Vicinity Centres (VCX.XA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Vicinity Centres FY '25 Annual Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Peter Huddle, CEO and Managing Director. Please go ahead.

Good morning, and thank you for joining us for Vicinity Centres' results call for the 12 months ended 30th of June 2025. Joining me on today's call is Adrian Chye, our Chief Financial Officer. Before we begin, I'd like to acknowledge the traditional custodians on the lands on which we meet today and pay my respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples on the call today. We will start today's presentation on Slide 5. FY '25 has been another important and successful year at Vicinity. The strategic decisions and investments we have made remain anchored by our strong conviction that premium, fortress-style assets located in great trade areas that are well managed by retail property experts have the potential to deliver superior and sustained income and value growth. What's more, with a growing shortage of retail GLA per capita in Australia, retailers are positioning themselves for the next cycle, becoming more discerning and selective in terms of partnering with owner-managers of the best-performing assets and are committing to leases with longer tenure and typically in larger store formats. In this context, we are curating a higher-quality and higher-growth asset portfolio by acquiring premium assets with strong growth potential at attractive pricing, divesting nonstrategic assets also at attractive pricing and selectively investing in important large-scale retail developments. To that end, we have successfully acquired a 50% interest in Lakeside Joondalup in Western Australia for $420 million, and importantly, secured the associated property management rights. Under our management, the acquisition was accretive to FY '25 earnings and achieved a gross valuation gain of $30 million since acquisition. We exceeded our asset divestment target by more than $200 million, having raised close to $460 million from divesting whole or partial shares of assets. Not only have asset sales provided an important funding mechanism for our growth priorities, asset sales have also provided a further trend towards our targeted premium portfolio mix. We completed the development and launched Chadstone's revitalized fresh food precinct, The Market Pavilion, with the customer response and trading metrics exceeding expectations. Construction of Chadstone's new One Middle Road office tower was completed in May this year with Adairs commencing occupation in June and Kmart commencing their head office fit-out in July. We are particularly pleased to announce the extension of our partnership with the Louis Vuitton Moet Hennessy Group to open at Chatswood Chase in quarter 4 FY '26, which combined with other market-leading retailers, makes the successful reimagination of Chatswood Chase into Northern Sydney's fashion capital all but complete. Adrian and I will cover our financial and operating metrics in more detail shortly. However, in summary, at $674 million, funds from operation was $9 million up on the prior year, and importantly, on a per security basis at $0.148, was at the top end of our guidance range of $0.145 to $0.148 per security. The Board declared a final distribution of $0.0605 per security, bringing FY '25 distribution to $0.12 per security, representing a payout ratio of 95.4% of adjusted FFO. Strong income growth and improving portfolio metrics reflect the confluence of curating a higher-quality retail asset portfolio, especially in an environment of tightening retail supply, and of course, the team's steadfast focus on delivering leasing outcomes that drive robust earnings growth in a more resilient than expected retail sector. Disciplined financial stewardship together with a $349 million increase in asset valuations in FY '25 ensure gearing remained at the lower end of our target range of 26.6%. And having maintained our sector-leading credit ratings, our balance sheet remains a source of competitive advantage and strength. It is pleasing to note that our significant focus on culture, strategy and performance was showcased by our FY '25 employee experience survey results, having achieved a score of 7.8, representing a 0.4 increase relative to the prior year. We look forward to building on this result even further in FY '26. Lastly, I'm pleased to report that while we remain focused on embedding ESG into all aspects of our financial and operational decision-making, we have been intently focused on uplifting our data capture processes and systems as we ready ourselves for mandatory climate reporting, which comes into effect in FY '26. At Vicinity, we believe that strong employee engagement relies on a strong connection existing between our people's day-to-day activities and the purpose and vision of our organization. Our purpose is to shape meaningful places where communities connect. And with a network of 51 owned shopping centers nationwide, our centers naturally play an important role as economic, social and employment hubs where communities can access essential and discretionary goods and services and connect in our entertainment, food and leisure precincts. Our shopping centers welcomed around 380 million customers in FY '25. That equates to more than 1 million visitors per day. Our organizational vision is to prosper with our people and communities by creating Australia's most compelling portfolio of retail-led destinations. A key measure of industry success is specialty sales productivity, where 5 of the top 8 most productive retail assets in Australia are Vicinity assets. Vicinity's unwavering customer centricity, willingness and ability to transform assets into experience-led destinations coupled with trusted and enduring partnerships with the best retailers, local and international, are at its most fundamental level, the intended outcome of our investment strategy. Which brings me to Slide 7, a slide often referred to as a strategy on the page. Our capital allocation model depicted on the top left of this slide highlights the means by which and indeed the magnitude of our deliberate strategy to recycle capital out of smaller nonstrategic assets where market liquidity and pricing continues