Stockland (SGP.AX) Earnings Call Transcript & Summary

Welcome to Stockland's market briefing. There will be a short presentation followed by a Q&A session. [Operator Instructions] I will now hand over to our first speaker, Mr. Tarun Gupta.

Good morning. My name is Tarun Gupta, CEO and Managing Director. Thanks for joining us at short notice for our market briefing on the expansion of our MPC portfolio business and progression of our capital partnering strategy. Before we begin, I would like to start by acknowledging the traditional owners and custodians of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to Elders past, present and emerging. Joining me today is Andrew Whitson, CEO, Development; and Alison Harrop, our CFO. Today, we are pleased to announce the acquisition of a high quality, actively trading MPC portfolio for up to $1.06 billion from Lendlease Corporation via the formation of the Stockland Residential Communities Partnership with our existing partner, Supalai Australia Holdings Pty Ltd. This acquisition is strongly aligned to our strategic priorities and represents a step change in the reshaping of our portfolio. We have strategically restocked our land bank, positioning our business for the recovery phase of the residential cycle and securing additional opportunities for our land lease communities and community real estate platforms. We expect the transaction to enhance our return on invested capital; generate new, high-quality recurring income streams and to be accretive to our FFO per security from FY '25. When we presented our group strategy 2 years ago, we set a goal of leveraging our market-leading residential capabilities by increasing our exposure to residential development, rental and management activities. This transaction represents a step change in executing that strategic target, increasing our residential capital allocation to the residential sector from 22% to 25% and providing a new source of substantial residential management earnings and over time, additional rental income. The portfolio represents a unique opportunity to strategically restock our pipeline at scale, growing our pipeline by almost 28,000 lots and providing exposure to new complementary residential corridors. We expect the newly acquired portfolio to generate approximately 2,500 additional settlements per annum from FY '25 and to provide additional upside from adjacent opportunities, including circa 2,500 land lease home sites and community real estate assets such as essential retail, childcare and medical centers. Scaling our capital partnership platform is another key priority for the group. We are pleased to be taking on this unique opportunity alongside an existing capital partner, Supalai, via the formation of the Stockland Residential Communities Partnership, SRCP, which achieves immediate scale with this acquisition and will benefit from leveraging the existing Stockland platform. In undertaking this transaction, we are furthering our strategic ambitions, enhancing our return on invested capital and generating additional FFO per security while maintaining a prudent balance sheet position as Alison will detail. Now turning to the details of the transaction. SRCP will acquire up to 12 high quality, actively trading assets for a total consideration of up to $1.06 billion. The 12 communities comprised a total of approximately 27,600 lots and are 96% weighted to deep markets across the Eastern seaboard. These are scale projects with an average community size of 2,300 lots. Our experience is that larger projects allow us to best leverage our capabilities and market insights, selling on multiple fronts and providing a greater range of product options to suit different customer categories and adapt to shifting buyer preferences. Importantly, the transaction consideration of $1.06 billion reflects our bottom-up assessment of the value of the individual MPC projects to be acquired with no consideration for economies of scale benefits or potential upside from opportunities in adjacent uses. We have secured this portfolio in attractive terms, and the transaction is structured in a capital-efficient manner. Settlement is expected to occur progressively in tranches over FY '24 and FY '25, subject to regulatory approvals, with the first tranche of this expected in early 2024. SRCP has also secured the right to acquire, at its election, additional parcels of land for up to $239 million with settlement expected by the first quarter of FY '25 if the right is exercised. We expect to receive full economic entitlement to the portfolio by fourth quarter FY '24 and expect the transaction to be accretive to Stockland Group FFO per security from FY '25. Now turning to the new capital partnership. SRCP is a closed-ended fund for the development of the acquired portfolio with Stockland holding 50.1% interest and Supalai holding a 49.9% interest. Stockland and Supalai have been partners in MPC development since 2020 at Katalia in Melbourne, and we have strong alignment and understanding of each other's organizational requirements and strategic ambitions. SRCP will benefit from that strong alignment and Stockland's leading platform while accelerating the execution of Stockland Group priorities, enhancing ROIC and improving recurring income. I will now hand over to Andrew to take us through our residential strategy and the acquisition portfolio in more detail.

