Property For Industry Stock

Good morning, and welcome to Property For Industries FY '26 Annual Results Briefing. It's Simon Woodhams speaking, the CEO of PFI. And on the line with me today is Craig Peirce, our Chief Finance and Operating Officer; and Nick Maloney, our Head of Investment Management. This morning, Craig and I will speak to the topics outlined here. As usual, Craig and I will take you through the presentation, and then there will be an opportunity for participants on the call to ask any questions they may have. So if you turn now to Page 4 of the presentation, where we lay out the highlights for FY '26.

PFI's FY '26 result reflects the resilience of our industrial property portfolio with strong leasing outcomes and high-quality cash flows driving double-digit earnings and dividend growth. Highlights included valuations across our $2.3 billion industrial property portfolio remained stable despite ongoing economic and geopolitical volatility, while portfolio cash flows were supported by 7.7% growth in contract rents and occupancy of 98.7% at year-end.

We achieved key Green Star development milestones during the year, including completion of Stage 2 at 78 Springs Road, commencement of Stage 1 of Totara Creek Estate in Whenuapai in the second half and the advancement of lease negotiations that would enable commencement of Stage 1 at our Harris Road development. Our capital position remains robust with over $200 million of available liquidity following the post balance date refinancing of our bank facilities and gearing remaining comfortably within our target range at 34.2% at year-end. This activity combined to deliver profit after tax of $77.7 million for the year, with funds from operations or FFO, increasing 20.7% to $0.129 per share and adjusted funds from operations, or AFFO, increasing 14% to $0.1093 per share.

Strong earnings growth has supported a fourth quarter final cash dividend of $0.029 per share, taking FY '26 cash dividends to $0.095 per share, representing a 10.5% increase on FY '25 dividends. We are also pleased to guide to further dividend growth in FY '27 with dividend guidance of $0.0975 to $0.0985 per share, representing expected growth of approximately 2.6% to 3.7% on FY '26 dividends. Now turn to Slide 6, headed strong stable returns. Before we get into the annual result itself, we wanted to take a moment to reflect on longer-term measures.

Delivering strong, stable returns has always been a core focus for PFI, and it remains central to how we manage and grow the portfolio today and into the future. Providing investors with exposure to a diversified portfolio of hard-working industrial property through shares listed on the NZX is fundamental to that approach. Across a wide range of market conditions, PFI has consistently delivered dependable outcomes for investors, reflecting the quality of the portfolio and the discipline applied to its management. Since PFI's inception in 1994 through to 30 June 2026, this focus has translated into an average annual total return of around 9.24% -- that long-term track record continued in FY '26 with PFI delivering a total return to investors of around 10.22% over the 12 months to 30 June 2026.

In practical terms, a $10,000 investment made at inception with all dividends reinvested would today be worth more than 16x the original investment. Turn to Slide 7. Delivering regular and growing income has always been fundamental to the PFI investment proposition. Our policy is to distribute 90% to 100% of AFFO on a rolling 3-year basis with a clear objective of providing investors with a reliable income stream that grows over time to protect the real value of that income.

Since 1994, PFI has paid a dividend every year. And importantly, that dividend has grown steadily over time with dividends per share increasing at an average rate of 1.9% per annum since inception. FY '26 continued that trajectory with cash dividends of $0.095 per share, an increase of $0.009 per share or 10.5% on FY '25 dividends. Looking ahead, FY '27 guidance of $0.0975 to $0.0985 per share represents expected growth of approximately 2.6% to 3.7%, reinforcing our commitment to delivering growing dividends to investors. If you turn to Slide 8. Growth in net tangible assets, or NTA, is another key measure in terms of how we create long-term value for investors. While valuations will fluctuate with market conditions, since listing in 1994, PFI has grown NTA per share by remaining disciplined through multiple cycles.

That discipline starts with a clear focus on industrial property, where we acquire, develop and actively manage high-quality assets, driving rental growth and maintaining high occupancy. We recycle capital where appropriate, divesting assets to reinvest in opportunities with superior returns, including developments where we will also capture development margin. This is supported by a prudent balance sheet with diversified funding sources and disciplined gearing and hedging.

Together, these elements have worked across cycles to grow NTA to $2.90 per share as at 30 June 2026, including growth of $0.064 per share or 2.3% in FY '26. Turning now to Slide 10. We will start to take a look at the last 12 months. Our portfolio has continued to benefit from strong re-leasing outcomes and structural rental growth. Here, we have a summary of the portfolio statistics as at 30 June. You can see that the company now owns a portfolio of 94 properties leased to 124 tenants. Through structured rental growth and asset management initiatives, contracted rents grew 7.7% to $121 million at the end of June 2026. Despite the addition of the speculative component of Stage 2 at our 78 Springs Road development in East Tamaki, the portfolio remained 98.7% occupied at year-end with a weighted average lease term of 5.04 years.

Turning to the next slide. During FY '26, the team completed leases on approximately 85,800 square meters of area or 11.5% of the portfolio by rent for an average lease term of 6.9 years. Of the $11.5 million relating to stabilized contract rents, rents were agreed on $8 million of this with those rents settling 22.1% above previous contract rents. The remaining $3.5 million of stabilized contract rents secured during FY '26 is subject to a market review on renewal.

