The GPT Group (GPT) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Vickki McFadden, and I am the Chairman of the GPT Group. On behalf of my fellow directors, I would like to welcome you to GPT's 2021 Annual General Meeting. We are conducting today's meeting from GPT's head office in Sydney, and we acknowledge the traditional custodians of this land, the Gadigal People of the Eora Nation, and pay our respects to elders past, present and emerging. I am advised by the company secretary that we have a quorum present, and I declare the meeting open. We are holding today's meeting online, and securityholders can participate in the proceedings, vote and ask questions using the online platform. After careful consideration, we determined that an online meeting was the preferred approach to conducting this meeting given the current uncertainty in relation to the community transmission of COVID-19. On behalf of the Board, I appreciate your understanding and we hope that next year, we will have a format for our AGM where our securityholders are able to attend either in person or online. If you experience any difficulties in participating in the meeting using the online platform, you can call the helpline number set out on the screen. The helpline number can also be found in the AGM Online Guide on the Annual General Meetings' page of GPT's website. If you have a question that you would like to put to the meeting, you may wish to enter your questions online before the formal part of the meeting commences. And we will address them at the appropriate time during the meeting. I would like to welcome all of the directors of GPT to our meeting today: Tracey Horton; Angus McNaughton; Mark Menhinnitt; Michelle Somerville; Robert Whitfield; and GPT's CEO and Managing Director, Bob Johnston. We are also joined by our General Counsel and Company Secretary, James Coyne; other members of the executive leadership team; and Sue Horlin, the lead partner of the group's external auditors, PwC. Clearly, 2020 was a challenging year. We commenced the year with a strong balance sheet and an expectation that we would deliver further growth in earnings and distributions for our investors. This, however, was disrupted by the unprecedented events triggered by the COVID-19 pandemic. Prudent management of our capital position, which has been a hallmark of the group for many years, stood us in good stead as we navigated the uncertainty brought on by the pandemic. The health and safety of our customers, our people and the community has always been a priority for GPT, and this came into sharp focus for both the Board and management during the year. The group responded well to the evolving challenges and worked with our customers to help them operate successfully and safely. The Board was actively engaged with management, meeting frequently to oversee the group's response and to provide timely consideration and counsel in relation to key decisions. The group's financial performance in 2020 was impacted by government measures implemented in response to the pandemic, including the restricted trading conditions for our retail assets and the mandatory rent relief to affected tenants. The impact on the group's 2020 rental income from COVID-19 was approximately $95 million, which includes approximately $72 million in the form of tenant rent waivers. We did qualify for and receive JobKeeper payments totaling $8.8 million. Despite the disruption, the group delivered funds from operations of $554.7 million or $0.2848 per security. Our full year distribution was $0.225 per security, which represented 100% of free cash flow, consistent with our distribution policy which was revised during the year. Our retail assets were most impacted during the period. The revaluation of the retail assets was the primary driver of negative property valuation movements of $712.5 million and the resultant net loss after tax of $213.1 million. In light of the unprecedented circumstances, in April last year, the Board and management agreed to withdraw the 2020 Short-Term Incentive Plan and the 2020-2022 Long-Term Incentive Plan. Consequently, no bonuses were paid and no performance rights were granted to management for the 2020 year. Furthermore, the performance rights granted for the 2018-2020 Long-Term Incentive Plan did not vest as the performance conditions were not satisfied. While adapting to the events of 2020, our focus on strategy and long-term performance remained. The group aims to deliver growing and predictable earnings and maximize total returns for investors over the long term by successfully executing on our strategy. Owning, managing and developing high-quality real estate in Australia's largest cities is core to our strategy. A key aspect of creating value through the thriving places that we own, develop and manage is to foster a sustainable environment by minimizing our impact upon it and by partnering with our customers, suppliers and communities for shared success. During 2020, we set an ambitious target to achieve carbon-neutral operations for all managed assets by the end of 2024. GPT recognizes the importance of continued action to address climate change. And the independent carbon-neutral certification of the GPT Wholesale Office Fund's operating buildings in 2020 demonstrates our commitment to reducing our environmental impact. The Green Building Council of Australia recognized the fund's achievement as a first for a property -- for a national property portfolio within the World Green Building Council network. We published the group's second Climate Disclosure Statement, which is aligned with the Task Force on Climate-related Financial Disclosure, or TCFD, recommendations. The statement outlines the steps we are taking to identify, assess and manage climate-related risks and opportunities. The group published its Human Rights Statement. This statement articulates our long-standing commitment to respecting human rights across our operations and in our engagement with third parties. Our first Modern Slavery Statement was released in December and sets out the actions we have taken and propose to take in order to identify and prevent modern slavery taking place within our operations and across our supply chains. We also made excellent progress against our Stretch Reconciliation Action Plan. In doing so, we offered our employees, our customers and communities the opportunity to explore the culture and traditions of First Nations people through our reconciliation commitments and activities. We were again recognized as an inclusive employer by the Workplace Gender Equality Agency and the Australian Workplace Equality Index. This is pleasing recognition of our continued progress towards the group's diversity and inclusion objectives. Our CEO, Bob Johnston, is Chairman of the Property Champions of Change, which seeks to improve inclusion and reduce gender bias in our industry and across Australian workplaces. Our strong credentials and performance are recognized by top-tier ratings in several international sustainability benchmarks, including ranking second globally for real estate in the Dow Jones Sustainability Index. And we again achieved the maximum 5-star status for our ESG management and performance, as measured by GRESB. Corporate governance is central to our commitment to securityholders. The Board's collective mix of skills, diversity, experience and tenure provide effective governance and direction for the group. The Board continues to be actively engaged in its governance responsibilities. Directors regularly meet with the leadership team and employees, and there is transparent dialogue between the Board and management on a range of matters, including strategy, culture, safety and sustainability. Board engagement also extends to our securityholders. Tracey Horton, our Chairman of the Human Resources and Remuneration Committee, and I met with a number of you to discuss our approach to remuneration and governance matters in the lead up to this meeting. We thank you for sharing your views and value your feedback. After more than 10 years of service, Gene Tilbrook retired from the Board at the end of December. I would like to take this opportunity to thank Gene for his commitment and valuable contribution to GPT over these years. Robert Whitfield joined the Board in May of last year and is standing for election at today's meeting. Rob brings extensive and valuable experience to GPT, particularly in management, banking, finance and the public sector. All of the directors, other than Rob, unanimously recommend Rob's election to the Board. Rob will present his credentials to you later in this meeting. I am standing for reelection to the Board today, and I thank my fellow directors for supporting my reelection. I extend my thanks to the Board for their support and guidance to management in steering the group through the unprecedented challenges of 2020 and acknowledge the extensive demands on their time, experience and expertise. On behalf of the Board, I wish to acknowledge the commitment and dedication of the management team and our employees, and I thank them for their hard work and resilience during a challenging year. Finally, I thank our securityholders for their continued support of GPT. I now invite our CEO and Managing Director, Bob Johnston, to address the meeting.