Thanks, Tarun, and good morning, everyone. We have strong conviction in the medium-term outlook for the residential sector. The fundamentals are compelling with ongoing land supply constraints amid a strong rebound in population growth and net overseas migration driving high levels of housing requirements across Australia. Dwelling completions are currently running at 175,000 dwellings a year, well short of the estimated 240,000 dwellings required to meet the National Housing Accord over the next 5 years. We believe the greenfield housing market has a crucial role to play in addressing the undersupply of housing by achieving speed to market and providing more affordable product. Over the past 24 months, the uncertain macroeconomic environment has weighed on residential market conditions. We're now beginning to see some improvement in key residential market drivers, including increased expectations for a stabilization of the interest rate environment. We believe this is the time to position our business for residential market recovery, and this transaction represents a compelling opportunity to restock our pipeline at an attractive point in the cycle. Over the last 7 years, we've built a market-leading MPC platform, which is underpinned by 3 key elements. The first, our scale, which enables us to develop deep primary source data that we can leverage to understand what our customers want, increase our conversion rate and lower our cost per sale. Our end-to-end capability also sets us apart. The Stockland team has a unique ability to source opportunities and take them through the entire development life cycle. And finally, our brand, which is built on the quality of the communities that we've created over the last 7 decades. The formation of the Stockland Residential Community Partnership allows us to leverage these strengths to drive returns for us and our partner, capturing scale benefits in areas such as procurement and project delivery, maximizing cross-selling opportunities between projects and leveraging the fixed cost base of the Stockland MPC platform. Turning now to the details of the acquisition portfolio. Tarun has already spoken about the scale and quality of the portfolio that we are acquiring. I'd like to touch on 2 additional points. Firstly, we're acquiring a portfolio that is actively trading with planning approvals in place. This will enable us to drive attractive returns from day 1 with a shorter payback period than for a typical MPC project and ensure that the partnership have flexibility around the timing of releases to capture any shifts in market demand. And secondly, the portfolio is complementary to our existing land bank, increasing our exposure to the heavily supply-constrained New South Wales market and to South East Queensland, which is benefiting from positive interstate migration and relative affordability advantages compared to the rest of the Eastern seaboard. Within these markets, the projects we've acquired are located in corridors that are complementary to Stockland's existing exposures in locations we have identified as priority development areas. Our past experience in these corridors means we know and understand the customer base and market dynamics within these corridors. These corridors have strong forecast population growth at 2.4% per annum, above the estimated 1.5% forecast nationally; and high connectivity to amenity and services, including transportation links to urban areas and employment hubs. As Tarun has highlighted, we priced this acquisition based on our bottom-up assessment of value for the projects as MPC developments. We believe the MPC opportunity, in isolation, is compelling even before allowing for the additional income streams that we will generate from the new partnership and the potential for adjacent uses. Over time, we believe the acquired portfolio provides scope for the creation of up to 9 additional land lease communities, comprising approximately 2,500 potential home sites. [ Creating ] communities is about much more than just delivering homes. The provision of community real estate assets, such as childcare, education, health care and essentials-based retail uses, as part of these scale projects will provide high-quality rental and management income streams that are incremental to the value that we've ascribed to this portfolio. I'll leave it there and hand over to Alison.

Thanks, Andrew. In addition to the strategic benefits of this transaction, we expect it to drive strong financial returns. We expect the portfolio to deliver through-cycle development margins within the target range for our existing portfolio and a return on our invested capital toward the upper end of our 14% to 18% target range, and this is before considering the additional benefit of fee income related to the partnership. Adjacent uses such as land lease and community real estate provide opportunities for additional high-quality earnings streams that have not been factored into the purchase price. We expect the transaction to be accretive to FFO from FY '25, which will be our first full year of ownership. Turning to transaction funding. The acquisition has been structured in a capital-efficient manner. Our total equity contribution to the partnership of approximately $400 million will be spread over 3 payments during FY '24 and FY '25. On a pro forma basis, this equates to a gearing impact of 1.9%. The initial payment, expected to be made in early 2024 depending on the timing of regulatory approvals, equates to a 0.5% increase in pro forma gearing. The transaction will be funded from our existing debt capacity. I'll now pass back to Tarun for some closing remarks.

Thank you, Alison. So this transaction is a step change in the execution of our strategy, leveraging the strength of our market-leading residential platform and positioning us for the recovery phase of the residential cycle and creating new, high-quality recurring income streams. We have strategically restocked our land bank at scale, expanding our market reach into adjacent corridors and securing additional opportunities for our land lease communities and community real estate platforms. We're pleased to be extending our relationship with Supalai and scaling our capital partnership platform further. The transaction is expected to generate an attractive return on invested capital and to be accretive to our FFO per security from FY '25. We will now open the lines for questions and answers.

