Stockland (SGP.AX) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Katherine Grace, Stockland's Chief Legal and Risk Officer and Company Secretary. We'd like to begin this afternoon by acknowledging the traditional custodians, the land on which we meet today, the Gadigal people of the Eora Nation and pay my respects to the elders past and present. Before our Chairman, Tom Pockett formally opens today's meetings for Stockland Corporation Limited and Stockland Trust, I would like to outline some procedural matters. Today's meetings are being held in a hybrid format with securityholders joining us both in person and online. We have designed the meetings to give securityholders the opportunity to participate in several ways. For those of you participating in the meeting via the online Lumi platform, [Operator Instructions] For securityholders who have dialed into the meeting via the teleconference line, please follow the prompts if you wish to ask a question. for securityholders in the room, we will invite you to ask questions at the relevant time. The Chairman will shortly open the meeting, and at that time, the polls will be formally opened to enable securityholders and proxyholders to vote by selecting the voting icon and selecting your voting preference for each resolution on the online Lime platform. To cast your vote, simply select one of the options. Your vote will be automatically recorded and there is no need to press a submit or enter button. For securityholders or proxyholders in the room, you will be able to vote using the handheld device provided when you registered at the door. Once voting opens, in room attendees will be presented with a list of today's resolutions on the voting keypad. Use the track board to highlight the resolution you wish to vote on and press the green square to confirm. The resolution text will appear, and you can bring up voting options by pressing on the green square. Press 1 to vote for a resolution, 2 to vote against or 3 to abstain. To move on to the next resolution, you can press the green square or return to a full list of resolutions by pressing the red triangle. As advised in our notice of meetings, participants who have dialed into the meeting will be unable to vote using the teleconference facility. I'll be moderating the questions submitted online today from securityholders during the meeting. Questions may be amalgamated if there are multiple questions on the same topic. And please note that only securityholders may ask questions during the meetings. We will address the questions during the formal business of the meeting as is our customary practice. And 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 is closed. A recording of the meeting will be available on the Stockland website shortly after the meetings conclude, and I will repeat these instructions later in the meeting before we commence the formal business. For securityholders attending the meeting today in person, could you please ensure your mobile phones are now switched to silent? And I note that in the unlikely event of an emergency, you should follow the instructions of the Stockland staff. Finally, as this is a hybrid meeting, technical issues may arise. If we do encounter any issues, we will have regard to the impact on securityholders and the Chairman may issue instructions for resolving the issue and may continue the meeting if it is appropriate to do so. I'll now hand to Tom Pockett, our Chairman, to formally open the meetings.

Thank you, Katherine, and good afternoon, everyone, and welcome to Stockland 2025 Annual General Meetings. My name is Tom Pockett, and I am Chair of the Board of your company. As a quorum is present, I now formally declare the Annual General Meetings open. Voting on resolutions 2 to 5 in the Notice of Meetings is now opened via the online Lumi platform. I am joined today by my fellow directors who are now introduced. Tarun Gupta, who was appointed Managing Director and CEO in June 2021. Melinda Conrad, appointed in May 2018, and Chair of the People and Culture Committee and Nominations Committee and a member of the Risk Committee. Laurie Brindle, appointed in November 2020 and a member of the Audit, Risk and Nomination Committees. Bob Johnston appointed in October 2024 and a member of the Audit and People and Culture Committees. Chris Lawton, appointed on 1 January 2025. I am delighted to welcome Chris to the Board and to his first Stockland AGM. He is standing for election at today's meetings. Chris has more than 40 years' experience in professional services, including 25 years as an audit partner with Ernst & Young. Chris is a member of the Audit and Sustainability Committees. Kate McKenzie, appointed in December 2019 and a member of the Nominations, Risk and Sustainability Committees. Stephen Muton appointed in June 2016 and Chair of the Audit Committee and member of the Risk Committee. Stephen is not seeking reelection today and will retire from the Board at the conclusion of the meeting. I'll share more on Stephen's contribution shortly. Andrew Stevens, appointed in July 2017 and Chair of the Sustainability Committee and member of the People and Culture Committee. Adam Tindall, appointed in July 2021 and Chair of the Risk Committee and a member of the Audit and People and Culture Committees. Penny Winn, appointed on 27 February 2025. I am also delighted to welcome Penny to the Board and to her first Stockland AGM. She is standing for election at today's meetings. Penny has over 30 years' experience in retail in Australia and internationally and an experienced Board Director. Penny is a member of the Audit and Sustainability Committees. Katherine Grace, who you've already met is Stockland's Chief Legal and Risk Officer and Company Secretary; and appointed in August 2014. Also in attendance today is Jane Reilly, who represents our auditors, PwC, along with members of the Stockland leadership team. As you will be aware from the notice of meetings, there are 4 resolutions for your approval today. We will provide an opportunity for discussion and to answer any questions you might have when we deal with each of the formal agenda items. I encourage you to vote in advance of or during each resolution to ensure you have sufficient time. I will now make some comments regarding Stockland strategy and results. The Stockland strategy has seen us fundamentally change the composition of our portfolio of assets since 2021. We have transformed from a balance sheet funded developer to an organization with a portfolio of high-quality assets that are creating value and sustainable growth through utilizing high-quality capital partnerships with major institutional investors. Since launching the strategy, we have recycled $3.6 billion of assets, and delivered a total securityholder return over the same period of more than 65%. Most importantly, the strategy has set the foundations for future delivery. Turning to FY '25. Stockland delivered a strong operational and financial performance. Our statutory profit was $826 million compared with $305 million in FY '24, with the statutory result for FY '25 including a positive net investment property revaluation of $197 million. This contributed to an increase in our net tangible asset backing or NTA per security from $4.12 to $4.22. Funds from operations was $808 million or $0.339 per security, which was at the top end of our guidance range. Our full year distribution was $0.252 per security and represents a payout ratio of 75% of funds from operations. Apart from our solid results, 2 key outcomes integral to our delivery strategy, where the finalizing of contracts to deliver the Waterloo renewal project with Homes New South Wales and forming 3 new partnerships in the logistics sector. Having secured several incremental growth opportunities throughout FY '25. The Board has determined that from FY '26, we will target a distribution payout ratio of between 60% to 80% of funds from operation compared to the previous range of 75% to 85%. The change reflects the Board's focus on seeking to balance consistent cash distributions with reinvesting capital to generate strong returns. In FY '25, we made significant strides toward achieving our sustainability goals. We are on track to meet our near-term target of net zero Scope 1 and Scope 2 emissions by the end of 2025, with the core component of our Net Zero strategy being the delivery of large, of a large-scale on-site renewable energy. We also made good progress toward our 2030 target of creating over $1 billion of social value with our most significant contributions to date coming from our delivery of social infrastructure and education facilities across our communities. Lastly, I would like to thank my Board colleagues and the executive team for their leadership throughout the year. On behalf of the Board, I would also like to thank the broader Stockland team for their ongoing dedication and commitment. As I previously mentioned, Stephen Newton will retire at the end of this AGM. Stephen has made a wonderful contribution to Stockland. He has brought his expertise, knowledge and experience from his long career in the property industry to assist and guide the group over his time on the Board. Stephen, on behalf of myself, the Board, the leadership team and our security holders. We thank you for all your contributions in making Stockland successful, and we wish you all the very best in your future and endeavors. Ladies and gentlemen, can you please put your hands together for Stephen. Turning now to the resolutions for today's meetings. The first item of business is a nonvoting item to consider the financial statements for the group. Resolutions 2 and 3 relate to the election of Non-Executive Directors, Chris Lawton and Penny Winn. You'll have the opportunity to hear from Chris and Penny later in the meeting. Resolutions 4 and 5 relate to remuneration. We have released the proxy results for all the resolutions ahead of the meeting. and these are now shown on the screen. As you can see, all resolutions have solid support. And finally, to our security holders, my thanks to you, for your ongoing support and investment in Stockland. I will now hand over to Tarun for him to make a few comments.