Thank you, Chairman, and good morning, everyone. I, too, would like to acknowledge the Gadigal people of the Eora Nation and pay my respects to elders past, present and emerging. 2020 was certainly a challenging and disrupted year on many fronts. This was most pronounced in Victoria where many of our assets are located. I'm very proud of how the GPT team responded during these extraordinary circumstances, keeping our assets and people safe and working closely with our customers to support them. While many of our people had to deal with lockdowns, home schooling and caring responsibilities, they never lost sight of the tasks at hand to ensure we delivered the best outcome possible for our securityholders. Our vision is to be the most respected property company in Australia, and the way our team responded during the year was consistent with this vision and our values. Despite the disruption and the challenges, we also continued to execute on our strategy and position the business for the economic recovery. The group maintained a strong balance sheet position and a prudent approach to capital management, with gearing remaining well below our target operating range of 25% to 35%. As the economy recovers and opportunities emerge, we expect to utilize this capacity to facilitate growth across the various sectors of the business. The group maintains A and A2 credit ratings from S&P and Moody's, respectively. Growth in the Logistics sector has been a strategic priority for the group. And during 2020, we increased the scale of our platform with acquisitions and development completions of approximately $400 million. Furthermore, we expanded our capital partnering relationships entering into a 50-50 joint venture with QuadReal, who manages real estate investment programs for the British Columbia Investment Management Corporation from Canada. The partnership will invest $800 million in logistics assets. Our 27,000 square meter office development at 32 Smith in Parramatta was completed in January this year. And we also progressed the 35,000 square meter Queen & Collins office redevelopment in Melbourne with the GPT Wholesale Office Fund, which will be completed later this month. Both assets are high-quality additions to the portfolio and testament to the innovation and tenacity of our teams to deliver these outcomes in a challenging period. Planned developments at Rouse Hill and Melbourne Central were suspended during 2020. But our teams are now progressing their work on these opportunities to ensure they can be activated at the appropriate time. We have a diversified portfolio of high-quality assets, and our strategy is to grow the portfolio through developments and acquisitions in Australia's largest property markets. We continue to believe in the megatrend of urbanization that will shape our cities for years to come, and we recognize that technology is playing an ever increasing role in the way we live and work. We're investing in our assets and opportunities that will deliver value for securityholders over the long term. Our Office portfolio continued to deliver strong results in 2020, demonstrating its resilience despite work-from-home arrangements enduring for much of the year. Notwithstanding travel and mobility restrictions, our team concluded 99,600 square meters of signed leases across the portfolio, with an additional 26,500 square meters under Heads of Agreement. As at December 2020, the portfolio had a weighted average lease expiry in excess of 5 years. Portfolio occupancy at the end of March was 91.9% with the inclusion of 32 Smith following its completion. The asset is currently 72% committed. Our Office portfolio has an average NABERS rating, energy rating of 5.8 stars, which is a strong benchmark, reflecting our commitment to sustainable buildings and reducing emissions. All Office assets were independently revalued as at the end of 2020, resulting in a small valuation decline of 1.2% for the year. The picture on this slide shows the scheme that our development team is working on currently. It's an exciting opportunity to create a landmark, state-of-the-art office tower on the edge of Cockle Bay, Darling Park. The scheme has Stage 1 development approval, and we are advancing the scheme so that it is positioned for the next market cycle. The office market is evolving as businesses embrace technology and remote working post the pandemic. While it is early days, we expect that many business will adopt hybrid working models with employees working from both the office and their home depending on their role and the specific activities they are undertaking. We believe that office space will continue to be important for collaboration, innovation, teamwork, culture and, importantly, experiential learning. But the way offices are used will continue to evolve. We have invested in our assets, upgrading services and amenities to reflect these changing needs and to ensure that our buildings are healthy and sustainable. We have our own flexible space offering called Space&Co., and we continue to see demand for tenants -- from tenants for flexible growth arrangements in addition to their core needs. Our Logistics portfolio delivered outstanding results in 2020 and is benefiting from strong demand from e-commerce, retailing, pharmaceuticals and general distribution requirements. We expect these trends will continue well into the future, supporting our strategy to further invest in the sector. Our Logistics portfolio was independently valued at $3 billion as at December 2020, and I expect this to further increase in value as investment demand for quality assets continues to outstrip supply. The Logistics portfolio has a long weighted average lease expiry of 6.7 years. And at the end of the first quarter of 2021, occupancy stood at 96.8%. Our growth in the Logistics sector is being delivered through both acquisitions and developments. And as you can see from this