After factoring in review caps, those 4 leases have been assessed at being around 14% under-rented at the end of June 2026, with a weighted average review date of October 2026. Moving over the page to Slide 12. As I mentioned earlier, the portfolio finished the year at 98.7% occupied with vacancy largely reflecting the speculative component at Stage 2 of our Springs Road development. Excluding development opportunities, $9.5 million or 7.8% of contract rent is due to expire in FY '26. Expiries are weighted towards the second half with 2 larger lease events accounting for almost half of FY '27 expiries. The white bars in the lower chart represent the development-related opportunities, including lease expiries at Springs Road and Neilson Street that are expected to facilitate future redevelopment activity.

If you turn to Slide 13, we'll take a closer look at the 2 most significant lease expiries. The 2 most significant FY '27 expiries represent approximately 3.9% of contract rent with both tenants indicating they intend to vacate. At 670-680 Rosebank Road, the current lease expires at the end of this month, contributing approximately $1.8 million of annual rent and accounting for around 70% of income at the dual tenanted site.

While the current rent is modestly above market, a targeted refurbishment program is expected to support re-leasing at around current rental levels while maximizing the value of the existing improvements. At 7-9 Niall Burgess Road, the current lease expires at the end of March 2027 and is currently around 25% under-rented. Following a modest refurbishment program, management expects to re-lease the property at improved rental rates, capturing rental growth. Importantly, FY '27 guidance assumes no income is generated from either property in FY '27 following the expiry of the existing leases. Moving now to Slide 14. 123 rent reviews were completed during FY '26, resulting in an average uplift of 7.2% or 6.9% annualized on $92.1 million of contract rent.

Almost 90% of our portfolio is subject to some form of lease event during FY '27, with $24.6 million of contract rent or 20.2% of the portfolio subject to a market review in FY '27. Those leases are around 10% under-rented as at June 2026 after factoring in review caps. If you could turn to Slide 15. During the year, we recorded an increase in the value of our portfolio from independent valuations of $16.1 million or 0.7% to $2.3 billion. The valuation outcome was primarily driven by realized rental growth across the portfolio, together with an increase in land values at Totara Creek Estate relative to the initial acquisition price. As a result of portfolio and valuation activity, excluding our active development sites, PFI's passing yield increased 18 basis points to 5.41%, while the portfolio market cap rate firmed slightly to 5.73%. An independent market rental assessment of the entire portfolio was completed as part of the valuation process. This assessment estimates that PFI's portfolio is around 7.1% under-rented.

Turning to Slide 16. PFI's portfolio continues to deliver rental growth by structured rental growth -- rent review, sorry, and capturing re-leasing spreads. The portfolio was 11.2% (sic) [ 11.5% ] under-rented as at 30 June 2025. Market rents continue to grow over the year by 1.6% on a like-for-like basis. However, PFI achieved a 6.5% growth in those same rents. As a result, PFI's portfolio under-renting gap closed by 4.4% to 7.1% as of 30 June 2025, and this under-renting gap continues to provide a tailwind to earnings. I'm now going to hand over to Craig, who will speak to several topics, including a review of the annual results. Craig?

Well, thanks, Simon, and good morning, everyone.

We appreciate you taking the time to tune in this morning as we share with you PFI's FY '26 annual results. At a headline level, profit after tax of $77 million was down $28 million on the prior year, driven by fair value gains on properties in FY '26 of $16 million as compared to gains of $71 million in FY '25. However, FFO was up 20.7% on the prior year to $0.129 per share and AFFO was up 14% to $0.1093 per share, with both measures buoyed by $15.2 million increase in net rental income. As a result, cash dividends for the year of $0.095 per share have been declared, representing an increase of 10.5% on FY '25 dividends. So let's dig into those numbers a bit.

Please turn to Slide 18. On this slide, we take a look at net rental income, which at $123.2 million is up $15.2 million or 14.1% on the prior year. A key contributor during the year was additional income of $3.6 million from the early lease surrender at 92-98 Harris Road. The other main drivers were positive leasing activity across the portfolio, contributing an increase of $9.4 million and the completion in the current and prior years of 5 Green Star Rated development projects at Bowden and Springs Road, contributing a further $1.6 million of additional rental income.

Moving now to Slide 19. On this slide, we can see how the activity over the financial year has translated into adjusted funds from operations or AFFO. On the positive side, AFFO level net rental income was up $14.1 million or $0.0279 per share on the prior year, driven in part by the aforementioned early lease surrender. The largest offsetting factors were an additional $4.7 million or $0.0093 per share of maintenance CapEx, equivalent to around 36 basis points as well as a $0.0030 per share increase in tax driven by higher taxable earnings. After normalizing FY '26 AFFO for the early lease surrender payment at Harris Road, underlying AFFO earnings were up $0.0085 per share or 8.8% on the prior year.

If you could turn now to Slide 20. If we turn our attention to dividends, the PFI Board has today resolved to pay a fourth quarter final cash dividend of $0.029 per share, with the dividend reinvestment scheme not operating for this dividend. This fourth quarter dividend will take cash dividends for the FY '26 financial year to $0.095 per share, a 10.5% increase on FY '25 dividends. After normalizing FY '26 earnings for the early lease surrender payment at Harris Road, dividends of $0.095 per share represent a payout ratio of around 90% based on PFI's dividend policy range and approximately 91% of AFFO on a 1-year basis.

Looking ahead, the PFI Board has provided FY '27 dividend guidance of $0.0975 to $0.0985 per share, representing expected growth of approximately 2.6% to 3.7% on FY '26 dividends. FY '27 has commenced in line with the expectations, supported by high cash collection rates, resilient portfolio performance, embedded rental growth and strong portfolio fundamentals. Based on current forecast, FY '27 guidance is expected to result in a 1-year AFFO payout ratio of approximately 95% before normalization or 92% after normalization, while remaining towards the lower end of PFI's dividend policy range after normalizing FY '26 and '27 earnings for that lease surrender payment.

