Storage King Group (ASK) Earnings Call Transcript & Summary

Good morning, and welcome to the 2026 full year results presentation and what has been a strategically significant year for Storage King Group with the successful internalization of the business being completed on the 30th of June. I'm joined here today by our CFO, Evan Goodridge; our COO, Inara Gravitis and the Investor Relations team. To provide consistency with half year ASK results, we plan to cover our results in a format familiar to all of you. Going forward, with the consolidation of systems under the group, we aim to leverage this into an updated pack for the February half year results. On to our highlights. FY '26 saw strong progress across our key growth drivers with highlights spanning operations, platform enhancement, development, capital deployment and dare I say the crowning achievement being the internalization of the business. Operationally, it was Australia who delivered resilient performance with 2.7% RevPAM growth and occupancy remaining above 90% despite competitive market conditions. We strengthened the platform through the rollout of our proprietary revenue management system, greater analytics capability and continued investment in the Storage King brand. Development was a standout with 34,500 square meters delivered and a further 110,000 square meters in the pipeline, creating a significant source of future earnings growth. We deployed $78 million into strategic acquisitions and replenished the development pipeline with three new sites aligned to our network strategy. But it's internalization that represents a significant milestone for Storage King Group. Today, SKG is the only ASX-listed vertically integrated self-storage platform in Australasia owning, operating and managing its portfolio. The transaction immediately strengthens alignment between management and security holders. It retains key leadership capability and simplifies the group's operating structure. It's already earnings accretive with forecast cost savings and cultural integration progressing well. Most importantly, it fundamentally improves the way security holders participate in future growth. While internalization is not the growth strategy itself, it creates a stronger platform and allows us to capture more of the value generated by that growth over time. Turning to our key business metrics. The group now manages 132 trading stores and a growing development pipeline with gross asset value increasing 8.1% to more than $3.9 billion. That's up from $666 million just 8 years ago. Underpinning this is a high-quality land bank of over 1.2 million square meters across metropolitan Australia and New Zealand. Across the portfolio, the weighted average capitalization rate tightened 3 basis points to 5.42%, reflecting the quality, resilience and growth prospects of the asset base. This contributed to NTA increasing to $1.77 per security, up from $1.74 a year ago and up from $1.57 on destapling 3 years ago. Our balance sheet remains strong with gearing at the midpoint of our target range, providing capacity to fund our development pipeline and pursue selective acquisition opportunities. Operationally, the Storage King platform continues to deliver market-leading occupancy, achieved rate and RevPAM performance. And finally, we delivered a full year distribution of $0.062 per security, in line with guidance. Overall, these results demonstrate the resilience of both our business and the self-storage sector. While near-term market conditions remain competitive, we continue to see strong long-term fundamentals and a significant runway for future growth. As we only listed self-storage REIT on the ASX, it's worth taking a moment to highlight why we remain so positive on the sector's long-term investment fundamentals. First, self-storage has a highly responsive revenue model. Month-to-month customer agreements allow us to reprice quickly and adapt to changing inflationary and market conditions. Second, demand has proven resilient across economic cycles. Our customer base is highly diversified, spanning personal and business users with no material customer or asset concentration. Third, we continue to see a compelling structural growth runway. Penetration rates in Australia and New Zealand remain materially below the United States, which in itself still continues to grow, while population growth, urban densification and smaller living spaces continue to support demand. Fourth, the sector benefits from attractive operating economics. High margins, low incentives and relatively modest capital requirements support strong cash flow conversion. And finally, the market remains highly fragmented. This creates ongoing opportunities for consolidation with Storage King's scale, brand and reputation providing strong access to future growth opportunities. Taken together, these characteristics make self-storage a resilient cash-generative sector with multiple avenues for long-term growth. And the group is uniquely positioned to capitalize on these attractive sector fundamentals. We combine scale, sector-leading operating metrics, significant embedded growth opportunities, a market-leading platform, the most recognized brand in Australia and New Zealand and deep experience in the sector. These competitive advantages give us confidence in our ability to continue creating long-term value for security holders through the cycle. With that, I'll hand over to Evan to discuss the financial results.

