Stockland (SGP.AX) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Katherine Grace, Stockland's General Counsel and Company Secretary. Before the Chairman formally opens today's meetings for Stockland Trust and Stockland Corporation Limited, I would like to take you through some of the procedural matters associated with our meeting. Although, we are holding this year's meeting virtually, we have designed the meeting to give security holders the opportunity to participate in the meeting in the format that best suits them. The Chairman will shortly open the meeting. And at that time, the polls will be formally open to enable security holders and proxy holders to vote by clicking on the bar chart icon available on the online Lumi platform. As advised in our meeting notice, participants who have dialed into the meeting will be unable to vote using the teleconference facility. For those of you attending the meeting via the online Lumi platform, you are free to start sending in your questions now by clicking on the question icon on your screen. For security holders who have dialed into the meeting via the teleconference line, please follow the prompts if you wish to ask a question. I will be moderating the questions from security holders during the meeting, and questions may be amalgamated if there are multiple questions on the same topic. Please note that only security holders may ask questions during the meeting. I confirm that we will address the questions during the formal business of the meeting as is our customary practice. While it may not be possible to respond to all questions during the meeting, we will endeavor to directly respond to any questions we don't get to as soon as practicable after the meeting closes. If you wish to view the meeting again after its conclusion, a recording will be available on the Stockland website shortly after the meeting. I will repeat these instructions later in the meeting before we commence the formal business. Finally, as this is a virtual meeting, technical issues may arise. If we do encounter any issues, we will have regard to the impact on the security holders, and the Chairman may issue any instructions for resolving the issue and may continue the meeting if it is appropriate to do so. I'll now hand to the Chairman to formally open the meeting.

Thank you, Katherine, and good afternoon, ladies and gentlemen. Welcome, and thank you for joining us today and for participating in Stockland's second Virtual Annual General Meetings. I would like to acknowledge the traditional owners of the land on which we broadcast to you today, the Gadigal people of the Eora Nation and pay my respects to their orders, both past and present. As a quorum is present, I would now like to formally declare Stockland's 64th Annual General Meetings open and confirm that voting on resolutions 2 to 9 in the notice of meetings is now open via the online Lumi platform. Please note the voting exclusions for Resolutions 6 and 7 are set out in the notice of meetings. I've been a proud member of the Stockland Board since 2014 and Chairman since 2016. As Chairman over the past 5 years, I have worked closely with my Board colleagues to oversee the implementation of group strategy. Joining me here today, both at Stockland and virtually, are my board colleagues. Tarun Gupta, who was appointed Managing Director on June 1, 2021. I welcome Tarun to his first Stockland AGM. Melinda Conrad, who joined the Board in May 2018 and is Chair of the People and Culture Committee and a member of the Sustainability Committee. Melinda is recommended for reelection at today's meeting. Barry Neil, who was appointed to the Board in 2007. Barry is a member of the Audit Committee and the Sustainability Committee and during the year was the Chair of the Board of Stockland Capital Partners Limited. This is Barry's final AGM as he will be retiring from the Board at the conclusion of these meetings. Christine O’Reilly, who was appointed as a Director in 2018 and is the Chair of our Risk Committee and a member of the Audit and Sustainability Committees. Christine is also recommended for reelection at today's meeting. Kate McKenzie, who was appointed to the Board on December 2, 2019, and is also a member of our Audit Committee and Sustainability Committee. Andrew Stevens, who was appointed to the Board in July 2017, and is also a member of our Risk Committee, People and Culture Committee and the Sustainability Committee. Stephen Newton, who is appointed to the Board in June 2016. He is Chair of the Audit Committee and a member of the Risk Committee and Sustainability Committee. During the year, he was also the Chair of Stockland Capital Partners Audit and Risk Committee. Next is Laurence Brindle. Laurence was appointed to the Board in November 2020. He is a member of the Audit Committee and Sustainability Committee. Laurence is recommended for election at today's meeting, and I welcome him to his first Stockland AGM. Next is Adam Tindall. Adam was appointed to the Board on July 1, 2021. He is a member of the Audit Committee and the Sustainability Committee. Adam is also recommended for election at today's meeting, and I also welcome him to his first Stockland AGM. Finally, we have Katherine Grace, who you have already met. Katherine was appointed as Stockland's General Counsel and Company Secretary in August 2014. Also joining us for the meeting today is the Stockland leadership team and our auditors, PwC. As you will be aware from the notice of meetings, there are 9 items of business to be discussed when we move to the formal part of the meeting. We will provide an opportunity for discussion and any questions you might have when we deal with each of the formal agenda items. I encourage you to vote at or in advance of each resolution to ensure you have sufficient time to complete this during the meeting. Before I move to the formal meeting items, I'll now make some general observations about the last 12 months, and then Tarun will provide us with an update on our business operations and the execution of our strategy. When I spoke to you last year at our first virtual AGM, I was hoping that this year, we might return to some form of normality. Unfortunately, this was not to be. As we emerge out of our last lockdown, it is pleasing to see that Australia is accelerating its response to COVID-19 as the national vaccination plan continues to be rolled out. Living with COVID will be Australia's next big challenge. While as a nation, we are still grappling with these challenges, I am very proud of our people and the way they demonstrate their commitment and resilience daily, protecting the well-being of our residents, customers and communities. I also want to acknowledge our customers and thank them for their continuing support across all our assets, including tenants in our retail town centers, workplace and logistics assets, our residents in our retirement living villages and our master planned and land lease communities. We very much appreciate your support and understanding during these uncertain times. As a Board, we have been proactive and decisive in responding to this environment to both safeguard our business and strategically position Stockland to access future opportunities. Our responses have been measured and focused on optimizing outcomes for all stakeholders while minimizing the impact on our business. During the year, we rigorously managed our cash flows and raised long-term and short-term debt to boost available liquidity and maintain capital strength through this period of economic disruption. And as a result, the group did not need to raise dilutive equity. We also retained all our employees in full-time paid employment and did not receive any assistance from the federal government JobKeeper scheme. Turning to our FY '21 result. The operating results reflect the continued impacts from the pandemic, but also the strength of our diversified portfolio. Funds from operation were $788 million down 4.6% on FY '20, but towards the top end of our market guidance. Our FFO per security was $0.331. Our statutory profit of $1.1 billion was largely due to net increase in revaluations in commercial property as well as a recovery in our second half income as COVID-19 impacts eased and we saw an improvement in market conditions. Our full year distribution was $0.246 per security with a distribution payout ratio of 75%, which was within our target range and fully covered by operating cash flows. We are mindful of the importance of this distribution to our security holders and have balanced this with our future capital needs to ensure our balance sheet is well positioned for the future recovery phase. Stockland continues to be a market leader on all ESG-related issues and matters. ESG is deeply embedded in the culture of Stockland. We have retained our leadership rankings on global sustainability, investment indices and benchmarks. We continue to build climate resilience in our portfolio and reduce our emissions profile. To that end, we have brought forward our net carbon 0 plan from 2030 to 2028. We have also released our second modern slavery statement, outlining further actions to access and address modern slavery risks. As you are no doubt aware, at the end of May 2021, after more than 8.5 years, Mark Steinert retired as Managing Director and Chief Executive Officer of the group. Once again, on behalf of the Board, I'd like to thank Mark for his dedication and leadership and for his numerous achievements over his time at Stockland. Mark laid the foundations for a forward thinking and purpose-driven company that will continue to serve our customers, security holders and the community well into the future. I would like to acknowledge Mark's absolute focus on driving our business during the CEO transition and also to thank our Stockland leadership team, which has also taken a lead role in ensuring the organization remain focused on the continued execution of our strategy. Our new Managing Director and CEO, Tarun, joined the Board on June 1, 2021. Tarun previously held a wide range of senior roles during his 26 years at Lendlease. Tarun brings with him a breadth of experience across the property sector, including communities, retirement living, commercial property and investment management. Tarun's experience has provided for a smooth transition following Mark Steinert's departure and sets Stockland up for continued future growth. Turning now to the resolutions for today's meeting. Resolutions 2, 3, 4 and 5 are ordinary resolutions and relate to the election or reelection of nonexecutive directors. In November last year, we announced the appointment of Laurence Brindle to the Board as part of our structured approach to Board succession. I look forward to introducing him shortly when we reach the resolution on his election. In July this year, we announced the appointment of Adam Tindall as part of our -- to the Board as part of our structured approach to Board succession. I also look forward to introducing him shortly when we reach the resolution on his election. Both Melinda Conrad and Christine O'Reilly will stand for reelection today with unanimous support from the Board, and we will hear from both Melinda and Christine when we reach the resolutions on their elections. As I mentioned at the start of the meeting, after 14 years of service, Barry Neil will retire from the Stockland Board. Barry is a highly respected member of the Board and the Australian business community. Barry, among many attributes [indiscernible] reelection [indiscernible] projects and for the people to his board during these uncertain times. I will make some further comments on this later in the meeting. Resolution 6 and 7 are ordinary resolutions and relate to remuneration. The Board recognizes the importance of aligning remuneration outcomes to business performance, and that these outcomes be sensitive to the experiences and expectations of our many stakeholders, particularly in the light of the current pandemic. FY '21 was a challenging year, punctuated by the ongoing disruptions from the pandemic and the transition to a new Managing Director. Our people have continued to demonstrate great resilience in these circumstances, focusing on the task at hand and delivering on our strategic priorities while protecting the well-being of our residents customers, the broader community and each other. The Board appreciates the exceptional effort and commitment of our people to our purpose and values. We consider the remuneration outcomes for FY '21 as set out in the remuneration report to be an appropriate reflection of business performance and the experiences of our stakeholders. We continue to give careful thought to how our remuneration framework supports the execution of our business strategy. In FY '21, we took steps to simplify the remuneration framework and improve alignment with security holder outcomes. The Managing Director and his leadership team is currently undertaking a group's strategic review of the business and the findings from this review will help inform any further changes to the remuneration framework for FY '23. Noting that our key principles of simplicity and security holder alignment will continue to guide our design. Resolutions 8.1 and 8.2 relates to amendments to the constitutions for Stockland Corporation Limited and Stockland Trust. Stockland's current constitutions were last amended at the 2013 Annual General Meeting. Stockland has undertaken a review of the company constitution and the trust constitution. And as a result, it is proposed that amendments be made to those constitutions. The proposed amendments are set out in detail in the explanatory notes to the notice of meetings. Both resolutions are required to be passed as special resolutions for the amendments to both constitutions to take effect. Resolution 9 related to the renewal of the proportional takeover provisions currently in the constitution for Stockland Corporation Limited. This is also a special resolution. This resolution is required to be presented to the AGM every 3 years and has been supported by shareholders the last 3 times it was presented to the AGM. As Australia continues to tackle the impact of the pandemic, we have taken opportunities to improve our business profitability and resilience while remaining agile in the execution of our strategic priorities. Tarun will speak to this in more detail shortly. I am confident in the management and governance structures we have in place to respond to those -- to respond to the ongoing challenges and balance our response with the long-term interest of our security holders and the community. Before handing over to Tarun to present his first report, I want to thank my Board colleagues and the executive team for their leadership throughout the year. I would also particularly like to thank our employees who have demonstrated great resilience and dedication through these challenging times. And finally, thank you, our security holders, for your ongoing support. Your Managing Director and CEO, Tarun, will now provide an update on our strategy execution.