[Operator Instructions] Our first question today comes from Tom Bodor from UBS.

I was just interested in if you need to take on any incremental overhead at the Stockland level, noting that the [ land lease ] platform is not coming across with the transaction?

Yes, Tom. We will be taking on some of the team members working on the project. So predominantly, the project teams across those 12 projects will transfer to Stockland and provide continuity. It will be around circa 120 people, which is about 50%, as we understand, of the communities platform [ at the vendor ]. So about half of the people, all project-based, will transfer.

I mean at the Stockland [ layout ], are you going to need to take on more overhead in your communities business to handle the bigger volume that you have?

No, Tom. That's the real strategic advantage of this acquisition. We are now, as we've highlighted in our strategy, looking to get operating leverage as we scale our platform across these partnerships. So it will be quite incremental in that sense. We'll get economies of scale, and we won't be adding more overhead at the Stockland level. It's really the 120 people at the projects because we need people to run our projects coming across.

Okay. That's great. And then from a financial perspective, there's sort of no mention of any '24 impacts. Is there anything to kind of take away there? Or is the impact neutral? Or are you just sort of not saying because you're still working through it?

Thanks, Tom. Essentially, given the timing of the deal, we've got -- we're still dependent on various regulatory approvals, the land owner consents and stuff. And if you think about the first payment, it's really only a few balance sheet assets. And actually, only one of those is in production. So it will be a very minimal number of settlements in FY '24. So yes, it's not -- obviously, we'll get the full impact once we take full economic entitlement in fourth quarter '24, but it's not going to have a huge impact on '24.

Okay. So assume then transaction costs are capitalized to the acquisition. Is that the right way to think about that?

Some of them, yes. Obviously, there will be some transaction costs that will end up below the line, though, and we'll obviously give you more color on that when we get to half year.

Our next question today comes from Sholto Maconochie from Jefferies.

Just some follow-up from Tom's questions. Just on the margin, I think you're saying mid -- high teens to mid-20s, so in line with your current book. Does that include the cost of those 120 people at the project level?

Yes, absolutely. Yes. I mean we would treat it the same way we would normally treat it. So yes, those people, yes, get allocated to those projects.

And the stamp duty, is that just paid on a tranche? Because it looks like [ you're gearing ] at 50% for the first tranche. So do you pay the stamp duty [indiscernible] asset value or [ in up per ] tranche? Is that how it's structured?

Yes. Essentially, yes. Yes, you only pay the stamp duty when you collect those, when you pay those tranches. Yes, that's right.

And from accounting, do you -- I mean, I know [ you'll update us ] [indiscernible] goodwill. So [ this mark ] -- that will be [ quoted ] at the purchase price at the time...

Yes, just asset value -- yes, you're right. Yes, I mean, again, we'll give you more color in February. But essentially, you're right. We're just taking on project values, asset values, inventory, essentially, yes.

And then just on the fees, I know you pointed out that you're not paying [ a goodwill ] for recurring income. Is it similar to your current structure, sort of 7% to 8% of revenue for the fees? How should we think about the incremental fee income going forward for this JV?

Yes, it's very similar to other partnerships. So probably more towards the 7% than the 8%, but in the order of roughly -- yes.

Okay. And then when -- and obviously, that -- would you -- is the land lease opportunity more -- for that 2,500 sites more sort of medium -- it wouldn't be initial FY '25? It's something you'd be planning sort of medium to longer term.

Yes, Sholto. So we'll go through a planning process to both master plan and get those approvals and service those sites. Yes, normally, for us, that takes 1 to 2 years to get those sites serviced to a point where we could start building homes. But yes, the intention would be to pull them forward as soon as possible given the tailwinds that we're seeing in our land lease platform.

And [ would you -- were there any superlots ] for these ones? Are you happy just rolling out in the partnership as it is?

Yes, the partnership on land lease, CRE, these are partnership we'll have the first rights to do those. And then if the partnership didn't want to do it, then we would do it with other capital structures or superlot and sell them. But most probably, again, we'll cross that bridge when we get to it. These are attractive asset opportunities we'd talk to Supalai first.

And then just finally, I think the average price in FY '23 per lot was [ 3 65 ]. What's the sort of average price point across this portfolio that you expect to achieve on a rolling 12 months forward basis?