to be robust and reinvest proceeds into premium assets via acquisitions and developments that present greater long-term growth potential. We have been selective, timely and disciplined with our acquisitions of the residual 49% interest of Chatswood Chase and more recently, with the 50% interest in Lakeside Joondalup. In a similar context, in a constrained construction sector and with cost of capital remaining elevated, we continue to prioritize the most value-accretive retail developments being the transformational projects at Chadstone and Chatswood Chase, which I'll talk to in more detail shortly. These developments, together with our acquisitions and divestments, are each driving a meaningful uplift in the overall quality of our asset portfolio, which you can see in the chart on the bottom left. What's more, we have been able to make these meaningful portfolio enhancements with relatively little impact on our balance sheet. In other words, we've been able to self-fund much of our current and future income growth. The premium assets remain the key source of sustained income growth, demonstrated in FY '25 by comparable NPI growth of 4.9% and leasing spreads of 6.1% or nearly 2.5x the average. Importantly, to transform an asset into a premium asset and/or to acquire and maintain a premium asset requires us to deploy our vertically integrated team of executives to identify and capture unlocked value. At Vicinity, our approach to unlocking value and maintaining our premium assets is depicted in the virtuous cycle where superior income and value growth is generated from partnership-based product allocation, capital and organizational capability collectively delivering integrated placemaking as well as the execution of innovative activations and experiences. Sustained retail sector resilience likely reflects population growth, the accumulated benefits of income tax reductions, federal government incentives to reduce cost of living as well as the recent and likelihood of further interest rate reductions. Despite this, we entered the year anticipating a softer first half, ahead of a steady return to growth in the second half. After a benign first quarter, we had a successful Black Friday period, which extended into a strong Christmas trade that underpinned a 2% growth in the first half, which then accelerated to a 3.8% growth in the second half. What is more interesting, however, is the momentum of improvement across the specialties and mini majors over the second half. This category delivered a growth of 4.7% in the second half, comprising 3.1% growth in the third quarter, accelerating to an impressive 6% growth in the final quarter. Interestingly, discretionary categories led the rebound, including leisure, jewelry and home wares. And pleasingly, this rebound was observed across all segments. The luxury category remains highly productive at more than $61,000 per square meter in sales, and we are pleased to report that over the second half, luxury sales reported positive growth in 4 of the 6 months. Consequently, these robust retail sales results saw our specialty sales productivity increase 2.3% to $13,037 per square meter, setting a new high for Vicinity. Importantly, however, retail sales growth and its impact on sales productivity are an outcome of highly strategic leasing activity, strong retailer demand, a higher-quality asset portfolio and, of course, tightening supply of retail floor space. We finished the year with occupancy at 99.5%, 20 basis points up on June 2024, achieving our lowest vacant shop count to date. In fact, all segments are now above 99% occupancy with our outlets essentially fully occupied at 99.9%. Notably, having mobilized our property and leasing plans for Lakeside Joondalup in the second half, we have already seen a 50 basis point improvement in that asset's occupancy over the period. Leasing spreads for the year were positive 2.5% with the premium asset portfolio once again the strongest contributor at 6.1%. Importantly, our apparel and footwear category, responsible for 36% of rent transacted, achieved a 4.1% leasing spread underpinned by Chadstone and the outlet centers. The average tenure of new leases remain robust at 4.3 years. Also supporting income growth, we maintained the average annual escalators on deals completed at a healthy 4.8%. Excluding sites that have been strategically held for development, the portion of income on lease holdover is at a historic low at just 2.1% or 154 stores. For some time now, we've been asked for how much longer can we sustain positive leasing spreads, especially given the resilient but largely benign retail sales environment in recent years as well as higher cost of doing business for retailers. Our specialty occupancy cost ratio, or OCR, has increased 40 basis points to 14.1% in FY '25, which we largely attribute to the subdued sales environment in 2024 and into the start of FY '25. While year-on-year movements in OCR are notable, with specialty tenants mostly on 5-year leases and given FY '20 was COVID impacted, it makes sense to compare to FY '19. Relative to FY '19, lower OCRs across our premium, core and total portfolio are a reflection of specialty sales productivity growth significantly outstripping rental growth by a factor of 1.5x. Naturally, COVID sparked a resetting of rents, but what's more important is that sales productivity has continued to grow and occupancy rates are now incredibly tight. Consequently, headroom exists for sustained rental growth. From a sector's fundamental perspective, we have a more premium asset portfolio compared to FY '19 that can support higher OCRs. Tightening supply of quality retail floor space leads to demand-generated price tension, knowing these retailers are locking in longer-term leases in larger-format stores in the best centers. And while I say this with a degree of caution, the recent investments we have made in our retail assets will be the benefactors of strong employment, growing population and loosening monetary policy, which will drive consumption. That all being said, we certainly acknowledge the uncertain and volatile geopolitical environment and other potential exogenous risks that have the ability to impact our outlook for both sales and rent growth. I'll now hand the call to Adrian.