Thanks, Nikki, and good morning. FY '26 was a year of continued operating growth and a significant strategic transition for Storage King. Operating revenue increased 3.3% to $236 million, and operating profit increased 2.4% to $145.3 million, while our operating margin remained steady at 62%. Breaking the operating result further. Established revenue grew by 1.2% to $193 million despite a tougher backdrop, including cost of living pressures, subdued housing turnover and a more competitive environment with heavier promotional discounting from our competitors. Importantly, our Australian established RevPAM increased 2.7% with positive growth across every state. New Zealand was the exception with established RevPAM down 11.7% or 2.3%, excluding the impacts of foreign exchange and disruption from capital works. Those works were completed in May 2026, meaning that operational disruption is now behind us, and the portfolio enters FY '27 in a materially better position. The composition of earnings is also changing as we allocate more capital to assets earlier in their earnings life cycle. Revenue from acquisition assets increased 7.3% to $9.1 million, and revenue from stabilizing assets increased 27.2% to $21.5 million. These assets have lower initial yields while they lease up, but they provide a substantial earnings pipeline as occupancy and rental yield move towards established store level metrics. Our proprietary revenue management system is now active across every owned store and will expand its capability further in FY '27. FY '26 was also a record year for new developments with 34,500 square meters of net lettable area delivered from next-generation stores and expansions. For FY '27, we are forecast to deliver a further 50,000 square meters, including two of our largest and highest quality assets at Sydney Olympic Park and Mascot. Operating expenses rose 4.9% for the period, driven by the addition of 6 new stores and like-for-like noncontrollable statutory costs, which again grew at double-digit rates for the year. For FY '27, we expect the statutory cost pressure to ease with growth returning towards more normalized levels. Our 62% operating margin is a whole of portfolio measure. It includes not only our established stores, but also our acquisition and stabilizing assets that are still building occupancy and earnings. We expect that the margin will broadly remain stable in FY '27 despite approximately 50,000 square meters of new development completions. Maturation of the existing acquisition of stabilizing portfolios, further revenue management capability and centralization of specialist functions should largely offset the initial drag from new stores coming online with operating profit continuing to grow. As Nikki mentioned, internalization also gives us, for the first time, one integrated operating and data ecosystem. We will use that capability to reconsider how best we present portfolio performance in our HY '27 results. FY '26 was the last year in which Storage King carried the full cost of external management. The increase in overheads from $21.9 million to $23 million is mainly attributable to these external management fees. Internalization removes that structural drag, and we expect approximately $7 million of annualized savings with a little over $5 million through lower P&L overheads and the balance reducing costs that would have otherwise been capitalized into our development pipeline. During the period, net finance costs rose to $39.7 million, up from $33.8 million. For FY '26, the group earned FFO of $82.1 million or $0.0624 per security and paid a distribution of $0.062. Over recent years, the group has benefited from a relatively low cost of hedge debt. As those hedges progressively mature, finance costs will increase and remain a material earnings headwind in the near term. The operating growth initiatives that I have discussed, together with the benefits of internalization are important to help cushion this near-term headwind, but do not fully offset it. As we enter FY '27, there are, therefore, 3 important moving parts. First, we expect the existing portfolio and maturing assets to continue to grow operating profit. Second, internalization removes approximately $7 million of annualized costs. And third, finance costs will rise materially as our historical hedges mature and drawn debt increases to fund the growth pipeline. Our FY '27 cost of debt is guided to be no greater than 4.75% or 5.5%, including capitalized interest. Against that backdrop, for FY '27, we have chosen to widen our payout ratio range, lowering the bottom end to 80% of FFO down from 90% and set FY '27 distribution guidance at $0.045 per security with at least 25% expected to be paid as a fully franked dividend. This will continue the planned distribution of our $36 million franking credit balance to security holders over the medium term. These expectations are subject to no material deterioration in current business conditions, and Nikki