Listen, it's going to be around that level, Sholto, as well. It's got good Eastern seaboard exposure. The New South Wales and South East Queensland weighting is something that's very attractive to us.

Yes. But Sholto, just -- yes, just with the per lot, it's not quite the best measure for this acquisition because there's a number of PDAs which can distort the benchmarking. So just keep that in mind. But yes, it is -- and also what net funds employed we would be putting in. So -- but yes, in terms of headline per lot, obviously, it's around what you've said.

It looks like a pretty good deal and a lot of accretion in '25.

Our next question comes from Lauren Berry from Morgan Stanley.

Just back on the margins. You're saying high-teens, 20s versus what Lendlease has been reporting in the last few years. It's closer to the low teens kind of level. Are you making any different assumptions about how your communities are going to operate or lot size, et cetera, that's going to contribute to that lift?

Yes, Lauren. We look at it -- obviously, our cost base is going to be quite different coming out of this business. As I highlighted, we are leveraging overheads quite efficiently. So that's one major difference. The other difference is the way Stockland master plans and diversifies and brings diversity into its master planned communities in terms of different product types is quite different. Therefore, we believe our velocity of sales and our price points will be quite differentiated to maybe what others have done. So there are a couple of reasons. But Andrew, you want to build on that?

Yes, Lauren. So one of the opportunities that we see is really broadening the market reach through diversifying both product and distribution channels. We see, obviously, through our builder partnerships, there's opportunity for more build form. We'll have townhouses, and we will have a broader range of lot sizes and village positioning. All of that goes to velocity of sales, as Tarun spoke about, and broadening that market reach. So we saw that as one of the opportunities in the portfolio.

Will there be any delay if you have to replan or get reapprovals for any of these changes?

No. We'll sequence them so that they can roll out over time. With the scale of our partnerships as well, builder partnerships and distribution channels, we're going to be able to work through the existing stock that's approved now and broaden it over the next 12 to 24 months to make sure we've got that continuity.

And Lauren, just the approach we're adopting on this acquired portfolio in terms of housing types, typology, average lot size, very consistent with what we do across our existing portfolio and the larger projects. So we're just applying the Stockland way onto this portfolio. And therefore, we believe we can generate very attractive margins without doing anything highly innovative. It's what we do, which is quite differentiated to others in the market.

Yes. And on -- can you give a bit more color, please, around how the cash flow from this new partnership is going to work and timing of distributions? Is any of that going to be reinvested? Yes, how is the cash flow actually going to work, please?

Yes. It's -- the partnership, you might have noted, is geared 25% underlying, which is pretty consistent with our 20% to 30% balance sheet gearing target. So it's got within that working capital, but we do expect quite substantial cash distributions coming back from this portfolio very quickly. It's a cash-generating business, which is unusual when you buy development projects. And as Andrew noted, the payback on this deal is much shorter than other acquisitions because we are trading already. So we'll service our debt cost, working capital, work in progress and then all excess cash flow will be distributed. As I said, the payback is substantially lower than our normal MPC acquisition. So we will be getting cash-based distributions coming from the partnership.

Great. And just last one. On land lease, can you just describe how these [indiscernible], like will you be doing specifically land lease with Supalai? Or will those lots be moved out into a different partnership? Or will it be [ a stock on ] balance share? How will that work?

Yes, Lauren. This is a closed-end fund structure with Supalai. So we'll do everything within this partnership. If there are projects that, say, the partnership doesn't want to do for whatever reason, that's not where we are, the intent is that land lease/community real estate will be done in the partnership. But obviously, we haven't put that proposals to the partnership because we're going to go through planning, et cetera. So that's the base case assumption. In the event that the partnership wants to superlot and sell, then Stockland would, in the first instance, look to do it in our land lease business with -- [ SRRP ] could be one or other capital partners; or if we didn't want to do it, we'd sell it on the open market. But the most likely scenario, Lauren, is that they will be done in this partnership, subject to, obviously, us agreeing that with Supalai down the road.

Our next question comes from Lou Pirenc from Jarden.

A few questions for me just on the loss expected from this additional portfolio. You talked about 2,500 per annum on a stabilized basis. And is that where you mentioned that it will take you 1 to 2 years to get there? Or will that be sooner?