Good afternoon, ladies and gentlemen. I would like to start by acknowledging the traditional owners of the land where I am today, the Gadigal people of the Euro nation, and I pay my respects to elders past, present and emerging. I'm very pleased to be joining you today for my first AGM as CEO of Stockland. It is a privilege to be leading this iconic organization, which has made a valuable contribution to our nation's success for almost 70 years by creating vibrant and connected communities. I want to acknowledge the contribution Mark Steinert made to Stockland over the past 8.5 years as CEO. I also want to thank all our employees who continue to focus on keeping our tenants, residents, customers and assets safe in these challenging times. It is energizing to join an organization that is so strongly driven by its purpose, vision and values. What has stood out to me the most in my first 5 months at Stockland is how strongly are people live these values every day. We have a strong platform, and we have a number of very exciting specific opportunities to create long-term value for you, our security holders, and for the community as a whole. Across our portfolio, we controlled 60 million square meters of land, equivalent to more than 20 Sydney CBDs. Our focus is on maximizing the value of every square meter of this land. The $9 billion commercial property development pipeline enables us to create at scale, the investment product heavily favored by institutional capital partners. These partners value the strong reputation, experience and capability that Stockland can provide. Stockland's position as Australia's leading developer of master planned communities, creates unique opportunities for us to leverage this leadership position across the broader residential sector. The acquisition of the Halcyon land lease business in July 2021 demonstrates our determination to leverage our scale, reach and expertise in master planned communities to create both additional revenue streams and higher quality recurring earnings in the residential sector. More broadly, we are finalizing a comprehensive strategic review of Stockland's business to set us up for long-term success. And we will report to you on its outcomes early next month. This review is focused on positioning Stockland to capitalize on 4 key long-term trends that we expect to shape our industry. Continued urbanization, the impact of rapid technological advancement on real estate uses and customer preferences, the exponential growth of institutional capital flows into real estate and the critical importance of environmental, social and governance considerations across our business and our communities. We will be looking to scale our leadership in the residential, workplace and logistics sectors by accelerating our secured $33 billion development pipeline. We will fund this growth by recycling capital from the retail and retirement businesses and utilizing third-party capital. We are investing in people and talent. We have made several senior appointments across our business to scale and enhance our capabilities in apartments and mixed-use execution. We also look forward to welcoming 2 new members of the Stockland leadership team, Alison Harrop, who will be joining us in January as our new CFO, group's Chief Financial Officer; and Justin Louis, who joins early next month as our new Chief Investment Officer. I would also like to wish our current Chief Financial Officer, Tiernan O’Rourke, all the best for his new role outside the organization and thank him for his contributions to Stockland over the last 8 years. As mentioned, we are building on a strong foundation. Stockland delivered in FY '21, a statutory profit of $1.1 billion in a testing and challenging environment. The result included revaluation [ uplifts ], totaling $432 million driven primarily by strong gains across the logistics, life sciences and technology portfolio. We delivered funds from operation of $788 million, down 4.6% on FY '20 and FFO per security of $0.331 at the top end of our guidance. The underlying contribution from our residential business, excluding transaction profits, increased by 20.5%. The retirement living business also delivered a strong underlying performance for the year and record sales and strong settlement growth. Our commercial property portfolio generated solid FFO growth of 3.9%. This included a rebound in the performance of our retail town centers with improvement in leasing activity, rental spreads and rent collection rates over the second half of the year. Importantly, our operating cash flow was strong a $1 billion, and we ended the year with a balance sheet that provides ample flexibility to pursue strategic opportunities. Gearing ended the period at 21.4% toward the bottom end of our target range. The first quarter FY '22 operational update announced today demonstrates that the strong performance of our residential business has continued into the current financial year, with sales volumes for the September quarter up 8% on the prior corresponding period. While we are mindful of the potential for macro prudential measures to have some marginal impact on demand over time, we continue to see very strong levels of inquiry for our residential product. Sales rate for our Retirement Living villages were impacted over the quarter by state government lockdowns. We had anticipated this impact, and our experience from lockdowns in 2020 tells us that these sales should bounce back fairly quickly post the removal of movement restrictions. Integration of the Halcyon business is progressing well, and our enlarged land lease business remains on track to deliver approximately 300 sites in FY '22. As we expected, retailer sales across our portfolio have been heavily impacted by lockdowns in New South Wales and Victoria over the quarter. However, the impact on our business to date has been consistent with the expectations we shared with you at the time of our FY '21 results. We continue to progress planning and leasing for our key development opportunities across the logistics and workplace portfolios. These strong operational results have been delivered in an environment of continued disruption due to COVID-19. And during this time, the well-being and safety of our employees and stakeholders has been our highest priority. Stockland has continued to provide essential retail services to its communities as well as enabling customers across Australia to purchase their homes via our online platforms. While dealing with market and economic disruption is never easy, the success of our efforts is demonstrated by our high customer satisfaction, strong employee engagement scores and the quality of our services and developments. Stockland has been driven by its purpose, a better way to live since it was founded by Ervin Graf in 1952. We are proud of our strong track record of delivering superior environmental, social and economic outcomes, and I look forward to building on it. We recognize that we have a responsibility and a significant role to play in addressing long-term challenges such as climate change, resource scarcity, growing in equality and the recovery from the COVID-19 pandemic. These challenges are likely to affect all businesses and will accelerate into the future if left unaddressed. For that reason, ESG leadership is an essential part of our strategy. Our long-term performance and an important source of competitive advantage. It ensures our business remains future-focused and is crucial for Stockland to access capital, attract and retain talent and sustainable returns to our security holders over the long term. We focus on actions that reduce our emissions as well as those that build both Stockland's and the community's resilience to a changing climate. In February 2021, we brought forward our net 0 carbon target to 2028. In recognition of the urgency to cut emissions. More recently, we joined the United Nations race to 0, business ambition for 1.5-degree centigrade program, confirming our desire to pursue science base parts to emissions reduction. Supported through our partnership with the Clean Energy Finance Corporation and along with our builder partners, we continue to pursue our shared ambition to deliver net 0 homes and build momentum in the housing industry as we all transition to net 0 carbon. We are continuously innovating, piloting and testing the scalability of circular models to reduce our environmental impact. So I encourage you to refer to our annual report, which provides many great examples of the work we're doing in these areas. Our customers' desire to live in Stockland communities is a direct result of our focus on designing and activating places that celebrate green spaces, walkability, safety and encourage connection and belonging. We have excellent resident satisfaction, and the personal well-being scores across our residential and retirement living communities are higher than the national average. As an organization, we place great importance on the mental health and well-being of our employees, tenants, residents and customers. And this is more critical than ever, given the strains that the pandemic has placed on all of us. The Stockland CARE Foundation plays a crucial role in navigating the challenges of COVID-19, providing resources to keep us connected when restrictions prevent physical engagement. We continue to promote responsible business practices and sustainable development, particularly in the area of human rights and inclusion. And during the year, we launched our third reconciliation action plan and progressed our work to identify and remedy any modern slavery in our supply chain. I am proud to lead a sustainable business, driven by employees and partners who share a commitment to our purpose and our values. This will ultimately ensure the long-term future and the performance of Stockland for the benefit of all its stakeholders. On behalf of the Stockland team, I thank you for your ongoing support. I will now ask Katherine to reconfirm the procedural matters for participating in the meeting today.