will cover the group's outlook, guidance and FY '27 priorities in more detail shortly. Turning to the balance sheet. Total assets grew 8.1% to $3.9 billion. Our total store assets were $3.6 billion with our stable, mature established portfolio representing 71% of the total, down from 77% a year ago. In FY '26, we deliberately shifted our capital allocation towards assets with higher growth potential, increasing our exposure to more than $1 billion of acquisition stabilizing and development assets. This saw acquisitions grow 10% to $133 million, stabilizing assets grow 24% to $563 million and development sites grow around 64% to $352 million. For FY '27, we expect the stabilizing portfolio to grow further as the additional 50,000 square meters I mentioned comes online. Goodwill and intangibles increased to $96 million at the end of the period. This balance includes the Storage King brand and operating platform plus an additional $19 million associated with acquiring the responsible entity and management rights to effect the internalization. Net tangible assets ended the period at $1.77 per security, up 1.7%, reflecting both growth in market income and the underlying quality of a portfolio that comprises our new next-generation purpose-built assets is overwhelmingly metro located and has 66% of our Australian stores located in Sydney, Melbourne and Brisbane, the country's three biggest markets. As part of the internalization, we upsized our unsecured banking facilities by $300 million, while pricing, tenor and covenants remained unchanged. We now have $1.65 billion in debt facilities with a weighted average term to maturity of 2.3 years. Our weighted average cost of debt for FY '26 was 3.1% or 4.2%, including capitalized interest, benefiting from hedges put in place when rates were considerably lower. At 30 June, the group was 72% hedged and our interest cover ratio was 3.3x against the covenant of 2x, providing headroom even as finance costs rise over the next few years. Gearing was 33.7%, comfortably within our target range and provides us approximately $400 million of additional capacity. We nevertheless intend to manage capital prudently as the development pipeline progresses. Our capital management options include organic valuation growth as acquisition of stabilizing assets mature, capital-light structures, selective asset recycling and other funding initiatives, and we will continue to assess each source of capital in light of security holder returns. Storage King's portfolio values increased 2% during the period, up $71 million. Importantly, the principal drivers were income growth and value created through completed developments rather than cap rate compression. Separately, we invested a further $78 million in acquisitions and $168 million in capital expenditure during the period, reflected in the portfolio at cost. The portfolio weighted average cap rate tightened by only 3 basis points from 5.45% to 5.42%. Transaction activity across the sector remains very strong with multiple portfolios being acquired or marketed. The weight of capital that is seeking high-quality self-storage assets underpins our confidence in the value of our portfolio. Finally, I wanted to put our reported NTA of $1.77 into context. NTA captures the carrying value of our tangible assets under accounting methodology, but it does not capture all of the economic value that we see in storage here. First, there is property value not reflected in the NTA. Each property is valued as it individually owned and externally operated. Developments are held at cost rather than completion value and portfolio transactions can attract a premium to the value of assets considered individually. Recent comparable portfolio transactions have occurred at cap rates approximately 50 to 100 basis points tighter than the rates applied to individual assets in our portfolio. While those transactions are not directly comparable in every respect, they do provide useful evidence of the premium the market attributes to scaled self-storage portfolios. Second, there is platform value. Storage King brand, our proprietary revenue management system, our management rights, the responsible entity and associated licenses and the approximately 25,000 new customer inquiries generated each and every month. And third, there is strategic value, our people, our integrated operating capability, our managed and licensed store network and associated preemptive rights and the ability now that we are internalized to allocate capital and operate the platform entirely for Storage King security holders. NTA tells us what our tangible balance sheet is recorded at. It does not tell us the full economic value of a vertically integrated owned, operated and managed self-storage platform listed on the ASX. The strength of our people, portfolio, platform, market access and now internalized structure positions us well to drive long-term value for our security holders. And with that, I'll hand back to Nikki.

