved into a [indiscernible] businesses on them, but it has been -- and the workforce today is a workforce [indiscernible]. They're on phones. They're in meetings [ and meetings then on phones ]. They're not in a meeting like this. They're in a meeting on the Internet. They're -- you're doing everything -- and [ you sort of called ] [indiscernible]. And then he brings everything in. And he said that [indiscernible] is on its way [indiscernible] 3 weeks. And they were [indiscernible]. It's a different workforce [ that now you work ]. And [ you've got more with us. And now ] they're with you for about 3, 4 [indiscernible]. And [ they're out of the place ], but they're going to go into another [ real estate ] [indiscernible]. And it's a workforce [ who will try to ] appreciate it [indiscernible] this is a meeting and you still [indiscernible], but today, if they want to speak to you, [ they'll speak to you ] and you [indiscernible]. So thank you [indiscernible]. I think [indiscernible].

Thank you very much. Thank you. Any other questions or comments? Anything online, moderator?

Chair, there are no questions at this time.

Okay, well, the voting statistics for this resolution are now shown on the screen. I'll put the motion to vote. The directors, Mr. Mellowes abstaining, unanimously recommend security holders vote in favor of this resolution. I'll now move to the next item of business, the issue of long-term incentive rights under the executive incentive plan to the Chief Executive Officer, Anthony Mellowes. Resolution 5 is displayed on the screen and taken as read. And I now open this item for discussion. Are there any questions or comments in the room? No. Okay, any online moderator?

Chair, I have one question from investor [ Stephen Mayne ]. Could the CEO summarize his past LTI grants, as to whether they have vested or lapsed? Also has he ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position in the company?

Yes, well, I can't comment forever, so I'll leave that up to Anthony to -- I certainly -- while I've been the Chair, I think Anthony sometimes sells some stock to pay the tax he has to pay on the shares that are vesting, which is not uncommon for most chief executives. They get -- the ones that vest, they suddenly have a tax liability; and so they need to sell. Unless they've got just money sitting in the [ bank or waiting to be delivered ], they sell a certain amount of shares to pay that tax. They seek authorization from me as the Chair. And that's usually given unless there's some other circumstance, but Anthony, in terms of whether you've done other things, I can't comment...

No. I've -- basically we have a minimum holding policy, which I think I'm 3x or 4x above that minimum. I have not bought anything on market. I have only received the units through the long-term incentive plan and the short-term incentive plan. And I have sold to pay tax, generally, but other than that, I have kept them all. And with respect to the question of how have I gone, I think we got -- I think you answered it during last year's. It was basically 40 -- I got roughly 40% in last year's long-term incentive. Some years -- 1 year, I think I got lucky and got 100%. And next year's isn't looking too good at all. So I've got to go with how the performance of the company goes...

That's right. We've had -- well, we've had outcomes between 0 and 100, so it's actually -- I think, if you look at our -- and I think, Angus, maybe you've got those numbers to hand. I don't know, but I think it basically shows the system we've got works because it basically varies from one to the other and in between and...

Yes. So the -- as we said, last year was 44-odd percent. And the previous years before that were 6.8%, 9.7%, 68.2%, so...

So it's varied from single figures to above 50%.

Yes.

Okay, any other questions?

No further questions.

Thank you. All right, well, then the voting statistics for this resolution are shown on the screen; and I now put the motion. The directors, Mr. Mellowes abstaining, unanimously recommend security holders vote in favor of this resolution. And I'll now move to the next item of business. Online security holders are reminded that they can submit their vote online until 5 minutes after the meeting closes. [Voting]

Ladies and gentlemen, this concludes the formal business of the meeting. Link representatives will now collect the yellow voting cards to tally the results for the meeting. I would now like to open the floor to general questions or comments that haven't been addressed in any other part of the meeting; and invite our online security holders, if you haven't already done so, to please send through any general questions or comments for the Board and management. Has anyone any general questions or comments? Yes, yes.

This is [ Morrison ], unitholder. I just had a query. And I know nothing about the general concept or the application, but how viable would EV charging stations be as a standalone or a...

Yes, no, it's a good question...

A greening the country and -- or encouraging people to use electric vehicles as part of the repertoire...

Yes. Well, we have looked at it, so I will let Anthony respond here.