slide, the value of the portfolio has doubled over the last 3 years. We expect to allocate further capital to this sector. And we have a Logistics development pipeline with an end value of approximately $1 billion, which includes a land bank of 33.4 hectares at Kemps Creek. This area is attracting strong interest given its proximity to the new Western Sydney Airport and the planned aerotropolis. We currently have 5 Logistics developments underway, 4 of which are due for completion in the second half of this year. Government restrictions and the mandatory Code of Conduct in response to COVID-19 significantly impacted the performance of our $5.5 billion shopping center portfolio in 2020. As noted earlier, the restrictions imposed in Victoria from July to November last year were particularly challenging for GPT and our retailer partners. Pleasingly, though, when shopping centers were able to fully reopen, there was a strong return to the centers, and visitations in December were generally back at around 95% of pre-COVID levels, with the exception of Melbourne Central, which is in the heart of the Melbourne CBD. Restrictions in relation to office usage in the CBD were eased at the beginning of this year, and we have started to see a ramp-up of foot traffic, albeit recovery of Melbourne Central still lags the balance of the portfolio and it is likely that it will take some time to see the foot traffic back at pre-pandemic levels. As you can see from this slide, most retail categories are showing a strong recovery in sales with the exception of cinemas, which have not only been impacted by restrictions, but also the lack of new product releases from offshore. Excluding Melbourne Central and travel agencies, total center sales growth in the first quarter of this year was up 8% on the prior corresponding period. While leasing conditions remain challenging, we continue to see space -- demand for our space with occupancy sitting at approximately 98%. There were just over 400 leasing deals completed last year and a further 140 deals completed in the first quarter of this year. The structure of our leases has not changed, and we continue to agree with our tenants fixed base rents with annual increases. The recovery we have seen in visitations and sales growth this year demonstrates the quality of our retail assets and our customers' desire to return to our shopping centers. Record levels of household savings and buoyant consumer confidence should continue to translate to ongoing sales growth of the entire portfolio over the remainder of 2021. Reducing energy intensity across our retail portfolio continues to be a priority for our team. The portfolio has an average NABERS energy rating of 4.4 years -- 4.4 stars, I should say, and we are developing pathways for carbon-neutral certification for the portfolio consistent with our 2024 group target. Our Funds Management platform is an important part of our business that we are seeking to grow. With $12.9 billion in assets under management as at December, the funds platform has significant scale and provides operational leverage for the group. We hold substantial co-investments in each of our wholesale funds, providing an income stream and alignment with our investors. The $9 billion GPT Wholesale Office Fund raised approximately $340 million during 2020, demonstrating investor support for the fund and its strategy. The fund expanded its development pipeline following the acquisition of a Parramatta CBD site and has debt capacity of more than $1 billion to fund future development and acquisition opportunities. Our $3.9 billion GPT Wholesale Shopping Centre Fund faced similar challenges to our balance sheet Retail portfolio during 2020, with the main focus being prudent capital management and rent collection. The fund is now benefiting, though, from the recovery in retail sales and visitations to its assets. Furthermore, the team has progressed plans to pursue mixed-use opportunities for a number of its assets and recently lodged a mixed-use master plan for the Highpoint Shopping Centre, which is one of the largest and most successful shopping centers in the country. Both funds retained their 5-star ESG ratings from GRESB. And as the Chairman mentioned earlier, GWOF achieved carbon-neutral certification, an achievement that we are particularly proud of. While uncertainty remains, we are optimistic about the outlook for 2021. We have delivered encouraging results for the first quarter of this year, and we recently announced that we expect to deliver growth in funds from operations of 8% per security and growth in distributions of 12% per security on the prior year. We have an engaged and empowered team at GPT. And this, coupled with our high-quality portfolio and growth opportunities, positions us well to continue to grow securityholder value as the economy recovers and the impacts of the pandemic recede. Melbourne Central Shopping Centre will take some time to recover, but we remain confident that it will once -- will again be one of the most productive shopping centers in the country. I'd like to once again acknowledge and thank GPT employees for the determination and commitment they have demonstrated to deliver outcomes they have for securityholders in what has been extraordinary circumstances. Despite the challenges of 2020, our employees also found ways to give back to the community through various programs that are run by The GPT Foundation. I'd also like to thank the Chairman and the Board for their guidance and support during a period where it has been difficult to travel and meet in the usual way. The directors were called upon to attend many additional Board and committee meetings, and their commitment to ensuring they provided appropriate oversight was exemplary. And in closing, I would like to thank you, our securityholders, for your ongoing support for GPT. Thank you, and I'll now hand back to the Chairman.