Thanks, Tom, and good afternoon, everyone. I would also like to acknowledge the traditional owners of the land, the Gadigal people of the Euro nation and pay my respects to elders past, present and emerging. As we come together today, I'm reminded of the words of our founder, Ervin Graf, a Hungarian immigrant to arrive in Australia on a temporary visa and we had a simple vision of bringing affordable housing to Australian families. He said, "Our purpose is not to merely achieve growth in profits but to make a worthwhile contribution to the development of our cities and great country." Ervin and his partners, Albert Scheinberg and John Hammon, had a driving belief and a defining vision to create something better, which saw Stockland deliver Australia's first affordable housing in 1952 at Sefton in Sydney's West. Today, their vision lives on in everything we do for our people and our communities. And I'm pleased to share with you that we're making good progress. For our customers, as we grow, we continue to focus on delivering on our purpose of a better way to live. Over the last financial year in our Master Planned Communities business, we achieved more than 6,800 settlements. And I'm proud to say that almost 34% of these were to first home buyers. This means we've helped over 2,300 Australians get a foot into the housing market last year. And over the last 5 years, we have helped more than 12,000 first-home buyers gain access to housing, which makes Stockland the largest supplier of homes to first home buyers in the country. Over the last 4 years, we have bedded down the fundamentals of our strategy and have arrived at an inflection point for the growth of our business. For our immediate focus is on growing our land lease communities, Master Planned Communities and Logistics businesses. And over the longer term to create a more diversified pipeline of growth in data centers, apartments and strategic partnerships. I'll now focus on the year that has been, as Tom noted, we delivered a strong financial and operational results for FY '25, which was at the top end of our guidance range. Funds from operations was up 2.8% on FY '24 and reflected a material uplift in MPC settlements, higher development fee income and a strong underlying performance from the logistics portfolio. This was partly offset by the impact of asset sales over FY '24 and '25 as we recycle capital into growth opportunities. FFO from Investment Management segment was $591 million, which was down 6.3% on the prior year, primarily because of the disposal of town center and logistics assets over the past 2 years as well as the transfer of logistics assets into new partnerships. The portfolio delivered comparable growth of 3%, which was driven by positive leasing spreads in Logistics, Town Centres and Workplace as well as growing income from our communities rental assets. The Development segment delivered FFO of $460 million, up 11.6% on the prior year. The result was underpinned by a strong performance from the MPC business, which included a part year contribution from the acquired MPC portfolio and higher fee income from partnerships across MPC, Commercial Development and Land Lease. There has been some improvement in MPC trading conditions in the Victorian market, which represents our largest MPC exposure and has lagged other markets for some time. Pleasingly, the acquired MPC portfolio is performing ahead of acquisition assumptions, and it has replenished our pipeline as we look to deliver materially higher settlement volumes at an increased number of activated communities. Across our MPC and LLC businesses, 82% of our development pipeline is now activated, underpinning future growth. We finished the financial year in a strong capital position with gearing of 25.2%, which provides the group with significant capacity for investment into our strategic priorities. While delivering a strong financial result and driving near-term growth, we also secured several longer-dated capital-efficient residential and logistics projects that we expect to contribute to earnings in future periods. From FY '27, we aim to commence construction at our Waterloo project, which will ultimately deliver more than 3,000 apartments in what will be one of Australia's largest and most significant inner-city renewal initiatives. We formed 2 significant capital partnerships in the logistics sector in the first half of the financial year with leading global investors M&G Real Estate and KKR. And just prior to the end of the financial year, we formed a 50-50 partnership with John Boyd Properties to develop a world-class logistics hub at the Kogarah Golf Coast site, which is adjacent to Sydney Airport. And following the end of the financial year, we entered into an exclusive arrangement to form a 50-50 partnership with EdgeConneX, a leading global data center operator backed by EQT infrastructure to develop, own and operate a portfolio of Australian data centers. Subject to documentation and approvals, this collaboration marks a significant step forward with a high-quality operator to activate our substantial data center pipeline in future years. Now as we increase our rate of production and progress new value-enhancing opportunities, we are focused on calibrating our capital settings with our growth objectives. This includes utilizing Stockland's capital and that of our partners, recycling assets and leaning into a strong balance sheet position. In light of the significant incremental growth opportunities we have secured at attractive expected returns, the target distribution payout range has been amended. For FY '26, we expect the distribution to be in line with FY '25 at $0.252 per security. With our strong balance sheet, retained earnings and demonstrated access to third-party institutional capital, we are in a strong position to fund our growth. Two other essential elements for sustainable growth are a comprehensive ESG strategy and our focus on building and maintaining a high-performing, collaborative and innovative workforce. We made further progress during the year in implementing our ESG strategies in areas such as low carbon materials, partnering on renewable energy delivery and social value creation, and we remain on track to meet our net zero Scope 1 and 2 target this year. And today, as you would have seen, we released our operational update for the first quarter of FY '26. Our Investment Management portfolio is performing well with continued strong performance across our logistics assets, and consistently positive results from our Town Centres portfolio. In the Development segment, our MPC business achieved more than 2,000 sales for the quarter, which is a strong result as we target higher settlement volumes for FY '26. Our Land Lease business recorded net sales of 206 homes, which is our strongest quarterly result to date, as we work to create scale for that business. So after 4 years of disciplined execution of our strategy, our goal of providing sustainable growth for stakeholders is coming to fruition. We have positioned the business for a step-change increase in production from FY '26 across our MPC, LLC and logistics development pipelines. We have also established multiple drivers of sustainable growth in future periods, including capital-efficient, longer term residential and logistics projects secured during FY '25. And we have good flexibility in line of sight of multiple funding options to support our growth. With these pillars now in place, FY '26 marks an inflection point for Stockland. Our focus is on high-quality execution and driving sustainable growth with a clear strategy and a commitment to the people and communities we serve, Stockland is well placed to capture the opportunities ahead and to truly create something better. So I'll conclude by thanking the Stockland team for their contribution to this year's results and by thanking you, our security holders, for your ongoing support and investment in Stockland.