Thank you, Tarun. As noted at the start of the meeting, for those security holders joining us today through the online Lumi platform, the polls are open to enable security holders and proxy holders to vote by clicking on the bar chart icon. You may submit any questions on the Lumi platform by clicking on the question icon on your screen. Security holders that have joined the meeting by phone have the option of asking questions using the moderated phone line by following the prompts on the teleconference facility. As disclosed in our meeting notice, participants who have dialed into the meeting are not able to vote using the teleconference facility. I will be moderating the questions from security holders during the meeting, and questions may be amalgamated if there are multiple questions on the same topic. Please note that only security holders may ask questions during the meeting. I confirm that we will address the questions during the formal business of the meeting as is our customary practice. While it may not be possible to respond to all questions during the meeting, we will endeavor to directly respond to any questions we don't get to as soon as practicable after the meeting closes. Before the Chairman takes us through the various formal resolutions set out in the notice of meetings, I will also run through the voting procedure. Voting on all resolutions will be by poll. As mentioned at the beginning of the meeting, the polls are open in respect of Resolutions 2 to 9 in the notice of meetings, and you may cast your votes at any time from now until the close of the polls. A representative of Computershare Investor Services will act as the returning officer and determine the results of the polls. We will provide the meeting with details of the proxy votes for each item of business after members have had a reasonable time for questions but before we move on to the next item. The results of the polls will be provided to the ASX as soon as they are available, which I expect will be later this afternoon. If you need assistance with voting, please refer to the instructions available in the online meeting guide available with your notice of meetings for help. A simple majority will be required to pass resolutions 2 to 7. Resolutions 8 and 9 are special resolutions and must be passed by more than 75% of the total votes cast on those resolutions by security holders present in person or by proxy and entitled to vote. Please note that open votes given to the Chairman will be voted in favor of all items of business. I will now hand over to the Chairman for the formal business of the meetings.

Thank you, Katherine. And we now move on to the first item on the notice of meetings, consideration of the 2021 financial statements in the annual report. Section 317 of the Corporations Act requires that the financial report, the director's report and the auditor's report for the year ended June 30, 2021, be laid before the meeting. Ladies and gentlemen, this is your opportunity to ask any questions you may have about the company's performance and outlook. No formal vote is required on this item. I confirm that questions about the election and reelection of directors, the remuneration report, the proposed amendments to the constitutions and other matters contained in the notice of meetings be deferred until we get to those resolutions. Both Tarun and Melinda as our Chair of the People and Culture Committee are also on hand to assist with questions today. Katherine, can I ask that you now read out any questions you have received via the online Lumi platform and via the telephone facility. Thank you.

Thank you, Chairman. Our first question comes from Mr. [ Aronson ] and is in relation to the proposed increase in manager fees from 0.5% to 0.75%. The Mr. Aroson's questions, other than because the other companies are doing it, why is the Board proposing to increase the manager's fee? Surely, the whole point of having a percentage-based fee structure is that if the manager wants higher fees, they can get that by performing better. He also does ask whether Stockland is an internally managed company, and is the trust manager Stockland Trust Management Limited, an independent external entity to which fees are paid?

Great. That's a great question. So thank you very much for the question. Yes, the fees are paid from the trust to the company, and that is one legal entity as the shares of the company and the units and the trust are stapled together. So it really goes from one part of the company to the other part of the company. The fee of 0.5% that went up to 0.75% hasn't been reviewed in quite a while. And the cost and complexity associated with operating managed investment schemes has increased dramatically over the recent years. And the increase in the fee really just covers those additional costs of managing such schemes. So thank you very much for the question. I hope that answers it for you.

Chairman, our next question comes from [ Ms. Staner ]. Her question is, with the removal of checks, would the company consider making distribution and dividend payments via direct credit to New Zealand security holders?