Thanks, Peter, and good morning. Statutory net profit after tax for the year was $1 billion, comprising $674 million of FFO and $331 million of statutory and other items largely relating to net property valuation gains. Funds from operations increased by 1.4% to $674 million. But adjusted for one-off items and higher loss of rent from developments, FFO was up 3.6%. Comparable NPI increased by 3.7%, which was supported by the continued strength of our premium asset portfolio, which delivered 4.9% comparable NPI growth and an increase in media income, which drove a 7% uplift in ancillary income. External management fees were down $10 million with the reduction largely attributable to development fees. Having acquired the residual 49% of Chatswood Chase in March 2024, we ceased earning development fees and instead started capitalizing development personnel costs to the asset. This provides an offsetting benefit to corporate overheads, which I'll come to. In addition, the completion of the major development at Chadstone naturally resulted in a reduction in development fees. Disciplined cost management and development personnel costs related to Chatswood Chase development being capitalized to the project underpinned lower net corporate overheads. Net interest expense increased by 9.6%, mainly due to the higher weighted average cost of debt at 5.1% relative to 4.9% in FY '24. The timing of transactions, notably the acquisition of Lakeside Joondalup in August 2024, and the settlement timing of divestments, which was skewed to the second half, also contributed to the increase in interest expense. Maintenance and leasing incentives were stable at $100 million, and we expect a similar level in FY '26. Turning now to valuations on Slide 13. The portfolio delivered a net revaluation gain of $175 million or 1.2% over the 6 months to June 30, representing the third consecutive 6-month period where the portfolio delivered a valuation gain. Over this period, net valuation gains have been underpinned by consistently strong income growth, which has, in turn, been driven by the improved quality of the portfolio, in addition to strong asset management and leasing outcomes. Outlets continued to record strong gains, reflecting their superior occupancy and consistently positive leasing spreads. Our CBD portfolio increased 2.4%, benefiting from significant tenant remixing undertaken in recent years and improvement in occupancy. Valuation growth was partly offset by increased property operating expenses, largely comprising additional and increased state-based taxes and levies. Pleasingly, transaction markets remain active across the majority of retail subsectors with increased investor appetite and market evidence supporting current valuation metrics. Looking ahead, we continue to expect that with lower interest rates and resilient income growth, Vicinity's portfolio will continue to be well positioned for future growth. Turning now to capital management. Maintaining our conservative and disciplined approach to managing gearing and retaining our market-leading credit ratings continue to be guiding principles for Vicinity when managing and deploying capital. Vicinity maintained its market-leading credit ratings of A/stable and A2/stable from Standard & Poor's and Moody's, respectively. And at 26.6%, our gearing remains at the low end of our 25% to 35% target range. Consequently, Vicinity enters FY '26 in a strong and flexible position to invest in its long-term growth priorities, both planned and opportunistic. We continue to actively manage our funding risk. In January this year, we took advantage of attractive market conditions to issue $500 million of 7-year fixed rate AMTNs at a margin of 130 basis points over the relevant swap rate. With undrawn bank facilities of $1.7 billion, we have sufficient liquidity to fund all FY '26 debt expiries and committed development spend. Additionally, in January this year, we established a DRP as an additional source of funding for Vicinity and to provide optionality for our securityholders. The DRP will continue to be in operation for the FY '25 final distribution. Thank you. I'll now hand back to Peter.