Thank you, Tarun. As noted at the start of the meeting, for those securityholders joining us today through the online Lumi platform, the polls are open to enable securityholders and proxyholders to vote by clicking on the bar chart icon. [Operator Instructions] Securityholders 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. But as mentioned in our notice of meetings, participants who have dialed into the meetings are not able to vote using this facility. As I mentioned earlier, I'll be moderating the online questions from securityholders during the meeting, and questions may be amalgamated if there are multiple questions on the same topic. As mentioned previously, only securityholders may ask questions during the meeting. As noted by the Chair, we will address the questions during the formal business of the meeting as is our customary practice. And while we may not be able to address all questions during the meeting, we will make every effort to follow up with responses to any outstanding questions as soon as practicable after the meeting is closed. Before Tom takes us through the formal resolution set out in the notice of meeting, I will run through the voting procedure. Voting on all resolutions will be by poll. As mentioned by Tom, the polls are now open in respect of resolutions 2 to 5, 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 a returning officer and determine the results of the polls. For the securityholders in the room today, you will be invited to ask questions when we move to each item. And at that time, I would ask that you please come to the standing microphones in the aisles, state your name, organization or association and show your electronic voting device. Please direct all of your questions to Mr. Pockett as Chairman. The results of the polls will be made available to the ASX as soon as we have concluded the meeting, and I expect that this will be later this afternoon. If you are joining online and you need assistance with voting, please refer to the instructions available in the user guide, which is available on our website by going to the Investor Centre page clicking on the Annual General meeting link and then clicking on the online meeting user guide located towards the bottom of the page. If you are in the room today and you require assistance with voting, please ask a Computershare staff member for help. A simple majority will be required to pass resolutions 2 to 5 and must be passed by more than 50% of the total votes cast on these resolutions by securityholders present in person or by proxy and entitled to vote. Any open votes given to the Chairman of today's meetings 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.

Thanks, Katherine. We now move to the first item on the Notice of Meetings, consideration of the 2025 financial statements in the annual report. The Corporation Act requires that the financial report, the directors' report and the auditors' report for the year ended 30 June '25, be laid before the meeting. No formal vote is required on this item. Ladies and gentlemen, this is your opportunity to ask any questions you may have about Stockland's performance and outlook. I ask that questions about resolutions 2 to 5 be deferred until we get to those resolutions. As noted by Katherine, for those securityholders in the room wanting to ask questions, please come to the microphones holding your electronic voting device, state your name and direct all your questions to me as Chairman. Are there any questions, please?