So you broke up. But Lou, you're asking the 2,500 per annum in FY '25. That's what we think it's going to be in the first full year of ownership. Obviously, we haven't taken control of the asset. So as we get to FY '25 guidance, we'll be able to give you much, much harder number. But that's what we think the first year of trading under our ownership looks like. But we will build from that because as we get into the project, we think the project's got capability to do more. But that -- for '25 first year of ownership, approximately 2,500 looks like the right number a year out.

Yes. And Lou, just to add to that, when you're thinking about the numbers, we've got 3 projects within this portfolio that will contribute first settlements in '25. So currently, some presales and under construction, but first settlements only contribute in '25 when you're looking at like-for-like performance.

That makes sense. Can you maybe add some color about -- you've clearly given a quarterly update in terms of your sales volume, what you've seen since then. I mean does that give you comfort to basically restock at this point in time? Are you seeing a pickup in sales momentum?

Lou, you're right. At our quarterly update, we spoke about it being at similar levels to Q1. Yes, obviously, we've had a couple of months of trading to observe the market. What we're seeing generally, South East Queensland, we've seen -- with the announcement of that First Home Owner's Grant, we've seen a response immediately from first-home owners and also builder partners within that market. So that's driving some positivity that we're seeing there. Obviously, very recent, so more likely to contribute to future periods. Yes, WA continues to have that affordability advantage over the Eastern seaboard. So we've seen some good trading in that market. And then New South Wales is undersupplied. It's probably the Victorian market that is in the earlier phase of recovery. So that's sort of how we're seeing the 4 markets where they're trading at the moment.

And Lou, just the general trends we called out in Q1 are continuing. There is inquiry levels are similar. Our settlement volumes, as we said, around thousand, give or take, a bit is where we see it until the interest rate outlook stabilizes, which seems to be underway. But we'll wait and see in the new year where that gets to, and we do think that would be a major trigger for pent-up demand to be released.

Great. And my final question, which is maybe a bit unfair after doing a big restocking exercise today, but how should we think about restocking going forward? I mean your chart on Slide 10 kind of highlights that this is the right time to do it. Is this kind of [ a bit now for a bit ]? Or if there is further opportunities like this in the next couple of years, will you consider restructuring even more?

Yes, Lou. This is a big acquisition for the group. It does put a big filler in terms of our long-term -- medium- and long-term portfolio composition. But as you know, in certain corridors where projects are winding down and they're attractive corridors, we are always restocking along the cycle. Clearly, there, cyclically, we are calling it's an attractive point in the cycle. So here and there, we might pick up some attractive projects. But our focus now next year is to bring the teams across to the Stockland family to bed down the projects and get heavy into production. That's our focus now. This is a very strategic restocking of the land bank, and we're very pleased with it.

Yes, Lou. Just to add to that, Lou, when you think about what we bought at the beginning of COVID, we acquired around 25,000 lots over that period. This is obviously a similar scale. Big difference, though, is these are all active projects, 12 trading projects, is very unique in the marketplace. And that was really what attracted us to this portfolio, good projects in good corridors and all actively trading, driving those immediate returns.

Our next question comes from James Druce from CLSA.

Just going off topic a little bit but I think it's important. The divi you announced today of $0.08 per share, I think it's the lowest number since before 2009 as far as I can see. Can you just comment on the SKU? I know you [ haven't ] called out a SKU, but this seems to be a bigger one than usual.

Yes, James. We do have a very large second half SKU. So it is larger than last year, probably the largest it's been for a number of years at Stockland. So there is a very heavy settlement SKU to the second half. So it really just reflects that. Nothing more.

It's really the MPC SKU, which we've been calling out since August, James, and also in our Q1. It is more extreme than last year. The only other factor we have called out, it's not in -- all in the last month of June this year. It's in the last quarter, and that's just because of the COVID and weather delays. That's just how the production is rolling off, and we're trying to get it normalized. We're hoping FY '25, if weather holds up, we can start to bring it back to more of that 40% to 60% half-on-half SKU in MPC. At the moment, it's running more like 80%-20%.

Okay. So that $0.08 is just purely resi.

Yes, predominantly MPC.

And just cleaning up a couple of details, what's the cost of debt that you're getting at the project level?

Just give me a second...

It's around -- yes, [ 6.5 to 7 ] roughly, all in.

And just on the margin, is it something that builds up a little bit over time as you realize efficiencies [ and you vary ] the product types? Or [ it's where you're going to ] get the margin you want from the get-go?

