Dexus Property Group Stapled Security Stock

Okay. Good afternoon. I'm Warwick Negus, Chair of the Board of Dexus Funds Management Limited. On behalf of the Dexus Board, welcome to our AGM. And it's good to see some of you back here in person again. Before we start the meeting, I would ask our audience in the room to ensure your mobile phones are switched off or on silent. In the event of an emergency, the fire exits are located along the corridor outside this main room. It is also where you will find restrooms.

I would like to acknowledge the traditional custodians of the land on which we are presenting from today and pay our respects to their elders past and present. I would also like to extend that respect to, and welcome any First Nations people who are joining our meeting today in person or online.

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Today, I am joined by our independent directors, Varya Davidson, Mark Ford, Jon Gidney, Peeyush Gupta, Rhoda Harrington, Elana Rubin and Dexus' Group CEO and Managing Director, Ross Du Vernet. It's a pleasure to have them here today. We'll hear from Varya and Jonathan on their election later in the meeting. I will commence the meeting with my address, which will provide you with an overview of our positioning and key aspects of our '26 results. I'll then hand over to Ross, who will discuss our quarterly update and strategic priorities, which were also released to the market this afternoon. We'll then turn to the formal aspects relating to the resolutions, which were outlined in the 2026 Notice of Meeting and explanatory memorandum sent out on the 24th of September.

I will now table my appointment as Chair of today's meeting and formally open the meeting. Accordingly, I call for a poll on all resolutions to be put to the meeting and declare the polls are now open so that you can now start to lodge your votes.

Today, our $15 billion balance sheet portfolio is largely invested in high-quality office and industrial real estate alongside third-party clients. We've been transitioning our balance sheet portfolio, improving its quality, becoming more capital efficient and building a more diversified business with a clear ambition to create a more resilient business that can generate sustainable earnings growth over time. We have a funds management business of scale and significant relationships with clients, but there is work to do, to ensure the strategies and products continue to be relevant and deliver for clients and for us.

Over the past few years, Dexus has been making a deliberate transition to become more capital efficient and diversified. Ross will talk more to the benefits of this later. Today, we have a high-quality investment portfolio. We also have a funds management business of scale and significant relationships with clients. And we will be disciplined about continuing to actively manage our products to ensure fund strategies generate appropriate returns for clients. For '26, FY '26 results show we've delivered what we said we would and continue to make progress on our transition, noting we have further to go. Specific issues have emerged on the infrastructure funds and mandates that transitioned to Dexus from AMP, and we're addressing these directly.

Our portfolio and deep relationships have created a privileged position when it comes to opportunities and deal flow. And we will be disciplined in choosing opportunities for us to deploy capital alongside third-party clients. The security price materially understates the value of the underlying investments and value in the platform. The Board acknowledges this disconnect, and we're working with management on improving it, both in the near term and sustainably over time.

In FY '26, we delivered solid outcomes in our core business, despite navigating some challenges in infrastructure. We delivered on divestment targets, secured attractive capital growth opportunities, substantially resolved redemptions across the core real estate portfolio -- platform and raised capital from clients, twice as much as last year.

In our investment portfolio, we improved occupancy, income and returns from assets we already own. We continue to focus on meeting the needs of our fund clients, delivering performance in those strategies and ensuring we bring new opportunities that create long-term value. We're also laying the foundations for long-term growth with initiatives like the joint venture announced with Boral, a more than decade-long project, which has the potential to create the nation's largest logistics precinct and investments in businesses like ADC, an exclusively Australian-focused data center business that is part of a -- of the first consortium to secure a large contract with global AI leader, Anthropic. And we're being responsible in how we think about costs and overheads to run the business.

Despite a subdued transaction market, we've taken an active approach to capital recycling to enhance the quality of the portfolio and strengthen our balance sheet over the last 7 years. More recently, we committed to $2 billion of assets being divested over 3 years to FY '27. Pleasingly, we have exceeded our target ahead of time, completing $2.5 billion of divestments. These actions, along with the completion of committed developments, will further enhance the quality of our portfolio while maintaining a prudent level of gearing. Our office portfolio is 95% prime grade and 78% weighted to core CBD markets. Our industrial portfolio is 89% weighted to core industrial estates and distribution centers. The quality of the portfolio is evident in stabilizing the valuations during the year with the total portfolio valuation increasing by 1% despite the interest rate environment.

We've been considered and decisive in responding to the APAC matter. Our priority is to act in the best interest of our clients and to provide stakeholders and -- with confidence in our business as we move forward. To provide background to this matter, the Dexus Bloc is a group of interests in APAC, the company that owns Melbourne and Launceston Airports. Dexus became the manager of the Dexus Bloc through the 2023 AMP Capital transaction. As manager, Dexus acts in a fiduciary capacity for those investors. In May this year, the New South Wales Supreme Court handed down a judgment against the Dexus Bloc in proceedings relating to a sale process. The Dexus Bloc investors have now appealed the judgment with a court date set for November 30. This means the final outcome for the Dexus Bloc holding in APAC and the potential ultimate impact of this matter on Dexus remains uncertain at this time.

The judgment made a number of adverse findings regarding conduct. While we sought to act in the best interest of our clients throughout the process, it is clear that this situation does not meet the standards we set for ourselves and that our stakeholders rightly expect of us. We recognize the disruption and uncertainty this matter has caused for our clients and security holders. The Board and management have considered the judgment carefully and have taken direct action, including standing down relevant employees and making remuneration adjustments where appropriate. Further, additional mandatory training has been completed by relevant employees and more governance KPIs have been introduced for all employees.

We are implementing a range of initiatives as part of our ongoing programs to strengthen governance, risk management and organizational controls. Current areas of focus include culture and accountability, information governance, compliance and control frameworks and escalation arrangements. We've also updated the reporting line of our Chief Risk Officer directly to the CEO with a functional line to our Board Risk Committee. This change reflects the important role that the risk and compliance plays in supporting Dexus' strategy, governance and long-term success. It also further strengthens the independence and the influence of the function across our organization.

In June '26, we also commenced a strategic review of the infrastructure funds and mandates. The review reflects our commitment to address issues that have emerged and determine a path forward for investors. Further detail on the APAC matter and our response can be found throughout the annual report, and Ross will provide an update on the infrastructure review shortly.

Before we move to the formal items of business, I want to update security holders on a matter that has had ongoing attention of the Board. As many of you know, allegations across this year regarding KPMG's conduct. These matters have been examined through regulatory investigations and by Parliamentary Joint Committee on Corporations and Financial Services. KPMG was appointed by security holders at the 2024 Annual General Meeting and signed our accounts for the year ended 30th June '25. As more information emerged regarding the allegations, we onboarded a new KPMG lead partner and engagement partner during the year ended 30 June '26.

The Board has also sought and received additional safeguards from KPMG as a result -- and as a result, KPMG has agreed to implement specific controls over Dexus' confidential information. The Board has considered the disruption that would be caused by further changes in audit firms and audit partners in a short period of time. As we stand here today, KPMG remain our external auditor, and we'll continue to maintain a watching brief. We're disappointed by the way this issue has evolved and we recognize this has caused concerns amongst our shareholders. In this regard, I thank you for your patience.

In summary, FY '26 was a year with both challenges and evidence of real progress. We invest for the long term, and despite market and more recent challenges, we have a solid plan and a team in place to execute. While the core portfolio is expected to benefit from leasing momentum, earnings in FY '27 will be lower. This is driven by a minimal contribution from performance fees and trading profits, higher financing costs and the practical completion of Atlassian building in Sydney. We've also made some allowances for a materially lower earnings contribution from funds under review and consultation. As a result, and barring unforeseen circumstances for the 12 months ended 30th of June '27, we expect AFFO, adjusted funds from operations, of between $0.375 and $0.395 per security and distributions of $0.37 per security.

The Board and management acknowledge that our securities are trading at a material discount to net asset backing. At our half year results in February, we announced an on-market securities buyback with meaningful progress linked to divestments and the release of capital from major transactions. The interest rate rises and geopolitical uncertainty that followed have impacted transaction and investment markets and have slowed the pace of execution. We continue to view the buyback as a lever to create value for security holders over the medium term, and we remain resolved to execute in a disciplined manner as we pursue both divestments and attractive investment opportunities while maintaining prudent gearing levels. We have solid foundations with the differentiated funds platform, strong client relationships and a diverse product offering. Our investment portfolio is high quality and positioned to benefit as liquidity returns to the office market.

Before passing to Ross, I would also like to thank my fellow directors and the Dexus team for their commitment and contribution over the past 12 months; and to you, our investors, for your continued support.

Thank you, Warwick, and good afternoon, everyone. Nice to see some familiar faces in the room. 12 months ago, we set out the priorities and actions to reshape the business to deliver more sustainable earnings growth over the longer term. The macro environment during FY '26 was challenging, with 3 rate rises and the Middle East conflict impacting capital raising conditions and transaction markets. Notwithstanding this, we made solid progress. We raised almost twice as much third-party capital in FY '26 as we raised in '25. This included our opportunistic fund, DREP2, which exceeded its original target by more than $300 million, the establishment of a new product, DSIT1, to acquire an interest in Chermside shopping center in Brisbane and resolving the redemptions in our flagship fund, DWPF. We also exceeded the quantum and timing of our divestment target, as Warwick has mentioned.

Our major projects are also progressing well. Atlassian Central here in Sydney has topped out and is on track to complete later this year. Our other major project, Waterfront in Brisbane, has experienced delays but remains favorably positioned in the country's strongest workplace market, and the project remains profitable, and the yield on cost is expected to remain within the 5% to 6% range. We also actively are addressing fund-specific issues. This includes responding directly to the APAC matter, continuing to support our fund investors and ensure that we're embedding learnings into the wider business.

Turning to the September quarterly update. Well, despite challenging operating environments, we continue to see positive momentum across the platform in the September quarter. On the balance sheet, rent collections across our office and industrial portfolios remained strong at 99.5%. The office portfolio occupancy reduced slightly to 94.2% but remains well above market average of 85.1%. Average incentives of 23.8% are also down, reflecting lower incentive deals done in Sydney's prime core market and a higher proportion of effective deals done during the period.

Positively, the office market conditions continue to improve with positive net absorption recorded in 3 of the 4 major CBDs and the demand remaining concentrated in high-quality, well-located assets. The industrial performance also remained strong with over 113,000 square meters of leasing, occupancy of 94% and re-leasing spreads of around 36%. The portfolio remains underrented by about 8.1%, and this supports future income growth on upcoming lease expiries.

In the funds business, the September quarter saw continued strong investment performance in the flagship funds of Dexus Wholesale Property Fund, DWPF, and the Shopping Centre Fund, DWSCF. We raised circa $230 million of capital from both domestic and offshore investors, and this included more than $160 million of secondary unit transactions.

As we communicated at the Dexus' FY '26 results, following an increase in the redemption queue, Dexus in conjunction with the responsible entity of the Healthcare Fund, DHPF, undertook a structured engagement process to understand investor objectives going forward. The responsible entity has now engaged an independent adviser and is reviewing a full range of options for the fund. And this includes asset sales, alternative capital and ownership structures or a wind-up. DHPF's third-party FUM is about $1.1 billion, and Dexus has about $180 million co-investment in that fund.

During the quarter, we also saw some important news for ADC. It's a small Australian data center-focused business that Dexus owns a controlling interest in. ADC, as Warwick mentioned, is part of a consortium that has recently entered into a lease with an Australian subsidiary of Anthropic for the delivery of the first stage of a proposed hyperscale data center campus in the Western Downs region of Queensland. While it's subject to further approvals, this is a really exciting opportunity. ADC has launched a fundraising process to introduce additional capital into that business, but Dexus is yet to determine the extent to which it will participate. Further details will be provided at the financial close of the Anthropic project.

Turning to the developments. Well, our 2 city-shaping developments that will further enhance the portfolio quality are well underway, and you can see that in some of the images on this slide. Atlassian Central, which is 100% pre-leased for 15 years, is on schedule for practical completion later this year. As announced at the full year result, the completion of Waterfront Brisbane has been delayed with the expected completion of late 2029 based on the contractor's current program. Dexus' share of total costs are expected to increase, and this is primarily due to interest costs and leasing incentives associated with the delay.

We remain confident in this project. It's 71% leased with rents around 50% below current market levels in the country's strongest office market, and the project remains profitable with the yield on cost materially in line and known valuation impacts are reflected in the carrying values and NTA. In the industrial portfolio, construction continues at 7 projects across nearly 71,000 square meters at Jandakot Airport, and that includes 2 newly committed projects started during the quarter, both of which are 100% leased.

Turning to the priority areas for the year ahead. We have a clear strategy, and we're very focused on our execution. Our objectives of transitioning the balance sheet, expanding capital partnerships and enhancing platform efficiency will guide what we do. As we execute these near-term priorities, we are also ensuring that the business is positioned with options for longer-term growth. Our logistics partnership with Boral and the seed investment in the Australian-focused data center business, ADC, are both good examples.

That's also why we're investing in our people. People are an important part of our business. The connection with customers, clients, partners and the decisions to create value and manage risk all relies on people. We have a great team of passionate experts who thrive in creating and driving value from assets, and we continue to invest in them. This year, there's been a particular focus on upskilling our people to help them navigate change in challenging markets. And I would like to acknowledge the contribution of our people who have worked tirelessly this year, sometimes in some challenging circumstances.

I would also like to acknowledge our CFO, Keir Barnes, who's here with us today, who will be leaving us at the end of the year to pursue an opportunity outside of real estate. I've known Keir for many years and worked with her closely for the past 7. She's been a great partner and a tremendous -- made a tremendous contribution to Dexus, and we wish you all the best in the next chapter in your career, Keir.

Our plan is really designed to close the valuation gap between the security price and the intrinsic value in the business. Transitioning the balance sheet is a key driver and focus area. We have a high-quality portfolio of assets. However, the operating environment has impacted the return equation for real estate. Capital is more scarce, and it's more expensive. We need to make our balance sheet investments work harder, and we want our investment portfolio to be more resilient. That is why we are transitioning our balance sheet. We will continue to hold high-quality investments, but we are transitioning to hold these investments alongside fee-paying third-party capital. This improves the economics of our ownership and releases capital, which can be used to repay debt, invest in high-returning opportunities or buy back our own securities.

As a management team and Board, we have rigorously explored a range of options to unlock value in the business. This includes exploring alternative structures for our balance sheet assets and our funds management business. We expect to introduce third-party capital on both an asset and a portfolio basis. Atlassian is a good example of an asset where we will look to introduce third-party capital alongside us. We have existing JVs where we will also look to introduce additional third-party capital, and we are also exploring opportunities to bring institutional investors into portfolios of high-quality office assets, which we own on balance sheet. All of these activities, along with ordinary course asset sales, could release considerable amounts of capital over time.

This transition has the potential to create meaningful value, but the execution is important. What we sell, the price we sell, what we invest in, the generation of funds relationships and the potential change in our asset and business mix. We will continue to test and reassess, and will be measured and pragmatic in how we execute to deliver the best outcome for security holders.

Today, we have provided an update on the strategic review of the infrastructure funds, which was announced in June. This review has confirmed that clients across a number of funds are seeking liquidity, and Dexus will work closely with the responsible entity boards and the infrastructure clients to determine the appropriate way forward for each fund and mandate. Macquarie Capital was engaged to support the review, which included an independent assessment of each fund in conjunction with the responsible entity boards and infrastructure clients.

Specifically, the focus during FY '27 for the Dexus Diversified Infrastructure Trust, or DDIT, and the Dexus Core Infrastructure Fund, DCIF, will be to progress asset sales to provide liquidity for clients. For the other infrastructure funds, consultation regarding the best pathway to provide liquidity remains ongoing. For the funds and mandates with stakes in APAC, the path forward will depend in part on the outcome of the appeal, which is due to be heard in the 30th of November this year.