No, it's a really good question. It's something that we look at not only for sustainability but also income potential as well, so -- and we do have a number of them at different centers around the country. The key aspect that they look at is where it is on road networks and how busy it is for -- so if you're driving Sydney to Melbourne, they're a lot more important than just in the local area. If you're in a local residential area that has houses, garages, they're not that interested in having an EV charger because people have a garage and they charge at home. So it really comes down to the market that you're sitting in and where you are. There's also a couple of safety issues with them. So there's a bit of unknown about having EV chargers in basement car parks, for example, if they catch on fire or -- and these type of things, so there's a number of factors that go into it, but yes, we do have some. Would we like more? Yes, but we generally have them in the far corner of our shopping centers, as opposed to taking up the prime car parks at the front.

[indiscernible].

Yes.

Yes.

They don't pay a lot of rent, I must say. They don't make a lot of money.

Yes. The -- yes?

The DRP has been suspended. And I think there was something to do with the value or something, I believe. When is it likely to be reactivated?

Well, it was suspended because we were trading at a -- well, one -- at one stage, I think we didn't need the capital. And the second time was because the asset value -- or the security value was trading so far below our [ NAV ] that we didn't want to issue shares at that price. It didn't make sense. It diluted other people. So in terms of what we will do in the future, I can't really say, but we're actually trading back now to around our NTA, so I think it's -- at least it's an active thought that we -- and we did look at it just recently because we are now back to our NAV.

Net tangible assets.

Yes, yes, net tangible asset backing. And so -- but we haven't made any commitments. And I don't think we'd do it in the very short term, but I think there's a regulatory issue about doing it now but -- in terms of just timing. But I think, when we come to next -- the end of the financial year, we'll -- I can assure you, we'll look at it as part of our process, yes. And we know that smaller shareholders do like that facility, so it's something that we do actively look at.

But it's also advantage to the company itself. I mean the money that you get is interest free. And it also helps you reduce your debt, so it's like a mutually...

Well, yes. Well, we've got to pay a distribution on it, but yes, that's right, yes. That's right.

Whatever small benefits. I just thought I'll just throw a question up and see what you've got to say about it because I have...

Yes. Well, we examined it just recently back at our last Board meeting, so you're on point with the question, but we're not doing anything just at this very moment in time, okay? Thank you.

Terrific, okay. Can I just say -- I've been in touch with Philip Marcus Clark. Last I heard, that he is going on special trials for his health; and so far as I know, that he's doing okay. But he was moving, upon wherever he was, to a smaller -- downsizing, I think he said, so I thought I might raise it. And I thank -- he was a very good Chairman. He was a very nice person. And he always responded openly and frequently whenever the need arose. He acted very quickly when I raised the solar panels issue. Because I said my alma mater, University of New South Wales, is a world leader. And if they didn't know how to get the results from it, University of New South Wales could help. And I'm very pleased to hear that we progressed very well on that account. Thank you very much. You're doing a good job.

Thank you so much.

[indiscernible].

Sorry -- yes, yes, sir?

Just a quick question in regards to Region. And yes, Coles and Woolies have been accused of [ putting swaps aside ]. Is Region involved in that, or are they staying away from the land banking...

Yes, you answer that, yes.

Okay. So I was at Woolworths for 10 years prior to -- or 11 years prior to being here for 12 years. So what Woolworths and Coles -- I can talk directly on this. Do -- you should consider them as the developer of last resort. Both Woolworths and Coles would definitely prefer to lease a property rather than build it themselves and spend the money on their balance sheet. The only reason they do it is because a supermarket is not the highest and best use in that location. Take for -- there's 2 really good examples. So the Woolworths at Double Bay here in Sydney, that took 18 years. No other development company would take that long to put a supermarket down on the ground. It just doesn't make financial sense. So the politicians are calling it land banking. It's actually, when Woolworths and Coles actually buy a site, they will stop -- if it's not zoned, they will start a rezoning process. And they will also start the DA process. That takes a long, long time, so I don't think they're land banking much at all. We work -- we were created as SCA Property spun out of Woolworths. That's $1.5 billion of properties that Woolworths developed. There wasn't any land banking in that. And there's very few bits of land banking where they're doing -- to stop a competitor coming in. They buy land. They start the rezoning process. They start the DA. They're looking at -- like anyone else, they're looking at construction costs have gone through the roof. And if you really want to know why construction costs have gone through the roof: There's not enough labor for builders at the moment. And obviously we have a government that isn't allowing builders to come in to the country, so there wasn't any builders that came in to the country. So construction costs are being held higher by the government. I don't know why. Perhaps the CFMEU has something to do with it, but that's the issue that's there at the moment. And Woolworths and Coles aren't building because it's not even economic for them to build some at the moment.