Yes, we've stopped paying using checks for New Zealand distributions. And I think the residents in New Zealand have to do it via direct debit, which has got a small fee attached. So I think that's a good question. It's something that's Katherine, the Company Secretary, and I will look at going forward and see if we can determine a better arrangement for that. Thank you.

Our next question comes from [ Ms. Lee ]. The question is, I note that data analytics are being used. This is a fast-moving and complex area. And while Stockland has a stake in a data analytics company, she wonders what steps are being taken to manage risks such as privacy, data mining and opaque algorithms that could produce an accurate customer profiles and biased results?

Yes. So it's a very pertinent question, Ms. Lee, for the current environment. So I'll break that down into 3 components. Firstly, privacy. Stockland takes privacy and private information very seriously. We have established a range of policies, processes and procedures to ensure that when people give us their private data, they are properly recorded, securely recorded and that access is restricted to only the people that are required to have that data, and that there's no specific identification of individual data in any kind of data analytics that we do. So we spend a lot of time making sure that is correct, and we continue to review those policies, processes and procedures all the time to make sure that they are of a high standard. Very connected to that is the cyber risk component. This is a continuing and ongoing threat that all organizations are trying to deal with. Really, over the last 4 to 5 years, Stockland has increased its cyber risk capability significantly. We've invested quite a lot of money in the prevention of cyber incidents happening and then the detection of cyber incidents happening. And it will still be required going forward as the people that attempt to break into company systems, they get more and more advanced, and we'll have to increase our capability in this area continuously. I don't believe we've had any major problems at Stockland. The other thing that goes with that is training of our people in terms of the way they can manage and control cyber risk attempts on Stockland and that's proved very beneficial. The third part is on data. And data is a very important element of helping us improve our customer experiences. We have used it, for example, in our residential business to help us identify potential customers that are interested in our blocks of land in our residential business. And that's proved very effective. And it's also provided a great service for those people that are looking for a product in our residential business. But again, that's all covered by the privacy and the cyber risk items that I mentioned before. And data and data analytics will continue to be a growing trend in our business as it is in many others, but it's got to have those controls and security around it, which are quite important.

We have a number of specific operational questions that have come through. Would you like the Managing Director and CEO to address those questions.

That would be good. And just take them one by one, that would be great.

Fantastic. Tarun, the first question we have comes from the Australian Shareholders' Association. The question is, what is the likely impact from retail rent abatements for Q1 '22? Are provisions adequate? And are we seeing a fast recovery now that we are moving out of lockdowns?

Thank you to the ASA for that question. As we mentioned in our August full year guidance, we had provided for the first half of this year to have impact from lockdowns in our retail business, particularly here in Sydney and also Victoria. So we had made provisions, and our expectation was that by the end of this calendar year, as vaccinations around the country started to ramp up, we would then start to see a more structured opening taking place in the second half of this year. Now with Sydney opening up and Melbourne not that far behind, currently, we are tracking within the expectations that we put in our guidance in terms of provisions at the start of the year. In terms of -- we have highlighted today in our quarterly report that because of that as we work through the abatements and particularly supporting small to medium enterprises, we will have a skew to second half earnings when we do anticipate trading conditions to start to come back, obviously, based on the country opening up, but that's our expectation into the second half.

The second question from the Australian Shareholders Association is demand for urban design communities continuing? And are there any delays in the supply chain and availability of construction workers?

Thank you again to the ASA for the question. The demand for our communities business, our residential business has continued over the quarter, and that's followed through a very strong FY '21 results. Low interest rates, credit availability, still a lot of high employment, high savings rate, and clearly a desire by a lot of our customers to move into our communities is driving that demand. We reported this morning 8% growth on a quarter-by-quarter prior corresponding period. And we had quite a strong quarter last year, so 8% on that was strong results. So demand side looks pretty good, and we anticipate those tailwinds will continue at least in the short term. We do note some of the macro prudential measures that are being brought into moderate price growth. We would like to see more supply come into the market. But we think those measures will have impact at the margin going forward, and that will emerge over time in our business. In terms of supply constraints and construction worker movements, there are some constraints because of the lockdowns, and the movement between our states has been restricted. We have seen because of that labor is not moving around, and construction workers are not moving around as freely, and you do see from time to time, bottlenecks emerging. And in the supply of goods, mainly timber is where we've seen a bit of tightness, but it's easing over the quarter. We do a lot of civil work obviously in our business, and that part of the market is still operating. So we've taken all of that into account in reconfirming our outlook for this financial year to do 6,400 lots. Although because of the couple of lockdowns we've had around the country, we will see a skew again in the fourth quarter of FY '21 as we're accelerating production to catch up on some of the time that we've lost due to lockdowns.

The final question from the ASA in relation to this business agenda item. The ASA commends your move into land lease retirement developments. How are you going to address the old brownfield retirement properties going forward?

Thank you again for the question. Yes, we're very pleased to be moving at pace into the land lease communities business. That communities business is targeting the 50- to 75-year demographic. It's a very fast-growing demographic. It's growing at 2.5% growth per annum. It's our baby boomers that are now getting into that age bracket. And they're really looking for lifestyle community living, which is what we're targeting to provide them over the coming years. We've now secured 7,800 lots in our pipeline through the acquisition of the Halcyon portfolio. That integration is going well as we reported in our Q1 update this morning. And we're looking forward to building vibrant communities for that demographic. Conversely, our Retirement Living business is focused on really customers in the 75 to 85 demographic. And that business, again, currently has tailwinds from the residential cycle. Clearly, with lockdowns, we had some impact on sales, but we anticipate they will pick up. And within that business, we do have brownfield opportunities, which is existing villages that are getting on in years, and there's a requirement to regenerate them for the benefit of our residents in those communities. We had some success with that with Cardinal Freeman here in Sydney, and we're looking at a number of other opportunities to, again, over the next 3 to 5 years, do some development activity to create new product for that 75- to 85-year demographic, which is our residents in that part of the business.

Thank you, Tarun. We had a similar question in relation to residential land lease communities from [ Mr. and Mrs. Wong ]. Their question was, how do you intend to promote and market the concept of residential land lease communities in Australia? And how big is the percentage of earning contribution for the group do you expect this division will make in 5 years?

Thank you for your question, [ Mr. and Mrs. Wong ]. Yes. So land lease is again, we are building scale in that business. This year, we're targeting to do 300 sites. Last year, we did 119. Clearly, with the Halcyon business, we've now got a very strong operating platform that we are now integrating into our operations at Stockland. And a lot of the business and marketing in that part of the business, that part of the market segment comes from word of mouth. And in Halcyon, there's a very strong track record of over 50% of our customers and inquiries in sales are coming from the word of mouth of the great experience other residents have had. So we are really looking to leverage that going forward. But of course, coming into the Stockland family, we have very evolved as the Chairman noted, digital channels and our marketing scale across the country where we're selling almost 7,000 homes per annum, we'll be using to leverage that marketing and sales expertise and the reach we have around the country through our digital channels and, of course, through the communities in which we operate to attract and to sell the land lease lifestyle community product across the country. So we are looking to launching new projects in Sydney, in Victoria, along the Eastern Seaboard, and we're looking to leverage, again, the scale of the business that we have.

Tarun, our next question comes from [ Ms. Lee ]. Her question is, I would first like to thank the Chair and Board for last year's results. I note the audit fees for audit services increased 21% from $2.603 million to $3.153 million. Can you explain why these fees increased significantly as the operations of the company did not seem to change significantly?