Thank you, Bob. I'll turn now to the formal business of the meeting. You can cast your vote using the electronic voting card available when you registered online today. If you have any questions about casting your vote online, please refer to the AGM Online Guide or call us on the numbers set out in the guide or on the screen in front of you. All resolutions will be decided on a poll. The results of the polls will be declared and released to the Australian Securities Exchange later today. I will now open the poll in respect of all motions that securityholders will vote on today. I invite you to start submitting your votes from this point onwards. You do not need to wait until the relevant item of business. The poll will close 5 minutes after the conclusion of today's meeting. Some of you participating in the meeting today may have questions, and we will ensure there is plenty of time for you to ask them. Those eligible participants who have registered as a securityholder or a proxyholder can submit questions to the meeting by clicking on the Ask a Question box. If you have already submitted a question online, we will respond to that question at the relevant item of business. General questions which do not relate to the formal items of business will be considered after the formal items. A copy of the Notice of Meeting has been distributed, and I will now move to the matters set out in the notice. Item 1 calls for the receipt of the Directors' Report and Financial Statements for the year ended 31st of December 2020 together with the Auditor's Report. While there is no resolution for this item, this is an opportunity to discuss the Directors' Report, Auditor's Report and Financial Statements and ask any questions you may have for the Board or for our auditors, PwC. I now invite questions in relation to the Directors' Report, Auditor's Report and Financial Statements. We will take a brief pause to allow participants to enter their questions into the online platform.