Well, I understand the zoning side of things [ because I'm in one of the councils ]. It takes forever.

It takes forever, but there's very, very -- in my time at Woolworths, 10 years there, I can't think of a site that we bought that we didn't honestly think we're going to convert to a supermarket or one of the businesses that we did and we started the process. We never bought something and then just held it forever without thinking it was ever going to do things.

Any other? Yes, all right, yes. I think you [indiscernible]...

Yes, yes. I'm sorry. This is just throwing a comment. A lot of people move into the regions -- and people working from home. Is that impact slowly being expressed in business at the regional centers? Because a lot of people just came from Sydney. And there are people who can work from home from regional areas. From what I read, this trend is happening in America as well as the United Kingdom; and it's revitalizing the regional areas. I mean, instead of going to the town [indiscernible] coffee shops and all, the other expenditure local money. Is that being noticed? Or is it...

Well, it's happening in some areas, but I'll let Anthony...

Yes. Look. There's no doubt, as a result of COVID, working from home has been a real positive for a lot of people. And so it doesn't mean that they're not still buying a coffee. My wife works for the government. She buys a coffee every day. She's not buying a coffee at the shop here in the city, but she's buying it at her local shop around the corner because she's working from home. So some CBDs are suffering. Some of our shopping centers have definitely been positive. Ulladulla has been very good for us, so -- down the South Coast. Within a 3-hour ring of Sydney, it's actually you can see where people have moved to.

Okay. And I don't agree with these populist politicians about land banking. This is strategic thinking. So I mean look: This is the area that might develop. And if you left it to the last minute, you'd be paying so much more for the land, so I mean, these [ diminutive ], stupid politicians who -- ruling us, I just don't think they get it. I mean it comes up every election time. They're going to find such scapegoat because they want to draw attention from the inactive and [ diminutive ] decisions they've made while they were in office. I mean I'm not [ labeling all of them ruler ]. I'm just saying decision-making is extremely [ prudent ]. I think we're all losers for it.

Okay, thank you. Is there any questions online?

We have 7 at the moment, Chair.

Gosh. Well, okay, yes. [ There you go ].

The first is a comment from investor [ Ren Ten. ] The statement for dividend for taxation needs to be completed as soon as possible after the end of financial year.

Yes. So...

Yes. I think I'll answer that, yes. It's required by the end of August and we do it by the end of August, and yes, so we do comply...

Yes, okay.

The next question is from investor [ John Donovan. ] Page 92 to 93 of the 2023 annual report gives value of each shopping center. The 2024 report does not. Why the changes?

Yes. Well, we've taken that out because, in fact, we were the only ones who -- I think, the only ones who were doing it, and -- well, pretty much the only ones who -- doing it. And we believe it was just giving information. If we wanted to eventually sell one of those centers, we were just providing information to people who will be buying the centers. So that's the reason. It's because it was against our interests and against our unitholders' interests to put that information there.

The next question is from investor [ Tony Graco ]. "With 96% of debt now hedged, does that mean we will miss out on reduced interest charges when interest rates reduce in Australia in 2025 and with interest rates already reducing globally?"

[ You're right ]. Evan is very keen to answer this question. I was going to do it, but Evan wants to answer.

This year, we're fully hedged. And the reason why we did that is we wanted to take interest expense out of the equation so that our earnings -- our distribution was really influenced by our operational performance. From next year, onwards, we are highly hedged, but again that's we're not in the business of speculating on interest rates. We really wanted to focus on how our portfolio is operated.

Yes. And look: Yes, the predictions now are that interest rates will fall and -- official interest rates may fall, but the costs of borrowing may not fall. There's all sorts of -- interest rates are much more complex than just whether the government sets a benchmark at a certain level. The margin between government rates and [ corpo rates ] or individual rates can vary, depending on the credit climate. And we've had a fairly strong credit climate. Not only we had low interest rates. We had quite a strong credit environment. And so if things got tougher, the credit environment will actually get tough even though interest rates are coming down. Sometimes [ interest rates ] come down for that reason. So interest rates to people other than the government might not come down all that much, but as we're saying, that's not the business we're trying to put ourselves in. We're just trying to position ourselves so that we can reflect the underlying performance of our assets back to our unitholders.

The next one is from investor [ Stephen Mayne ]. "Thank you for offering a hybrid AGM this year. And will you commit to doing this in future years to maximize shareholder participation? What was the experience like from your end? Also, when disclosing the outcome on voting of all resolutions today, could you please advise the ASX how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment and insight into the chronically low level of retail participation in voting."