The infrastructure review has given us a clear basis to simplify the platform and focus our capital and capability where Dexus can deliver the strongest long-term outcomes. As a result, Dexus is refocusing the business on the real estate markets of office, industrial and retail, plus a targeted alternatives platform. The alternatives platform will be focused on the emerging real asset sectors that, one, leverage the core capabilities of the Dexus platform; two, drive a substantial portion of income from real estate like activities; and three, provide material growth potential.

From an infrastructure perspective, activity will, therefore, be focused on areas which are predominantly enabled by physical real estate or real estate-related activities. The alternatives team is currently focused on data centers and select living subsectors as well as multisector opportunities, for example, health care precincts. We'll also continue to deliver on existing fund commitments across health care, public private partnerships and transport.

I'd like to conclude by thanking you for your ongoing support. I know this has been a difficult year. And while there have been some challenges, there have been bright spots, too. The most pleasing for me is the way the team have rallied around the challenges, remain focused operationally and delivered strong results while continuing to successfully pursue and secure opportunities that will provide long-term growth for the business.

I'll now hand you back to Warwick to work through the formalities. Thank you.

Thanks, Ross. I'd like to pause here and ask if anyone has a question they'd like to ask regarding what we've touched on so far before going into the formal part of the meeting.

First, we did receive some questions and comments through our registry prior to the meeting, and I will just address a couple right now. The first was from a shareholder, [ Teresa Sakuto ] and her question was why so much money for performance? We all work hard, but the average person does not get performance rights, although they may outshine.

Thank you for your question. In '25, the Board undertook a review of executive remuneration framework with the assistance of an external independent adviser to best support our strategy and remuneration principles. We adopted a back-to-basics approach and used the following criteria to develop a remuneration framework: simple and sustainable, credible internally and externally, the ability to attract and retain key talent and provides incentives that are variable and aligned to the security holder experience. Where outcomes feel misaligned with the security holder experience, the Board has the opportunity to exercise discretion and has done so both last year and this year. All proxy advisers and major security holders have supported the remuneration report in both years. And in response to [ Teresa's ] specific question about performance rights, they are only of value if the company has delivered to the outcomes specified.

The second question I have is from Timothy Clifton. At present, Dexus does not have a dividend reinvestment plan. Does Dexus plan to introduce a dividend plan in the near or distant future? In what areas does Dexus plan to expand its investment portfolio outside of Australia and New Zealand?

Okay. So there's 2 questions there. We have no plans at this stage to open a dividend investment plan, particularly given where the security price is trading. If we decide to open a DRP in the future, we would contact all security holders to inform them and provide with the option to participate. Dexus is also not currently planning to expand its investment portfolio outside of Australia or New Zealand. I think that would be going in the opposite direction of the strategy that Ross talked to. Our focus remains on recycling capital, being more capital efficient and selectively investing in higher returning opportunities and capital partnerships.

So I'll pause there and open for questions. Please. There's a microphone coming for you.

I've listened very closely, and I'd like you to give us more of a real-world understanding of the last points that you were making, Ross, about health care and subsets of, I think, it was housing. So if you could give us a feel for what you're talking about.

Thanks for your question. First of all, I put in context the alternatives part of our business is quite small. So this is areas where we think there might be attractive returns, and we think we can scale opportunities. But I'll just contextualize for you, it's a very small part of the business today. The sorts of things that the team are currently focused on are things like student accommodation. So part of the AMP Capital business acquired had a large on-campus student accommodation business. That is an area that does play to the skill sets in terms of development and product creation. So it's those sorts of things, data centers in the living space in our opportunistic fund DREP, which is again serviced by our alternatives team. They are looking at everything from residential development being a partner, so not a developer, but financing these type of projects. So that's sitting largely within our opportunistic fund series. But I don't expect that these subsectors are going to make a meaningful contribution to our earnings or our investment portfolio over the next couple of years. But the way I'm certainly thinking about it is what are the seeds we're putting in the ground today to ensure we've got growth opportunities 5 or 10 years from now. And that's what that team is focused on.

Does that answer your question? Okay. Other questions? Go ahead, David.

Yes. Good afternoon, Chair. Look, last year, I provided a lengthy diagnosis, but I don't propose to repeat that today, you'd be pleased. But just a few quick comments and then a couple of questions. Sadly, in the past year, the Dexus stock price has fallen heavily from $7.60 to around $5.60 current price today. It's over a $2 billion fall in the last year in the market value. I do accept that interest rates have risen. And congratulations, as I raised last year, excessive office exposure. You've sold a couple of billion dollars of offices, so well done on that.

But the reality is today's price is a very heavy 37% discount to claimed NTA of $8.90, around about $8.90. But that discount is actually even worse. If you take into account substantial value of the very large funds management platform you have, whereas your intangibles in the balance sheet are only about, from memory, $450-odd million, some of those are software and other things. So clearly, the intangible value of your funds platform is dramatically higher than that. And accordingly, the discount you're being rated at, including funds management platform is well under the 40% level, which is huge.

So clearly, the market is very skeptical of, number one, the stated NTA. But number two, it has concerns about contingencies. So I've only had 2 questions today on this item. But firstly, I mentioned last year, I think you are losing money on developments. Ross said today that Brisbane, you're still going to make 5% to 6%. I think if you fully factored in management time and a whole lot of other things, you'd be losing money on that, Ross, without any doubt. But I think the market generally, Chair, thinks you're going to lose $200 million to $300 million on the Atlassian project. Are you looking to take a provision on that?

And the second part of that first question is I totally understand the vagaries of court cases, understand the APAC decision is on appeal. But given the current decision is against Dexus, did you consider taking a provision on the legal exposures? You've already been -- had major costs awarded against you. You've then got your own costs, which I think will amount to both of those categories over $60 million. But I appreciate you may well have insurance, Chair. Insurance is always a bit of a gray area. And you may well have a third-party claim. There was a lot of press about your adviser and you may well have a third-party indemnity claim.

But given the potential damages are in the many hundreds of millions of dollars, did you consider taking a provision for that? Because clearly, those issues are reasons -- part of the reason why the market, which is not always right, but is pricing you at, including the funds management platform, a discount of well under the 40% level, which is huge for a company of this history, scale and it indicates clearly that they don't believe your NTA, and they think that you are not taking into account contingencies. But that's my first question, Chair.

Okay. Thanks, David. I'll handle the APAC question and then maybe Ross can talk to developments. Your question around APAC is really did we consider making a provision of a potential third-party claim. And we did provide for legal costs. At the start of this, we undertook to support the costs of our clients. And it's our clients who are pursuing the legal action, and it's our clients who are pursuing the appeal as well.

We know what the costs are, and we've been expensing those as we've gone along. I think there would be far too many uncertainties to come up with some sort of number that would approximate some sort of claim. I'm not sure that the claim that you think might be there is actually there. But because of the level of uncertainty either way, it just didn't feel like the right thing to do to make a provision.

On the announcement of the original judgment, the stock did trade down, and so there is a lack of information there. And it's -- maybe it's a little bit frustrating at times for us that we can't share all of the intricacies of what is actually going on. But as far as taking a provision against some sort of future claim, no, we have not done that. And we considered it, and we just felt that there were so many uncertainties that it just wouldn't make sense.

I'll pass to Ross on developments.

Thanks for the question. I think we would wholeheartedly agree being disciplined around capital allocation is so important to value creation for investors long term, and developments are a key area of focus. And certainly, the 2 that you highlight have caused some issues for the portfolio. I'll just make a couple of observations. One, this is not unusual for office developments. They are long dated, and you need to think about it through cycle, and there was a similar commentary. You may recall when Dexus, prior to my joining the company, was developing 1 Bligh Street. So I think at points in time, it is going to be hard. We got to remember that we're developing these assets for the long term.

The other point I would make is we haven't committed to large office projects in recent times. And so while we did have a great development pipeline, 60 Collins Street in Melbourne, Pitt and Bridge here in Sydney, I think you are seeing in our actions as the current management team, having applied a very disciplined capital allocation model that we aren't committing those projects today. We're very mindful around the risk and the returns that we need as we deploy shareholder capital.

So I think shareholders would understand you can't stop a project halfway through, particularly these large projects once they are commenced, you really need to see them through, you're going to -- you are committed to a degree. So we are absolutely committed on those projects. Atlassian and Waterfront are both independently valued. The point I did try to make in my presentation is while the yield on cost for Waterfront is in that 5% to 6% range, the building currently is going to be -- the rents are going to be 50% below the current market. So that is on a market rent basis. So actually, we feel pretty good about owning premium leasing risk, and that asset in Brisbane with all the setup, it's the strongest office market in the country, I think we're going to be okay. There have been delays.

Atlassian is a different kettle of fish. It is a long lease. We have been hurt on that. We have taken significant write-downs already that is already factored into our current NTA. I can't sit here and say that there's no further write-downs. But what I can say is our assets independently valued third-party appraisal, and we are running a process to try and bring some third-party capital in there over the next few months. So we will see exactly where the market's at on that asset.

Okay. My second question, and I only have 2 on the opening item. But with -- in my assessment on the basis I've mentioned in my view, you are trading at probably mid-40s discount to true NTA if you include a value for the management platform. That's huge. Have you received any approaches from third parties about mergers or takeovers? And if not -- because the press has alluded to that periodically. And if not, as a mechanism to restore shareholder value, should Dexus take the initiative and seek a merger or some combination that will crystallize at least part of the huge discount? You yourself, Chair, and you're a very measured guy, and I respect your opinion, have stated very clearly that the market is undervaluing the assets. I respect what you're doing. You've stopped development, which any rational REIT would stop office development at the moment. I respect what you're doing in a number of areas. You're closing a few funds that are failing. So there's progress there and well done for selling some offices. But probably the way to restore value quickest is some corporate activity at the global level, the topco level. Have you received any approaches preliminary albeit they be? Or -- and should you initiate some of those discussions?

Thanks, David. It wouldn't surprise you that all the investment banks have called offering to help in the event that we are contacted. But -- and it wouldn't be appropriate for me to discuss at a meeting like this whether we've been approached or not. We're really conscious of what the difference is and Ross devoted part of his speech to how we close the gap over time. The NTA is there. It's public number, so there's no secret what the underlying value of this company is. Whether we should make outgoing calls, I think at the moment, our focus is solely on executing the strategy.

And I respect that, albeit similar comments were made last year. And there were realistic comments and fair comments. You're always fair and balanced. However, another year has gone by with some good things done, and I accept interest rates have gone up. Most REITs are down a bit. But there's $2 billion of eroded value according to the market anyway. Share price is quite often misleading, but with $2 billion lower today than this time last year. So there comes at a point where momentum is an issue. I think it's an issue for this company. A couple of good people are departing, Keir, a capable person, sad to see her go. But at some point in time, maybe not today, Chair, but at some point in time, maybe you should make some outgoing calls because it is one way to crystallize value gap.

Thanks, David. In the last year, the REIT index is up to last -- the end of last night is down 22%. So the decline is -- and we're down 19.5%. So we're down roughly in line with the REIT index. It's with the rising rates, with global conflict and the risk end markets, I think there are a lot of reasons why the listed real estate sector has had a troubled year. But I take your point. Thank you.

Other questions?

Row, do we have any online?

Chair, we have a question online from Stephen Mayne. KPMG issue is complex. Could the Chair of the Audit Committee briefly explain where Dexus fits in the scandal, how the Audit Committee responded and whether it was the crime or the cover up that caused the most amount of concern. Could the new KPMG audit signing partner also comment on how the handover was handled with the previous partner who signed the '24 to '25 accounts? Were we given a choice of new partners as normally happens with partner rotation? Did the partners present to the full Board or just the Audit Committee?

I think I can probably take most of that question myself, Row. Thank you, and welcome back, Stephen. So I think where did Dexus fit in, Dexus has moved very early into this process and made a change to the signing partner, as I said in my opening remarks. And we -- it's not easy to bring a new signing partner into a relationship like this in June, if you're a 30 June year-end, but the replacement signing partner and the engagement partner did a really good job in getting to the bottom of our accounts in a very short period of time. And they signed off on the accounts in what was, for us, was a relatively smooth process.

In going through the process of asking for a new signing partner, we did have choice. It was a good process. KPMG responded quite quickly for an organization that was under a bit of pressure. And we discussed that as a Board. And so it wasn't simply confined to the Audit Committee, and senior management was also very much involved in that replacement decision.

So as I said in my remarks, for the moment, we are not intending to make another decision about our audit -- external auditor, our relationship with KPMG, but it is on a watching brief. I think that probably answers most of the questions from Stephen.

There are no further questions online.

Okay. Well, I'm going to start going through the formal parts of the meeting. And as I said previously, there's an opportunity for anyone to ask questions on each of the items. Today's meeting has been convened in accordance with the constitution of each trust and the Corporations Act. And I have been informed by the registry, MUFG, that a quorum is present to enable the formal resolutions, the subject of this meeting to be considered and passed.

I'd also like to table the 26th annual report, which includes the directors' report, financial report and independent auditor's report for the financial year ended 30 June. In accordance with the Notice of Meeting and voting form, for instances where I, as Chair, have been appointed as a proxy but not directed how to vote, I intend to vote undirected proxies in favor of resolutions 1 to 3.

The way we'll run the meeting is that we'll go to a poll on resolutions 1 to 3 and look at each of these resolutions and the proxies received individually, at which time, you'll have the opportunity to ask questions or make comments about each of these resolutions.

Accordingly, I formally call for a poll on resolutions being put to the meeting and declare that the polls are open. You can vote on these resolutions and for the attendees at Dexus Place, you can hand your yellow voting card to the representatives from MUFG, who will collect them at the conclusion of this part of the meeting. For security holders joining us on our online meeting platform, you can access your voting card and complete your voting as we proceed through the resolutions. You should have received the Notice of Meeting, which sets out the resolutions and accompanying explanatory memorandum, which provides security holders with information to assess the merits of the resolutions.

Let's turn to resolution 1. Resolution 1 is an ordinary resolution and concerns the adoption of the remuneration report for the year ended 30th of June 2026. Under the Corporations Act, a listed company is required at its AGM to put to its security holders a resolution to approve its remuneration report. Consistent with our corporate governance framework, the Board has determined that Dexus will be subject to this obligation, even though it's a listed stapled group comprising real estate investment trusts. The vote on resolution 1 is advisory only and does not bind the directors or Dexus Funds Management Limited.

The Board is acutely aware of the impact of the APAC matter on our security holders. As a result, the APAC matter has had a material impact on executive remuneration outcomes. And this has been outlined in detail in the remuneration report. The proxies received are detailed on the screen and represent about 77% of issued capital.

Let me now turn to the questions in relation to resolution 1. Are there any questions or comments in relation to this resolution? Go ahead, David.

Just really seeking some clarification, Chair. Chief Executive's total remuneration in FY '25 was $3.0 million, which I'm fine with for a $6 billion company. I was at an AGM today for an education company $600 million and the woman was getting $4 million. So $3 million on this size company I'm fine with if the performance is there.

But just a clarification, Chair, in FY '26, Chief Executive's remuneration was a total of $1.8 million, which seems to arise from -- did you cancel $435,000 of STI because there's -- in the rem report, it actually has square brackets around $435,000, as a deduction of the total earned.

So in '25, there was a combination of the fixed remuneration plus the value of the long-term incentives, which were given to the Chief Executive in that year. The STI was assessed at 0 for that year. The value of the long-term incentives, we won't know what that number is, but that was the fair value. In '26, the incentive, the short-term remuneration was decreased. We exercised judgment as a Remuneration Committee and as a Board to decrease that by 70%.

But in the rem report, it actually has minus $435,000. Did you take that away from Ross?

Minus $435,000. Approximately. Yes.

So that just came off his total rem. Okay, fine.