We have received no questions on this item, Chairman.

Thank you very much. I will now hand over to Robert Whitfield to chair the meeting as we move to item 2 in the Notice of Meeting, my reelection as a director.

Thank you, Vickki. Resolution 1 concerns the reelection of Vickki McFadden as a director. Vickki joined the GPT Board as an independent non-executive director in March 2018 and was appointed Chairman in May of that year. Vickki's reelection has the unanimous support of the directors, and I now invite Vickki to address the meeting.

Thank you, Rob. I am honored to be considered for reelection by securityholders at this meeting today with the unanimous support of my fellow directors. As Rob stated, I joined the GPT Board on the 1st of March 2018 and was appointed as the Chairman in May of that year. I bring to the role wide-ranging and extensive experience from my executive career and as both the Chairman and non-executive director of other listed and non-listed companies. This diversity of experience, together with that of my Board colleagues, is a critical element in a Board's meaningful contribution to the governance and leadership of an organization. My particular skills and experience have been in finance and accounting, risk management and processes, capital markets, mergers and acquisitions, and leadership and governance in highly regulated markets. I hold degrees in law and finance from the University of New South Wales. These skills are very complementary to those of my Board colleagues. And together, we provide a balance of skills and experience, which enable us to fulfill our responsibilities on behalf of the group, our employees and stakeholders. I assure you of my focus and commitment to GPT and to encapsulating the fundamental values of accountability, teamwork, social responsibility, integrity and respect, all of which are essential to the way we do business. I wish to thank my colleagues and our securityholders for their support.

Thank you, Vickki. Are there any questions on this resolution? We'll take a brief pause to allow participants to enter their questions into the online platform.

We have received no questions on this item of business. Thank you.

I put resolution 1 to the meeting as an ordinary resolution of the company. I ask that you now record your vote for resolution 1 if you have not already done so. [Voting]

The proxies received prior to the meeting are now to be shown on the screen. Congratulations, Vickki. I'll now hand back to you to resume chairing the meeting.

Thank you, Rob. And thank you, securityholders for your support. We move now to resolution 2. Resolution 2 concerns the election of Robert Whitfield as a director. Rob was appointed to the Board as an independent non-executive director on the 14th of May 2020. Rob's significant banking and finance experience in senior management roles across the public and private sectors is of great value to the Board. This is Rob's first meeting since being appointed to the Board. And being eligible, he offers himself for election today. Rob's election has the full support of the Board, and I now invite Rob to address the meeting.

Thank you, Chair, ladies and gentlemen. My appointment as a non-executive director to the GPT Board was announced on the 14th of May 2020. It is indeed an honor to now seek election from securityholders on my candidacy. I'm currently the Chair of the Sustainability and Risk Committee, a member of the Audit Committee and of the Nominations Committee. Currently, I serve as a non-executive director of the Commonwealth Bank and Chair their Risk and Compliance Committee. I'm also a non-executive director of Transurban Group. I bring significant banking and finance skills and experience from senior roles both across the private and public sectors, particularly in risk management, treasury activities and stakeholder engagement. I also take many learnings from the issues identified through AUSTRAC's proceedings against CBA and Westpac, the independent inquiry by APRA into CBA and the Banking Royal Commission. These include always being mindful of the underlying purpose of each law or regulation, governance matters and a good risk culture is critical, as is ensuring businesses continuing to invest in their core capability. As a Board member for GPT, I can and do apply these learnings. My career has demonstrated proven skills in leadership, strategy development, including mergers and acquisitions, business optimization, innovation and customer service. These have been underpinned by the values of integrity, transparency, fairness and accountability. With your support, I look forward to continuing to diligently apply my capabilities and contribute to the collective skills of the Board to help GPT navigate the challenges and opportunities we face. Thank you.