Thank you, Tom. I didn't want to disappoint you.

Well done.

Firstly, I'd like to congratulate the Board and the Stockland team for outstanding results. I can understand the logic of moving to logistics center centers. And you've announced your agreement or the arrangement, I should say, with EdgeConneX for data centers. Because it's a build-own-operate, to what degree have you built in enough flexibility because data centers as you're aware are huge consumers of electricity and water, and the thing is, the demand isn't linear? It's somewhat exponential. So we don't sort of want a situation where the assets sort of effectively become obsolete or limited in a few years' time as it seems the data -- the energy requirements go through roof? So I can -- that's the first question I have.

That's all right. Let me get that one. Yes, we've already built a data center out of Macquarie Center just for information. Basically, we built the box. We're not the operator out there. We have an emerging data center strategy. I think Tarun would be best to answer that and you can explain how Stockland and the joint venture partners or -- are going to work together. So Tarun, you take that question?

Yes. It's a strategy that we are at the early stages of executing. We have a strong endowment in our logistics portfolio and the land positions we have in our business where we have some very strategic pieces of land that are in key availability zones that can support the delivery of data centers. So we wanted to see how we can optimize the returns to data center already at Macquarie Park. But as your question entails, model ideally will be to develop, own and operate. It's the operating part that we don't have that deep experience. That's why we have partnered with EdgeConneX, which is really one of the leading data center operators in the world. They have 80 centers operating around the world. And they have very deep customer relationships with the top 5 or 6 hyperscalers, which are the big large technology companies that we'll be looking to bring into our data center pipeline. In terms of your question on the electricity, water and the sustainability of these data centers, that is a key area we are focused on. Obviously, EdgeConneX brings a lot of expertise in that. They have, on the water side, developed over the last 5 to 10 years, data centers that use very little water except for just potable water. So they have some very interesting technology that's being developed, where we can deliver that in a much more sustainable way. And on the energy question, yes, they are very energy hungry, these data centers. But our strategy working with the hyperscalers would be to access renewable energy, which is something we're still working on. But we are in the initial phase is really looking to extract the development upside because we're a developer. We have the land positions. In terms of long-term ownership, we will have a more smaller stake in the long-term ownership as the returns come down in these data centers. But we are at the early stage of the execution of this strategy. And with the Board, the management, we'll be very focused on the risk positions we take as we execute the strategy.

Okay. The next question is concerning the property valuations. You mentioned that you'd sort of banked $191 million in revaluations. And I realize you've got a range of different methodologies for valuing the properties. I suppose one thing that struck me is you use benchmark if you're using the discounted cash flow method of sort of between a 7% and 7.25% discount rate, which seemed somewhat high. I also ask you to justify that, given long-term bond rates are sort of like for the quarter on 10-year rates. And of course, your cost of borrowing would be a little bit higher than that, nowhere near 7%, I imagine. And so when you come to the process of valuing, do you take a range of different methodologies and average? Or -- and I suppose it's justification for using the 7%? And how do you check that against the other methodologies?

No, we do, Nash. We actually have methodology that requires us to, or policy, which requires us to have external valuations done on our properties on a 3-year rotating basis. Quite often, we do more than a month or the year if certain factors in the economy say we should check these valuations. So we basically use external values to use a range of different methodologies, including DCF to come up with those valuations. So that's how the Board gets comfortable. And for those assets that aren't independently verified, we utilize the information that the external people have told us plus our own internal benchmarks and do an internal valuation on that. So that's the methodology. I won't comment on the 7 and the -- it's too hard for me to do it standing up here at the moment. But that's the process. So very much independently verified by external parties.

Okay. The next question concerns order remuneration. Apologies, Jane, b ut the basic orders actually increased by about 20%, which seems excessive. I know there are changes going on in the business, but it's not to that extent. So can you justify why the fees have gone up significantly?

I knew you'd ask that question.

I know you guys work sharp and think, what am I going to ask?

I know you're really good at keeping an eye on Jane's audit fees. I'm very glad about it. The main reason is the increase in the size of our business and the increase in the forward workload that we have put in place and the partnerships that we've put together. So they are the key drivers. Now our auditors have to -- are required to audit some of the partnerships or all the partnerships that we have to ensure that they're all quickly accounted for. So it's a whole new piece of work. And there's been a range of other things that go along with that, some compliance matters and so forth that we've had to do because of a bit more complexity in our business. So that's basically the reason, the rates increase, just in accordance with the auditors moderate salary increases. So.

Okay. don't entirely agree but we accept it.

Thanks, Natasha.

Hello, Mr. Chair, Allan Goldin, Australian Shareholders' Association, holding proxies for 157 unitholders, about $2 million about 2 million securities. As you mentioned and the CEO mentioned, the you recycled about $3.6 billion worth of assets since 2022. At same time, we you're a third party. You've done about $3 billion worth of third-party equity. Fantastic. But as you said, your business has changed. Business is changing fundamentally. And as you said, this is the inflection year for that. You're now going to become -- you're going to do a major expansion in logistics. In the next couple of years, your whole logistics portfolio will double the size of where it is today. I know you have partners with that, but there's still going to be a lot of expenditure. You're becoming a major player in the apartment buildings, not just with Waterloo but also with the other ones. You're also happily expanding your master plan and land lease communities. At the same time, your debt level has been increasing. I saw in your operational update today, you said that the debt -- the gearing level will rise in the first half, but by the end of the year is going to be moderate. That's the beginning of it. You're -- we're looking at the next -- not just the next year but the next 2 years, in particular, you have a very big capital commitments that are going to come up. So what I want to know is are you going to do a capital raising?