It did. That was as a result of discretion exercise mostly related to the APAC matter. Look, I should say, but whilst Ross wasn't directly responsible, the accountability sits with the Chief Executive.

Are there other questions on the remuneration report? Any questions from online, Row?

Chair, there are no questions online in relation to this resolution.

Okay. I'll now turn then to resolution 2. Resolution 2 is an ordinary resolution and relates to the grant of FY '27 long-term incentive performance rights to the group Chief Executive. We're not required to seek security holder approval for the grant of performance rights as we buy the Dexus securities that are on market. However, for transparency and good governance, the Board has determined to seek security holder approval for the grant to be satisfied. These performance rights are subject to meeting Board-approved hurdles over 3- and 4-year periods. The details of the FY '26 grant of 406,504 performance rights are detailed on the screen. At the time of providing the 26th Notice of General -- Annual General Meeting, the FY '27 LTI performance rights details were not available due to the extended allocation timing to the 25-day period post the release of the results. Following the completion of 25 trading day period, we announced that the value attributed to a performance right to be allocated to the CEO under the FY '27 LTI has been determined at $5.69, and the proposed grant under the FY '27 LTI will be 527,240 performance rights. The proxies received are detailed on the screen and represent, again, 77% of issued capital.

Are there any questions with respect to the resolution 2? Go ahead, David.

Just trying to clarify a few things, Chair. Ross is on a base of $1.5 million, which is fine for a company this size, $3 million conditional LTI, fine for a company this size if the performance is there. Certainly concerned with the wording, though, that your people who produced the annual report talked about. They say to assist in the motivation of one of the reasons. I would have thought that Ross would be adequately motivated anyway. I think that choice of word is unfortunate.

But if we come to the main issue, Chair, splitting it between half relative TSR and half CAGR is fine. Where I've got a little bit of a concern or significant concern is that the 50% relative TSR, it's coming off such a low base, Dexus. As I talked last year, it's the worst. And if it was coming off an even base, no problem at all. But just a bit of a concern it's coming off such a really low base of TSR.

But secondly, CAGR, if you could clarify. 7% to 9%, it's not great. It's okay. As the annual report says, it's better than excess delivered in previous years. But again, that's a very low base. I'm not sure that Goodman's or some of the more aggressive REITs would be happy with 7% to 9% because that's a combination of dividends and capital growth. So it's not a particularly great hurdle. But where I've also got a concern, Chair, is that I assume that formula relates to CAGR off the very heavily discounted share price rather than off NTA. To be frank, I think it was more balanced and fair and more aligned with shareholders if it came off NTA because if this horrendous discount, as I talked including funds management, maybe 45%, that narrows to 25%, which is still substantial, Ross will clear that hurdle very comfortably. I would have thought basing it off NTA rather than massively discounted share price is fairer, but I'll leave that to you, Chair.

Look, these are all really good comments, David, and we have been through a lot of iterations. And look, one of the reasons why we chose the share price is that it's easy to see what it is. We can't tamper with that. And it's easy to calculate transparent for shareholders. Together with Elana and myself, we met with a whole range of shareholders on this issue. And far and away, the main thing that they wanted was simplicity.

And if you go back a few years, we had other financial measures that were contained within the LTI. We had return on capital employed. We had other measures. And we felt that this one was the most simple, and I think that that's why I think you saw the support for the rem report generally. It was because the shareholders felt that this was the right thing to do.

The second point is we also agreed with the shareholders that we wouldn't keep tampering with it every year, that we would go to a measure, and we would use that and let it sort of solidify. It's good for employees as well that we don't keep changing these measures.

And look, the final one is your question about should you do it off NTA. I think this is 3 and 4 years, and so compounding of between 7% and 9% over 3 and 4 years does -- will create some value. My guess is the NTA is going to go up at the same time because if we're creating -- if we're encouraging the share price up, it means that we're actually doing things with the underlying business. So I think I'd like to think that if we're closing the gap and growing the NTA at the same time, then the future returns can be well in excess of that. But these are good questions. And with LTI, you can't please everybody. The LTI, if you see in the rem report from -- that were due to vest this year were from 4 years ago and 3 years ago, they didn't meet any of their financial hurdles. And so I think there's good alignment with the shareholders in these things as well.

Just a brief follow-up. Look, I totally agree, simple is great. A lot of these formulas are very complex, so well done on making it simple. But my issue is that Ross has been in the chair for 2 years or so, COO before that. Stock value has declined dramatically. I think it peaked at $13 a few years ago. Sitting there at $5.60 today. My issue is not against the incentive. I think terrific if Ross gets $3 million added to his $1.5 million, fine. But it's just such a low bar. Chair, 45% -- I'm just using that figure generally, adding some notional value for the funds platform. If it happens to drop to 25, he gets the $3 million, assuming he also gets the TSR as well. But look, it's done. It's been approved. I'm just a little bit surprised at the low bar you've set.

Thanks, David. Are there other comments or questions? Anything from online?

Chair, we have an online question from Stephen Mayne, who asks, could the CEO summarize his past LTI grants as to whether they have vested or lapsed? Also, has he ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position? Please don't say look it up in the annual report and through ASX announcements. Given the complexity, could the CEO actually summarize the situation in 1 minute?

Stephen just canceled my response before I gave it. So I can answer part of that. I do know because in the last couple of years, there has not been vesting on long-term incentives. And so I mean these are an important part of the remuneration makeup for executives. And so they have not been vesting. And I do know that Ross has sold some shares, and we discuss that each year. And I'm sure that, that was for personal financial planning reasons, and he does that with the blessing of the Board.

Ross, is there anything you wanted to add to that?

I had a lot. I have been in the company 12 years. The schemes are complex. I have some sympathy for Stephen. I think the point around, to be frank, alignment with shareholder experience, I certainly feel it personally. And what I would say is the fact that I haven't sold some shares. I'm still paying tax and I paid tax out of my post-tax earnings to pay for tax bills on STI and those sorts of things that are vested. And I did that when the share price is $9 and the share price is $5. So my cost base for many of that has actually come out of my pocket, for example. So I feel very aligned to drive the share price performance moving forward. I haven't bought securities out of my own wallet, but I think that explanation hopefully addresses the question.

Okay. Are there any more questions, Row, from online?

There are no further questions online for this resolution.

Okay. Then I'm going to move to resolution 3.1. 3.1 is an ordinary resolution and seeks the initial appointment of independent Director, Varya Davidson. The proxies received are detailed on the screen and represents, again, circa 77% of issued capital.

Before we turn to questions and comments relating to this resolution, I'm going to ask Varya to present to the meeting.

Thank you, Warwick. Good afternoon. Standing for election to the Dexus Board is a privilege, and I appreciate this opportunity to seek your support for my appointment. Dexus owns and manages the places Australians work, shop and do business, offices, retail centers, warehouses and the infrastructure that connects them. These are long-lived, capital-intensive assets. That is the world I know. I've spent my career working in heavy asset and infrastructure businesses. I currently serve on the Board of APA Group, an ASX-listed gas, electricity transmission and renewables company. So I understand what it takes to make sound capital investments and run assets built to last for decades on behalf of security holders.

I also know this is a period of change. Inflation and global uncertainty are weighing on property values across the sector. The Dexus infrastructure funds are under review and security holders rightly expect market returns that match the quality of the portfolio. I don't underestimate that. But I do see high-quality assets, a large funds platform and a clear strategy under Ross. And I really do believe the opportunity is bigger than the challenge.

So what do I bring? During my career, I've worked with executive teams and boards around the world developing strategies and translating strategic intent into action. I have shaped and led significant enterprise-wide transformation efforts, capital allocation and expenditure programs and M&A activities. I am deeply passionate about the role culture plays in organizations, and I bring hands-on experience activating culture as a strategic asset. Over the last decade, I have focused my efforts on solving sustainability, social value and energy transition problems, finding new sources of value through positive action and preserving existing value through managing risk.

Dexus is recognized globally as a leader in sustainability, and I'm looking forward to working with the team to ensure that leadership continues to translate into returns. The opportunity to help Dexus fulfill its potential is exciting, working with a Board and executive team who are genuinely focused on creating value for all stakeholders. I'm committed to serving your interests diligently and with integrity. I'd be honored to serve as one of your directors. Thank you.

Thank you, Varya. And I can see that I have one question from online. So Row, I'm going to hit on this one straight away, and it's a question from Stephen Mayne. Could the 2 new directors, Varya and Jonathan along with the Chair comment on the recruitment process that led to their appointment to the Board since the last AGM? Which recruitment firm assisted with the process? Did the full Board interview other candidates? Did either candidate know any of the directors or KMP engagement with [indiscernible] and what was the onboarding process in terms of the APAC issue?

I'm not sure what the last bit is. So when we recruit new directors, our directors don't stay forever. We generally stay for -- in the order of about 3-year terms. And so we do plan for succession. And when we know that people are going to be leaving the Board, we know what skills are also leaving the Board, and we also think about the skills that no one has on this Board and that we should look to complement.

And so we did run a proper process. We did have the assistance of a recruitment firm, and we looked at a lot of people. We generally start with a long list, and you narrow it down. All of the Board members participated in interviewing the shortlist. And this would be a normal process, and these processes are ongoing as people come towards the end of their terms.

I think did either candidate know any of the other directors or KMP before engaging in the process? I think in both cases, we did know both Varya and Jon through various other relationships but not related to Dexus. And so again, one of the processes we do with our directors and with the senior management is we ask for ideas because most recruitment firms don't have all the ideas. And so it's part of a complete process. And we're really happy with the outcomes with the 2 people we are asking for election today.

So are there other questions specific to Varya?. Go ahead, David.

Nice speech. Just a couple of questions. In my opinion, successful people in business have a degree of confidence, but also paranoia. You've got to be looking at what's the next iceberg that's coming down the tube. Clearly, you're intelligent woman. You would have done significant due diligence before accepting this opportunity to serve on the Dexus Board. So just the first question is, what keeps you awake at night regarding potential risks that concern you that may or may not materialize? Because I'm sure you've done your due diligence and you are experienced. APA is a big company.

The second question is you mentioned culture. I agree with that. But I would have thought with the ongoing challenges of Dexus, some of the issues, a number of senior and mid-level departures, culture, I would have thought is not its longest suit at the moment. Maybe that can be turned around. But again, I'm sure you've done some due diligence. You mentioned culture. How would you rate the culture and just the confidence of the management team given the circumstances it finds itself in?

Thank you, David. So let me start with the culture question as a topic of passion. Look, I actually think it's a big misnomer when people look at culture and describe it as toxic in any company setting or describe it as problematic in any company setting because there are always incredible strengths in any cultural situation. And in any cultural situation, there are risks that come along with those strengths. And absolutely, I did do my due diligence, and there were some very clear cultural traits that really impressed me as I met with the executive team and I met with fellow Board members to understand more about Dexus and how it ticks.

So I am very excited to be working with Dexus to help understand and help the work with the executive team and the Board to really understand how we can use those cultural strengths to accelerate the strategic objectives of the business.

On to my broader due diligence and the risks. Absolutely, I did my due diligence. I was very aware that there were headwinds when I joined in February. And I actually believe then, as I do now that, that is exactly when a director's judgment matters most. And it's one of the reasons that attracted me to Dexus knowing that there would be some significant strategic choices that the Board and the executive team will be needing to make to ensure that we can create long-term value for all of our stakeholders. And so that's probably one of the things that does keep me awake at night, David, is weighing up what some of those biggest strategic choices are and how do we ensure that we keep that light on the hill, and we are constantly looking to that longer-term sustainable value creation.

And just a brief follow-up. Look, I didn't mention the word toxic. Maybe that was a Freudian slip from you. That was certainly not my word. That was your word.

Not a Freudian slip, David, but it is common in the media whenever anyone frequently media releases where companies have had headwinds at certain varieties, the word toxic often gets used and delightedly has not been used in the Dexus case. But I am certainly aware in other settings, it is a common misnomer to describe when people are unhappy with the cultural situation to describe it as toxic. So absolutely, thank you for clearing that up. It was not in relation to Dexus in any way.

No, I don't think the press have used it at all. But look, I would respectfully slightly disagree. I do know a number of people who have left Dexus at various levels. And it's not a hugely optimistic place. Look, we all hit hurdles, and that's fine. No problem at all. But I do think you're overstating it to say the culture is fantastic. It would be inhuman given the challenges the company has had for it to be massively buoyant culture. So I do think that's one of the challenges for the Chairman down to reinstate a positive winning culture.

The market is voting, Varya, this company every day, and that's the challenge. We can talk motherhoods. We can talk marketing slogans and say nice words. But every day, this company is being voted on. And it's not a great vote for the reasons we've talked about last year and this year. So I do think you've been overly motherhoodish. And I think you've got -- the company has a challenge to reinstate a positive winning culture. I think the Chairman has got that attitude. You talk about it, but I'm not sure that it's as easy as you say.

David, can I jump in there, please, because I object to motherhoodish? We're talking about culture. Culture is a strategic asset. And I didn't say it was fantastic. I said there were real strengths in the Dexus culture that we are going to be able to build on and associated with those strengths, there are real risks. But what I will say is I have been very impressed and as a Board, we have the opportunity to meet with people throughout Dexus. So I've had the opportunity to meet grads. I've had the opportunity to meet middle management and various members of the leadership team. And one of the things that has impressed me throughout actually is how amazing the people are. In the Dexus environment, there are amazing people. And actually, yes, there is a sense of optimism despite all the headwinds the business is facing. And I think that's reflected, and Marjan's going to connect -- correct me here, but latest -- well, actually, we've just had a very latest engagement survey, but the one before that, the participation rate was incredibly high. It was 85% plus on the engagement survey. You do not get 85% plus in engagement survey responses without a team that is behind the business. So that is a real credit to Ross and the executives that they are managing to maintain that esprit de corps across the business with these headwinds.

Maybe the headcount is too high, but I will change one word, bearing in mind you were defensive, Varya. You didn't like motherhood. I was using it in the context of euphemisms. In no way was it meant to disparage mothers. It's a generic term.

Correct, because I have one.

I have children, too. I'm not a mother, but I have children. But it was meant in the context of euphemism. So I will retract that for the record and replace it. I think you are talking a number of lovely concepts with euphemisms, and I'll respect your opinion. But from the feedback I received from a range of people, you are not correct.

Go ahead, Ross.

People and culture is really what we have. We've got assets, but it's the people who create the value. And I think there's always going to be people who leave organizations for different reasons. Some because have had a great experience, and we can't provide the runway for them. Some because the culture doesn't fit with how they want to work. I think if we look at the performance of the business over the last 12 months, I'm talking last financial year. I'm not sure there are many organizations that could have worked through the challenges that the business faced, compartmentalize it and still deliver outstanding operational performance. And I think that is absolutely a credit to our people and the culture that we have as a business.

As I said, we raised twice as much capital in '26 over '25. The investment portfolio performance improved materially. We have big complex projects. It would be understandable if people in the business all went to one side of the boat to look at the challenges we've had in APAC and parts of the infrastructure business. But to their credit, everyone stepped up and focused on delivering for our customers and our clients. And I think that speaks volumes of our people and our culture.

I always accept that we can be better, and I am working very hard with the leadership team to help navigate the company through what are some challenging moments in time. But I think we have amazing DNA. We have amazing people. And I just really need to make sure that, that is on the record.

And just one final quick feedback. All I'd say is I look at facts. It's beautiful speeches, beautiful comments. But why is the market rating you at, call it, a 45% discount. If the culture is so good, if the assets are strong, the market is saying there's a challenge here, a big challenge. Your comments, if I came in off the moon, I would have thought you're trading at a 20% premium to NTA, Ross, which you're not. I'll leave it to you.