Thank you for the question, [ Ms. Lee ]. A couple of points here. The base fee for the auditors did not change. It remained the same. But over the year, in FY '21, they had extra work that was generated because of COVID, we had to do further audit work, clearly a lot of disruption in the business. So they carried out that work. We had some major changes in our accounting standards over the last year, so there was extra work required for that. And also, we continue to monitor, audit and report on the platform, the technology platform on which we're now operating. It's a single platform we invested very heavily over the last 2, 3 years. And the PwC were assisting us with, again, the integration of that platform, and they provided extra support. So they were the 3 reasons. But as I said, the base fee remain consistent.

Thank you, Tarun. Our next question comes from [ Mr. Fielding ], his question is, do you see inflation becoming an issue in the next 12 to 18 months with the property side of the business? And do you see a strong rebound with commercial property now that we seem to be nearing the end of COVID?

Thank you for your question, [ Mr. Fielding ]. So inflation outlook, clearly, at the moment, we are in disrupted markets. Our global supply chains are impacted, labor, again, the movement of workers. We haven't had immigration into the country for almost coming up to 2 years. International students are not here. So there are pockets of inflation that is happening here and around the world. Just to give you comfort in our underwriting and when we deliver our projects, we do carry contingencies, we forecast inflation. And currently, our underwriting and the projects we're delivering are operating within those guidelines. But we're very focused on making sure we're running scenarios for anticipating what may happen in the future. We do anticipate, though, with the opening -- expected opening of the economies as vaccinations take hold and we start to open our borders. That will allow more free movement of goods and services, but also of workers, which should have a moderating impact we hope on inflation. In terms of the commercial property business, where we have our logistics business, commercial office, and then our retail town center business. The commercial business is not that material for us, and it's been holding up quite well. And so has our logistics business occupancy is currently at 99%. We did some strong leasing over the quarter, achieved 2.6% rental growth. So those 2 businesses are very robust. And again, from a portfolio point of view, performing well. It's our retail town center business, where clearly we've had impacts, especially over the last 3, 4 months in New South Wales, in Victoria and in other states. We are starting to see that abate. It's great to see last week, New South Wales starting to open up. And now nationally, we have 96% of our tenants that are now open for trade in our town centers. So subject to, again, vaccinations continuing and COVID impact starting to become more normalized, then we do anticipate a rebound in customer traffic and therefore, retailer trade, especially over Christmas, not unlike how we saw in the first half of this calendar year when we opened up, we saw some very strong numbers coming through. So we do hope for a good Christmas for retailers and customers.

Thank you, Tarun. Our final question in relation to this agenda item comes from [ Ms. Lee ]. Her question is in relation to climate matters, the report talks about circular systems, but I didn't read about water. Our new developments, in particular, incorporating systems such as rain water collection, utilizing wastewater and planting of drought-resistant vegetation.

Thank you again, [ Ms. Lee ], for your question. Yes, as I mentioned in my speech, ESG and environmental resilience is paramount for us and our people and our stakeholders. And to answer your question simply, yes, our project is absolutely focus on closed loops on recycling water to preserve water and to provide, again, recycled water to the vegetation and the flora and fauna, we put into our projects. So absolutely, that's a key target for the team. And as you go through our communities, you will see great examples of that happening around the country.

Fantastic. Thank you, Tarun, there are no further questions in relation to this agenda item.

Thanks, Tarun. And thank you all for those very excellent questions. There being no further questions, we will note the financial report and directors report and auditors report and move on to other business. We will now move on to the items of business. Resolution 2 is the election of Mr. Laurence Brindle. The resolution is that Mr. Laurence Brindle is eligible and having offered himself for reelection, is elected as a Director of the company. Laurence Brindle was appointed to the Board on November 16, 2020. And Laurence has extensive experience in the acquisition, development and management of landmark property assets. His executive career includes 21 years with QIC where he served in various senior positions, including a long-term member of QIC's Investment Strategy Committee, and Head of Global Real Estate, where he was responsible for a $9 billion portfolio. Laurence is currently Chairman of both National Storage REIT and Waypoint REIT. He is former Chairman of Shopping Center Council of Australia and has previously been a Director of Westfield Retail Trust and Center Group. Laurence is a member of the Audit Committee and the Sustainability Committee. I am sure you will agree that Lawrence brings much valuable experience to the Stockland Board, and his election today is unanimously recommended by the Board. I will now invite Laurence to address the meeting.

Good afternoon, ladies and gentlemen. Thank you for the opportunity to address the meeting and present myself formally for election to your Board of Directors. I joined the Board in November last year, and I have also served as a member of the Audit Committee and the Sustainability Committee since that time. There are a number of reasons why I think that I can serve you well as an independent Nonexecutive Director. First, I have deep experience in real estate investment, development and funds management. I believe that I can make a meaningful contribution to the Board's deliberations around strategy and in investment and development matters broadly defined. Second, I have significant experience as a listed company director, particularly in the real estate sector. I have a good understanding of modern governance practices where I can pursue together with my Board colleagues and the Stockland executive team, continuing high standards on behalf of all securityholders. Finally, having been immersed in the sector for many years, I have access to a strong network of relationships in our industry, which I believe may enable me to further contribute to the Board of Stockland in a meaningful way. I am very pleased to present myself for election to the Board, and for the opportunity to participate in Stockland's long history of success. Thank you.

Thank you, Laurence. For those that have not yet as -- not as yet placed their vote, please take a minute to cast your vote for resolution 2 via the online Lumi platform. Katherine, are there any questions on this resolution?

Chairman, we have 1 question on this resolution from the ASA. The question was the ASA would like Mr. Brindle to speak to the meeting about what he feels he can bring to the Board of Stockland, which he has just covered in his presentation.

Yes. Thank you, Katherine. I think Laurence has covered that point off. But just while I'm here, can I acknowledge Alan and Julian from the ASO for taking a very strong interest in our company and sending through some very good questions. So if there are no more questions -- no further questions, Katherine. I will refer to the proxy voting, which is now shown on the screen. As you can see, over 96% of proxy votes have been cast in favor of the resolution. Congratulations Laurence. Resolution 3 is the election of Mr. Adam Tindall. The resolution is that Mr. Adam Tindall is eligible and having offered himself for election is elected as a Director of the company. Adam Tindall was appointed to the Board on July 1, 2021. Adam has over 30 years' experience in investment management and real estate. Adam was the Chief Executive Officer of AMP Capital from 2015 to 2020, where he led a global leading investment manager overseeing funds and separate accounts for clients across a range of asset classes, including real estate, infrastructure, equities, fixed income and multi-asset capabilities. Adam's prior roles at AMP Capital included Director and Chief Investment Officer for Property, leading a team and managing -- leading a team managing a $19 billion portfolio of real estate investments on behalf of domestic and international institutional investors. Prior to 2009, Adam held senior leadership roles at Macquarie Capital and Lend Lease. Adam holds a Bachelor of Engineering with honors and is a fellow of the Australian Institute of Company Directors. Adam is a member of the Audit Committee and the Sustainability Committee. And I am sure you will agree that Adam also brings much valuable experience to the Stockland Board, and his reelection is unanimously recommended by the Board. I will now invite Adam to address the meeting.