Thanks, Evan. Before discussing earnings growth from the portfolio, it's worth reflecting on the significant capital growth achieved in the underlying portfolio itself. Over the past 8 years, the value of our self-storage assets has grown from approximately $666 million to almost $3.9 billion, representing a compound annual growth rate of 25%. More importantly, this growth has been achieved through the deliberate creation of a high-quality, predominantly metropolitan portfolio located in densely populated markets across Australia and New Zealand. These assets are increasingly difficult to replicate. Planning restrictions, land availability and development costs continue to rise, reinforcing the strategic value of the portfolio that we have assembled. Looking closer at the composition of that growth, an important trend is emerging. The value of our stabilizing and development segments has nearly doubled since destapling in 2023 and is forecast to exceed $1 billion in FY '27. This reflects the increasing contribution of our development pipeline and highlights the growing role these assets play in the future growth of the group. With strategic locations, significant scale and increasing barriers to entry. We believe the quality and scarcity of our assets represent one of Storage King's greatest competitive advantages and a powerful foundation for long-term security holder value growth. Beyond that capital growth achieved, during the year, the portfolio continued to deliver income growth. As in prior periods, we break the portfolio into four segments: established and then our high-growth segments, acquisitions stabilizing and development sites. The established portfolio is best analyzed by region, and I'll cover this shortly. The most important takeaway from this slide being the shape of the portfolio and the meaningful change that has occurred. Today, 29% of the portfolio or 48 of the 151 company assets sit in the high-growth segments that have yet to reach their full earnings potential. Within this, it's a stabilizing portfolio that drags most on current yields. Day 1, when we open a new store, we open with 0 customers or revenue, but the full cost of operations, marketing and borrowings are expensed. This moderates current overall portfolio yields substantially, but it also represents the group's most significant source of embedded growth. As acquisitions are optimized, stabilizing stores mature and development projects are delivered and leased up, these assets provide a substantial runway for future earnings growth. By way of a simple arithmetic illustration, utilizing the established portfolio metrics as seen on this slide. The organic growth opportunity within the acquisition stabilizing and development sites represents a potential incremental revenue uplift of approximately $71 million per annum. And given the significant operating leverage inherent, particularly in the acquisition and stabilizing segments, the $26 million from these stores already trading should flow directly to FFO with the majority of the development site revenue flowing to FFO too. Understanding that this doesn't happen overnight, it happens over years, and there are many factors that sit between a development site and successful maturity. However, in summary, the portfolio today contains a larger pool of embedded earnings growth than at any time in the group's history. Moving on to the established portfolio, which provides the foundation of the group's earnings. The portfolio continues to deliver market-leading RevPAM of $341 a square meter, and that is up 0.7% on FY '25, with occupancy remaining strong at 90.2%, but down 3 basis points on prior year. Rate growth was driven by continued ECRI performance, partially offset by lower street rates. As we highlighted at the half year, market conditions remain competitive with street rates exhibiting periods of both pressure and recovery throughout the year. Looking at the established portfolio by the regions, FY '26 was characterized by resilient operating performance with every Australian market delivering positive RevPAM growth. Importantly, our largest markets continue to perform well, with underlying rent roll growth of 5.3% in New South Wales and 7% in Queensland after adjusting for satellite acquisitions and expansions. Western Australia and the ACT remained more challenging with elevated levels of new supply directly impacting our portfolio. In Western Australia, in particular, a meaningful portion of the portfolio has been impacted by new competitor facilities entering the market over the past 18 months. The intensity of the impact is typically greatest in the early years following opening, and we expect this to moderate as these new facilities reach maturity. Turning to New Zealand. FY '26 was impacted by three factors. First, the depreciation of the New Zealand dollar reduced earnings. Second, trading was disrupted by roof strengthening works across 5 stores, which were completed in May. Third, softer macroeconomic conditions weighed on underlying performance. And as Evan mentioned, with the first two stripped out, New Zealand was still negative -- at negative 2.3% in the year. The capital works are now complete. The affected stores have moved into recovery mode and are focused on rebuilding occupancy and revenue performance through FY '27. While competitive conditions are likely to make a feature of the operating environment, management remains focused on the factors within our control. Alongside strengthening revenue management capability, we are placing increased emphasis on productivity and cost discipline across both Australia and New Zealand to support earnings growth through the cycle. Development remains one of our most attractive avenues for growth and value creation. Our focus is simple, develop in markets where we see strong long-term demand and where acquisitions are either unavailable, overpriced or unlikely to meet our quality and scale requirements. During FY '26, we continued to replenish the pipeline across 3 new sites identified through our refreshed network strategy. Today, 16 of our 19 development projects are well advanced and are expected to increase portfolio capacity by around 15% over the short to medium term. Importantly, these projects are underpinned by our proven development model, and we continue to target capital uplifts around 20% across the pipeline. We've mentioned that FY '27 will be a record year for development delivery. You can see the more than 50,000 square meters of NLA scheduled to open, including our flagship Sydney Olympic Park and Mascot stores. These next-generation facilities not only create future earnings growth, but continue to strengthen the quality and relevance of the portfolio, helping to expand the appeal of self-storage to an ever broadening customer base. In short, the development pipeline represents a significant source of future value creation, an important driver of the embedded growth opportunity across the portfolio. Importantly, our recent developments continue to validate our strategy. All four developments shown on this slide are performing at or ahead of underwriting expectations, demonstrating the quality of both our development model and operating