Thank you, Rob. Are there any questions on this resolution? We will pause briefly to allow participants to enter their questions on the online platform.

We have received one question on this item. It is from Mary Fifita from the ASA. We ask Mr. Robert Whitfield to comment on his 30 years spent with WBC where he was CEO of the Institutional Bank, Chief Risk Officer. Shareholders will want to know what lessons are to be learned from the Westpac problems and how those lessons will impact his role on the GPT Board.

Thank you very much for that. I believe Rob has addressed what learnings he has from that experience in his address just now. But I would like to add that from the Board's perspective, we greatly value and are privileged to have Rob's contribution to the group's risk management and governance, which is, in no small part, enhanced by his understanding of the banking sector's response to the Royal Commission, AUSTRAC proceedings and the demands of APRA. So we greatly value that contribution and those learnings. Thank you.

We have received no further questions on this item.

Thank you very much. I would now put resolution 2 to the meeting as an ordinary resolution of the company. I ask that you now record your vote for resolution 2 if you have not already done so. [Voting]

The proxies received prior to the meeting are now shown on the screen. Many congratulations, Rob. Moving to resolution 3. Resolution 3 is for the adoption of GPT's Remuneration Report for the year ended the 31st of December 2020. The Remuneration Report is part of the Directors' Report and commences on Page 52 of GPT's Annual Report. It describes GPT's remuneration policies and sets out the remuneration arrangements for key management personnel and directors. The Board considers that the remuneration arrangements and outcomes described in the report provide a balanced compensation platform, enabling us to be competitive and attract talent in the property sector whilst aligning remuneration to the achievement of GPT's strategic objectives and the returns for our investors. As noted in my opening remarks, no short-term incentive bonuses were paid to executives for 2020, and no performance rights were granted under the 2020 to 2022 LTI plan as both plans were withdrawn. The Board is committed to seeking regular securityholder feedback on our remuneration framework. And prior to this meeting, Tracey Horton and I met with a number of you to discuss our approach. We value that input and commend the remuneration report to you. Are there any questions in relation to the remuneration report or this resolution? We will take a short pause to allow participants to enter their questions online.

We have received no questions on this item, Chairman.

Thank you. That being so, I now put resolution 3 to the meeting as a nonbinding resolution of the company. Can I please ask that you now record your vote for resolution 3 if you have not already done so? [Voting]

The proxies received prior to the meeting are now shown on the screen. We now move to resolution 4. Resolution 4 seeks approval to grant the company's CEO and Managing Director, Bob Johnston, performance rights as his long-term incentive under the 2021-2023 GPT Group Stapled Security Rights Plan. The Board is of the view that this long-term incentive is an important part of Bob's overall remuneration package and that the selected performance measures ensure that he will only be rewarded if securityholders have also received appropriate returns. The applicable performance conditions will be assessed over a 3-year performance period starting on the 1st of January 2021 and ending on the 31st of December 2023. The Board has determined that the rights to be granted to Bob, should approval be received today, will be subject to 2 performance conditions over the performance period, being: total return calculated each year as the sum of the change in net tangible assets, plus distributions each year, divided by the NTA at the beginning of the year; and secondly, relative total securityholder return, which compares GPT's TSR performance with the TSR performance of the ASX 200 A-REIT Accumulation Index, excluding GPT and the Goodman Group. Are there any questions in relation to this grant of performance rights or this resolution? Again, I will pause briefly to allow participants to enter their questions online.

We have received no questions on this item, Chairman.

Thank you. I will then now put resolution 4 as an ordinary resolution of the company and the trust. I ask that you now record your vote for resolution 4 if you have not already done so. [Voting]

The proxies received prior to the meeting are now shown on the screen. And now we will move to resolution 5. Resolution 5 seeks approval to renew the rules in the company constitution and trust constitution relating to provisions dealing with proportional takeover bids. The current provisions ceased having effect on the 3rd of May this year. And accordingly, it is proposed to renew them. If renewed, Rules 79 and 80 of the company's constitution and 12A of the trust's constitution will operate on the same basis as they did prior to the 3rd of May for a period of 3 years from the date of this meeting. Are there any questions in relation to this resolution? And once again, we will take a brief pause to allow you to enter your questions.

We have received no questions on this item, Chairman.