Good afternoon, everyone. Thank you for the opportunity to address the meeting and put myself forward for election to your Board of Directors. When Tom approached me last year, I was immediately interested in being a part of this highly regarded company. This interest deepened as I came to understand the quality of the Board, the management team and the potential of the organization. So I am proud to be seeking your support to join the Board and to have the opportunity and privilege to contribute to building on Stockland's 69-year history. Since joining the Board in July this year, I've been a member of the Audit Committee and the Sustainability Committee. And this has been a part of an excellent induction to the role. As a Director of Stockland, I bring skills and experience that working in combination with other directors can help guide the future direction of the company. I also have the time to dedicate to fulfill my duties as a nonexecutive Director of Stockland, and I am focused on securityholder returns over the short and longer term, and I am committed to Stockland continuing to be Australia's leading community creator and a strong ASX 50 company. I look forward to and appreciate your consideration of me as a Director of Stockland. Thank you.

Thanks, Adam. If you have not already cast your vote, please take a minute to cast your vote for resolution 3 via the online Lumi platform. Katherine, can I ask if there are any questions on this resolution.

Chairman, we have 1 question on this resolution. The question is from the ASA. And the question is, the ASA would like Mr. Tindall to speak to the meeting about what he will bring to the Board of Stockland, which we've just heard from his presentation.

We have. Thank you very much. Okay. If there are no other questions, I'll refer to the proxy voting, which is shown on the screen. As you can see, over 97% of proxy votes have been cast in favor of the resolution. Congratulations, Adam. Ladies and gentlemen, Resolution 4 is for the reelection of Ms. Melinda Conrad to the Stockland Board. The resolution is that Ms. Melinda Conrad being eligible and having offered herself for reelection is reelected as a director of the company. Melinda was appointed to the Board on May 18, 2018. Melinda has more than 25 years of expertise in consumer-related industries, including as a retail entrepreneur and CEO and roles at Colgate Palmolive and Harvard Business School. Melinda is currently a Director of ASX Limited and Ampol Limited. She is also a nonexecutive Director of the George Institute for Global Health, the center for independent studies and is a member of the AICD Corporate Governance Committee. Melinda is Chair of the People and Culture Committee and a member of the Sustainability Committee. The reelection of Melinda is unanimously recommended by the Board. I would like to invite Melinda to address securityholders.

Thank you, Mr. Chairman. Good afternoon, ladies and gentlemen. Thank you for giving me the opportunity to address your meeting. It is a privilege to have served as one of your directors and to be seeking your approval today to continue to serve as your representative. I've been a Non-Executive Director of Stockland since May 2018 and currently serve as the Chair of the People and Culture Committee, and I'm a member of the Sustainability Committee. I'm immensely proud to serve on the Board of Stockland. Our commitment of being a great Australian real estate company that makes a valuable contribution to our communities and to our country is something which I am very passionate about. Our core values of community, accountability, respect and excellence are what underpinned the company and which guide me as a director to help deliver value to our stakeholders. It's fair to say that over the past 2 years of uncertainty and disruption, the company's resilience and commitment to these values have been tested. It hasn't always been easy, but the strength of our result comes down to the commitment of our people in upholding these core values. I'm continually impressed with our executives' hard work and dedication. And as we position our business for the future, I'm genuinely excited about the many possibilities of what our people can achieve in the times ahead. It is also a true pleasure to work with my fellow Board colleagues. In my view, we, as a group, have the appropriate culture of constructive challenge, accountability and collegiality. My background and experience is set out in the notice of the meeting, revolve around strategy, customer focus, innovation and stakeholder engagement. These areas of expertise are particularly relevant for Stockland at this time as we position the business for the future and leverage the benefits of our diversified model. I'm confident that I have the time and capacity to serve on your Board. I currently serve on the listed boards of the ASX Limited and Ampol Limited. I'm also a Non-Executive Director of the Cybersecurity Technology Company, Penten, the George Institute for Global Health, The Center for Independent Studies and I'm a member of the AICD Corporate Governance Committee. I am dedicated to acting independently, understanding stakeholder priorities and serving with the utmost transparency and integrity. And like you, I am a shareholder of Stockland, and I am well aware of the importance of delivering shareholder returns. If elected today, it would be an honor to continue to serve as a Director of Stockland and to help create lasting value for our investors and our communities. Thank you.

Thank you, Melinda. If you have not already cast your vote, please take a minute to cast your vote for Resolution 4 by the online Lumi platform. Katherine, are there any questions on this resolution?

Chairman, we have 1 question on this resolution from the ASA. The question is the ASA would like Melinda to talk about her experience on the Board and how she feels she contributes to Stockland, which we've just heard from her address.

That's great. Thanks, Katherine. As there are no more questions, I'll refer to the proxy voting, which is shown on the screen. And as you can see, over 98% of proxy votes have been cast in favor of the resolutions. Congratulations, Melinda. The next item for consideration is resolution 5, the reelection of Ms. Christine O'Reilly to the Stockland Board. The resolution is that Ms. Christine O'Reilly being eligible and having offered herself for reelection, is reelected as a Director of the company. Christine was appointed to the Board on August 23, 2018. Christine's executive career includes 30 years experience in both financial and operational entities, both domestically and offshore. Following an early career in chartered accounting and investment banking, Christine has held a number of senior executive roles in diverse industries, including CEO and Director of the GASNET Australia Group and Co-Head of unlisted infrastructure investments at Colonial First State Global Asset Management. Christine is currently a Director of BHP Group Limited, Medibank Private Limited, and Baker Heart and Diabetes Institute. Got it. Christine is the Chair of the Risk Committee and a member of the Audit Committee and Sustainability Committee. The reelection of Christine is unanimously recommended by the Board. I would like to invite Christine to address securityholders.

Good afternoon, ladies and gentlemen. I am pleased to submit myself for reelection to your Board. I have been a Nonexecutive Director of Stockland since August 2018 and currently serve as the Chair of the Risk Committee as well as being a member of the Audit and Sustainability Committees. I'm also currently a Director of BHP, Medibank Private and the Baker Heart and Diabetes Institute. I will retire from Medibank Board this November, and then I am joining the ANZ Bank Board. Importantly, this is an exciting time for Stockland, with the appointment of a new CEO and the consequent renewed focus on the evolution required to best position Stockland to deliver long-term value to you, our shareholders, while maintaining our strong commitment to creating social value for all of our stakeholders. This renewed focus includes responding to the challenges and permanent societal changes arising from the pandemic. My extensive experience as both a CEO and a nonexecutive director has equipped me with the breadth of skills, experience, insights and perspectives to contribute meaningfully to the discussions and deliberations at the Board and Risk and Audit Committees. I also have the desire, energy and capacity to perform my role as a Nonexecutive Director at Stockland. I would greatly appreciate your support for my reelection.

Thank you, Christine. If you have not already cast your vote, please take a minute to cast your vote for resolution 5 via the online Lumi platform. Katherine, are there any questions on this resolution?

Chairman, we have 1 question on this resolution from the ASA. The question is, the ASA would like Christine to talk to the meeting about her time on the Board and what she feels she brings to Stockland, along with how she will manage her workload with the addition of her new ANZ directorship and November and other Board positions. So Chairman, Christine has addressed the start of that question already but we may wish to address the specific question on ANZ.

Yes. It's important for Christine to comment on her workload just before we hand over to Christine, I'd just like to say that as a governance requirement on Stockland, all the directors have to be satisfied by themselves that they have the time and commitment to give to Stockland and as Chair, I confirm that all of our directors are committed and passionate about serving Stockland. But I'd like now -- as requested, we have Christine on the line, and I will hand over, and she can make a few comments Thanks, Christine.