Okay. I think we're going to move it along. Good response. Thank you. I'm going to move to resolution 3.2. Resolution 3.2 is an ordinary resolution and seeks the initial appointment of Independent Director, Jonathan Gidney, Jon. The proxies received are detailed on the screen and represent, again, around 77% of our issued capital. Before we turn to questions and comments relating to this resolution, I will ask Jon to present to the meeting.

Thank you, Warwick, and good afternoon, fellow security holders. My name is Jon Gidney. I joined the Dexus Board in December of last year. I'm pleased to seek your approval of my appointment as an independent director today. I serve -- currently serve on the Board Audit Committee, the Board Nomination and Governance Committee and the Board People and Remuneration Committee. My background, I'm a fellow chartered accountant and a graduate of the AICD. I began my career in audit in Coopers & Lybrand in Perth many, many years ago. I was a Senior Manager of Corporate Planning at a small retail bank called Challenge Bank, and I moved in Risk Advisory at Macquarie Bank before turning to the advisory side of investment banking in the early '90s.

Over 3 decades as an adviser, I worked with Australian International Boards and CEOs on strategy, M&A, capital raisings and crisis management. For 11 years, I was Head of Mergers and Acquisitions at JPMorgan in Australia, and I was later Vice Chairman of both Greenhill and Citi. I led teams on some of Australia's largest and most complex transactions, and I'm proud of that with real estate and funds management also being a core part of that work, among others. I've worked with Westfield, Blackstone, Centro and indeed, Dexus itself at points in time a number of years ago.

So I came to this Board with a deep understanding of the industry, of Dexus' strategy, its platform and some of its people. Today, I'm also a Director of ASX-listed companies Megaport and Cettire. I chair a group called FNZ, an unlisted group called FNZ in the Asia Pac region. These nonexec roles give me close -- keep me close to many relevant capital markets, governance and regulatory issues. And I also continue to be a member of the Australian Takeovers Panel.

I've got to say after 10 months on the Board, I continue to see Dexus as a great business. In a period of transition, we face external headwinds, not the least from rising bond yields, and internal challenges, which have been discussed in transitioning the infrastructure platform. However, the team are committed to a clear strategy under Ross, and I'm genuinely excited by the opportunities that we're seeing in all of the lines of the business.

I believe my background in transactions, capital and risk management help me support the management team and challenge them when required, whilst also adding to the Board's focus on making sure capital is allocated wisely and profitably for security holders. I'd like to thank my fellow directors for their support and I confirm I've got the time and commitment to serve you, our security holders. It would be my privilege to continue as one of your directors.

Thank you, Jon. Are there any questions in relation to resolution 3.2? Go ahead, Dave.

Welcome. You've got an excellent background, so I'm sure you can contribute a lot. You mentioned rising interest rates, which is correct, clearly a factor. But also, I think Ross indicated before that most of the properties have been recently valued by independent valuers. Now they've clearly taken into account those rising interest rates. But my question to you, Jonathan, bearing in mind your investment and banking experience as well as your other experiences is, what do you think is the silver bullet to narrow the, call it, 45% discount to fair value, including the management rights? It's a big discount. What's the silver bullet?

Yes. Thank you, David. Can I answer that question?

Yes, go ahead, please.

Thank you, David. I was hoping you can ask me the same question you asked Varya about what keeps you awake at night because...

She didn't like my answer -- my question. So...

I don't stay awake at night thinking of these issues, but I think very regularly every day about what can we do to close that gap to NTA, which you're talking about. I may not agree with your numbers, but I'll certainly agree with the thesis, which we've talked about here in the Chairman's presentation and you were calling out. There are -- the background I had was about hopefully creating value for security holders and applying that to what I'm doing as a director here, much of that is what can be done to demonstrate the asset value that sits appropriately verified, appropriately supported by well-qualified valuers and considered as a part of our audit at every 6-month period and what could also be done with the opportunities that we're facing.

So it's a 2-headed strategy that I think has to be there in terms of demonstrating the values in those assets. Ross has talked about potential ways in doing that in terms of fund creation and other matters. And in relation to new opportunities, it's about capital allocation and making sure that we can support the business in looking at those things.

So I think the answer to your question in a roundabout way is in a period where there's still unavoidable uncertainty around certain litigations, certain other issues in the market, bond yields that are moving both domestically and offshore, and we do have a funding that comes through the U.S. markets in either both the direct and indirect sense in that way, it's about making sure we can demonstrate their value and have people believe in it.

Please.

This is one of the advantages of coming in person to meetings, and I'm pleased that I got here. I've been wondering, at the moment, there are so many options for where money can be placed. There's a limited amount of money. And if you talk about the press, they're hyping up things that may be imaginary. They're certainly artificial.

Thank you. I think that's a statement rather than a question, but I'm really glad that you came today. Thank you.

Look, Row, are there any questions or comments on the last resolution?

There are no questions online.

Okay. Are there any other questions? So if there are no further comments or questions, I'm going to call on the representatives from MUFG to circulate the ballot boxes and collect your completed voting cards. For our security holders voting online, I ask that you now complete your voting, if you haven't done so already, and remind you that the voting system will close 5 minutes after I formally close the meeting.

[Voting]

Okay. Ladies and gentlemen, that ends the formal part of today's meeting. I'd like to thank you, our security holders, for your continued support and for attending the meeting today, both online and in person. For those of you who are attending, I invite you to join me and my fellow directors as well as members of senior management for some refreshments. And I now formally close the meeting. Thank you.

Thank you for standing by, and welcome to the Dexus FY '26 Results Briefing. [Operator Instructions]

I would now like to hand the conference over to Ross G. Vernet, Group CEO and Managing Director. Please go ahead.

Well, good morning, everyone. We really appreciate you taking the time to dial in this morning. I know it's a really busy day with other companies reporting, and there's probably a few tight analysts given it's been a busy reporting week. Let's begin today by acknowledging the traditional custodians of the lands and waterways on which we operate and pay our respects to Elders past and present.

Today, you'll hear from some of the management team who will provide you with a full picture of the business and the operating environment. You'll hear from Keir, our CFO, on the financials; Andy on office, Chris on industrial and Michael on funds management. At the conclusion, I'll provide a summary and outlook, and then we'll open up for some questions.

We know -- Dexus today, it's a good business. Now you may see Dexus as an opportunity to buy high-quality assets cheaply. And in the short term, we're looking to capitalize on that ourselves. But Dexus has all the ingredients to be so much more than that and unlocking that potential is what we're all about. We have a diverse platform with deep sector expertise and the ability to create assets. We have long-term and deep relationships with private capital, and we have a balance sheet of serious scale with high-quality assets.

Over the past few years, Dexus has been making a deliberate transition. We've been reshaping our portfolio, improving its quality, becoming more capital efficient and building a more diversified business, all with a very clear ambition to create a more resilient business that can generate sustainable earnings growth over time. Today's results show that we've delivered on what we said we would in FY '26, and we continue to make progress on our transition. But I also want to be clear about where we are today and open about the work we have to do.

While we have a high-quality investment portfolio, we have further to go in transitioning the balance sheet to be more diversified and more capital efficient. That will improve our ability to generate attractive and sustainable returns for security holders through the cycle. We have a funds management business of scale and significant relationships with clients, but there's work to do to ensure the strategies and products continue to be relevant and deliver for clients and for us. Specific issues have emerged in the infrastructure funds and mandates that transition to Dexus from AMP, and we're addressing these directly. Our portfolio and deep relationships have created a privileged position when it comes to deal flow, but investing in this market has become more asset specific, and we need to be very selective about the opportunities we go after as we deploy capital alongside third-party clients. This is all reflected in a security price that materially understates the value of the underlying investments and value in the platform. And the management team and I are acutely aware of this disconnect, and we are focused on improving it in a sustainable and enduring way. So the question I know you'll be asking is, what are we doing about it? And the answer is, in short, a lot.

As detailed on this slide, in FY '26, we delivered solid outcomes in our core business. We delivered on divestment targets. We secured attractive capital growth opportunities. We substantially resolved redemptions across the core real estate platform, and we raised capital from clients, twice as much as last year. We're driving hard on the performance of our own investment portfolio, improving occupancy, income and returns from the assets we already own. And we continue to focus on meeting the needs of our fund clients, delivering performance in those strategies and ensuring we bring new opportunities that create long-term value. It shows the resilience in our operating model, the ability to deliver this performance while navigating the challenges in infrastructure.

We're also putting down the foundations for longer-term growth with initiatives like the Boral JV, a more than decade-long project, which we expect will create the nation's largest logistics precinct. And we're being responsible in how we think about costs and overheads to run the business. And the team will share more on progress and highlights in a moment.

12 months ago, we set out a series of priorities and action items that will move us towards our goal to reshape the business to deliver more sustainable earnings growth over the longer term. And as you can see on this slide, we've made decent progress. Atlassian Central topped out last month and is on track to complete this year. Our other major project, Waterfront, is experiencing further delays but remains favorably positioned in the country's strongest workplace market, and the commerce remains intact. We've had success attracting capital to products we've created that leverage our capabilities with DREP2 exceeding its original target by nearly $300 million. The conversion of a Brisbane office to student accommodation asset in DREP that reached PC in June is a good example of what the platform can create.

And people are such an important part of our platform. The execution of strategy, the creation of value, the management of risk, the connection with customers, clients, partners, all of this relies on people. We have a great team of passionate experts who thrive in creating and driving value from assets, and we continue to invest in them, strengthening the leadership, the skills and the capabilities in the platform. We also continue to actively address fund-specific issues. This includes responding directly to the APAC matter, continuing to support our fund investors and ensuring that we embed learnings into the wider business. I'd like to spend a moment on this before I hand over to Kier.

This slide sets out the context, the actions we've taken and the next steps. And there's a few things I want to make sure are really clear. Dexus primarily acts in a fiduciary capacity in these funds. We don't have a direct ownership or control of the underlying assets. Our job is to act in the best interest of investors, our clients, and that's what we're doing. In May, the New South Wales Supreme Court found against the Dexus block in proceedings in relation to APAC, and the investors are appealing that decision with the court date scheduled in October. Managing this well for our clients is critical, and we take it seriously. Pleasingly, our operating model, which is designed around the sectors, and this ensures that we have teams focused on delivering in each part of our business. This is evident in the positive outcomes this year we've achieved across the wider platform.

I can understand some of the frustration from security holders regarding the uncertainty. Fund-specific decisions will be made by RE Boards and trustees. Legal processes have a timeline of their own, and some conclusions won't be possible until the appealed outcome is known. These are complex matters, and it will take time to resolve, and we will update you as security holders as decisions are reached.

I'll now hand you over to Kier, our CFO.

Thanks, Ross, and good morning, everyone. Turning to the results in detail. In line with expectations, total AFFO was $484 million, with a distribution of $0.37 per security, reflecting a payout ratio of 82%. Office FFO reduced primarily due to divestments and lower average income-producing occupancy, while industrial FFO increased driven by development completions, higher average physical occupancy and strong re-leasing spreads, partly offset by divestments. Co-investments in pooled funds increased, driven by Dexus' investments in DSIT1 and DWSF as well as higher distributions received from some funds. As expected, FFO from management operations decreased due to lower FUM as a result of divestments, lower management fees and slightly lower performance fees. while active cost management reduced group corporate costs by 6%. Taken together, group corporate and management operation costs have now reduced by more than $30 million since FY '24, with the impact of recent initiatives expected to benefit FY '27.

Finance costs increased due to a higher weighted average cost of debt, partly offset by the impact of divestments. As expected, trading profits were higher with the sale of Brook Hollow, Chester Hill and completion of construction at Prestons. And maintenance CapEx and leasing decreased for the office portfolio as a result of timing, partially offset by higher incentives across the industrial portfolio.

The recovery in property valuations is increasingly being driven by fundamentals, with market rent growth the main contributor this year, partly offset by a marginal expansion in capitalization rates. Overall, for the 12 months to 30 June, the portfolio increased by 1%. Our office portfolio, which is 95% prime grade and 78% weighted to core CBD markets increased by 0.6%. And our industrial portfolio, which is 89% weighted to core industrial estates and distribution centers, increased by 2.3%. These outcomes demonstrate the quality of the portfolio and stabilizing valuations despite the interest rate environment.

Moving to capital management. Our balance sheet remains solid with look-through gearing of 33.4%, which is expected to reduce by around 1.5 percentage points following recently announced divestments, net of circa $490 million of committed development spend over the next 12 months. This provides support to recommence buyback activity. We have been active with refinancing, resulting in a weighted average debt maturity of 4.2 years, $2.5 billion of headroom and manageable near-term debt maturities. 91% of our debt was hedged during the year at an average hedge rate of 3%, providing material interest rate protection.

Thank you. And I'll now hand over to Andy.

Thanks, Kier, and good morning, everyone. I'll take you through the office results. We own the best office portfolio in Australia, 95% prime grade and 78% in core CBDs, up from 88% and 61% 7 years ago. Occupancy improved significantly this year from 92.3% a year ago to 95.7%, our strongest result since June '23 and remains well above market average. The improvement was driven by a combination of leasing success on vacant space and divestments secured post 30 June. Our leasing volumes of 172,000 square meters were 60% higher than the prior year. Incentives were 26.4%, held down by effective deals in Melbourne. And excluding those, incentives were 29.9%, still well below market.

Effective like-for-like income grew 30 basis points, impacted by downtime on key vacancies at 80 Collins and 30 Hickson Road, however, improving since the half year as we had targeted. The portfolio delivered a 1-year total return of 5.4%. We are working to address the capital intensity of office ownership, pushing for lower lease incentives, effective rent structures and investing in fit-outs that endure beyond a single lease term. These initiatives compound over time and will improve free cash flow.

We aim to hold any single year of expiries below 13% of the portfolio. FY '27 expiries stood at 12.1% at 30 June, excluding those, excluding car parks and the leasing that we have secured since the year-end, that reduces to 8.5%. The vacancy we're most focused on is 80 Collins Street in Melbourne, which represents 1.2% of portfolio income. There are also upcoming expiries at Australia Square and 25 Martin Place, where we will pursue leasing across a combination of suites and turnkey whole floors.

We expect an improvement in like-for-like growth in FY '27. Further out, FY '30 and FY '31 sit above the threshold today, driven by concentrations at 80 Collins Street and 240 St Georges Terrace, expiries we have a long runway to manage. Our portfolio is well diversified and is weighted to financial, insurance and legal services, high-value professional work concentrated in premium CBD buildings. That is the work we think is most resilient to AI and in parts may benefit from it.

Two city-shaping developments that will further enhance the portfolio quality are underway. Atlassian Central is on schedule for practical completion in late '26, 100% pre-leased for 15 years with fixed 4% annual increases. As flagged at the half year, completion of Waterfront Brisbane has been delayed. The expected completion of late 2029 is based on the contractor's current program with greater certainty expected once construction passes Level 5 later this financial year. Dexus' share of total cost has increased primarily due to interest costs and leasing incentives. While we have a fixed price construction contract and earlier delays are expected to be absorbed within the relevant contractual provisions, a delay of this length goes beyond that capacity, impacting our cost to complete.

We remain confident in the asset, 71% pre-leased, rents around 50% below market in the country's strongest office market. The project remains profitable, yield on cost remains materially in line and known valuation impacts are reflected in carrying values and NTA.

The office market has commenced a recovery cycle, supported by a very favorable supply backdrop. Completions across the major CBDs will remain well below long-run averages for an extended period with development economics challenged by higher construction costs. Demand is harder to predict, but the supply outlook is clear and supportive of stronger rental growth. Performance remains hyper local. As the chart shows, Sydney core premium assets have materially outperformed the broader market and are one of the few segments where net effective rents are above pre-pandemic levels. Dexus is positioned exactly where the market is strongest, 95% prime grade, 78% in core CBD precincts.

Thank you, and I'll now hand you over to Chris.