Thank you. I now put resolution 5 as a special resolution of the company and the trust. I ask now that you record your vote for resolution 5 if you have not already done so. [Voting]

The proxies received prior to the meeting are now shown on the screen. And that now concludes the formal business of the meeting. We will now take any general questions or comments from securityholders. Are there any general questions? And again, I will take a brief pause.

Chairman, we have received a question from Mary Fifita. Why, from a shareholder point of view, is it better to put a logistic asset into the QuadReal property group JV as opposed to GPT buying it as an asset?

Thank you. And thank you, Mary, for your question. I'm going to ask our CEO, Bob Johnston, to respond to that question.

Thank you, Chairman, and thank you, Mary, for the question. Clearly, we're quite excited about the opportunity to have partnered with QuadReal for this -- from a logistics perspective. We have a development pipeline of $1 billion that our balance sheet can access. So what we are looking to do is further grow beyond that, and that's where the QuadReal partnership really comes in. So we're looking at opportunities to not only grow the balance sheet, but also grow our partnership with QuadReal. Through QuadReal, they're an excellent partner, good culture alignment, good cultural fit. And we believe we can grow both successfully. The other thing that you get with the QuadReal relationship is basically, we earn -- we extend our funds management platform. We establish a capital partner relationship that we can extend into other areas of the business, we would hope at some point. And lastly, it enhances our returns. We get fund management fees, development management fees, et cetera, through that partnership. So we think it's an excellent relationship, an excellent opportunity to grow our business in the logistics sector, not only on the balance sheet and our direct investments, but also through that partnership that we have.

Thank you, Bob.

We have another question from Mary Fifita. Her question is, is the 91.9% office occupancy announced at the end of April the lowest it will go?

Again, thank you, Mary, for your question. And again, I will ask Bob if he would respond to that question.

Yes. Thanks again, Chairman. Thank you, Mary, for that question. Yes, our occupancy on the office portfolio did reduce to 91.9% at the end of the first quarter. That was down from about 95% at December. And that was really primarily as a result of us completing 32 Smith in Parramatta, which is 70% leased up. It's a great development, an exciting opportunity for the group. We are long-term believers in the Parramatta market being a significant part of Sydney's future infrastructure. So where does it go from here? The work-from-home arrangement certainly provides some level of uncertainty. But we've been truly encouraged, I guess, by the level of leasing inquiry that we have seen in the first quarter of this year. We do have another development that is completing in Melbourne at Queen & Collins on behalf of our office fund. So it's quite difficult to predict exactly where occupancy goes with the, I guess, the overlay of both those. But we are optimistic about maintaining a healthy level of occupancy across the portfolio into the future.

Thank you, Bob. Are there any questions?

Yes, we have a further question. This is from [ Ronald Karl ]. His question is, the GPT is aiming to be carbon neutral. Please advise how this will be achieved and whether this also includes electricity used by tenants? For example, is GPT planting trees, et cetera, in other areas to claim this carbon-neutral position?

Thank you for that question. Again, I will ask Bob to respond.

Thank you, Chairman, and thank you for the question. Again, this is an area that we have a lot of focus on in the business at the moment. And we're -- as I said in my address, we're really proud of the fact that we're able to achieve carbon neutrality for our office fund in 2020 despite, I guess, the challenges of a pandemic year. Well, we've taken a lot of lessons out of that and now are applying it across the balance of our portfolio. And what we've been on a journey of doing is really reducing the energy intensity of our assets. That's come down by about 60%, I think it is since 2005. So we've made significant headway in reducing the energy intensity of our assets. And what we have been then procuring is green power for the balance. We do not include our tenants' electricity in that. So what -- when we're saying carbon neutral, it's for our operations, the GPT's operations. We do not include our tenants in that. But that is something we'll explore once we actually achieve carbon neutrality for our portfolio. Thank you.

Chairman, we have no further questions.

Thank you. Securityholders are reminded that they can submit their vote online until 5 minutes after the meeting closes, upon which the polls for the resolutions put to today's meeting will close. The votes will be compiled by Link Market Services' representatives with the results announced to the ASX and posted to GPT's website later today. On behalf of the Board, management and employees of the GPT Group, thank you for your support and your participation in today's meeting. I now declare the meeting closed, and I hope that you and your families remain safe and well.