No.

And that's a guarantee. For as long as you're here or...

As long as I say no. Yes. It's a good point, Allan. I mean we look, we do have an excellent portfolio of assets to develop over the next 2, 3, 4 years. We'll do that with our debt levels and with our capital partners. We have strict guidelines around where our debt levels we want to be within that context. And that's -- and we have -- and we model out the cash flows of our business over that period of time, and we model out the downsides that if certain things don't happen, how will we cope with all that. So we do manage debt levels and sensitivities to those debt levels quite tightly.. Tarun, do you want to add anything to that or?

No, Chair. I think we have a very disciplined capital management strategy, we don't commence developments or other initiatives before we can have a secured debt and equity capital strategy, like we've been doing progressively in our logistics pipeline, land leases, and we've got now 7 blue-chip capital partners, very large institutions from around the world that are supporting us in our pipeline. So we'll remain very disciplined. Our main source of capital, as you noted, $3 billion of equity capital raised from institutional capital, which is our capital partners. That remains our #1 priority, but it's being supported by asset recycling because we are continuing to improve the quality of our portfolio. So you'll always see us recycle the assets that have reached their investment, optimum investment thesis, and we'll divest those. So that's second lever we're pulling. And then obviously, our balance sheet capacity. 20% to 30%, we are going to be within that target. Why it's going up in the first half is because, again, a lot of our settlements in MPC business are coming in the second half, but it should come back to the midpoint of our gearing range. And then we've also got -- we are raising some shareholder capital and we are very thankful for that through our DRP, which is very well supported and some of the retained earnings as part further payout ratio. But for us to get retained earnings, we have to grow earnings. If we don't grow earnings, we don't get retained earnings. That's how we think about it. So there's multiple levers, but the main one is institutional capital partnerships.

Just on that, I do have a second question that's a different one. But, just on that, on the recycling, is there going to be a lot of recycling this year?

You should expect us to always look at the, we've got 200 assets around the country. The ones at the bottom as a good investment manager should we are constantly looking at those. And you should expect us to recycle. Some assets we would sell. We don't want to sell the assets. We have look indiction on to our capital partners. So they will be sold on market. You should expect -- some last year, we sold about $200 million to $300 million, similar number this year. And then we'll recycle capital into partnerships. Last year, we did about $1 billion. I won't say how much it will be this year, but it will be -- we're targeting a substantial number again. So you can see the business model is very active on those activities.

Right. Okay. My second question, as the CEO mentioned, the -- your largest MPC exposure is in Victoria, and that there was good progress in what was happening in Victoria at the end of last year. And then the update today said that has continued that is strengthened, which is wonderful, which is fantastic. The comment that I didn't quite understand. It was right after that, where it said where I said the New South Wales is constrained by supply and affordability issues. I wondered what supply issues are you talking about? Your access to lands? Or is it applications or...

It's the supply of housing to the Australian community. So it's getting enough properties zoned for housing into the pipeline, so the supply of housing is sufficient to meet the needs. That's basically what the supply is.

So is that a delay in approvals or just getting...

No. It's actually -- the setting is quite -- now are quite favorable for us, particularly in New South Wales and in Queensland. The governments there have realized they have to generate enough supply. And so the settings -- and you would have seen it in those numbers that we released today, the settings for our MPC and land lease communities are quite favorable.

Great. And the affordability issue?

Well, the more supply, the more affordable housing becomes. That's the key. There's a questions at the back.

Daris Pete. I just have one easy question. One might be more difficult. The easy one, what's the cost of average cost of debt at the moment?

It's about 5.3%. 5.3%.

Okay. I was on a Transurban AGM last week. They had at 5.5%, just to compare.

We have a long-dated -- it's not spot. We can get spot rate at that rate or lower, but we have a long tenure. The average expiry is 5 years. So we have some long-dated bonds as we should to manage our risk.

You've got some language along the way. Okay. And my second question is in regards of the communities business. which we are doing a very good job trying to promote it, which is great. But I'm just trying to figure out the logic behind it because like, say, if I look at Victoria now, it's some out west areas where Stockland is building houses, correct, like [indiscernible]. You can buy a brand new house for bedroom for around $600,000, $650,000, right? But if you want to buy one of those things, it's actually cost some money, more money like $100,000, $200,000 more and you don't buy the land here. So what's like I understand, I mean, the more you can sell it at a higher price, better for us. But how does that work if I can?

I think that yes. Yes.

So now you raise a good point. It really depends on trade area by trade area. So -- and the amenity we offer for the land lease communities that you're referring to. So in typically the Halcyon brand, which is a brand in the land lease communities business is more upper to premium brand. So we are targeting that price point. It has a, communities are positioned the, with a lot of facilities that wouldn't be there if you're just buying a house in a normal development. So we have a very swing pools and cinema houses and yoga rooms, et cetera. So people pay a premium for that. And also the houses are of a certain quality that we develop. So it's where we position the product. And typically, we're selling at around somewhere between 85% to 110% of the median house price in that local area. So you really got to look at suburb by suburb to see what the relative pricing is. But they are -- we have good demand coming through as you saw in our quarterly report this quarter for land lease product.