Thanks, Andy, and good morning, everyone. We leased nearly 0.5 million square meters this year across stabilized and development, our second largest year on record. Our industrial portfolio has delivered a strong result, including a 1-year total return of 7%. Occupancy by income reduced slightly to 94.6%, impacted by expiries at select assets with relatively high rents, partly offset by lease-up of other vacancies. Occupancy by area of 96.5% remains above the national average. We achieved strong re-leasing spreads of 24%. Average incentives increased to 21%. This is supply-driven and location-specific.

Recent completions in select submarkets have given tenants more choice. It's not a signal of broader demand softening. Underlying reversion is unchanged. The portfolio remains 8.1% under-rented with 20% accessing reversion by FY '28. We leased 128,000 square meters across 23 development deals and 68% of the committed book is now pre-leased with fixed annual increases of 3% to 3.5%. Every completion expands the quality end of the portfolio and captures tenants trading up. A portfolio built for the market we're now in, returns driven by rental growth, reversion and development, not cap rate tailwinds.

Moving to our expiry profile. We have leased 32% of the portfolio over the past 24 months, derisking the expiry profile and capturing strong re-leasing spreads. We remain focused on leasing key vacancies at Matraville, Lakes Business Park, and Greystanes, and we're in active discussions with potential tenants on these properties. The vacancy we absorbed was older stock in New South Wales and Victoria, and we leased it well. The market is splitting quality, well-located assets stay in demand while secondary stock is discounted, and our portfolio sits on the right side of that line. 80% of FY '27 expiries sit in younger prime assets, so our upside is exactly where the market is strongest.

On development, we're actively growing and upgrading the portfolio over 208,000 square meters in play this year, 154,000 completed and a further 54,000 under construction. This is new, prime, high-performing stock, modern facilities meeting the specifications occupiers are demanding as they move out of older buildings into better, more efficient space.

Supply is in check, around 60% less speculative supply over the next 3 years, and the market has slowed building on spec. Developers now precommit before they start, so little new vacancy is being added. As existing vacancy is absorbed, the setup points one way -- tightening availability, returning rent growth and easing incentives.

Data centers are accelerating and are now a structural tailwind, close to 290 hectares taken up across Sydney and Melbourne, a new higher and better use for power served industrial land. That lifts land values and replacement costs. That supports the value of our existing modern stock. We're leaning to modern logistics in the best locations and stepping back from the secondary stock the market is discounting.

Thank you. I'll now hand over to Michael.

Thanks, Chris, and good morning, everyone. Our funds business manages $36 billion in third-party capital across a diverse range of real asset strategies, servicing 150 institutional investors along with direct and wholesale clients. The platform is diverse across channel, sector and risk profile, and it brings together products we have managed for a long time like DWPS, strategies we have built organically like DREP, large joint ventures and products that came to us through platform acquisitions like AMP and APN.

Funds Management is a competitive business, and we are not here simply to promote products and collect fees. We invest alongside our clients, focusing on 3 things: Investments must generate attractive returns in areas we have a competitive advantage. Clients need to support the product and the fee economics need to be fair, delivering a positive financial contribution. That is the lens we apply to both new and existing products. And Dexus has been in business for 40 years, and there will be a need to refresh and renew funds from time to time. For example, our health care fund has not achieved the scale or performance we had hoped for when it was launched almost 10 years ago. And as mentioned earlier, following the unfavorable APAC judgment, we formalized a review of the infrastructure products and strategies acquired as part of the AMP acquisition. That review builds on work already underway to resolve some fund-specific issues. Dexus holds a modest co-investment in these strategies around $260 million. So the reviews are focused on ensuring these funds have contemporary strategies that align with client needs and our capability to deliver.

Turning to our achievements for the year. We raised $2 billion in equity across the platform, including $260 million in the last 2 months of the year, while also providing liquidity to investors. DWPF's redemption queue, which stood at $1.7 billion at the start of the year has been completely resolved post year-end. We have also maintained our focus on returns. DWSF was ranked first among all wholesale funds in the MSCI Index over the 1-, 2- and 3-year periods. And DWPF continues to outperform its benchmark across all time periods, achieving a 1-year return of 9.3%. The performance of these funds highlights the quality of the underlying portfolios and our active management approach. And with structural fee pressures across the market, strong performance does support fee retention.

Finally, we continue to deliver on our ESG ambitions across the platform. Three funds achieved 5-star GRESB ratings, and we maintained net zero emissions across Scope 1 and 2 for our managed portfolio.

Thank you. I'll now hand you back to Ross.

Well, thanks, Michael. I know our clients have a lot of confidence in your focus on the fund strategies and how you're evolving the product set. Now we've covered a lot today, and there's lots of moving parts. So let's turn to the priorities for the year ahead. Our commitment to transition the balance -- the business, remains the same and the priorities to get us there have been refined. We've been deliberate about where and how we allocate capital, we remain invested and importantly, where we don't. We are targeting to release more than $2 billion of capital over the next 2 years by introducing third-party capital into our core long-term holdings and continued pruning of the portfolio.

Capital deployment will focus on opportunities that support us being more capital efficient, more diversified and ultimately generating more sustainable earnings growth. Examples of these type of opportunities include the Boral joint venture and a modest investment we've made in an Australian data center operator, ADC. I expect the buyback will continue to feature as an attractive use of capital. We have deep belief in the value of the business and see this as a lever to generate value for security holders as we navigate our transition. With transaction markets improving and our divestment target exceeded, we are now in a position to capitalize on the current disconnect. But to be clear, the buyback does not replace our long-term growth strategy. It is a near-term lever to create value for security holders.

So, in summary, it has been a year with both challenges and evidence of real progress. We are focused and clear-eyed about addressing the headwinds and have a solid plan and a team in place to execute. We have met commitments to security holders, but we know we have more work to do, and FY '27 will be a critical year for us. And while the core portfolio is expected to benefit from leasing momentum, earnings in FY '27 will be lower. This is driven by minimal contribution from performance fees, trading profits, higher financing costs and the practical completion of Atlassian. We've also made some allowances for materially lower earnings contribution from the funds under review and consultation.

As a result and barring unforeseen circumstances for the 12 months ended 30 June 2027, we expect AFFO of $0.375 to $0.395 per security and distributions in line with last year at $0.37 per security.

As we think about the year ahead, every decision, every action is taken through a lens of creating sustained value for our security holders. Some of those actions will have an impact relatively quickly and others will take time. But they are all moving Dexus towards being a more diversified, more capital-efficient business capable of delivering sustainable growth over time. And I have real conviction in that direction. We have high-quality assets. We have valuable capabilities and relationships that have been built over many years, and I have enormous confidence in the team across Dexus, who are doing the hard work to make this transition happen. And while the year ahead will have some challenges, I'm generally optimistic about what we can achieve, and I thank our security holders, our clients, our customers and our partners for their support and the Dexus team for their dedication and focus.

That ends the formal part of today's presentation. We'll now open up to any questions. Thank you.

[Operator Instructions] The first question today comes from Adam West from JPMorgan.

My first one today is just on the ongoing APAC matter. But I'm just wondering if you're able to quantify how we should be thinking about the scale or quantum potentially if the shareholders were to take legal action against yourself and whether or not your provision that you've got in there for NTA covers just the current cost of the appeal or also if you were to lose that appeal and had to cover the cost of the upside?

Thanks for the question, Adam. Look, I understand that there is going to be lots of questions around APAC. But obviously, this is a live and complex bit of litigation. So, there's not much I can add beyond what's in the materials in the prepared remarks. In specific -- answer your question around what is kind of cooked in NTA today, that essentially relates to legal costs both for our clients, but also legal costs for the other parties to the judgment to date. It doesn't kind of provision for -- it doesn't provision for any future claims. It does allow for some cost for us to get through the appeal on our side as well. So, there is nothing in NTA today or provisions made in the accounts today for subsequent claims. I would make the observation that no claims have been made. And to the extent that claims are made, that will be kind of -- that will probably happen or if it happens, it will take some time.

Yes. That's clear. I guess just on my second question, but just in terms of, I guess, the AI dynamic and just some of your conversations you might have been having with your tenants in terms of leasing, how do you see the use of space changing in the future? And do you think there's potentially a tailwind of people taking out more space for collaborative and breakout spaces?

Look, I think it's a fascinating question. Andy is in there talking with customers every day. So, I'd like to get him to share some views on that. But I think from my perspective, certainly, what we're seeing in our business is AI is definitely making the most productive people more productive. And that means that we're going to see people investing, I think, in high-quality space and the value and utility of those people actually becomes high moving forward. But Andy, what are you seeing when you're talking to... your customers?

For the most part, our customers are like us, investing in AI productivity tools and seeking to capture that performance gain. They are yet to see AI flow through to a reduction in headcount, that type of efficiency. It's more about productivity for them. And I think bear in mind, our average customer size is relatively small. It's 1,500 square meters for the balance sheet. So those types of small- to medium-sized enterprises are more likely to be using AI to grow than to contract. In terms of the -- how the space is used, I think whenever there's heightened uncertainty, tenants look for shorter lease terms and more flexibility. That's probably what we're seeing in Bris.

The next question comes from Andrew Dodds from Jefferies.

Maybe just a follow-up on some of the APAC legal fees. I think back in the first half, you quantified that amount at $17 million. So, I was just hoping where that number kind of sits today and I guess the outlook sort of going forward over the next 12 months of what this number could sort of potentially be?

Yes. Thanks for the question. So, in terms of the costs, both for the proceedings to date and as Ross mentioned, in respect of our costs for the appeal, those costs that can be more reliably estimated total approximately $60 million, and they've been expensed in the P&L and reflected in NTA. I don't think it's appropriate for Ross's comments to estimate what future costs will look like.

Okay. That's clear. And then maybe just one on the buyback, given your comments in the outlook statement. Ross and team, is the intention to restart the buyback tomorrow now once you're out of blackout? And I guess just how sustainable do you see this just given where look-through gearing is at 33% and close to $1 billion of capital commitments over the next 2 years?

Look, the buyback is something that I'm very passionate about, and that is why it's in the plan. But as you'll appreciate, we are balancing the short term, and there is clearly kind of a short-term gain we had through the buyback through ensuring that we don't kind of start the business of capital for longer-term growth. So -- and when you do all of that while managing risk and you rightly identify the financial risk, I'm also thinking about the investment risk, so how we think about the investment portfolio. So, I guess in a nutshell, it's a balance. All these decisions are guided by our capital allocation framework, which we kind of put in place in 2024. But certainly, at current prices, I'm a buyer of the stock, and you should expect us to be active in coming weeks.

Okay. And just in terms of guidance and what guidance is factoring in, how much of the buyback are you assuming?

There's nothing material in guidance in terms of the buyback. It's not a material needle mover given where kind of cost of debt and the yield of the stock is. It will have benefits in future years as you kind of think about shrinking the capital base. And then when we get earnings growth moving, we're doing it off a smaller capital base. So, it's going to increase NTA, it will increase NAV per security. it will give us more positive leverage to growth as the business turns around. The other point I would make just on your earlier question around capacity for the buyback, I think we are thinking carefully about the balance sheet. We don't want to stretch it, but we have also announced that we're targeting to at least release at least $2 billion of capital over the next couple of years, and we have a good track record in terms of capital release. So, I kind of think certainly, at current prices, I think it would be a missed opportunity for us not to capitalize.

Right. And then just a final one for me. Just in terms of some of the moving parts in FY '27 guidance, I guess it's been pretty well flagged that performance fees and trading profits are kind of likely to feature less going forward or at least in '27. But it would just be good to understand some of the kind of bigger moving parts just given how deep the sort of year-on-year decline is?

Keir, do you want to?

Yes, happy to take that one. So, you're right. As we have flagged, we anticipate an immaterial contribution from trading profits and performance fees. Now those factors alone account for 14% of the lower earnings. Outside of that, there are a number of moving parts. So, we anticipate impacts from higher funding costs, practical completion of Atlassian. There's some slight dilution in there from disposals as well as some allowances for a materially lower contribution from FUM that's under review or consultation. And I think pleasingly, offsetting those headwinds, we're anticipating solid growth in the core portfolio, driven by leasing momentum, stronger office growth and continued industrial performance.

I think just kind of closing out on that, I think that's kind of something that maybe just doesn't jump out of the result is notwithstanding the headline print of earnings being lower next year, the underlying business is actually pretty much flat. And that's after we take into account higher funding costs and the full year impact of the Atlassian coming through. So, I think that's something to -- certainly us as a management team, but also brokers to be focused on.

The next question comes from Adam Calvetti from Bank of America.

Just on the office, do you provide a like-for-like number ex the divestments? I mean, you guys have, as Andy said, the best office portfolio in the market and you don't report leasing spreads and growth -- like-for-like growth of 0%. Like what's going on? When is this going to return to positive?

Adam, it's Andy. Is the question there what's like-for-like for '26 ex divestments?

Yes, ex what's settling in 30 Hickson Road, which I'm sure has dragged it down.

Yes. So, it would be about 2.5% as opposed to 30 basis points in FY...

And is there a reason why [ I'm not ] a leasing spreads?

So leasing spreads are improving, especially on an effective basis. And for the first time in a long time, we are now on an effective basis, under-rented in Sydney CBD and in Brisbane CBD. The effective spreads on the deals we did in FY '26 were negative 8.7%. So that's down from 10.2% at '25.

Okay. That's clear. And then just on the divestments as well, you've got a coupon that's going to be -- is that going to be coming through FFO?

Yes, it will be. That's right.

Okay. That's clear. And then just maybe one quick one as well. Just on this APAC litigation expense, I mean, with the FUM that's at risk, is that still fee paying currently? Is the full $7.3 million? Or how do we think about the $4.5 million fee paying? And is that expected to be fee paying throughout the year?

So yes, we're still providing services and collecting fees in relation to that FUM. As I said, I think the concluding remarks, we haven't had some allowances in guidance for a materially lower contribution from, let's call it, fund that is under review or consultation. We're not being specific as to what that is, but we need to make some assessments around what that is in determining guidance, and we've done that. So yes, we factored in on a reasonable basis what that looks like.

Okay. But it's fair to say that it's contingent on the actual decisions at court. So, if that's delayed, you could see them paying -- you see that fee -- that fund paying fees for all of FY '27?

I would separate the litigation outcomes from the reviews that we're going through with fund clients and trustees.

Right. So you're doing reviews on the full $7.3 million regardless?

Correct.

The next question comes from David Pobucky from Macquarie Group.

Just another one on the infrastructure strategic review. How should we think about the timing of the progress you make there? And I mean, at what point would you have made material progress? And maybe at a high level, what would success look like to you and Dexus security holders off the back of the review?

Thanks, David. In terms of timing, we just flagged that this is a process that we're working through with clients, trustees and investors. And so, it's not for Dexus to dictate the timetable per se. I think there is a shared interest in trying to get resolution, but I think there's a general acknowledgment amongst all the stakeholders that is a very complex situation, and we also have to navigate, as I said in some of the remarks, the conclusion of the litigation is probably going to impact some of the decisions as well. So, I think we collectively, as a stakeholder group, would like to get clarity as soon as practical. It will take some time. We're not going to be -- and we are not, Dexus, going to dictate the timetable. I think we're very respectful of all the stakeholders in relation to that.

What does success look like? I think in the end for us, it's not that complicated. We want to have strategies that we think can deliver attractive returns. We want to have strategies and products that our clients are going to support us in. And ultimately, the economics need to be a positive contribution for us given the complexity and the loss of control that you have when we're investing alongside clients. So, I think that's the framework that we're looking about. I accept that this is a difficult situation, we have stakeholders and clients with differential interest, but that's how we're working through it in a methodical and considered way.

And just the second question. You mentioned you're targeting the release of $2 billion of capital over FY '27 to '28. A few months ago, there was an article in the press that mentioned Dexus was trying to put together an office fund that might include stakes in some of your top buildings. So, if you could provide any comment on those kind of a couple of pieces.