Thanks, Adrian. Turning to our developments. Our willingness and our ability to invest in the vibrancy and quality of our asset portfolio remains a key differentiator and a source of competitive advantage. Vicinity has been one of the few developers of larger retail assets, which we believe positions us and our assets well as the fight for quality retail floor space intensifies. Against a backdrop of capacity constraints, elevated construction costs and increasingly burdensome regulation, the completion of Chadstone and the substantially advanced Chatswood Chase could only be achieved by the enormous effort of our highly skilled internal team partnering with industry experts. The completion and launch of The Market Pavilion at Chadstone has been widely touted as world-class and reinforces this asset as Australia's preeminent retail destination. It has also generated a huge sense of excitement and pride not just for those directly involved in the project, but for everyone at Vicinity. The Market Pavilion alongside One Middle Road were significant developments that have brought a unique fresh food, dining and commercial offer to Chadstone. The precinct introduced a range of iconic fresh food outlets who have chosen Chadstone as the destination of their first in-shopping center retail store, including the likes of Brunetti's, Flowers Vasette, Champagne and Oyster Bar and others listed on the left of this slide. The results speak for themselves. In the first 3 months since opening, The Market Pavilion has delivered $67 million in sales, resulting in a staggering 36% increase in total center traffic since opening, which has boosted total static center sales by 4.4%. In June 2025, Chadstone welcomed Adairs' head office team to the One Middle Road office tower. Meanwhile, Kmart is fitting out its office space and is expected to officially commence occupation in early 2026. Combined with the recent opening of the Chadstone hotel in 2019 and The Social Quarter in 2023, the latest development continues to solidify Chadstone's position as a world-class retail destination that blends fashion, food, entertainment, leisure, work and stay. At Chatswood Chase, where the center's transformation into Northern Sydney's fashion capital is preparing for market launch, the pre-leasing for the project is now largely complete with an enviable lineup of luxury and premium offers. I am pleased to report that owing to a very successful leasing campaign that the project's financial metrics have improved to a stabilized yield of greater than 6% and an unlevered IRR of circa 10%. During the course of July, we commenced the handover of spaces for retailer fit-out works to commence as common area finishes are progressing at pace. Our plans for a staged opening remain unchanged, comprising the redeveloped ground and level 2, being stage 1, is on track to open in the second quarter of FY '26, in time for Christmas this year. The opening will feature Australian designers, local and international flagships, along with leading brands in athleisure, jewelry, accessories and services. Both David Jones and Apple will also open for stage 1. The eagerly awaited stage 2 opening will be the official unveiling of Chatswood Chase's new luxury precinct on level 1 and is expected to be open and trading by Q4 FY '26. As I mentioned earlier, we are especially pleased to have extended our strategic partnership with global luxury powerhouse, the LVMH Group, with 12 flagship LVMH Maisons augmenting an already comprehensive collection of globally coveted luxury brands. In addition to these luxury retailers featured on this slide, the center will welcome an elite mix of fashion and other category leaders that is unrivaled in Northern Sydney. Please refer to Slide 28 to view the extensive list of retailers joining us at Chatswood Chase. Suffice to say, the completed Chatswood Chase will deliver a customer experience that is also commensurate with the world's best premium shopping center destinations. We are also delighted to announce that Galleria is now set to embark on the next stage of its much anticipated revitalization, marking a significant milestone in the transformation of this asset. With a loyal customer base within a large trade area in Central Perth in Western Australia, the redevelopment will redefine Galleria's role in the community by returning the asset to its former vibrancy and as a contemporary destination where people visit to shop, dine, socialize and be entertained. Early works are completed with formal construction works scheduled to commence next month and the project completing prior to Christmas 2026. Key features of the extensive redevelopment include: a complete revitalization of the iconic Myer Mall across 2 levels; introduction of The Terrace, a new alfresco dining precinct designed to bring people together in a vibrant open-air setting; nearly 100 refurbished tenancies across 2 levels; and a new entertainment and lifestyle precinct. At our interim results in February, we shared that in November, the New South Wales state government approved the Bankstown rezoning proposal as part of the transport-orientated development program to create housing supply near major transport hubs. We are increasingly well positioned to advance residential development adjacent to our Bankstown Central asset and the new metro station, which is due to commence services in 2026. More recently, however, Chatswood Chase now presents an exciting near-term mixed-use development opportunity, given that we own 2 properties that are directly adjacent to the center as shown on the image on this slide. Sites at both of these centers are proposed for high-density residential and have been endorsed for inclusion in the state's Housing Development Authority's accelerated assessment pathway. This provides an expedited planning outcome. Given their strong alignment and government priorities, both Bankstown Central and Chatswood Chase represent 2 of our most strategically located and exciting assets from a near-term mixed-use perspective. Turning now to FY '26 earnings guidance. Akin to FY '25, FY '26 is expected to be a year where we continue to deliver strong portfolio metrics and make investment decisions that support current and future income growth whilst we simultaneously absorb the short-term impacts associated with the execution of our investment strategy, being earnings dilution from divestments settled in the second half of FY '25 as well as the ramp-up to FFO accretion in FY '27 from our developments at Chadstone and Chatswood Chase. In this context, we expect FY '26 FFO and AFFO per security to be in the range of $0.15 to $0.152 and $0.128 to $0.13, respectively. Adjusting for one-off items and a year-on-year reduction in the loss of rent from developments, our FY '26 FFO guidance range implies growth of between 2% and 3.5%. Key assumptions in our guidance are on this slide. However, the 2 I'd like to draw out are: comparable NPI growth of circa 3%, noting that excluding the impacts of newly levied local and state government taxes, comparable NPI growth is expected to be circa 3.5%; and loss rents from development of $25 million, down from circa $35 million in FY '25, relating to the completion of Chatswood Chase and commencement of Galleria. With the completion of Chatswood in FY '26, loss of rent in FY '27 should reduce to circa $15 million. As we have said before, delivering predictable and growing income for securityholders whilst at the same time, driving capital growth over time, remain at the core of our business decisions and investments. In this context, FY '25 has been a particularly important year for Vicinity, where we have made meaningful investments in the future resilient and growth potential of our retail asset portfolio. As we look ahead to FY '26 and beyond, the momentum of execution and focus on delivering our strategic financial and operational priorities will be maintained, perhaps accelerated, given the increasingly favorable long term fundamentals of the retail property sector, together with a cautiously optimistic expectation of a continued strengthening in consumer spending. Before I hand the call over to Q&A, I, together with the executive leadership team would like to acknowledge and thank everyone who is affiliated with Vicinity for their ongoing support, most especially our securityholders, retail partners, joint venture and capital partners, customers and, of course, the Vicinity team and its Board. Thank you, operator. We are now happy to move to Q&A.