I see. Thank you. You almost convinced me to buy one.

Any more questions? Any questions online?

Chairman. So we've got 3 questions from Mr. Mayne. Stephen Mayne that I'll read out for you. So, the first question chair is could the CEO please comment on the huge $4 billion-plus price at Living Co backed by the Korean National Pension Fund paid for Aveo's retirement village land lease properties in 2024, '25. His questions are, what does that suggest our land lease portfolio is worse, did we participate in the Aveo tender? Does the CEO believe the ACCC would have allowed us to buy that business? And then once the dust settles on the land lease exit from its stake in Ketan, which is Australia's largest retirement living operator, where will we sit in terms of market share in this important growing sector? Just final question to that, is it fair to assume that ACCC would be unlikely to allow any of the 3 biggest players to merge, There a lot of questions in there.

A lot of that is -- thank you, Stephen. The parts around speculating value, I don't think we'll comment on participating in the Aveo that we didn't participate, what was the last one?

The last meeting was in relation to the ACCC's view on the retirement living sector and whether it would allow any of the 3 biggest players to merge. Obviously, we are not participating in that market. So I don't think it would be appropriate for us to comment on the regulators' view, Mr. Chair.

No. Did we get all the elements of the question because so I think that addresses the question.

That the second question from Mr. Mayne related to -- actually, we've another question come through. So second question from Mr. Mayne is in relation to the meeting protocols today. So he congratulated the Board in relation to hybrid AGMs, in relation to our proxy disclosure. He's raised a question in relation to providing some scheme like around the number of securityholders that vote for each resolution, and I can confirm we'll provide that information to the ASX this afternoon. So there's no further action required on that. Two final questions. I'll read out now. One relates to Mr. Newton. Mr. Mayne congratulates Mr. Newton on his 9 years of service for the Board. His question was whether it would be possible for Stephen to comment on what he regards as best practice. Sorry, on what he regards as the best 2 Board decisions made during the time on the Board and doesn't have any regrets.

No, Steve has indicated that no, he won't comment, but thanks, Stephen, for the congratulations.

Thank you, Chair. Final question from Mr. Mayne also relating to another director. The question is after spending 8 years as CEO of our competitor, Bob departed the Board last year. Mr. Mayne's questions relate to the remuneration for Mr. Johnston. How has relatively recently appointed Independent Director, Bob Johnston managed the situation, having a large legacy equity position in one of our largest competitors. Has he sold down to avoid a perceived conflict of interest? And has the Chair taken an interest in this issue? Or is it a private matter?

Look, I don't think we of saying he has so I think you probably didn't need to comment. But yes, Stephen. So Bob has indicated he sold down. Yes, I think they will leave it at that.

Thank you, Chair. Mr. Mayne did comment that he does believe Bob has been a great hire, but it is not common for CEOs to retire and quickly join the Board of a competitor. That's the focus of his question.

Got a snap up good people we are there, Stephen.

Chair, we've got no further questions online.

Great. Thank you, Stephen. Okay. I think it will continue. So no further questions. We'll note the financial report and directors' report and auditors' report and move on to other business. We will now move on to the election of nonexecutive directors. Resolutions 2 and 3 relate to the election of non-executive directors for Chris and Penny. The biographies for each director are set out in the notice of meetings and are available on the website. We will now hear from each of them, and I'll propose a resolution for each of them in turn. Chris, would you like to come up?

Good afternoon, everyone, and thank you for your time today. My name is Chris Lawton and I'm seeking election as a non-executive director at Stockland, following my appointment in January earlier this year. My prior career was in professional services was the last 25 years spent as an audit partner at EY focused on the real estate sector. During that time, I led EY's Oceania and then Asia Pac real estate sector teams. My -- I've had the opportunity throughout my career to work with a broad range of real estate companies both in an audit and in a transaction role who have been involved in most asset classes within the real estate sector. I believe, through my experience in financial reporting, controls, risk management and compliance, together with an exposure to a broad range of business models within the real estate sector, I can make a meaningful contribution to Stockland as it pursues its strategic objectives. Since my appointment, I've had the opportunity to visit a number of Stockland's assets and ongoing projects and met with local teams and management. That's given me a great insight into the culture of the organization and the alignment to the group's strategic objectives. I'm excited at the opportunity to contribute to Stockland and look forward to representing the securityholders in my role as a non-executive director. Thank you.

Thank you, Chris. Penny, would you like to come up?

Thanks, Tom, and good afternoon. fellow securityholders. My name is Penny Winn. And today, I'm seeking your support for election as a non-executive director to the Stockland Board, having joined earlier this year. I've had the honor of serving as a non-executive director for over 10 years on many publicly-listed companies such as Ample, CSR Limited, Coca-Cola Amatil and the Goodman Group. I've recently joined the Boards of Endeavour Group in Super Retail. These experiences -- the experience I've gained through my own executive career have talked me valuable lessons, lessons that I will -- that I believe will serve me well, help me to serve you well whatever challenges and opportunities may come along. Prior to commencing our nonexecutive career, I had a 30-year career in retail, leading business divisions with specialization in logistics, information technology, customer engagement, business transformation and online retailing. I've worked for Grace Brothers Big W, Woolworths, Myer and Walmart. Stockland is a great Australian company with over 70 years of history, developing and operating assets and communities that are an integral part of life for so many Australians. The strategy developed by the current leadership is both exciting and attainable and its execution is being very well supported by a hugely talented team. Indeed, since joining the Board in February, I've had the privilege of visiting many of our sites and projects and have met with many of our great team members. I've been truly impressed by both the professionalism and the passion for the business at all levels of the organization. I believe I'm strongly placed to support this business during its next stage of its journey, given my experience in the important logistics and retail segments. I hope with your endorsement today to be able to provide sound advice and good stewardship to the Board and senior leadership of Stockland as it navigates what can only be described as a very exciting future. Thank you.