platform. Expansions are also delivering attractive returns with a further 23,000 square meters in the pipeline. Strong execution gives us confidence in our ability to continue converting development capital into future earnings growth. Moving to our Storage King platform. And at Storage King, growth starts with customers. We attract more customers through the most -- being the most recognized and most searched self-storage brand in Australia and New Zealand. And this generated more than 300,000 quality inquiries for the business in FY '26. We then convert the demand through a superior customer experience, reflected in the 24% conversion rate, NPS of 72, our quality assets and our engaged workforce. The combination of customer traction and customer experience has again resulted in Storage King being recognized as the #1 preferred self-storage brand across Australia and New Zealand. We believe this leadership position is a significant competitive advantage and a key driver of long-term revenue and earnings growth. The most important organic growth initiatives for the group is our proprietary revenue management system. FY '26 marked a key milestone with deployment now complete across the portfolio and the business transitioning from implementation to optimization. While market conditions have remained competitive, our confidence in the system continues to grow. The data on the left demonstrates that stores operating with RMS generated pricing delivered ECR outcomes approximately 2.5% higher than non-RMS stores during the measurement period. More importantly, the system is creating a disciplined data-driven approach to revenue management. It combines centralized analytics with local market expertise, enabling more informed pricing decisions at unit, store and market level. Looking ahead, our focus shifts to value capture. We've established a dedicated revenue management team are preparing to launch value pricing capabilities through our digital channels, and we'll continue to enhance the platform through machine learning, testing and optimization. For us, the significance of the RMS is not the technology itself, but the capability that it creates. By combining data, analytics and local market expertise, we're building a more sophisticated and scalable approach to revenue management that sits at the heart of our ability to grow revenue across the portfolio. We see AI as a meaningful opportunity for the business, but our approach is targeted, practical and focused on measurable outcomes. Rather than taking a static approach, we're prioritizing use cases across customer experience, productivity and brand visibility, where we believe AI can create the most value. Importantly, we're already seeing results. AI-enhanced security cameras have now been deployed across 45% of the portfolio, reducing security incidents while lowering after-hours callouts and operational intervention. Our next major initiative is Alex, our AI customer support agent, which enters customer testing in Q1 FY '27 and takes Sir Stow-A-Lot, who's been our chatbot to the next level. Alex is conversational. He'll provide 24/7 customer support in multiple languages. He'll manage routine inquiries and seamlessly escalate sales opportunities to our team for follow-up. I've had a few long conversations with him, and I can confirm he also has a great sense of humor. What excites us most is not any single application, but the ability to combine AI with our existing strength in brand, customer experience and operating capability. Early results are encouraging, and we see AI becoming an increasingly important lever for customer growth, productivity and value creation across the platform. Our approach to sustainability is practical and focused on long-term value creation. During FY '26, we improved customer NPS to 72, reduced Scope 1 and 2 emissions intensity by 5%, expanded solar so that we are now across 95 stores. And we've also retained our Great Place to Work accreditation in Australia and New Zealand. These initiatives strengthen the resilience of our assets, support our customers and people and contribute to sustainable long-term returns. Further detail will be provided in our sustainability report later this year. Before I move to the priorities ahead, I'd like to take a moment to acknowledge the leaders and teams who laid the foundations for the business we are privileged to lead today. Michael Tate, together with Steven Sewell, the broader Abacus leadership team and many talented people across both organizations helped to build one of the most respected self-storage businesses in Australasia. Their vision, commitment and capability shape the brand, portfolio, culture and operating platform that underpin our success today. As the new CEO, I have enormous respect for what is being built and a clear sense of responsibility for what comes next. Great businesses are built over decades, not years. We are fortunate to inherit a business shaped by outstanding leaders and outstanding people. Our task is now simple, honor that legacy by building something even better. So as I look ahead to FY '27 and beyond, my focus is clear: successful internalization. Internalization provides us with the foundation to capture the full value of the growth ahead. Enhance the platform through specialization and optimization initiatives. Execute with excellence, realizing the embedded value in the business, controlled capital management, recognizing where the business stands in its investment cycle and return cycle as well as the macro environment in which we are operating and then balancing sustainable security holder returns against disciplined reinvestment in our growth opportunities. And finally, continue to grow through value-accretive capital allocation into new marketing and new market opportunities. As we look ahead to FY '27, Storage King enters the year from a position of strength. with a simpler structure, a high-quality portfolio and a substantial embedded growth opportunities. FY '27 is a year where the full cost of growth becomes visible in earnings. As developments open and move to the stabilizing segment, capitalized interest progressively moved through the P&L, while our stabilizing portfolio, now the largest in group's history, incurs operating costs ahead of reaching its full earnings potential. Rather than smoothing these impacts, we believe it is important to transparently reflect the economics of the business and the stage of the portfolio's evolution in today's higher interest rate environment. Accordingly, we are providing FY '27 distribution guidance of $0.045 per security. and introducing a revised payout ratio of 80% to 100% of FFO, expecting to be in the midpoint of the range. We believe FY '27 represents an important inflection point where the earnings impact of our investment program is recognized ahead of the benefits. Many of the assets creating an earnings headwind today are expected to become some of the strongest contributors to earnings, cash flows and security holder returns in the years ahead. Our focus is now on converting that embedded potential into the next phase of value creation. Thank you for your continued support, and I look forward to updating you on our progress throughout FY '27.