Guidance assumes AFFO adjustments of $9 million to $10 million and the continuation of Investment Boost through FY '27 and as always, remains subject to events beyond PFI's control. Turning now to Slide 21. And looking at the balance sheet. Here, we provide more detail on the change in value of PFI's investment properties, now valued at $2.3 billion. During the period, we completed acquisitions in Hamilton and on Mount Wellington Highway in Auckland as well as settling the land purchase at Spedding Road. We also deployed $55 million on capital expenditure with the majority of this being spent completing the company's Green Star development project at Stage 2 of Springs Road as well as early works at the Totara Creek Estate, which was formerly called Spedding Road.

In addition, as Simon mentioned earlier, valuation gains resulted in a write-up of $16.1 million, and these increases were partially offset by divestments in Christchurch and New Plymouth, which settled in March of this year. So turning now to Slide 22, where we look at NTA or net tangible assets. NTA increased by $0.064 per share or 2.3% with the increase being the result of that positive valuation outcome, retained earnings and a small gain in the fair value of our swaps. So moving now to Slide 24 for an update on capital management. First, thinking about funding. The second half of FY '26 is an active period for us. We issued $200 million of 6.5-year senior secured fixed rate bonds in April.

The proceeds from that issue replaced the $100 million of bonds which matured in the first half of FY '26. So on a net basis, we added $100 million from debt capital markets to our overall funding envelope during the period. And looking just beyond balance date, last month, we refinanced our bank facilities, introducing adjustable green tranche limits in the new facilities so that as the value of our Green Star certified properties grows, we can draw more green finance against it at favorable terms. More broadly, PFI's funding mix of liquidity, diversity and capacity puts the company in great shape to execute on its strategy. Moving over the page to Slide 25. On this slide, the top chart shows our bank and nonbank facilities as they stand after the April bond issue and July bank facility refinance.

The effect of our recent capital management decisions is clear. We've extended the maturity profile of our debt and at the same time, diversified the makeup of this funding. The lower graph illustrates our hedging profile. Through interest rate hedging, an average of around 65% of the company's debt is fixed at an average rate of around 3.15% during FY '27, meaning a good portion of our interest cost is protected against interest rate movements.

Turning now to Slide 26. Here, we provide a bit more detail on committed gearing. Following all currently committed acquisitions, divestments and projects and excluding any future revaluation impacts, development margins or general portfolio CapEx, we currently see gearing lifting to around 36.3%, remaining well within PFI's target range. PFI has sufficient capital available within our existing funding envelope for the company's near-term development pipeline with an ability to maintain gearing near the midpoint of the target range covered in more detail in Appendix 5 of this slide deck. Moving now to Slide 28. I'm speaking briefly about sustainability. This slide summarizes our progress against our sustainability targets.

We've continued to make great progress on our Green Star, solar and LED lighting targets during the year. In particular, we're pleased to have achieved a 5 Green Star design rating for our new building as Stage 2 of 78 Springs Road, partly leased to MiTek. We also certified some of our existing portfolio under the Green Star performance tool, meaning that together with recently completed developments, around 20% of our portfolio is now rated Green Star. So that's all for me for now. I'll hand you back to Simon, and I'll be around for questions at the end. Simon?

Thanks, Craig. We're back on Slide 30 now. So turning to current market conditions. CBRE expects Auckland industrial vacancy to increase throughout 2026, reflecting the well-signaled completion of a significant volume of speculative development that is currently under construction here in Auckland. Importantly, while vacancy is expected to continue increasing from historic lows, it is forecast to remain within long-term averages and below levels typically associated with a materially weaker leasing market. Looking ahead, a gradual recovery in New Zealand's economy is expected to support improving industrial demand and net absorption from 2027 with forecast absorption expected to outpace new supply over the medium term.

Consistent with these conditions, CBRE expects industrial base rents to remain stable throughout 2026, although high vacancy is expected to result in increased incentives and some softening in net effective rents during the current calendar year. From a PFI perspective, however, recent rent reviews and leasing transactions continue to settle above market rental estimates with limited incentives required outside newly completed or vacant space. This is supported by the quality of our portfolio and tenant base as well as our proven leasing capabilities with lease renewals historically accounting for around 75% of our annual leasing activity. Turn to Slide 32. On the slides that follow, we've set out our priorities for the year ahead. As many of you on the call will already know, when we look at our portfolio, we split it into 4 categories, and these are listed on this slide. Turning to Page 33. On this slide, we provide a little bit more detail on the 4 categories.

Our core generic holdings remain the backbone of the portfolio, providing resilient income from well-located, highly liquid industrial assets with a broad tenant appeal. Development opportunities provide a pathway to deploy capital into higher returning modern industrial facilities while also supporting the ongoing improvement in the quality and sustainability of the portfolio. Specialized assets offer stable income streams, typically underpinned by more bespoke tenant requirements, longer lease terms and higher replacement costs. And finally, non-core holdings are assets that sit outside our long-term focus with asset recycling remaining an important part of our capital management strategy.

Taken together, these categories provide a clear framework for capital allocation, supporting portfolio quality, earnings growth and long-term value creation. Turning now to Slide 34. On the horizon, we have several near-term development opportunities. FY '26 saw practical completion of Stage 2 at 78 Springs Road and the commencement of our construction at Totara Creek Estate, while we continue to progress development opportunities at 92-98 Harris Road and across our remaining brownfield sites. In the next few slides provide a closer look at 4 of these opportunities.