Okay. We'll start with resolution 2 for the election of Chris Lawton to the Stockland Board. The resolution is shown on the screen. The election of Chris is unanimously recommended by the Board. Are there any questions?

Yes, Mr. Chairman, we'll be voting our undirected proxies in favor of this nomination. We just -- it's an ongoing problem, and this nomination just highlighted it. The lack of transparency of companies about the experience of their existing directors their gaps that they have in their Board. It just seems to be getting worse. I mean, here, we have a good example to my mind, of course, as you know, because we've discussed this. If the company had been transparent and said that Mr. Newton is leaving this year, which we knew, they, yourself and Mr. Stevens are going to be leaving next year. Therefore, your Board is going to have a requirement for a chartered accountant with real estate experience. Mr. Lawton fills that perfectly. Why was it set? The simple words,, no one would have been upset about anything. I just don't understand there's always this idea that the Board knows best. And you guys aren't very knowledgeable and ladies, sorry. You're very knowledgeable, and you're very professional. But just share some more information, that's just a comment or...

Okay. Okay. Thanks, Allan. We try and be pretty open in the directors have a term at Stockland for 3 periods, 9 years. And then the preference is that they stay the 9 years and then they retire. There's been an exceptional circumstances in the past where that was in the case, but that will, going forward, I would suggest it will be the process. Yes, the Board spends a fair amount of time thinking through what it needs going forward. in terms of director skills and that allows for people that we're retiring at different stages the future. And that's really the Board's responsibility. We try to be as open as I can. I told shareholders a while ago that this would be my last term, and we will be, I'll be retiring in 2026. So I think I told, 2 years ago or whenever it was. So we try to be pretty open, but I think the discussion about skills and where we need new director skills, that's a Board matter. And once we conclude on it, we're quite open about telling shareholders what it is. So we can't do it at 2 [indiscernible] events because we still have people on the Board that are still there. We may not be able to find a replacement for them in the market. So we are cautious. Yes. Any other questions on Christian? Questions on online?

No online questions, Chair.

Great. For those that have not as yet placed their vote, please take a minute to cast your vote for resolution 2 via the online Lumi platform. or the electronic voting device. There's no more questions, so I'll refer to the proxy meeting on the screen? Congratulations Chris, on your election. Well done.

Resolution 3 is for the election of Ms. Penny Winn to the Stockland Board. The resolution is shown on the screen, the election of Penny is unanimously recommended by the Board. Are there any questions from the floor or this resolution?

Mr. Chairman, Natasha again. First firstly, I'm happy to support Penny, but I saw there was a bit of a headache into your 5%. It's not huge. Was that one proxy adviser or institution or what was he...

We don't normally detail who's voted for and voted against. But yes, it's only 95% for. Yes. That's the key metric.

Okay. You're being a bit cagey. The other thing is, look, I understand the argument about skills and things like that, but you try and have a reasonable amount of gender diversity on Board, but not only you, but most of the Boards do like other forms of diversity. And I think that really, you should be making more of an effort to having a board which better reflects the Australian community which are your customers and securityholders.

Yes. No, I agree. We in fact the Board now you have and rightly so. on gender diversity, the Board will have an opportunity. We'll have a few directors retiring just through the normal course over the next 2 to 3 years. And I think the Board will have an opportunity to, I think we're about 30% now to get to 40, 40 20, which is our goal. So that will be -- I think that's a good opportunity the Board should miss. On other diversity, we were discussing that at board today and saying it's very hard to get more diversity on the Board, but it's certainly in the back of our talk on the front of our thoughts as we're looking for new directors. Allan, yes.

So Mr. Chair, I like the idea of a director who's got actual operational experience, I think that's fantastic. And I congratulate Ms. Winn for that. I do have a problem, and I will be adding some of our -- all of our undirected proxies to that small number against this resolution. And the reason is, as Ms. Winn said herself, she is an experienced director. She has been a director for over 10 years. She's been a director with a number of large companies in this area, when she joined the Super Retail Board, it was at the beginning of the complaints made about the CEO. I know she just arrived virtually. But I would say, as an experienced director, which it comes into a decision like that, she's going to ask why? Why was it done this way? What was the situation? As this situation expanded over the next 20 months, again, as an experienced director, I would think that you'd be questioning. We're talking about the complaints coming from the senior person in the company responsible for governance. If that senior person and another person is saying there's a governance issue, going and having a hurried outside external examination isn't really going and giving -- acting as a director in the interest of everyone. So that's why we're going to vote against it. I'm sure that if I ask Ms. Winn hopefully, she would tell me, she learned a lot from that experience and it was a very helpful learning, but we just have that problem.

Okay. Thanks, Allan. Yes. Obviously, I can't comment on that experience in Super Retail was complicated, messy, all sorts of things, but anyway, thanks for your question. Are there any other questions from the floor? Okay. For those -- there's nothing online.

No questions online, Chair.