[Operator Instructions] Your first phone question today comes from Carl Braganza with Jarden.

A few questions from me. The first one was on guidance. Even at the low end of your new payout range, earnings are going back 10% in FY '27. Can you just walk me through the drivers of that change? Obviously, some large debt headwinds, but how much is the ramp-up in development and soft operating conditions playing a part?

Thanks for the question, Carl. I'm going to flip to Evan to answer that one.

So when we're looking into next year, we continue to grow the stabilizing portfolio, and we're going to see that operating profit will grow and that operating margin will stay the same. So from an income receipts perspective, we're seeing that grow. However, it's not going to be enough in relation to the headwinds of the interest expense with those hedges rolling off. Another thing to make sure that you put into your modeling is the $7 million worth of annualized cost savings from the internalization structure. Nikki guided to the midpoint of that range as well in her speech.

And then also just on your capitalized interest, what was the assumption going into FY '27...

The assumption going into FY '27 is that any developments that don't come online capitalize the direct debt associated with those transactions. What we're looking at in FY '27 is a similar amount being capitalized as that of FY '26.

Okay. And then a final one on guidance was what RevPAM growth were you assuming in FY '27?

So in relation to RevPAM growth, when we look across the established portfolio, stabilizing portfolio, the acquisition portfolio and the developments coming online, they all have different forms of RevPAM growth. It's not something that we directly guide to in relation to our analysis, but we hopefully have given other clues throughout the presentation to assist you in your modeling.

Okay. Cool. And then a final question for me was that the 80% to 100% is quite a wide payout range. Is FY '27 guidance assuming a payout at the bottom end? And just going forward beyond FY '27, where do you hope to sit in that range?

Yes. We have provided guidance, Carl, that we're expecting to be in the midpoint of that range. But the wider payout ratio just gives us flexibility. And given the nature of the environment that we're in, we think that's prudent.

Your next question comes from Howard Penny with Citi.

Just on the finance cost reset. There's a big jump in finance costs by 110 basis points between FY '26 and FY '27. But looking into '28, '29, that expected overall finance cost seems a little of a -- it's still going up, but looking a little less than the big jump we're seeing now. Is it fair to say that you're expecting operational earnings to outpace that headwind of finance costs into '28 and '29. I know you're not guiding those numbers, but is this reset in '27, is that expected to be more '27 issue and not move into '28, '29?

That's exactly right, Howard. We're looking at a near-term reset in relation to the interest expense so that we can create medium- to long-term growth going forward.

Great. And just a second question, which comes up regularly on self-storage is the link between residential housing activity and turnover of houses as a driver for self-storage demand. And -- but I know it's more diversified than that. How would you answer a question for those that are saying we are under pressure here in this residential market and activity is slowing. How is that impacting your business operationally?

Yes. Howard, look, residential turnover is definitely a factor. It's a fairly large factor. But as you've mentioned, it's one of many factors. And you could arguably say we're in one of the very worst markets for residential turnover ever. It does obviously provide us with a potential future tailwind as that pent-up demand changes. But in the short term, we do see that as a cyclical headwind that is affecting the business.

Your next question comes from Richard Jones with JPMorgan.

Just -- FY '27 earnings and distribution is obviously a big miss versus where market expectations were. Just wondering if you thought of updating the market around where your trajectory was heading as part of the internalization.

Yes. Richard, when we were doing the internalization, we hadn't yet sat down and updated all our budgets and done our budgeting for the year ahead. So the right figures and what was available for us at the time we updated. We were still discussing because there's obviously many ways for us to manage our interest rates and our interest rate hedge book and those decisions we've only made recently as we look forward and set the strategy for the year ahead.