Well, sorry. The -- on the last question: I think we'll look at that. We have -- it's not on -- I've got no -- I can't see an objection, but we'll look at that; and disclosing the number of votes, number of voters, if I could put it that way, or unitholders -- sorry. What was...

It was about the hybrid...

About your experience from the Board...

Hybrid, yes. The answer was yes. Yes, we'll continue. We're going to continue with hybrid AGMs, yes. I think it's -- I'm personally -- these guys would get sick of me talking about the fact that I think this is an opportunity, obviously, mostly for smaller shareholders. And I'm personally an advocate for providing the opportunity for the average unitholder to speak, to get in front of the Board and management, so things that make that easy to happen and within a reasonable cost estimate -- then that's what we're in favor of, yes, so we will continue.

The next question is from [ Stephen Mayne ] also. Australia is currently in the midst of an unprecedented deluge of takeovers that it's contributed to listed entities on the ASX falling by 170 or 7.4% to a 15-year low of 2,124 since June 2022, including 20 straight months of declines. There have already been 27 major takeovers above $200 million completed, so far, this calendar year. There is a clear mispricing between public markets and private markets. Why are public markets not valuing ASX-listed companies like ours more highly? And what are we doing to avoid being gobbled up?

Yes. Look. I think the general observation is correct. I think we're doing everything we -- mostly, of course, when you get into the private markets, they don't have the gearing restrictions that we feel we're under, so that -- especially when interest rates were very low, but yes, I don't think -- I don't have any particular strategy other than we're working to make sure that we perform as well as we possibly can as a company and deliver the best outcomes we can. And I think that's our best offense in these circumstances.

Mr. Chair, there's 2 further questions from [ Stephen Mayne ]. Would you like me to read those out?

No...

I think he's had a fair go. I think -- read them out. I'll see if I can deal with them quickly, yes.

The Victorian government is trying to manage surging debt; and has introduced the highest property taxes in Australia, particularly land tax and stamp duty. Does this environment impact the investment environment in Victoria relative to other states? Also is there an upside for us when the current federal state moves to speed up the planning process for new housing supply? Are we likely to see more dense housing development near our centers nationally, and is this good for our business?

Well, the answer to the first one is we obviously take any tax environment or tax regime in a state -- at a state government level into account when we're buying centers. So the answer is, if it's onerous, then we'll -- it will definitely show up in our acquisition plans. And does the development of more dense population [ of our ] centers -- I don't know. It helps some, but I think a lot of ours are in more regional areas, so I'm not sure. Anthony, what do you say...

Yes. Look. There is definitely an opportunity there in -- not just right now but in the future as densities increase even further. So that's why we like buying big blocks of land for that really long term. And the other thing with the question about Victoria: Yes, that has very much come into our mind. The asset -- the only asset that we've sold since that announcement is East Warrnambool in Victoria.

After 12...

Why did you sell Warrnambool?

Why...

Why did you sell Warrnambool?

Well, we got a great price for it. And looking at the income, which is going to be negative -- or further negative because of the introduction of these really onerous land tax because they've run out of money -- so they're going after other people.

"After 12 years as a local government counselor at Sydney -- city of Manningham, I'm retiring on October 26 but want to see the sector do better. Could the CEO, please, comment on his views on the overall performance of local governments across Australia in terms of dealing with our company on issues like planning, trading hours and shopping center management?" Which states and systems are best for us to deal with was the second part of that.

I'll answer...

Look. I think -- well, I -- do you have brief comment...

I've got a very brief one. There's a lot of very good local councils. There's a lot of very bad local councils, so it really comes down to the ones that you're in. And you try and stay away from the bad ones. I think they're trying to do a really, really good job, but it's getting harder because of a lot more people. There's more activists about, not in my backyard at the moment, so it's going to get harder, not easier.

Okay, any other questions?

No further questions.

Thank you very much. Well, I now declare the meeting closed. I would like to take this opportunity to thank my fellow independent directors, Anthony and his management team and all the staff at Region for their diligence and commitment to this business. We are fortunate to have an outstanding team. And I can tell you that's what the feedback is we get from shareholders as Angus and I go around. I thank all of our security holders, old, new, large and small, for your continued support and confidence. And for those security holders attending here in person, I invite you to stay for afternoon tea. Finally, thank you for your attendance today. I hope it was interesting. Thank you very much.