For those that have not done again, for those that have not as yet placed their vote, please take a minute to cast your vote for resolution 3 via the online Lumi platform or the electronic voting device. If there are no more questions, I'll refer to the proxy voting, which is shown on the screen. Congratulations depending on your election. Well done.

Resolutions 4 and 5 relate to remuneration. Our executive remuneration framework is designed to reward executives where strategy delivers results in value creation and superior long-term securityholder returns, the Board spends considerable time each year assessing the performance and remuneration outcomes for the group and senior executives and considers a range of quantitative and qualitative factors in its decisions, which we have set out in detail in our remuneration report. The Board is pleased to see that the reward framework and outcomes are aligned with securityholder returns and that is working as intended. Resolution 4 seeks your approval of the remuneration report for FY '25. The resolution is shown on the screen. As securityholders will know, this is an advisory nonbinding resolution, but your Board gives great consideration to the views of our investors on the important subject of executive remuneration policy. Are there any questions from the floor? Have we got any questions online?

Chairman, we have no questions online in relation to the remuneration report.

Okay. If you have not already cast your vote, please take a minute to cast your vote for resolution 4 via the online Lumi platform or by using the electronic voting device. If there are no more questions from the floor, I'll refer to the proxy voting, which is shown on the screen. As you can see, over 97% of the proxy votes have been cast in favor of the resolution. Our next resolution, Resolution 5 relates to the grant of performance rights to Managing Director and CEO, Tarun. The resolution is shown on the screen. The Board proposes to offer participation in the performance rights planned to the Managing Director, Tarun Gupta, who is eligible to participate in the plan as an Executive Director. Tarun's participation in the performance right plan forms part of his usual remuneration arrangements since commencing his role as Managing Director and CEO in June '21. The Board, excluding Tarun, believe that his participation in the plan on the terms and conditions described in the notice of meetings is an appropriate equity-based incentive given his responsibilities and commitment. In line with the ASX Listing Rules, securityholder approval is sought for the grant of these performance rights to Tarun. The details of which are set out in the explanatory statement attached to the notice of meetings. The directors, other than Tarun, unanimously recommend that securityholders vote in favor of this resolution. Are there any questions from the floor? Allan?

Mr. Chairman, I'll be casting our undirected proxies in favor of this one as I have with the remuneration. The structure is great. I still have a question about the hurdles. And if we look at the -- this particular one where I have the problem, I mean, look, the idea of going and getting 300% of your fixed annual remuneration is very generous. I'm sure that you all believe that the CEO deserves it, and that's great. My question is if -- not question, but if you're going to give that amount of bonus, you've got to have some big hurdles. I have you know questions on both of your hurdles, that 8% actual TSR sounds nice unless you look at the record of the company. It's not that big. It's not that big for a lot of decent companies. It's big for a small company, but not for a company that's in the top 50. It's not. That's first. Second one, you're doing a comparative group of other listed REITs? Yes, great. I just have a problem with, yes, I understand, excluding Goodman, that's a nice one to exclude, this year, it would have been good because it didn't perform very well as far as TSR, but there's a lot of differences. You're trying to do the same model in the way that you're funding now. It's very similar to what Goodman has been doing for years as is when we know better than me even that this is very successful, but it's different. A lot of their money is overseas. A lot of the developments are overseas. I understand those differences. A lot of the other ones, some of the other ones you have excluded, I don't see where the differences are compared to other ones you have kept in. I just think that there's been a lot of little picking here and there to go and get a comparative group, didn't like that, okay?

Okay. Thanks, Allan. Let me cover that. The benchmark is 8 to 13, I think it is, on absolute TSR. So just bear in mind the LTI hurdles for Stockland for the 5 years prior to Tarun's starting never vested. So when Tarun and the new leadership team started, we needed a team and a strategy that would deliver strong TSR for Stockland. And as I mentioned, it was 62% or 63% to shareholder return over the last 3 years. So they are working. The higher incentives only kick in at the higher levels of return for both absolute and relative TSR. In regard to the index of companies, we spend a lot of time making sure that the comparators that are in there are relevant to our business. And some of the companies just aren't relevant, such as Charter Hall. But nearly all the other companies in the index are in. So we do spend time it. We haven't changed it. And it's been pretty steady over the time of -- or it's been exactly the same over the time of setting those hurdles. So anyway, I think we've got a pretty robust structure. It's working to shareholders. And when I was on the road show and the majority in nearly all investors, we're very comfortable with the structure and the way it worked. We do and we'll review the hurdles every year as part of our rem review. Any other questions from the floor? No? Online, Katherine.

No questions online Chair.

Okay. So once again, please take a minute to cast your vote for resolution 5 through the Lumi online platform or by using the electronic voting device. [Voting]

If. There are no more questions, I refer to the proxy voting, which is on the screen. As you can see, over 98% of proxy votes have been cast in favor of the resolution. That was the last item of formal business or persons wishing to cast a vote who have not already done so should now place their vote through your electronic voting device or the online Lumi platform. If you need assistance in the room, please speak to a Computershare staff member. For securityholders joining online, if you need assistance with voting, please refer to the instructions available in the online meeting user guide available on our website. I will just take a small pause and proceedings for any final voting. There's a couple of people there are voting. [Voting]

I think we're okay. Okay. Thank you, ladies and gentlemen. The polls for voting will now be closed. The final results will be announced to the ASX later this afternoon. That concludes the business of the meeting, and I now declare the meeting closed. Thank you for your attendance, and good afternoon. Thank you.