[Operator Instructions] Your first question comes from James Druce with CLSA.

Peter, Adrian, congrats on solid results. Just firstly, can we get a sense of how sales have been tracking into July and August? You talked about sort of the momentum building through the 4Q.

James, it's Peter here. We're just wrapping up July's results at the moment, but it continues on a positive trend, it's fair enough to say. Probably July looks even more positive than the last 2 months of FY '25 at this stage. So having 3 months now of solid positive trends. We're turning a corner.

Yes. Okay. And then maybe just on the asset recycling story. I mean you've done a good job over the last 12 months. How are you thinking about the next 12 months? Is there anything in guidance? And is it -- can you provide any color on some of the quantums or any thinking about that?

James, there's nothing in guidance for asset recycling for '26. But in terms of recycling, we're still looking for opportunities in the marketplace. And obviously, one of the opportunities to fund that is through further asset recycling. So at this point in time, nothing is planned. But we're watchful where we can either have acquisitions that we can add value to. As I said, one of the opportunities for that is further asset recycling considering there's quite a fair bit of liquidity in the marketplace.

Yes. Okay. So it's fair to say you'll be matching acquisitions with -- well, you'll be matching asset sales with acquisitions.

It's typically our go-to at the moment. It's definitely one option that we could fund acquisitions if they present themselves.

The next question comes from Cody Shield with UBS.

Just on the Chatswood redevelopment, could you provide some color on how long you'd expect that to stabilize and whether that yield will be initially on stage 2 opening?

So in terms -- so we opened the first stage in October, the second stage from April of next year. Typically, the stabilization period that we factor in is around 3 years. So -- and typically, it represents around about 4% to 5% of specialty rent coming through that stabilization period. So in terms of initial yield on Chatswood is around the low 4s in terms of percentage and then ramps up to in excess of 6% on year 3.

Okay. That's clear. And for Galleria, I mean, you're looking at a similar stabilized yield there. Should we think about the yield profile and ramp-up as kind of similar to Chatswood? Or are you expecting some differences for that project?

We -- so Galleria, we aren't anticipating the phasing of the project in the same way. The phasing is a lot closer together in terms of the 2-stage opening. The Galleria's initial yield will be higher than Chatswood's, and that's risk adjusted. We required that. So -- but similarly, again, we would have 2 years' worth of stabilization in at Galleria from commencement of trade, which is late next year, calendar year, and then 2 years' worth of stabilization to get to in excess of a 6% yield.