It's always dangerous to comment on press speculation. Look, we see a great opportunity to improve the returns for Dexus security holders and the capital efficiency of the business by bringing third-party capital into that very high-quality office portfolio. But I would say the same principle applies as we think about our logistics assets as well. So improved capital efficiency is a clear objective. We've got to get the timing of that right. We've got to make sure we get the right partners in. We're not under pressure to do a deal tomorrow, if that makes sense, but the balance sheet is in a really good position. So, for us, we'll work through it, again, in a methodical considered way. I think pleasingly, institutional capital interest in office has come back a long way. 12 months ago, it was hard. I think there is a general acceptance around the better assets are really going to perform well. Andy has given you some good color around I think the supply-demand dynamics have really favorable setups, and I think that is acknowledged globally by investors. So, we're working through that. We'll update the market as we make meaningful progress. And as I think I flagged at the Macquarie Conference earlier this year, the scope for material capital release from these initiatives is significant and the challenge is going to be back down on the redeployment and the use of those proceeds.

The next question comes from Tom Bodor from Jarden.

I was just interested in whether you see FY '27 as a trough year for FFO? Or do you think there could be sort of some risk into '28 as well?

We only just delivered the '27 guidance, Tom, and you want us to talk about '28? Look, I think we're very clear around the business needs to be in a position where it has a sustainable earnings base and it's going to deliver sustainable earnings growth for security holders. I think we're very clear around the plan of what we need to do in '27. There's headwinds, there's tailwinds in relation to that. The team is focused on '27, all with the lens of getting the business back to sustainable earnings growth. And so, we'll be pleased to update the market on '28 probably this time next year.

And then on Waterfront and the delays, I think historically, when you've sort of answered questions around that, there's always been sort of a refrain of a fixed price contract and it's the builder's risk. But clearly, a fixed price contract isn't ever fully fixed because you sort of can't take all the risks that could play out. And it seems that weather contingencies have been [indiscernible] through. Does that mean that you're now on the hook for any excessive weather delay from here? And what other risks are you exposed to in that contract?

Look, developments involve managing risk, absolutely, and we are laser-focused on this as a team. And I think while there has been delay and there will be some costs, and these are principally financing costs, as Andy alluded to, there really isn't a better project in the country to be invested in, certainly in the office space. And I'll let Andy provide some specific comments on the contract particulars. But for me, this is -- we picked the right market. This is the right product in the right location, a premium asset in a premium location. We've had the right leasing strategy. We didn't lever it up too quickly. Notwithstanding views around John Holland, I think we have the right procurement strategy. This is a Tier 1 builder with deep expertise and financial support, and they are very well equipped to deal with a build of this complexity. And notwithstanding the delays, and we do want to get this built as quickly as possible, the economics have been largely preserved. And so, I think that's the important thing for us. I think you're right to identify, well, if there is further delays from this point, what does that look like, but I'll let Andy touch on that.

Thanks, Ross. Tom, so the fixed price contract remains intact, and it protects Dexus and DWPF from escalation in construction costs. It also anticipates a regime for liquidated damages in the event of delays to practical completion. And the previously announced delays have been absorbed within that capacity in the contract. This delay to late 2029 is frustrating, but we have been working closely with John Hollands to review the program. It does include and resets an appropriate contingency for weather from this point on. And we'll feel much higher conviction about forecasting PC once we get to Level 5, which will be later this financial year. And at that point, it should be much clearer.

The next question comes from Howard Penny from Citi.

Just a question on finance costs and how to think about the sources of funds over the next 2 years. There is 1 or 2 -- there's some potential to renew funding, but also the exchangeable notes that's coming up in November 2027. Could you just guide us on how you see sources of funding and just overall funding costs over the next year or 2?

Sure. I might take that one. Thanks, Howard. So maybe if we start with gearing, gearing at 30 June was 33.4%. That's towards the lower end of the range. If we pro forma for the post balance date divestments that the team has achieved, pro forma gearing sits at around 30%. That's just with the initial proceeds from those sales. And then it steps up to around about 32% if you look at the $0.5 billion of committed DevEx over the course of FY '27. Now things that might occur outside of that, Ross has talked to the $2 billion of capital release over FY '27 and '28, that will further benefit gearing. Naturally, there are also things that we are looking to spend on, including the buyback as well as potential other investments. So, it's difficult to give you a forward estimate, but hopefully, that helps with some of the moving parts.

If we're looking at cost of funding itself, look, the team has done a great job in terms of the hedge book. We have quite high hedge coverage. The average rate is around about 3%. As that rolls off, it will normalize to higher rates. And you are right, the exchangeable note that expires towards the end of FY '27. It's too early to say what we will do with that particular instrument, but you should assume at the moment that it will be in place until maturity.

And just a second question coming back to thinking about the core portfolio. That portfolio has done well and remains strong. And just thinking about how Dexus is allocating that next dollar. There's a few opportunities, it seems at hand, both taking opportunities, maybe liquidity in the funds, the share buyback and reinvesting into developments and the core portfolio. How are you thinking about allocating that next dollar of Dexus across those opportunities?

Howard, the way we think about capital allocation is not about the next dollar, it's actually about thinking about the returns on the assets we already own. So, it's both, and that is also driving some of the decisions around divestments. So, I think we see opportunity to sell assets where kind of the go-forward returns are going to not meet our hurdles or returns relative to the redeployment opportunities. So, I think you should expect us to continue to be active. There is no shortage of opportunities out there at the moment quite genuinely. I think the challenge for our team is given where the buyback is at, the bar is very high. So, it doesn't mean that we're not going to do new things. It means that the -- yes, as I said, the bar is high in terms of doing new and different things. And if you look at actually where we have deployed capital, we haven't committed that marginal capital over the last year. It has been on things that generally have high returns and adding to diversification and ideally capital efficiency in the business. So, there's certainly going to be characteristics of any of the new things that we do.

The next question comes from James Druce from CLSA.

Yes. I think part of the question might have just been answered, but just what you'd like to do with that $2 billion of capital that will be released over the next couple of years, is there any other color you can add?

I'd probably just be saying the same thing. You can have another extra question, if you want to.

Yes, yes. So, we -- just on the maintenance CapEx and leasing CapEx for '27, is that heading up or down? Or what is that number?

Thanks for the question. So, I'd expect it will be a little bit lower than what we delivered in FY '26. And that's a combination of the office portfolio being smaller as well as the work that the team has been doing in terms of managing CapEx and the way in which we do that. That's slightly offset by an increasing contribution from industrial as a consequence of higher incentives and flowing through the book.

Has that peaked given that what you're doing with the portfolio now? I mean it should be trending down [indiscernible] I would have thought.

Yes, I think that's fair. And maybe, Andy, you can talk to certainly office markets where that's the expectation.

I think the short answer is we expect cash incentives as TI, AFFO CapEx to continue to gradually reduce. What you see in the number will be a reflection of the composition of leasing. And so, we're able to really drive incentives down in the markets that allow us to, Sydney prime, Brisbane. Incentives are sticky in Melbourne and in Perth. If you look at our FY '28 expiries, we've got half of them in Sydney prime. So, we hope -- we expect to do well there. On the maintenance CapEx and lessors work line, the timing of those works happens when the space becomes available and the TI flows when the space is leased. That's probably how I would suggest you look at that. And we're trying to be really disciplined in how we allocate that capital, make sure we create a product that leases well, but we are capturing the benefits of scale.

Okay. That's clear. And one more, if I may. Just on Atlassian, is that in the bucket to be -- capital to be released? And what cap rate are you holding that asset at now?

So that's -- I think when we started that project, we said there's 2 times to monetize this asset. It's going to be before we start and when we complete, and we kind of, to be frank, missed the boat, unfortunately. So yes, as we get to completion, that will be one of the assets as much from a -- to be frank, portfolio concentration risk as anything else. So that's a levered structure. The financing is being put in place at the moment. So it reaches PC end of the year, and that is something that would be -- ideally, we'd be bringing some third-party capital in. Given it's a levered structure, it's not a huge check to raise. It's in the books. I think it's [ 5.375% ] is the cap rate, 15-year fixed 4% leases, clean cash flows. A lot is probably going to depend on where bonds are trading at the end of the year as to what that capital raise looks like.

Okay. And how levered is that on the project -- sorry, on the asset finance side?

About 65%. I think it's actually good support from the financiers on that. So yes, I think that bodes well for the project.

The next question comes from Lauren Berry from Morgan Stanley.

Just got a couple of questions. The office expiries in FY '27, I think about 8.5%. Can you give us some insights as to the retention rate you're expecting across that portfolio, please?

Simon, it's Andy. Look, we don't -- retention is one of those statistics that we don't focus too much on. And the outcome of retention is printed ultimately in occupancy and leasing volumes. In FY '28, we have some expiries, some known exits from the portfolio. And so there's a known exit in Australia Square and then a known exit in 385 Bourke Street. Otherwise, I think retention in the year gone by was more than 50%.

No, I mean I was asked -- I guess with retention, I was more worried about downtime, et cetera, right, if you've got existing tenants leaving and it could take several months for you to backfill it. So, is that going to create a drag in '27? But by the sounds of your answer, that's going to be a nonissue?

Well, if you look at -- well, look, it's all asset-specific. But if you look at 2 large exits we had from the portfolio last year, we were able to backfill them within 12 months. So, one at 80 Collins Street South and at 25 Martin Place, 2 deals about 3,000 and about 5,000 square meters.

Okay. So, the bulk of the 8.5% expiring, you're pretty comfortable with in terms of being tenanted over the course of the year?

So, the 8.5% is -- the lease expires in '28 that as at today, we haven't dealt with. So, we are in active discussions. We know that we've got some work to do at 385 Bourke Street. Melbourne is a slow market to move, and so that might not be solved by the end of FY '27, but it shouldn't be too far from that.

I think perhaps just to add to that, I mean FY '26 was impacted by some downtime, particularly at 30 The Bond. I think what is pleasing in terms of our expectations is we're expecting more normalized growth in '27, just given the leasing momentum to date as well as higher average physical occupancy.

Great. My next question, I'm just interested, you know about the Waterfront delay up in Brisbane. What does that mean for the tenants who had signed up to move in? Are you on the hook to help them out in terms of helping them extend their existing lease? Or were there flexibilities in the deal that they signed with you guys?

So, we're working closely with our precommitment tenants, Simon, at the moment to mitigate the impact of this delay on their own space requirements. So, 3 of the 8 precommitment tenants are within our control at 1 Eagle Street, and we're working closely with everyone to help mitigate that impact. I think the risk to precommitment leasing is relatively low given where the market has moved on an effective rent basis and given that the project is 50% under-rented. But that's not something that we're taking for granted.

The next question comes from [ Claire McHugh ] from [ Green Street ].

Just quickly on capital rotation. You've been selling assets in Brisbane. Is that simply a function of liquidity being stronger in those markets? Or is there something specific about the return profile of those assets that make the disposals the right call despite the market's compelling outlook?

Thanks, Claire. It's -- don't read too much into it beyond we underwrite the assets. We look at the go-forward return. We look at the clearing price, the return at the clearing price and the alternative use of capital. And then we look at the portfolio construction impacts. And we have -- we're building our exposure in Brisbane through the Waterfront precinct. That is going to be the best product in town, I think, for some time. And all the trends that we see actually support strong investment performance from those sorts of assets. So, it's -- that's kind of the model that we approach it in. And clearly, we've got better use for proceeds and assets' going to give us, let's call it, more average type returns.

Okay. And then in terms of the targets, just as a follow-on, in terms of the targets for future disposals, there's been obviously a little bit of discussion. But are you looking at -- just given the comments you've made around AI things and so forth, are you really looking to target some of those perhaps on the risk spectrum, more at-risk assets as you look to refine the portfolio? Or will it continue to be opportunistic and commensurate with where you're seeing better liquidity?

There's a consistent and strong rigor that we apply as we kind of think about this analysis. I think the quality problem that we have, to be frank, is that the portfolio is of such high quality at the moment that, let's call it, the bottom 10% is typically better than the kind of the average of the top quartile for some competitors. So, I think we're kind of splitting here to some extent if we're kind of talking about quality. We have got principally out of the suburban markets. I think we've got like 2 assets left, which we're in joint ventures, which we would like to exit. But again, it's at what price? So yes, I think kind of -- it's just going to be driven by the numbers.

Yes. No problem. And then maybe just lastly, just on the secondary units, can you just give us a sense across the sectors where they traded versus their own NAVs or NTAs?

Sure, Claire. For DWPF, for example, the flagship fund, part of the redemption facility has a baked-in discount of 2%, and that's where the most recent transactions have happened. Predominantly, other redemptions have been through liquidity mechanisms. So, they weren't traded. But I would say, in summary, this year, we've seen the discounts pretty much disappear.

The next question comes from Yingqi Tan from Morningstar.

Just a very quick one for me. Just can we just talk about the uncommitted pipeline? I was looking at 60 Collins Street, your yield on cost has increased to 6% to 7%, and it was 5% to 6% a year ago. And we know that the Melbourne office market isn't improving just yet. I'm just curious as to what has changed in the past year?

Yingqi, it's Andy. I'll grab that one. So, thanks for pointing that out. 60 Collins Street sits in our sort of predevelopment classification, which affords us the opportunity to iterate with the development scheme and the development feasibility. You'll see that the area and the project cost has also changed. And so, this smaller scheme, we think, delivers more potential for better risk-adjusted returns for a prospective capital partner.

And I would just reiterate earlier comments around capital allocation, but there is a very high bar for us to commit incremental capital to things that includes development assets that haven't been otherwise committed.

At this time, we're showing no further questions. I'll hand the conference back to Ross for closing remarks.

Look, thank you, everyone. I know it is a really busy day. We look forward to catching up over the coming weeks. Thanks for your time.

Thank you for standing by, and welcome to the DEXUS HY '26 Results Briefing. [Operator Instructions] There will be a presentation followed by a question-and-answer session.

I would now like to hand the conference over to Ross Du Vernet, Group CEO and Managing Director. Please go ahead.

Well, good morning, everyone, and thanks for joining us for our half year 2026 results presentation. I'd like to begin today by acknowledging the traditional custodians of the lands and waterways upon which we operate and pay our respects to elders past and present.

Today, you'll hear from Keir on the financials, Andy on office, Chris on Industrial and Michael on Funds Management. Concluding the presentation, I'll provide a summary and open up to any questions that you may have.

DEXUS is a unique investment proposition in the Australasian real asset market. Today, we manage $51 billion of assets across our platform with third-party funds under management at 2.4x our investment portfolio. We have scale and diversity across the real asset spectrum, $20 billion in office and around $10 billion in each industrial, retail and growth markets, which includes infrastructure, health care and alternatives. This scale is underpinned by our multidisciplinary team with deep expertise across each sector. Importantly, we have access to diverse pools of equity capital, which positions us well to capitalize on opportunities through the cycle.

Our strategy is unchanged and our vision to be globally recognized as Australasia's leading real asset manager continues to guide our decisions. The strategy targets large growing markets, leveraging our multi-sector strengths in transacting, managing and developing across each. Our high-quality balance sheet portfolio, together with a large diversified funds management business continues to differentiate us. Today, the investment portfolio is anchored by prime office exposure across Australia's major CBDs. Over time, the investment portfolio will continue to become more diversified by investing alongside capital partners into a diverse range of opportunities. Our culture, the quality and scale of the portfolio and projects we have underway, coupled with our approach to people, enable us to attract, retain and develop leading talent to ultimately create value for customers, clients and you, our investors.