Yes, James. The margin on a [ whole of ] basis is going to be consistent. But the buildup, we're forecasting more moderate cost and revenue growth. You get the outperformance where we can drive those improved sales and revenue outcomes. But it is a [ whole of ] forecast, so we'll be recognizing those consistent margins from day 1.

And again, James, yes, as we've called out, this is a trading business portfolio. In our first full year of ownership, we would expect to see metrics starting to come through, which are very consistent with a stabilized portfolio because we're not investing capital into planning and preproduction activity. It is a cash flow-generating positive portfolio that we'll be reporting on FY '25.

Our next question comes from Richard Jones from JPMorgan.

Just in relation to the transaction, can you just talk about the structure of how you put it together and perhaps why Mitsubishi is not the JV partner? I think you called them out as the likely MPC partner going forward.

Yes, Richard. So in terms of Mitsubishi, we're very happy with that partnership. As you know, we've seeded it with one of the Stockland projects from Melbourne. It's an organic strategy which we'll continue to work with them on going forward. M&A, when you're talking large-scale portfolio acquisitions, is deal-by-deal. We talk to our capital partners. And the Mitsubishi partnership wasn't set up for M&A activity. It's for more organic. And we were very pleased to be able to talk to Supalai, who is an existing partner, to come into this partnership. So that's how it's played out. Again, Supalai is very experienced in this market, as I said in my opening comments, and we've had a good relationship over the last 3, 4 years. So we're very pleased to have them go on the journey with us.

Okay. And then the $239 million additional land parcels, should we be expecting that will be exercised? And can you maybe touch on some of the hurdles that need to be achieved? And finally, just whether -- I assume that the returns metrics you're talking about are predicated on these land parcel acquisitions being executed.

Yes. Richard, the right to acquire is completely at our election based on some conditions being achieved that would make it production ready. That's the way the transaction's been constructed, and the returns that we're talking about are excluding that parcel.

Excluding. But if we were to acquire, we've structured it in a way that our returns would be consistent with or without those extra parcels of land. But as Andrew said, we -- our focus on this acquisition was to buy a stabilized, lower risk, production-ready, cash flow-generating, shorter payback portfolio. And that's what we want out of this acquisition, and the parcels of land need to demonstrate those characteristics. If they don't, we won't exercise the option, and we're happy with what we're buying without it as well.

Okay. Can I ask one more question? Just Jordan Springs, why was that not included in the acquisition?

It's a question for the vendor. It wasn't offered under this process.

Our next question comes from James Druce from CLSA.

Just a couple of follow-ups, if I may. Just curious, how long were you in the data room for? And what level of detail were you able to access?

Yes. So in terms of timing, we've been in the process for a few months. I won't go into exactly when. But the level of detail, we have spent a lot of time bottom-up. We have fully due diligence-d this acquisition. It's been Stockland cost, Stockland revenue, Stockland assumptions. And that takes, as you know, a bit of time. But our teams have been thoroughly through it, and that's how the process has played out.

And then on the 2,500 lots for FY '25, you sort of spoke about different margin before compared to the vendor. But is there a material difference in settlements as well that you're assuming? [ You've touched on it before a bit ].

Yes. So James, as Tarun said, we've done a bottom-up assessment of what we think are appropriate sales rates with, obviously, the difference like-for-like being the contribution from 3 additional projects when you're looking at like-for-like settlements. But we've done the bottom-up assessment of what we think is achievable based on comparables. And having traded in most of those corridors over the past 3 to 5 years, we've got experience on market depth. We made our own assessment of where we think the market is going to perform for that product in those locations.

All right. Can you comment on how your assumptions [ fit ] to the vendor or not?

Yes. James, as I said, I think it's completely different view on the -- we don't know what the vendor assumptions were. But as I said, our cost base is different because we are not putting on corporate overhead above the projects. It's only within the projects and then the things that Andrew said. So it's really not comparing like-for-like. It's a different strategy that we're applying, consistent with, as I said before, what Stockland does across our portfolio. And that is much more diversity of product, less homogenous lots and more fronts on larger projects to get better velocity in different customer types, very consistent with what you see across other larger projects.

There are no further questions.

Okay. Well, thanks, everyone, for joining at short notice and for your questions. It is the end of the year. So we wish you all a good end-of-the-year break, and we look forward to speaking to you all in the new year. Thank you.

That concludes today's call. Thank you for joining us. You may now log out.