We have a number of other development opportunities within the portfolio with more detail on these provided in Appendix 4. But today, I'm going to focus on the near term. So moving through to Slide 35. Here, we provide a closer look at Stage 2 of 78 Springs Road, which was completed in April 2026. Stage 2 has delivered approximately 16,000 square meters of 5 Green Star rated industrial space with around 70 -- sorry, 60% leased to MiTek on a 12-year term. Leasing inquiry for the remaining speculative component has been encouraging. And based on current lease-up assumptions, Stage 2 is expected to deliver a yield on cost in excess of 6.5%, including land. Looking ahead, demolition and asbestos removal of the final existing warehouse is expected to be completed in H1 FY '28, enabling future Stage 3 development works, which are expected to be tenant-led stage.

Turning now to Slide 36. This slide provides an update on Stage 1 of Totara Creek Estate in Whenuapai, formerly referred to as Spedding Road, where construction commenced in March 2026. The project is progressing in line with program and budget with completion targeted for Q4 FY '27. On completion, it will deliver approximately 8,500 square meters of 5 Green Star rated industrial space and is targeting a yield on cost of around 6.5%, including land.

Importantly, the flexible design allows us to accommodate a range of tenancy requirements, positioning the project well to respond to market demand during the planned lease-up period. Future stages at Totara Creek provides opportunity to progressively develop a further 4 hectares of land over the next 3 to 4 years, supporting total investment of around $140 million across the estate. Moving to Slide 37. This slide outlines the proposed first stage of the redevelopment of 92-98 Harris Road. Following GrainCorp's early lease surrender, the site has been prepared and positioned for redevelopment with advanced negotiations now underway with a leading international occupier regarding Stage 1.

If progressed, Stage 1 will comprise approximately 5,600 square meters of warehouse and 1,300 square meters of office accommodation, requiring around $25 million of incremental capital expenditure and targeting a yield on cost of approximately 6.5%, including land. Importantly, the current master plan provides flexibility for a further tenant-led stage, allowing the site to respond to future occupier demand and maximize value over time. Moving now to Slide 38. where we outlined the redevelopment opportunity at 304, 316 and 318 Neilson Street in Penrose. The site benefits from PFI's successful aggregation of a number of contiguous properties and provides the opportunity to deliver a significant new industrial facility in one of Auckland's premier industrial precincts. Given current market conditions, the development will be tenant led, while current master planning indicates the site could accommodate approximately 14,000 square meters of 5 Green Star-rated industrial space. We retain significant flexibility to tailor the scale and the configuration of the project to occupier requirements prior to commencing redevelopment.

Moving through to Slide 39. Including the projects just discussed, we currently have 11 planned projects across Auckland's key industrial precincts, representing around $335 million of capital investment, excluding the value of the land already owned by PFI. These projects are expected to deliver embedded value progressively over the next 6 years or so as they reach completion and leasing activity captures market rents and development margins. Lastly, since the start of 2024, we have completed over 70,000 square meters of 5 Green Star rated industrial space, all delivered on time and on budget, a strong track record we intend to build on.

Moving on to Slide 41. So to summarize, FY '26 was another strong year for PFI. We delivered double-digit growth in FFO, AFFO and dividends, reflecting the quality of our portfolio, strong leasing outcomes and the disciplined execution of our strategy. At the same time, we continue to grow the business, completing Stage 2 of 78 Springs Road, commencing construction at Totara Creek Estate, progressing development opportunities across the portfolio and enhancing funding flexibility through a successful bond issue and the refinancing of our bank facilities post balance date. With a high-quality, well-leased portfolio, embedded rental growth and a significant development pipeline, PFI is well positioned to continue delivering sustainable earnings growth and growing returns for our shareholders. Thank you for your time. That concludes the presentation, and we're happy to take any questions you may have.

[Operator Instructions]

And our first question today comes from the line of Nick Mar from Macquarie.

Just on FY '26 AFFO. When you sort of upgraded earlier in the year, you talked about how there was a bunch of maintenance that was sort of deferred to '27. Kind of looking at the numbers, maintenance was still pretty high. So does that include the deferral -- did something else sneak in there? And then '27, the $9 million to $10 million of AFFO adjustment still sounds like there's some pretty high maintenance coming through. Is that partly the refurbishments on those 2 vacant properties?

And -- or is there something else in there as well?

Yes, Nick, it's Craig speaking. I think the short answer is that, yes, that deferral is reflected in the higher number for '27. But I think at the same time, we still actually managed to get through a fair bit of it in '26. So it's kind of a yes and yes, I guess, I would say. And absolutely, the numbers for '27 include those 2 refurbishment numbers. There's some other roofs that we've got going on in there, these sorts of things. So as you know, sometimes that maintenance CapEx can be pretty chunky and the timing of it can be a bit pretty hard to handle because it often requires a tenant to be cooperating, getting on to the roof, those sorts of things like that. So certainly, in a sort of elevated period and hence, why we wanted to, I guess, give you a bit more color for FY '27 as to what those numbers in terms of AFFO adjustments would look like.

Yes. No, that's helpful. And just in terms of those 2 expiries, it seems like a reasonably long lease-up time on some of those.

How much of that time is the time spent actually refurbishing it versus allowed kind of lease-up periods? And are you sort of adding extra caution at the moment given the tougher leasing backdrop?

So in terms of the Rosebank Road expiry, we get that back end of August, Nick. And so we've got a 3.5-month refurbishment period there, which obviously takes us very close to the Christmas period. So yes, there's a bit of conservatism in and around trying to lease something through that period. The Niall Burgess one, the lease expiries not until the end of April. So for FY '27, we're just assuming no income on either one of those given we're assuming there will be some incentives involved as well.