Turning to our results. We delivered AFFO of $253 million and distributions per security of $0.193. This was the second consecutive six-month period of positive property portfolio valuations, which supported the delivery of a statutory net profit and an increase in NTA to $8.95 per security. Our office leasing volumes were almost double that of levels achieved in the prior corresponding half, including further progress at Waterfront in Brisbane, which is now 71% pre-leased and will deliver a premium product in the strong Brisbane office market.

Our industrial portfolio, as we expected, delivered strong like-for-like growth and re-leasing spreads. We undertook $800 million of divestments for the balance sheet, including the recently agreed divestment of 100 Mount Street in North Sydney. If we turn to the funds business, we continue to work through some fund-specific matters while positioning the business for long-term success. Our flagship funds continue to outperform, DWPF outperforming its benchmark across all time periods, while DWSF, the Shopping Center Fund has outperformed since joining the platform. We raised over $950 million of equity, comprised $640 million of new equity commitments and the facilitation of more than $280 million in secondary unit transactions. We established a new fund series. We closed DREP2 above its initial target, and we continue to rationalize subscale funds to simplify the platform.

In August, I outlined our action items for FY '26, aligned to our three strategic priority areas of transitioning the balance sheet, maximizing the contribution of the funds business and unlocking our deep sector expertise. In addition to the progress I mentioned on the previous slide, key development milestones were achieved at Waterfront in Brisbane. The DEXUS office and industrial portfolios delivered positive total returns over the 12-month period. And DEXUS has now secured $1.4 billion of divestments since 30 June 2024, progressing well towards our $2 billion target. We invested $170 million of seed capital into DSIT1, a new fund series, which we aim to reduce to $50 million during the year. We've reduced the real estate redemption queue by $1 billion. And post the APAC court date scheduled for April this year, we expect to make more progress on solving infrastructure redemptions.

Overall, we've made solid progress and remain focused on the priorities that will position the business for long-term success. Our sustainability strategy focuses on three priority areas where we can make the greatest impact across climate action, customer prosperity and enhancing communities. Sustainability remains core to how we operate, and we continue to receive global recognition for our performance.

Thank you, and I'll now pass you over to Keir.

Thanks, Ross, and good morning, everyone. Turning to the results in detail. In line with expectations, total AFFO was $253 million, with a distribution of $0.193 per security, reflecting a payout ratio of 82%. Office FFO reduced primarily due to divestments and lower average occupancy, partly offset by contracted rent increases. Industrial portfolio income increased due to higher occupancy, development completions and contracted rent increases, partly offset by divestments. FFO from management operations decreased due to lower FUM as a result of divestments and slightly lower performance fees, with $19 million realized in the first half and $16 million secured for the second half.

Finance costs were broadly flat with a higher cost of debt offset by higher interest income. As expected, trading profits were higher with the sale of Brookhollow, Chester Hill and continuing construction at Prestons, securing FY '26 guidance. Maintenance and leasing CapEx is skewed to the first half of the year, mainly due to the impact of incentives on deals secured in prior periods as well as the timing of maintenance CapEx. Looking ahead to FY '27, performance fees and trading profits are expected to be materially lower than FY '26.

It has been positive to see the second six-month period of valuation growth across the office and industrial portfolios. Overall, for the six months to 31 December, the portfolio increased by 1%. Capitalization rates have stabilized with the valuation movement predominantly driven by rental growth. Our office portfolio, which is 77% weighted to core CBD markets increased by 0.7% and our industrial portfolio, which is 90% weighted to core industrial estates and distribution centers increased by 1.6%. Pleasingly, these outcomes demonstrate the quality of the portfolio.

Moving to capital management. Our balance sheet remains solid with look-through gearing towards the lower end of the 30% to 40% target range, providing capacity to fund committed expenditure. During the half, we issued $500 million of subordinated notes at attractive rates and diversifying our funding sources. We have been active with refinancing, resulting in a weighted average debt maturity of 4.6 years, $2.5 billion of headroom and manageable near-term debt maturities. 95% of our debt was hedged during the half at an average rate of 2.9%, providing material interest rate protection. Looking forward, there's $1.2 billion of remaining spend on the committed development pipeline over the next four years, with $360 million expected to be incurred in the second half of FY '26.

Thank you, and I'll now hand over to Andy.

Thanks, Keir, and good morning, everyone. I'll now take you through the performance of our office portfolio. We continue to own and manage the best office portfolio in Australia. Over the past five years, we have enhanced the quality and resilience of our portfolio. And as a consequence, we are well positioned to benefit from the market recovery that is now underway. Location remains a key differentiator, demonstrated by our portfolio occupancy of 92.2%, which remains well above the market average.

Our average incentives of 29% are below market, reflecting the quality of our portfolio and notably, leasing deals done in Perth, Brisbane and North Sydney, where market incentives remain elevated. The effective like-for-like income decline of 2.3% primarily reflects downtime on select vacancies, including 80 Collins Street and 30 Hickson Road, and we expect this to improve into the full year.

Our leasing activity was strong this half with leasing volumes of over 95,000 square meters, almost double the volumes achieved in the prior corresponding period. The portfolio delivered a one-year total return of 5.7% at December, reflecting the improved market conditions.

Looking at our expiry profile, we aim to have no more than 13% of the portfolio expire in any single year. FY '27 expiries have improved to 12.3% following the recent divestment of 100 Mount Street with key expiries remaining in Australia Square and 385 Bourke Street. We remain focused on addressing the more challenging vacancies at 80 Collins Street in Melbourne, which represents 2.2% of portfolio income and 30 Hickson Road in Sydney's Western Corridor at 1.5% of income.

While there is no conclusive answer regarding the potential impact of AI on office markets, we believe different parts of the workforce are likely to be affected unevenly. Our view is that high-value professional work, the kind concentrated in premium CBD buildings, reflecting the majority of our portfolio will be the most resilient to AI replacement risk and may even benefit and grow.

We frequently monitor our customer base, which is well diversified with an average tenancy size of 1,000 square meters and our top 10 customers account for just 20% of our total property portfolio income. The staggered expiry profile, combined with our diversified tenant base, supports resilient income streams across the portfolio.

Our development pipeline provides the opportunity to further enhance portfolio quality. Construction is progressing at Atlassian Central in Sydney with completion on schedule for late 2026. This development is 100% pre-leased on a 15-year lease with 4% per annum fixed increases in what is now an improving Sydney market. At Waterfront Brisbane, we have achieved an important development milestone with the Riverwalk opening earlier this month and the vertical structure coming out of the ground. The Brisbane market continues to strengthen with a positive outlook over the medium term. Pleasingly, Waterfront is now 71% pre-leased with the recent leasing deal reflecting a 40% improvement in net effective rent compared to the previous Waterfront deal struck two years ago. In aggregate, 83% of the committed development book is pre-leased with contracted 3.7% average fixed increases per annum, providing a secure income stream once complete. We have fixed price contracts in place with Tier 1 contractors with material collateral and security arrangements to protect against construction risk. A very high threshold applies to projects in our uncommitted development pipeline and Central Place Sydney has moved out of our uncommitted pipeline as the scheme is reconsidered.

Turning to the office outlook. The evidence continues to suggest that we have passed the bottom of the cycle and are now in the early stages of a recovery. Office demand continues to gain momentum, driven by employment growth, return to work mandates and centralization trends. Net absorption has been positive across all four major CBDs with the strongest absorption in premium grade assets, which is exactly where our portfolio is positioned. Sublease space has continued to reduce and is now close to average levels. Importantly, upcoming office supply is low relative to long-term averages. This provides scope for vacancy rates to fall and rents to grow. Within our own portfolio, we are seeing examples of 15% net effective rent growth on comparable lease deals struck 12 months apart.

Looking at our rental growth expectations over the next three years, we expect strong growth across all major markets with Brisbane and Sydney Premium leading the way, followed by solid growth in Sydney A-grade, Melbourne Premium and Perth. The Sydney CBD core is now 95% occupied with DEXUS at 98%. With the seven-year delay in new supply, there is meaningful upside to the Sydney premium forecast. DEXUS is well positioned to capture this upswing given our portfolio quality and location in core precincts of the major CBDs.

Thank you. I'll now hand you over to Chris.

Thanks, Andy, and good morning, everyone. Our industrial portfolio has delivered a strong result, including a one-year total return of 8.8%. Occupancy by income increased to 97% following leasing success across Sydney, Melbourne and Perth, which also resulted in like-for-like income strengthening to 8.7% as expected. Occupancy by area of 97.5% remains above the national average. We achieved strong re-leasing spreads of 33% across the stabilized portfolio. Average incentives increased to 21.5%, primarily driven by lease-up of key expiries in Melbourne's West and Sydney's Outer West. The portfolio is 8.9% under-rented and 20% is set to access rental reversion upon expiry by FY '27.

On developments, we completed 102,000 square meters during the period, with construction continuing across a further 110,000 square meters. We leased 63,000 square meters across 10 development deals and 68% of our committed development book is now pre-leased with contracted annual increases of around 3%.

Moving to our expiry profile. We have leased 24% of the portfolio over the past 18 months, derisking the expiry profile and capturing strong re-leasing spreads. We remain focused on leasing key vacancies at Matraville, which has now been repositioned along with Gillman. And we are in active discussions with potential tenants on both of these properties. The vacancies we have experienced over the past 18 months have been in older stock in New South Wales and Victoria. And pleasingly, we have achieved strong re-leasing results. Looking forward, 80% of our FY '27 expiries are represented by younger prime assets and provide the opportunity for positive reversion.

Turning to the outlook. Supply under construction has moderated and remains at or below historic average take-up in all markets, while the picture for demand remains supported by strong Australian population growth, enhanced by e-commerce growth. Our portfolio with its focus on core industrial estates in strategic locations is well positioned to benefit from these trends.

Thank you. I'll now hand over to Michael.

Thanks, Chris, and good morning, everyone. Our funds business manages $36 billion in third-party capital across a diverse range of real asset strategies for more than 150 institutional clients with retail and wholesale investors. We've maintained prudent capital structures across our pooled funds with average gearing remaining conservative at around 32%. We have both returned capital and raised equity in existing and new products, but the near-term revenue impact of providing liquidity is still working its way through. While there is more to do, we are positioning ourselves to capture the strong expected growth in pension capital over the medium term.

Last year, we launched a new investment series focused on high-quality assets for long-term value creation, with the first fund in the series securing a 25% interest in Westfield Chermside. Offshore capital, particularly from Asia, is increasingly interested in Australian real estate with the office sector also seeing renewed interest. In the six months to December, we've reduced the real estate redemption queue by around $1 billion, and we continue to rationalize subscale funds. We expect to make further progress on infrastructure redemptions post the APAC court case scheduled for April 2026 with mediation to occur in March '26.

We raised over $950 million in third-party equity, including facilitating more than $280 million in secondary unit transactions. DWPF continues to outperform its benchmark across all time periods, outperforming by circa 200 basis points for the 12 months to 31 December. This highlights the quality of the underlying portfolio and our active management approach. And the shops fund has also outperformed its benchmark since joining the DEXUS platform. And while operating -- while the operating environment remains challenging with some continued pressure in the near term, we are steadily repositioning the business for long-term scalability and growth.

Thank you, and I'll now hand you back to Ross.

Thanks, Michael. Underlying real estate markets continue to improve, supported by positive business confidence, constrained supply pipelines, stabilization in asset prices and improvement in transaction volumes. Barring unforeseen circumstances for the 12 months ending 30 June 2026, we reaffirm our expectations for AFFO of $0.445 to $0.455 per security and distributions of $0.37 per security.

With valuations turning positive, transaction and fundraising markets recovering, our confidence in the long-term fundamentals of the business have strengthened. We are actively exploring opportunities to enhance returns and capital efficiency by increasing third-party capital participation in the $13 billion property portfolio. This would release capital in addition to the $2 billion divestment target. With the sustained disconnect between our equity market valuation and that of our underlying assets and businesses, we have activated an on-market securities buyback of up to 10% of DEXUS securities. We will execute the buyback at a pace consistent with maintaining balance sheet discipline as we progress asset sales and other initiatives to release capital.

Thank you. That ends the formal part of today's presentation. I'll now take any questions that you may have.

[Operator Instructions] The first question today comes from Adam West from JPMorgan.

I guess my first question today is just on the Atlassian development. I'm just wondering if you progressed any plans for a partial sell-down -- full sell-down of that asset?

Adam, thanks for your question. This is certainly an asset that we have flagged that we'll be looking to introduce third-party capital into. I think we've been pretty consistent with the market that we think the best time for that is closer to practical completion. That is slated for the end of the year. We think it's a great investment product, 15-year lease fixed 4% increases. And so yes, that's one of the assets that we will be bringing third-party capital in over the course of the year. It might not happen before practical completion, but it will be towards the end of the year.

And I guess just my second question on the office portfolio. In terms of the core Sydney CBD portfolio in particular, I'm just wondering if you could talk to how much under-renting would potentially be in that segment.

Andy, that's one for you.

Yes. No problem. Adam. So look, re-leasing spreads were positive in all of the CBDs, including Sydney CBD. And so re-leasing spreads obviously impact the extent to which the portfolio is over and under-rented. We're seeing a pattern of better effective re-leasing spreads driving or reducing the extent to which the portfolio is over-rented on an effective basis. And so the portfolio generally is around 7.5% over-rented on an effective basis. That's come in from 12.5% 12 months ago. And it's about 4.5% under-rented on a face basis, which is pretty stable with 12 months ago.

The next question comes from Cody Shield from UBS.

Just firstly, on the buyback. My understanding was that you need to do more than $2 billion of divestments to get the buyback away. Is that still the case? Or are you sticking with that $2 billion target?

I think we're very resolved around the $2 billion target. And I think what we're flagging is we see real value in the security price where it's trading. We instituted a pretty disciplined capital allocation framework when I stepped into the chair. Dare I say that has regard to the return on the investments we already have and also marginal uses of capital. So we are definitely resolved we're going to get through that $2 billion target. And as I have shared in my concluding remarks, we are actively looking at bringing third-party capital into the $13 billion investment portfolio. That has the potential to release a significant amount of capital. And certainly, given where we're trading today, the buyback would be a really good use of that.

Okay. That's clear. And then just turning to the leasing at Waterfront, looks like a good outcome. Just wondering whether there's some flex in that 5% to 6% yield on cost that you're targeting?

I think I've been pretty clear. I always kind of think we're going to be at the higher end of that range, and there's always scope for us to outperform. We're really pleased. We have great belief in that product. I think that is validated and the strategy of the team to be kind of patient and wait for the market to come to us on the leasing there. So I think that's a tremendous validation of the product and the leasing strategy from Andy and the team.

I would also kind of just flag that even at that yield on cost, we're going to be materially under-rented in that asset just given how much the market has moved. So I think there's going to be a great ultimate return for our security holders and DWPF, which is our co-investor there. And yes, I would like to kind of see the team surprise on the upside.

The next question comes from Simon Chan from Morgan Stanley.

My first question relates to the buyback. guys. How much of the buyback do you think you'll actually do in the second half of fiscal year '26? And if you are genuine about kicking off the buyback in the second half of fiscal year '26, I would have thought there's scope for you to change your earnings guidance for the year because you're buying back stock at essentially 10% earnings yield and your cost of debt is 5%.

So maybe I'll take the question in two parts. Are we serious about the buyback? The short answer is yes. I think it's not just a statement of intent, but we see real value in the company where it's trading. We see a disconnect. We have a very high-quality portfolio. Valuations have troughed. We see valuations moving north from here. And I think the market is fixated on maybe EPS growth and some noise in the business, be that developments or litigation, those sorts of things. So we see good value at the current level. We need to make sure that as we're executing that buyback, we're doing it in a disciplined way that we have regard to the balance sheet strength, which is really important to us. But I think I am getting more confident around the transaction market. It is improving. And certainly, I think bringing third-party capital into the platform and the confidence we have in doing that, there is scope for us to release a lot of capital.