Thanks, Chair, and thanks, Alan, and Julian, for the question. Maybe look, just it's worth the context that when people ask me what I do, I don't say that I'm retired, I instead say that I'm, in fact, a professional Non-Executive Director. And I take that very, very seriously. And as a number of my colleagues have already said in their addresses, part of being a professional Executive Director is very much having not only the energy, but the capacity to do your role and to be able to grow into that role and expand and dedicate even more hours as and when required. In my case, I certainly believe that I have done that and would obviously want to continue to do that and have never failed to do that in the roles that I have had. That being said, I also mentioned that in my particular case, I've been on another board now for an appropriate period of time for that Board to go through a succession process. So I'm stepping down from Medibank as of November and will be instead moving on to the ANZ Bank. And I suspect that the question was about the number of listed bank -- sorry, the number of listed roles. And clearly, I'm swapping 1 out for the other. Thank you.

Great. Thanks, Christine. And just from my perspective, Christine is an outstanding Chairman of the Risk Committee and shows her commitment every time she turns up for board meetings. So thank you, Christine. As there's no more questions, I'll refer to the proxy voting, which is shown on the screen. As you can see, over 98% of proxy votes have been cast in favor of the resolution. Congratulations, Christine. The next item for consideration is resolution 6. The resolution provides that the company's remuneration report for the financial year ended June 30, 2021 be adopted. Section 250SA of the Corporations Act allows securityholders to have a reasonable opportunity to ask questions about or make comments on the remuneration report. As securityholders will know, this is an advisory nonbinding resolution. But your board takes into consideration the views of our investors on the important subject of executive remuneration policy. I will ask Melinda to assist me in addressing any questions relating to this resolution. If you have not already cast your vote, please take a minute to cast your vote for resolution 6 by the online Lumi platform. Katherine, are there any questions on the approval of the remuneration report.

Thank you, Chairman. We have 4 questions that have come through in relation to the remuneration report. The first question comes from the ASA. The question is, can you explain the reasoning around the removal of FFO to the long-term incentives? Will we see a secondary measure applied to long-term incentives? Or is it going to remain only as TSR. Can you explain the reasoning around the choice of companies chosen? And when will you see a reinstatement of FFO?

Great. Thank you very much. Yes. The -- we removed the -- we did a review of the remuneration structures that we had in place. And given the fact that we were in COVID for the last few years, it became very difficult to set an FFO measure for the long term, given we're in a worldwide pandemic. So we removed that measure, and we just went to 1 single measure, which was relative total shareholder return. As Tarun and the senior leadership team continue to develop their strategy, we will be reviewing how that strategy evolves in relation to setting an appropriate remuneration structure that supports that strategy. And we may consider bringing FFO back at that point in time, but we will wait until Tarun has -- and the team have finalized their strategy. The second part was about the relative nature of it and the basket of companies. We try and choose a basket of companies that is most relevant to Stockland and has some similarities. Well, the majority of that operation is similar to Stockland. Obviously, that narrows the field significantly. We have added and we have taken out companies in the past that either do look like us or don't look like us. If companies merge away and change their business model, and we took 2 companies out of the index for this results on the basis that the nature of their businesses were very different to the nature of Stockland. In particular, basically a fees based or a funds management based business and significant overseas property holdings. They became too distant from what Stockland does, which is an Australian-based property business. So that's the rationale, and I hope that answers the question. Thank you much for the ASA asking. Yes. Next question.

Yes. Thank you, Chairman. Our next question comes from [ Mr. Aaronson ]. His question is in regards to the remuneration report, I would first like to comment that I'm pleased with the performance measures chosen for the short-term incentive plan. These measures, in combination with the long-term incentive performance measure adequately reflect the genuine performance of the company. He would like to ask, though, why the financial outcomes in the short-term incentive plan, FFO and return on equity, do not specify the specific performance that needs to be achieved. And his questions are, does this not allow management to lower the hurdle in times of poor performance so that they receive their short-term bonus regardless of poor performance and how can management be held account for poor performance if they are not held against a transparent fixed performance hurdle.

Thanks, [ Mr. Aaronson ], it's a very good question. Yes, it's very important we hold management accountable for delivery of their objectives. In this COVID environment, it became really difficult to understand what the FFO was going to be, as I mentioned, for the LTI. However, seeing we're coming out of a lockdown and hopefully we will stay out of lockdown. I am sure that we will revert back to the normal putting of targets on FFO as we go forward. And I think your comment also refers to the disclosure of those measures and the remuneration of the people and policy committee who will -- people and policy community who will review that as we go through, particularly in relation to the strategy, as I mentioned in answer to the last question. So we will review that. And you'll see the outcome of that review in the next annual report. So thank you very much. Katherine?

Chairman, the next question comes from the ASA. The question is, the ASA is firmly opposed to retention payments as we feel there is enough incentive built into short and long-term awards for KMP to keep them engaged. In FY '21, Louise Mason was paid $600,000 and Andrew Whitson, $800,000 in retention payments. Can you explain your rationale for these payments?

Yes. Thanks, ASA for the question. I think I need to broaden the answer to this because what we did during the year was we transitioned from one CEO to a new CEO. And in any CEO transition, that brings uncertainty. And so the Board was very focused on ensuring that, that transition operated extremely smoothly. From the time we announced for the time, Mark decided to retire. And from the time we announced Tarun, the Board was very active in managing all the aspects of that transition. A component of that transition was ensuring that our senior executives were secured in those positions that they are in. And for the 2 key executives that you mentioned, they are the 2 key executives that run our major operating divisions. So we needed to ensure from a Board perspective and from their perspective, that they felt recognized for their seniority already in their experience in those positions. And from the Board perspective was to protect the shareholder interest to ensure the stability of that senior leadership teams through that transition. The transition from Mark to Tarun in Stockland has been very well executed. And it's not just the Board that did that. It was a credit to Mark, and a credit to Tarun and a credit to that senior leadership team that helped through that period of transition. Thanks, Katherine.

Thank you, Chairman. The final question in relation to this agenda item is from [ Mr. Fielding ], his question is, can you advise on the increase of Ms. McKenzie's remuneration from 2020 to 2021 with a comment that overall remuneration for all looks reasonable?

Thanks [ Mr. Fielding ], yes, it does look like she got to pay raise. But no, it was just the fact that she started in December 2019, and she was only here for part of the year. And so next year, you'll see that the -- her fees will be consistent with everyone else's. Thank you, Mr. [indiscernible]. Any other questions?

There are no more questions in relation to this resolution, Chair.

Excellent. Well, I'll refer to the proxy voting, which is shown on the screen. And as you can see, 92.5% of proxy votes have been cast in favor of the resolution. Our next Resolution 7 relates to the approval of performance rights to be granted to our Managing Director. The resolution is as shown on the screen. The Board proposes to offer participation in the Performance Rights Plan to the Managing Director, Mr. Tarun Gupta, who is eligible to participate in the plan as an Executive Director. Mr. Gupta's participation in the plan forms part of his usual remuneration arrangements, and is consistent with his remuneration arrangements since commencing in his role as Managing Director in June 2021. Under Listing Rule 10.14, ASX requires that securityholders approve any acquisition of equity securities under an employee incentive scheme by a director. Accordingly, securityholder approval is sought for the grant of 654,094 performance rights to Tarun and in consequence of vesting of those performance rights. The acquisition of Stapled Securities by Tarun. In accordance with the planned rules and on the terms and conditions summarized in this explanatory statement. Further details of the performance rights plan are set out in the explanatory memorandum attached to the notice of meeting. The directors, other than Tarun, unanimously recommend that securityholders vote in favor of this resolution. Again, I will ask Melinda to assist me in addressing any questions on this resolution. Once again, please take a minute to cast your vote for resolution 7 through the Lumi online platform. Katherine, are there any questions on this resolution?