Now, that's helpful. And then in terms of the portfolio valuation, the second half looked a little bit kind of soft, especially if you had some of the uplift on Spedding Road land coming through. Could you just talk through some of those movements like the market rental growth of 1.6% would argue more than 7% uplift in valuation.

Simon, do you want to talk about that? Or you want to give it a go?

Do you want to give it a go?

Yes. Look, I mean, I think, I guess, coming into the beginning of calendar '26, there was a sort of fair wind in the sales of the market and things are going along quite nicely. And we obviously hit the sort of Middle East conflict and everything that entails. So that definitely has an impact -- has had an impact on leasing decisions and leasing things like that in the market.

And so from a valuation point of view, I think we saw some sort of momentum coming into the back end of '26. A little bit of that momentum, I guess, has come out as people are a bit more cautious as we sit right now. So I think that's sort of where things are at when it comes to the sort of the valuation market I mean that said, we actually got some transaction summaries through just last week on some recent sales. There's a $25 million sale with an equivalent yield of 5.4% on -- I mean, that does have a long lease that's 20 years. There's a $39 million sale with an equivalent yield of 5.35% on a 4-year WALT. And there's a $15 million sale with an equivalent yield of 5.1% on a 2-year income. So I think it's fair to say that stuff is still transacting and there's some pretty good prices there. But that last 6 months certainly hasn't translated into any additional uplift of any great degree, and you can see that reflected in our numbers.

Our next question today comes from the line of Rohan Koreman-Smit from Forsyth Barr.

Firstly, Investment Boost, can you give us an idea of what sort of benefit to the current tax year that provided? And also maybe just trying to work out like an absolute underlying here without any of these tax benefits and the surrender payment, et cetera, because [ of these ] things coming in and coming out that may or may not be there in the future.

Yes. Sure. So Investment Boost, I think the kind of most significant part of that is when we completed development. So that second stage of Springs Road, that was where you saw that investment boost benefit be booked in H2 of this year. And off the top of my head, it's sort of a couple of million dollars of benefit in terms of that there. So I guess that's kind of -- at the highest level, I guess, the benefit of that to us. I mean, of course, every dollar we're spending when it comes to maintenance CapEx and those sort of things, you're also sort of getting that there. Yes, when it comes to the normalization side of things, I think we've talked about those in the various bits of paperwork that we've put out there, but I suppose just to try and make sure that we're clear here, in FY '26. It's roughly speaking, $2.5 million of additional income from that surrender payment there.

Of course, you're getting the whole payment, but then you're getting -- you were going to be getting income anyway. And then as we unwind that in future periods, it's around $1.2 million, $1.3 million in future periods as that unwinds. So not sure if those numbers help.

No, no, that's helpful. That's helpful. And Simon, you spoke to higher incentives in new build and vacant space, given you've got a bit of new build space and vacant space coming up. Can you just give us an idea of where those incentives sit or where you think they sit?

I think if you look at the market, it's pretty common now for a minimum of 1 month per year of proposed term. So if you're looking to try and get someone in on a 10-year lease, you're looking at 10 to 12 months of rent-free period or the equivalent of. So it's quite markedly different to an existing tenant that is renewing. Typically, we give away very little. We might work with them to secure it early. There might be 1 or 2 months. But yes, it's really up to that 1 month at least is what we have seen in the market. And on occasion, depending on the asset, maybe 1.5 months. So yes, and I think we talked -- well, we talked about it in the presentation, whilst the face rents don't seem to be coming back, typically on new builds, they're sort of up around $240 to $255 a square meter. The net effect will start to track back slightly with those incentives.

And just on these expiries that are vacating, I think at the half, you talked to one of them, which I'm pretty sure is Rosebank that you were certain were leaving. You always talk to your kind of active tenant management.

Was the Niall Burgess one a surprise? Can you just kind of go through what happened there?

So Niall Burgess, obviously, that doesn't expire towards the end of FY '27. We've been in active discussions with them. That's DHL, a large international occupier. They had a 9-month notice period. So we've been talking to them for 2 or 3 years around whether they'll stay or leave. So yes, at the half year, we've just been given no clear direction, even though that we've been working with them. And right up until the 9-month period, there was a chance that they would stay. But yes, obviously, they've said no. And so they have given notice that they'll be leaving at the end of the lease. So that was it really. Sometimes you get a tenant who will happily commit 2, 3 years out and as a business, they've got a lot of space in and around Auckland. So yes, they're just reducing their footprint around Auckland.

And just one last thing. It was a comment that you made, you said vacancy below the level of vacancy associated with material weaker industrial market rents where we see them have a tracking. In your experience do market rents weaken materially at what sort of level of vacancy?

I think you'd have to be up around that 5%, 6%, which we're going back to the early 2000s when a lot of development started back then and you had rents that was -- going back a while now, sitting around that $100 a square meter for new build. And there's a period where there's a bit of an arms race that went on and people started putting them up $85 to $90 a square meter. I don't think you'll see that this time. If you look at who's developing in Auckland, mainly institutional and high net worth owners or property owners. So you tend to see them building, taking advantage of lower construction costs, but holding on to those face rents.

So yes, I don't think there'll be a material weakening in face rents.

I suppose just adding to that, side, the other part of that is the economics of it. I mean, obviously, with a sort of market cap rates out there of 5.5%, something like that. It doesn't take long if you're dropping those face rents to get back towards that there. So you would then be building stuff for less than -- sorry, the economics will be worse than going out and just simply buying things. So I think we're way off that yet.