And as I said in previous responses, I think the buyback is a really good use of capital at current levels. So I can't predict where the stock price is going to be in three months' time, and we're not going to put that into guidance. But certainly, at current -- trading at current levels, if we can be more active on capital recycling, I think you're going to see us being very active.

Okay. Fair enough. My second question, in Slide 17, and I think Andy Collins might have touched on this. That's that last bullet point, high threshold to commence new development projects. I think he referred to that after talking about scrapping central place. What's your new threshold now? Like are you going to have a -- have you guys done the review and have settled on a high yield on cost hurdle before you kick anything off? Can you talk to that, please?

I would say coming back to our capital allocation framework, this is something that is constantly assessed. And when we kind of look at alternative uses of capital, including things like a buyback, which we've announced today, there is a very high threshold for us to start new projects. So that's not to say that we're not going to do it, but where we do it, it needs to be capital efficient. We need positive economics from the management enterprise, and we need to believe that the underlying projects are going to deliver really good risk-adjusted returns. So -- that's how we...

I get that Ross. But previously, Central Place was -- you were guiding to, I think, 5% to 6% yield on cost and you've now scrapped it. So can I assume that 5% to 6% no longer custom?

I think that's probably fair to say 5% to 6% yield on cost kind of depending on where cap rates are is a pretty skinny development margin. So that's not a good use of shareholder capital, and we won't be committing projects on that basis.

The next question comes from Andrew Dodds from Jefferies.

In the remarks, you noted that $1 billion of real estate redemptions were satisfied in the period. I'd just be interested to hear where that redemption backlog is sitting today. I think it was around $3 billion back in the August results.

Andrew. Yes, redemptions are around about $2 billion. We satisfied about $1.5 billion during the half year period. And they're now around evenly spread between real estate and the infrastructure exposures. And infrastructure will obviously be dealt with in line with the APAC court case resolution, which isn't too far away. So our expectation is that the current redemptions will likely be dealt with within 12 months.

All right. That's a good outcome. And then just secondly, on trading profits, the expectation this year was for $40 million post tax. It looks like you have done that alone in the first half. So I guess just the expectations for the second half. And also just in FY '27, the slide on Page 59 in the presentation sort of shows pretty minimal opportunities for trading profits. So I mean, is it pretty safe to assume that there won't be any contribution in '27?

Look, I might take the comment on '27 and Keir can talk to '26. I think what we're providing is in guidance that as we sit here today, the realization of meaningful trading profits and they have been a meaningful contributor in '26, the likelihood of that recurring in '27 at this point in time seems lower probability, and we're flagging that to the market.

What I would say on trading profits is I am confident in the value creation that sits in projects that we currently have under our control and development in the trading book. I think it is just a matter of timing and the decisions that we're going to make in terms of the realization of those profits. So I think that's how I'm thinking about '27.

But Keir, do you want to comment on '26?

Sure. Thanks, Ross. So you are correct. The vast majority of trading profits have been realized in the first half. There will be a very immaterial amount coming through in the second half. So I wouldn't factor too much into your forecast. We're still expecting circa $41 million for the full year.

The next question comes from Adam Calvetti from Bank of America.

Just on Atlassian, I mean, there's $610 million to spend, it's well above the current run rate that you've been spending CapEx at. I mean is there any financial implications if this was to be delayed?

Yes. So, Adam, it's Andy. So under the contract, it's a fixed price contract. We have the protections in the event of a delay. So from that respect, it's typical for a development like that. Are you -- is there more to your question from a financing perspective?

No, just any financial implications for DEXUS and then whether it's with the actual tenant, if that was to be delayed, it sounds like there's not.

Yes, that's correct.

Okay. And then just on office, I mean, of that 80-odd or 90,000 that you did over the half, I mean, how many tenants are expanding versus contracting in size?

Yes. Good question, Adam. So just like the breakdown of that leasing volume, about 20% is tenants upgrading. That's the first thing to note. About half of the tenants by area reflect renewals. That's the second thing to note. And in terms of growth, there are some great examples of tenants within the portfolio growing going from one tenant. One example is in 25 Martin Place, a financial services tenant going from one floor to two. And there are others with smaller tenants coming out of incubators, small suites moving up the curve into larger suites. And so that's about 25%.

But just to clarify that, so 20% upgrading, half are renewing and 30% are contracting?

I didn't say contracting, sorry, Adam. So you need to look at those proportions independently of one another. To answer your question directly, about 25% of tenants we dealt with grew.

The next question comes from Ben Brayshaw from Barrenjoey.

Could you just talk about the rationale for the issuance of the subordinated notes during the period, the $500 million? And could you also clarify the margin achieved on that new debt, please?

Sure. Thanks for your question, Ben. So the issue of the sub-notes, I'd say that was a very prudent and opportunistic capital management initiative. It provides us with enhanced financial flexibility to pursue investment initiatives, certainly those with pretty attractive risk-adjusted returns whilst our planned capital recycling is ongoing.

In terms of spreads, I mean, you'll have seen DCM spreads have narrowed and the sub-senior spread is now at historically tight margins. So the 5.25-year notes were issued at 1.75% over three-month BBSW and the 8.25 were swapped back to floating, and they reflected an initial margin of 1.85% over three-month BBSW.

And will you receive equity credit from your rating agencies for those notes?

That's right. We will. 50% equity credit.

Terrific. And just in relation to your comments, Ross, on becoming more capital efficient to build the balance sheet portfolio. Do you have a target interest in mind in so far as ownership that you would like to maintain across the assets that you bring in capital partners for?

Look, that's -- it's going to be considered on a case-by-case basis. I think the reality is we have a really high-quality portfolio. There's lots of options for us. We have existing JVs, which are 50-50, which we can bring third-party capital into. And we have existing assets that we own and control that we can establish new strategies around. So I think it's going to kind of depend on what clients want. And ultimately, we're going to run a bunch of options concurrently and choose those which are best for DEXUS security holders.

I wouldn't see a scenario where if these are high-quality assets, which they are, we don't want to -- we want to have a meaningful aligned interest with our clients. So that's, call it, in the range of 10% to 20% would be kind of at the bottom end.

Okay. And would Waterfront Place and Atlassian potentially form part of those capital and partnering transactions?

I'm not going to be specific on assets, but I would say, as a general principle, we are open to looking at every asset in the platform and we'll be, as I say, running options concurrently to assess what is the best outcome for DEXUS security holders having regard to, to be frank, what we sell, but also the redeployment and what's left afterwards.

The next question comes from Tom Bodor from Jarden.

I just was interested in the passing yield on the circa $800 million of divestments.

I don't know that we have that one to hand. We might come back to you on that.

Okay. But I mean if I take something like 100 Mount Street, is it fair to assume that it's relatively high passing yield?

There's a reasonable passing yield. I would say that asset has got a reasonable amount of CapEx coming in the next few years. So we think divesting at these levels is an attractive decision at this point in time.

Okay. And then on the Waterfront project, just would be interested, can you confirm that you've allocated 100% of the podium costs to the first tower? Or have you pro rata it based on the square meters of the towers above or some other formula?

So when we look at the total project costs that are quoted in the appendix, the cost of the podium is in the Stage 1 cost. In terms of the yield on cost, we strip that out, and we can go into a little bit more detail later today, if you'd like, around the methodology. But we take that out in terms of calculating the yield on cost for Stage 1, but it is included in the yield on cost that we quote for Stage 2.

Okay. And then I guess just following on from that, in light of the positive momentum you've had on leasing there in that first tower, how do you think about the potential to get the second tower going in the next couple of years? Or is it really too early at this point to consider that?

Look, I think that's a quality problem to have given the opportunities that we have in the portfolio. But I refer to Andy's earlier comments as a high threshold to commence. New development projects will be somewhat guided on that project as well by our partner there, which is the wholesale fund, DWPF.

I think as there is increasing flow and interest from capital, that might be something that we reassess over the next 12 months, and there's certainly going to be some synergies in keeping continuity of contractor on site. So it's not really a decision for today. I'll just kind of make the point that for DXS, it's marginal capital, it's going to be a high threshold. So that is going to be a gating issue for us.

The next question comes from David Pobucky from Macquarie Group.

Just a follow-up on the buyback and how you're thinking about balancing the buyback development and growth initiatives. I mean, DEXUS reset its target payout ratio, I think, almost a couple of years ago now to retain more capital for growth. So perhaps if you could talk a bit more about some of those growth initiatives you're working on, please?

Look, I would certainly like to be growing the business more. And I think the market is increasingly conducive to where we kind of see the cycle and we see flow of capital from clients. But the reality is, given where we're trading is DEXUS security prices are really compelling proposition. So to be frank, new projects and opportunities are going to compete with that. So as long as we're trading at these levels, that's a pretty high bar.

I would like to think -- and if I kind of take a step back, we have a significant balance sheet. And so the scope for us to undertake considerable capital recycling and releasing a lot of capital by bringing third parties into that investment portfolio actually, I think, gives us scope to do both. But obviously, we'll be assessing all those opportunities on a case-by-case basis at that point in time. So I can't predict where the share price is going to be. All I can say is as I sit here today, it looks very attractive from a marginal use of capital.

Just second question on Office. You saw a modest improvement in incentives in the period. Would you say FY '26 is the peak year for incentives? And what's the expectation around when that starts flowing through to earnings?

Well, David, just in terms of market incentives, so we've seen vacancy peak in Sydney and in Brisbane and in Perth. Vacancy is expected to peak in Melbourne shortly, next 12 months. And so that should flow through to market incentives. And of course, our incentives, we try to manage them lower than that market number.

I think if we're thinking about just the pure dollar spend in terms of incentives. So I would expect this year, CapEx will be sort of probably a little bit below what it was in '25, but is expected to be higher in '27 off the back of the strong leasing that the team has been doing.

The next question comes from Howard Penny from Citi.

I just wanted to ask about the equity raising. So they raised -- you guys raised $640 million in third-party equity commitments and $280 million secondary unit transactions. Could you describe where the equity interest is coming from domestic, international? And maybe just as far as possible, give us some background as to where these equity inflows are coming from?

Sure, Howard. We've seen a wide variety of interest from -- we've got a diversified platform with different channels of capital, and it's safe to say there's a wide variety of interest that, that attracts. So we've seen increasing interest from offshore investors, particularly in the pooled funds. And then from a domestic investor perspective, what they're increasingly looking to do is partner with us in some of our initiatives. So the DDIT trust, which was launched is the first in a series, and we've seen very, very pleasing demand from investors to essentially come into a club. That's been largely domestic, but I would say we've got a wide variety of interest from a wide variety of areas at the moment.

And my second question is just on cost of debt and where you see that potentially peaking over the next 2 years and refinancing risk on that?

Thanks, Howard. I'll take that one. So the cost of debt, you'll have seen has increased. It went from 4.2% up to 4.7% for this half. I expect for the full year, we'll be sitting at the high 4s next year, sort of 5-ish. So we are pretty close to market at this point. In terms of refinancing risk, very minimal expiries coming up. We have been very proactive with refinancing. We just did more than $1 billion on average at about 15 basis points, tighter rates and an increase in tenor. So we will continue to take a proactive stance with our refinancings.

The next question comes from James Druce from CLSA.

I was hoping you could comment just on the bucket of performance fees that you might have. I noticed you have the second half secured. I was just trying to get a sense of what's left after that.

Is that -- sorry, in relation to '26? Or what's the longer-term outlook for performance fees, just to clarify?

Yes. You've got the second half secured. So I'm just wondering how you're looking for '27 and '28. Are there things behind that, that can come through? Or is this sort of a strong year for performance fees...

So, the significant contributions in, to be frank, '25 and '26 was there was an infrastructure performance fee on a mandate that was crystallized on the sale, and there was a significant outperformance in the industrial strategy, the DALT portfolio, which was realized over a couple of periods. So I would say they were at the kind of the larger end of the scale. We are trying to introduce performance fees into new strategies and initiatives. They're not going to be straight line. They are going to be a little bit lumpy. And I think what we're kind of flagging is as we look towards '27, that level of kind of contribution is unlikely at this point in time.

Yes. Okay. That's helpful. And just interested in your Slide 18, just looking at the net effective rent forecast. I was sort of wondering, have you incorporated any AI impact into those forecasts? And how do you think about the sort of the uncertainty or dispersion that could create over the next 3 years?

I just generally in relation to dispersion, we've kind of been calling this for a while we see increased dispersion in performance in assets across, I would say, both real estate and infrastructure. And to be frank, the better assets we think are going to do better and there will be assets that potentially get stranded or left behind.

I think the good thing for us is whether it be in the balance sheet portfolio or our funds, we generally have those high-quality assets in those premium locations. So I'd say at a group level, we feel well positioned. And these are difficult things to predict. But Andy, I know you've got some views on this.

Yes. So I think difficult to predict is right. So in terms of how AI lands, no one really knows right now, but we -- what we're seeing in our portfolio through engagement with our customers is that it is resulting in some of our customers growing. And so I'll use an example where a law firm following implementation of an AI augmentation program actually leased more space because they could adjust their ratio of lawyers to non-lawyers. And so they needed more space. That's one anecdote. You can't apply that to the whole portfolio or to the market. But I think it's not as simple as drawing a straight line between AI implementation and like a blanket adjustment to office demand.

And I would say, thematically, we do kind of see that the nature of work that is more likely to be impacted by AI is typically going to be middle or back office functions. And those -- that work is typically going to be in the suburban markets. And that is not a space that we are particularly exposed to.

The next question comes from Yingqi Tan from Morningstar.

My first question is in regards to that $1 billion redemptions. Just wondering if you are able to quantify how much of these are secondary transactions and how much is of this funding actually left the platform?

So during the half, about $1.5 billion was set aside. Most of that was in -- there was also a special redemption in the shops fund. And then as we said, about $280 million of that was through secondary transactions, so obviously stayed on the platform and the rest were units being redeemed. So those units disappear.

And with the money that has been redeemed, could you also share whether it's sold to any external parties? Or is it I guess, within DEXUS other platform?

Essentially, the process is we free up cash to meet redemptions. So we'll sell assets or use debt. So by virtue of the fact that there's assets being sold, that would be off the platform. And to the extent it's debt, well, it's just an increase in debt in the fund.

That's clear. And my second question is to Andy. Would you be able to share what the office leasing spreads were in the past six months for the deals that you have achieved?

Yes, no problem. So face spreads were positive across all markets. For our portfolio, the face spread was up 9%. The effective spread trajectory has come in from 16% or negative 16% to negative 10% to now negative 5%. So just to clarify, the effective spread on the leasing that we've done in the first half is negative 5%, which is a material improvement. So in terms of the submarkets, in Brisbane, we achieved positive 10% effective spreads.

The next question is a follow-up from Adam Calvetti from Bank of America.

Ross, I just wanted to follow up on your comments made to Simon earlier on the 5% to 6% yield on cost guidance, essentially not cutting the mustard, I think, is the term. I mean I'm looking at the uncommitted developments, we're still quoting 5% to 6% for Waterfront, 80 Collins and Pitt and Bridge. Does that mean to get revised going forward?

We're not committing those projects yet, I think that's a question for when we're committing those.

Is that a target range? Or I mean why is that in there?

I think we'll assess those when we're kind of close to the start line. Things like Pitt and Bridge Street are still years away. And the reality is they are income-producing assets. So it's not a decision for today. I think what we're -- the yield on cost is and we think about development margins, we have to have regard to where we think stabilized cap rates are. Again, that's an assessment that we kind of think we need to make at the time of starting those projects. So rest assured, if we're deploying capital into development projects, we're going to need to be compensated for the risk and it's going to meet our internal hurdles.

At this time, we're showing no further questions. I'll hand the conference back to Ross for any closing remarks.

Thanks, everyone. Enjoy the day, and we'll catch up with you over the next few weeks.