Okay. That's helpful. Maybe a last one, if I may. It's been pretty well publicized that there's potentially some movement in the fund space across the sector. Just on the acquisition point, do you see any opportunities emerging there? I mean would you be interested in an Erina Fair, for example?

I look at -- we know Erina is on the market. So we'll have a look at Erina just in terms of the potential of that asset. So we're active. Our preference though is to go in with a direct equity interest. And our sort of funds approach is more basically with a joint venture partner with the same equity interest going into assets like that. So ultimately, if we can find value in those larger major regional or superregional assets that really have significant market share in their trader and have some growth potential, then we'll be actively looking at those.

The next question comes from Lou Pirenc with Jarden.

Peter and Adrian, 2 quick ones. On Chatswood Chase, and maybe it's a bit too early, but when you bought the -- I guess, the remaining stake, you mentioned maybe further down the track bringing in capital partners around completion. Is this something that is on the agenda already? Or is that something for after stabilization?

Yes. Now in terms of Chatswood, it's a really tricky development environment at the moment, and the team has done a tremendous job in delivering that. It was far easier delivering it as 100% owned, and we really want to stabilize that asset first. And if there is an opportunity to bring a partner in later, we'll look at that. But ultimately, it will be dependent upon our growth ambitions in the future. We don't need to bring a partner in on that asset either now or in the midterm. It just depends on other growth opportunities in the future.

Makes sense. And then maybe just on your future developments and the housing or the mixed-use component of that. Realistically, is that -- when will you start spending money on that? Is that 2 years away, 3 years away? Or could it be nearer term?

Lou, the processes that we identified here, including the HDA process, which is an expediated process through the New South Wales government, it is still a circa 18-month to 24-month process. So the real capital expenditure in terms of in-ground construction is likely to be 2 years away across all of our mixed-use developments, which we have identified to the market.

The next question comes from Simon Chan with Morgan Stanley.

Just wondering if you could give me some color on this capitalization of corporate overheads into Chatswood Chase development. I know you spoke about it in the first half. But how much did it end up being in the -- on a full year basis?

Simon, Adrian here. It was about $5 million that came out of fees and then got capitalized into overheads for the financial year. Overall, overheads were down about $8 million. So about half of that, if you like, was really Chatswood.

And the other half was just cost savings, I would assume?

That's right. That's right.

Right. And what about into FY '26? Like I mean the project starts opening, right? So I imagine you wouldn't be capitalizing as much. How much capitalization are you factoring into your $0.152 -- $0.15 to $0.152?

Yes. I mean the capitalization looks at all assets on balance sheet, if you like. So when we think about the total capitalized development costs or personnel costs into '25, the total was closer to about $24 million. And into next year, we expect that to come down a little bit because of particularly Chadstone completing. But Chatswood is still going to have a large amount of personnel costs coming through. And then you've got Galleria as well, where there'll be a portion of the development personnel costs capitalized. So it'll probably go from circa $24 million, $25 million this year down to closer to $20 million next year.

Right. And you were saying $5 million of the $24 million was Chatswood Chase. Is that kind of what you were saying?

That was probably just the switch from when we initially treated as fees, if you like, to then when we moved it over, and that was the 49% for Chatswood.

Okay. Okay. Got it. Second question, just want to go back to Peter's comments earlier about Chatswood Chase redevelopment and the stabilization period. I mean you're essentially saying it won't stabilize until FY '30, 3-year ramp-up, opening date, 4% to 5% and then ramping up to potentially in excess of 6%. Can you just walk me through the mechanics of that? What happens over that 2- to 3-year period? Because are retailers not paying rent on day 1 and then they will be paying rent by the third year? Like why is there such a big delta between day 1 rent and day -- year 3 rent?

Simon, it's just a provision we have in terms of stabilization. So typically, the stabilization budget takes into account vacancy that we don't anticipate. So it takes a while for retailers sometimes to actually occupy the tenancy. Potentially if we need to provide additional marketing contribution or if there's any rent rebates that we require to ensure that we get the new product to the market in a sustainable level, that's what we put into stabilization. Again, it's a provision. We -- my personal view is I expect Chatswood to stabilize a lot quicker. It's definitely not FY '30. It's around FY '28 in terms of when we have stabilization in there. And if you take, for example, Chadstone, we opened that at late March. We have 3 years of stabilization in at Chadstone, but it's completely knocked it out of the park from its initial trading results. So we don't expect to use all that provision that we put to ensure that our developments are successful.