[Operator Instructions]

And the next question today comes from the line of Vishal Bhula from Jarden.

Just a couple of quick ones. Just on your FY '28 expiries, you've given great color on '27, but are you able to give a bit more information on what you're kind of seeing in FY '28 and '29 and if these expiries will come along with kind of big [ re-lease ] cycles?

Yes, FY '28, I guess what we're seeing in general is if you go back a couple of years, Vishal, tenants are a lot more engaged to secure renewals early, which is a good thing and you could work with them. We're seeing in this type of market, we're still talking to our tenants 2, 3 years out from expiry. The feedback we're getting at the moment is just give us another 6 to 12 months. So we haven't had the success that we had in '22, '23, where we were working 2, 3 years out. And I guess with the vacancy coming into the market, there's definitely a little bit more choice coming out there. There's a couple of reasonable sized expiries in 2028. None of them at the moment are causing us concern. So I guess if you're looking at expiries over $400,000 or $500,000, there's probably 7 or 8 leases -- we're talking to the majority of those at the moment.

There's no indication that anyone is planning on leaving. But it's just a little bit early given the current market to start knocking those over. So the team at the back get in front of people, like I said earlier, generally 2 years out if they've not already been tracking them. So we're pretty comfortable with 2028 at the moment. The main focus is, as we said, Rosebank Road, which finishes this month, we've got 3, 3.5 months of refurbishment. We've got a tenant there that we're working with, I guess, is what you'd say. It's by no means a done deal. And then the Niall Burgess one that comes on next year, we're out in the market looking for tenants. So what's a really good building in a great location. So yes.

Color there. Sorry, Vishal, the other piece of color there is just in terms of the leases that are expiring, looking at the more significant ones, they are very H2 weighted for FY '28. Just looking down the list here, if anything over $400,000, there's only 3 in the first half of the year that expire in FY '28. So the rest of them are all in the back end of '28.

And in fact, a couple of the much bigger ones are right in June of '28. So yes, a fair amount of time to get into all of that.

I appreciate that. And I guess just on your under-renting catch-up, that was quite strong. And then looking at your '27 reviews that you're going out, you'll be beating market rental growth across most of your portfolio once again, given your CPI stock 20%, 10% or so. But over the next 2 to 3 years, do you kind of see a material portion of your portfolio sort of moving to the over-rented territory?

Do you want me to answer that, Craig? Or do you want to?

Yes, no, no, you go.

I think what you see, Vishal, is it will start to balance, like, go back 2, 3 years, we were 20% under-rented. So we've done a good job on the leasing front of capturing that. CBRE is still anticipating some market growth in rents that will start to pick up to that sort of 3% plus from 2028. So we would expect it to sort of equalize out. The main leases that we've done in the last couple of years, even in our development have been at or around market rents. So I think you'll see a balance start to play out over the next 2 to 3 years. We don't think we'll be materially under or over-rented is what I'd say.

No, that's great. And then just the last one for me. Could you just give a bit more kind of update on what you're seeing out at Totara Creek Estate? I appreciate most of the guys developing out there are owner-occupied, but is anyone else looking to do anything spec at the moment?

No one else is speccing out there. I don't know the last time you've been out there, there's 1, 2, 3 completed or near completed developments, and there's 2 currently coming out of the ground, including ours. It's probably quieter than we thought it was going to be from 12 months on. I think we said last time around, we were hoping we would have secured a tenant prior to commencement. But again, the building that we're developing, it's 8,000 square meters, it's purposely been designed so that we can break it up into at least 4 units or up to 4 units, sorry. So that type of tenant you're sort of targeting that sort of 1,500 square meter to 2,500 square meter tenant.

So they do have the ability to move a bit quicker than a large 6,000, 7,000, 8,000 square meter tenant. So being out there last week on site, it's starting to take shape. It's got roof on part of it. We're expecting towards the end of this year that, that tenant inquiry will start to pick up. In general, I guess you could say the tenant inquiry has been a bit quiet the last 3 months. I think Craig touched on it earlier. We actually saw a bit of activity sort of November, December last year through to February this year, it started to feel like things were starting to pull away, which was pleasing. And then obviously, with the Iran situation -- the oil situation, sorry, it really went flat for a period. I would say the last 4 to 6 weeks, it does feel like there's a little bit of activity starting to pick up. So hopefully, this election coming up doesn't stymie that, and we'll start to see a bit of a gradual growth out. I mean outside of Auckland, in around the country, it's pretty buoyant in some of those regions.

Clearly, the South Island is on a tear, which is great, and that seems to be filtering through. Hawke's Bay seems to be going a little bit better. So it's not all doom gloom out there. It feels as though, particularly in the last sort of 4 weeks, there's a little bit more activity out there, which is pleasing. People getting on and doing things.

Vishal, I was just going to say the other bit of color around Totara Creek is obviously, one of the sort of parts of the thesis to get on with that was construction pricing and taking advantage of sort of attractive construction pricing. And we have locked that pricing away now through the sort of process. And that is -- we went in on the basis of it being attractive, and it was even more attractive than we thought when we went into it. So there's plenty of flex in the feasibility, shall we say, to still be hitting those numbers that we've put out there. And so I think the thesis still really holds true that get on and build a building while there's a bit of softness in that construction pricing and just be patient around the tenant side of things.

We have one further question. And the question comes from the line of Rohan Koreman-Smit from Forsyth Barr.