Chairman, we have a series of questions from the ASA in relation to this resolution. I may read them all together, and then we can come back to individual questions for you to answer. So the commentary is the ASA does not like the use of sign-on payments because they are very hard to value. However, we recognize the commercial imperative of this when attracting talent. Mr. Gupta's $3.72 million sign-on payments represents 62% of the $6 million in potential incentives for [ garnered ] lend lease, how did Stockland come up with that amount? The second comment is how was the $3.72 million sign-on bonus for the new CEO calculated? When considering that all Mr. Gupta gave up was an STI in 2021, but if awarded, would have been worth at maximum, what are the lend lease KMPs received, which was $300,000 in cash and $300,000 in deferred equity. And the final part of their question, for the LTI, which was not awarded in 2020 or 2021, he gave up 15,842 performance rights, be generous in adding the 14,388 rights which all the other executives had canceled. And at Lend Lease's higher share point in 2021 this was worth $446,000, which together makes a grand total of $1.046 million, which is 29% of the amount that Stockland awarded him.

Thanks to the ASA, again, for the question. That's a very complicated question, especially with the numbers in it. And so what I'll do is I'll answer that question at a high level. And then Katherine will come back to you directly with the -- a clearer view on how those -- how the mathematics works on to answer your question. However, at a high level, we call them buyouts. We don't call them sign-ons just for the information. They are a commercial imperative, as you say, and it's just a function of the labor market here in Australia. We took what Tarun was entitled to under his previous employer. And we made a commercial judgment at a point in time about the probability of those elements that he was entitled to as to whether or not they would vest. And on that basis of that commercial assessment we reduced the entitlements by -- that Tarun had on foot by 38%. So they weren't all paid in cash. There was some component of cash. There was some component of deferred equities, which vest over time. And there's a third component, which is equities which have hurdles attached to them. And so not only the discount, but also the structure was as close as we could get to what Tarun may have achieved if he had remained with his previous employer. But these are done at a point in time. And once you move past that point of time, things change. But at that point in time, that was the assessment we made. But as I said, Alan and Julian, we will come back to you on those -- on the details of those answers. But thank you for your question. Any other questions?

There are no further questions on this resolution, Chairman.

Thank you, Christine (sic) [ Katherine ]. I'll refer to the proxy voting, which is shown on the screen. As you can see, close to 98% of proxy votes have been cast in favor of the resolution. The next 2 resolutions, 8.1 and 8.2 relate to proposed amendments to the constitutions for Stockland Corporation Limited and Stockland Trust. Both resolutions are special resolutions and must be passed by more than 75% of the total votes cast on those resolutions by securityholders present, in person or by proxy and entitled to vote. The resolution are as seen -- are as shown on the screen. Stockland's current constitutions were last amended at the 2013 Annual General Meeting. Since 2013, there have been a number of developments at law and in the ASX listing rules, corporate governance principles and general corporate and commercial practice for ASX-listed entities. Stockland has undertaken a review of the constitutions for the company and the trust. And as a result, it is proposed that amendments be made to both constitutions to remain up-to-date with market practice, and provide flexibility for the group to efficiently and effectively manage its governance arrangements. The key amendments proposed to be made to Stockland's current constitutions are outlined in the explanatory statement to the notice of meetings and copies of the proposed amended constitutions have been and are still available from the Stockland website. Both resolutions 8.1 and 8.2 are required to be passed for the proposed amendments to the constitutions of the company and trust to take effect. I now table a copy of the constitutions for Stockland Corporation Limited and Stockland Trust at the meetings and sign them for the purposes of identification. This is nuance of the law but I did that. So the directors unanimously recommend that securityholders vote in favor of both resolutions 8.1 and 8.2. I will ask Katherine to assist me in addressing any questions on those resolutions. Once again, please take a minute to cast your vote for Resolutions 8.1 and 8.2 through the Lumi online platform. Katherine, do we have any comment -- questions on these resolutions?

Chairman, we thank [ Mr. Arison ] for his earlier question in relation to the manager fee, which is covered in the constitutional amendments. We have not received any further questions in relation to this resolution.

Great. Thank you. Thank you, Katherine. I'll refer to the proxy voting, which is shown on the screen. As you can see, more than 99% of proxy votes have been cast in favor of Resolutions 8.1 and 8.2. Both resolutions have been passed. The final resolution for today's meeting is Resolution 9. This is also a special resolution requiring more than 75% of the total votes cast on this resolution by securityholders present, in person or by proxy and entitled to vote. Resolution 9 is as shown on the screen. Securityholder approval is being sought for the renewal of the proportional takeover provision currently included in Rule 6.8 in the company's constitution in the form last approved by securityholders. A proportional takeover is a takeover offer where the offer made to each securityholder in the company is only for a proportion of that securityholder shares and stapled securities. These provisions prohibit the registration of transfers of shares under a proportional takeover bid unless a resolution is passed by securityholders approving the bid. Under the Corporations Act, proportional takeover provisions will cease to have effect after the third anniversary of their last renewal, unless they are renewed by securityholders. The effect and potential advantages and disadvantages of the takeover approval provisions are set out in detail in the explanatory statement. The Board believes the potential advantages for securityholders of the takeover approval provisions outweigh the potential disadvantages. In particular, securityholders as a whole will be able to decide whether or not a proportional takeover bid is successful. The directors unanimously recommend that securityholders vote in favor of this resolution. I will ask Katherine and assist me in addressing any questions on this resolution. Once again, please take a minute to cast your vote for Resolution 9 through the Lumi online platform. And Katherine, are there any questions on this resolution?

We have no questions on this resolution, Chairman.

Thank you, Katherine. I'll refer to the proxy voting, which is shown on the screen. As you can see, more than 97.4% of proxy votes have been cast in favor of resolution 9, and I declare this resolution passed. That was the last item of formal business. All persons wishing to cast a vote should place their vote through the online Lumi platform now. Thank you, ladies and gentlemen. The polls will now be closed. The final results will be announced to the ASX later this afternoon. Before we conclude, I'll say a few words in relation to the retirement of Barry Neil. As previously mentioned, Barry is the longest-serving member of our current Board. Barry has participated in 2 CEO transitions, navigated the challenges that occurred as a result of the global financial crisis and COVID-19. Throughout his 14 years as a director, Barry made a significant contribution with his extensive property expertise and deep sector knowledge. This has provided significant continuity and insight during his tenure. Barry has also held numerous roles, including membership of the Audit Committee and the Sustainability Committee, and he has also chaired the Stockland Capital Partners Limited Board, the responsible entity for Stockland's unlisted funds. During his tenure, Barry has seen many of our assets evolve from investment proposals to thriving communities and town centers. His encyclopedic knowledge of our projects, his enthusiasm for our people and our purpose, combined with his deep experience in the sector have been invaluable to the Board and management. Barry, on a personal note, you have been a great support to me as Chair, your insights, experience, knowledge and instinct in the property sector has guided myself, the Board and management to make sound decisions to the benefit of our shareholders, and we will miss you Barry. Barry, on behalf of the Board and our securityholders, we thank you for your great service to Stockland, and we sincerely wish you well for the future. That concludes the business of this meeting, and I will now declare the meeting closed. Thank you, and good afternoon.