Sorry, I just wanted to ask about Slide 47. You've got -- if you go back to that, you're talking about keeping gearing within the middle of your target band over a forecast period, but it looks like a lot of the heavy lifting is done by fair value gains and losses even in the year ahead from just on the portfolio as a whole. Can you just talk us through, I guess, the assumption that you have behind that and the confidence that you have in that? Or is it just kind of running forward CBRE forecast or something along those lines?

Yes. Thanks, Rohan. I mean this is a slide that's, I guess, responding to another slide that we've been putting in the deck for a while now. So if you look at Slide 39, we've been trying to give some really clear visibility to sort of how the development pipeline would play out. And a number of folks, including yourself, have been pretty keen to understand how we might pay for that and have suggested some weird and wonderful ways that we might do that. And so I guess what we wanted to do was just put something out there that responded to that and said, if you take those 2 slides and look at them together, it really doesn't take much to get to the point where you assume that you could build out that pipeline and still stay within your sort of target gearing range, based on a sort of level of assumptions there. So I mean, absolutely, this is assumption on assumption, this one, modest valuation growth of a couple of percent, development margins through the projects and a sort of small level of divestments.

Let's be honest, every number on this slide will be wrong. But it's just trying to give people a sort of sense of this is a sort of very steady program of work ahead of us. It's very much within our control to be able to fund these things. And we think that we can kind of keep that gearing around that midpoint of our range through the sort of various things there. But look, take your point, we didn't get 2% of valuation growth this year. So that's obviously going to be highly conditional on sort of how the market plays out over the next little while. But I guess just wanted to give some sense of how it might all hang together. So does that make sense?

Yes, it makes sense. And I'd say my suggestions weren't wonderful, but anyway, thanks for the...

They were perhaps less preferred.

There are currently no further questions. I will hand the call back to Simon for any closing remarks.

Thanks, everyone, for listening in this morning. I know we're catching up with some of you this afternoon and a lot of you tomorrow. So I appreciate your time this morning, and we look forward to answering any questions you may have. Craig, thank you very much. Nick, thank you, and we'll see you guys soon. Cheers.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Property For Industry FY '26 Interim Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Simon Woodhams, Chief Executive Officer. Please go ahead.

Thank you, and good morning, and welcome to Property Industries FY '26 Interim Results Briefing. It's Simon Woodhams speaking, the CEO of PFI. And on the line with me today is Craig Peirce, our Chief Finance and Operating Officer; and [ Nick Moloney ], our Senior Investment Manager and Acting Financial Controller. Moving through to Slide 2. You can see that we have a slightly larger debt than normal. The plan is Craig and I will take you through the presentation, and then there will be an opportunity for participants to the call to ask any questions they may have. going to start on Page 4 of the presentation headed Highlights.

We're very pleased to deliver another strong interim result, reflecting resilience of PFI's industrial portfolio and the benefits of our long-term strategy. Highlights include valuation growth, which has continued across our $2.25 billion industrial property portfolio with the 19 properties that received full valuations at the half year, delivering an average uplift of 3.2%. Core assets have delivered annualized rental growth of 7.3% across the $46.2 million of contract rent that was reviewed during the period. $6.6 million of stabilized contract rent was leased during the year with rents being agreed on $3.1 million of contract rent at an average of 14.9% above previous contract rents. We're happy to report that occupancy remains high, continuing to be almost 100% occupied at the end of the interim period.

Our key Green Star development projects have been advanced with Stage 2 of the redevelopment of 78 Springs Road nearing completion and continuing to track well under budget and ahead of program. Demolition is complete at 92-98 Harris Road and Stage 1 of Spedding Road is set to commence next month on a speculative basis. Our capital position also remains robust with approximately $154 million of available liquidity, while gearing remains well within our target range at 34.2%. This activity has combined to deliver a very strong interim result with profit after tax of $46.9 million for the period, which is up $18.2 million on the prior interim period.

We've also announced a second quarter interim cash dividend of $0.022 per share, with FY '26 dividend guidance increased to at least $0.0905 per share, representing an increase of at least 5.2% on the FY '25 dividends. We now turn to Slide 6, headed delivering strong stable returns. Before we get into the interim result itself, we wanted to just take a moment to reflect on our longer-term measures. Delivering strong stable returns has always been a core focus for PFI, and it remains central to how we manage and grow the portfolio today and into the future. Providing investors with exposure to a diversified portfolio of hard-working industrial properties through shares listed on the NZX is fundamental to that approach.

Across a wide range of market conditions, PFI has consistently delivered dependable outcomes for investors, reflecting the quality of the portfolio and the discipline applied to its management. Since inception in 1994 through the 31 December 2025, this focus has translated into an average annual total return of around 9.27%. In practical terms, a $10,000 investment made at inception with all dividends reinvested would today be worth more than 15x that original investment.

Moving to the next slide. Delivering regular and growing income has also been fundamental to the PFI investment proposition. Our policy is to distribute 90% to 100% of AFFO on a rolling 3-year basis with the clear objective of providing investors with a reliable income stream that grows over time and protects the real value of that income. Since 1994, we have paid a dividend every year. And importantly, that dividend has grown steadily over time with dividends per share increasing at an average rate of 1.9% per annum since inception. Looking to FY '26, we are pleased to continue this trajectory, guiding to cash dividends per share of at least $0.0905 per share, an expected increase of at least $0.045 per share or 5.2% on last year's dividends.

Turning to Slide 8. Growth in net tangible assets, or NTA, is another key measure in terms of how we create long-term value for investors. While valuations will fluctuate with market conditions, since listing, PFI has grown NTA per share by remaining disciplined through multiple cycles. That discipline starts with a clear focus on industrial property, where we acquire and actively manage high-quality assets, drive rental growth and maintain high occupancy. We recycle capital where appropriate, divesting assets to reinvest in opportunities with superior returns, including developments where we also capture development margin. This is supported by a prudent balance sheet with diversified funding sources and disciplined gearing and hedging. Together, these elements have worked across cycles to grow NTA to $2.88 per share as at 31 December 2025.

So if we turn to Slide 10, we'll start to take a look at the last 6 months. PFI's portfolio has continued to benefit from strong re-leasing outcomes and structured rental growth. Here, we have a summary of the statistics as at 31 December. You can see that the company now owns a portfolio of 94 properties leased to 125 tenants. Through structured rental growth and asset management initiatives, contracted rents grew to $116.3 million at the end of December 2025. The portfolio remains essentially fully occupied at 99.9%, reflecting the high quality of both our properties and the tenants in our portfolio. Lastly, the company's weighted average lease term decreased slightly to 5.37 years over that period. This is a function of having low levels of expiries in the current financial year.

Turning to Slide 11. In line with our valuation policy, we revalued 19 properties at the end of the interim period, resulted in a write-up on those properties of $17.1 million or an average increase of 3.2%. The valuation outcome was attributable to realized rental growth and development progress at Stage 2 of 78 Springs Road. As a result of portfolio and valuation activities, PFI's passing yield increased by 13 points to 5.34%, while the portfolio market cap rate remained stable at 5.74%. On a like-for-like basis, market rents were estimated to have grown by around 3.2% over the period across the 19 properties that received full valuations. PFI's portfolio is now assessed to be around 9.1% under-rented at the end of the interim period.

Turning to Slide 12. During the interim period, the team completed leases on almost 50,000 square meters of area or 5.8% of the portfolio by rent for an average lease term of 7 years. Of the $6.6 million relating to stabilized contract rent, rents were agreed on $3.1 million of this with those rents settling 14.9% above previous contract rents. The remaining $3.5 million of stabilized contract rent secured during H1 FY '26 is subject to market review on renewal. After factoring in review caps, those 4 leases have been assessed at being around 14% under-rented at the end of December 2025, with a weighted average review date of October 2026.

Moving to the next slide. As I mentioned earlier, the portfolio is essentially fully occupied at 99.9% and the near-term expiries are very, very manageable. As the graph on the left-hand side illustrates, all material FY '26 expiries have now been leased. Excluding properties held at development opportunities, $10.2 million or 8.8% of contract rent is due to expire in FY '27, with the team continuing to make meaningful progress on some of the more material FY '27 expiries post balance date.

Turning to Slide 14. 57 rent reviews were completed during the interim period, resulting in an average uplift of 8% or 7.3% annualized on $46.2 million of contract rent. Almost 40% of our portfolio is subject to some form of lease event during the second half of FY '26 with just 0.1% of contract rent due to expire. $7.7 million of contract rent or 6.6% of the portfolio is subject to a market review in the second half of FY '26. And those market reviews are about 15% under-rented as at December 2025 after factoring in review caps. PFI's core portfolio continues to deliver growth by structured rental growth and re-leasing spreads with a portfolio under-renting gap of around 9%, providing further tailwinds, noting that market reversions continue to be settled in excess of value assessed market rents.

I'm now going to hand over to Craig, who's going to speak to several topics, including a review of the interim results. Craig?

Well, thanks, Simon, and good morning, everyone. Thanks for tuning in as we share PFI's FY '26 interim results. As I mentioned earlier on the highlights slide, profit after tax of $47 million was up $18 million on the prior interim period. FFO was up 32% to $0.064 per share per share and AFFO was up 24% to $0.539 per share, with all measures buoyed by the early lease surrender payment at Harris Road. As a result of the strong results, cash dividends for the year -- for the half year, sorry, of $0.044 per share have been declared, and we'll dig into the numbers a bit more now.

Turning to Slide 16. On this slide, we take a look at net rental income, which at $62.6 million is up $10.7 million or 21% on the prior interim period. A key contributor during the half was an additional $4.3 million from the early lease surrender at Harris Road. The other main drivers were positive leasing activity across the portfolio, contributing an increase of $5 million and the completion of development projects at Bowman Springs Road contributing a further $1.6 million of additional rental income.

Moving now to Slide 17. Here, we see how the 6 months of activity has translated into adjusted funds from operations or AFFO. On the positive side, net AFFO level net rental income was up $9.2 million or $0.183 per share on the prior interim period. Largest offsetting factors were $0.43 per share increase in tax, driven by higher earnings as well as an additional $2.1 million or $0.04 per share of maintenance CapEx, which is tracking at around 37 basis points on an annualized basis. After normalizing for the early lease surrender payment at Harris Road, underlying AFFO earnings were up $0.42 per share or 9.6% on the prior interim period.

Turning now to Slide 18. And turning our attention to dividends. PFI Board has today resolved to pay a second quarter dividend of $0.022 per share, with the dividend reinvestment scheme not operating for this dividend. The second quarter dividend will take cash dividends for the first half of FY '26 to $0.044 per share. At the beginning of FY '26, we guided to dividends of at least $0.089 per share. Today, reflecting a strong first half performance and positive trading conditions, we are upgrading that guidance to at least $0.0905 per share, which is an increase of $0.45 or 5.2% on FY '25 dividends. Cash dividends at that level are anticipated to result in a dividend payout below the lower bound of PFI's dividend policy range and around 86% of AFFO on a 1-year basis. However, after normalizing FY '26 earnings for the early lease surrender payment at Harris Road, dividends of at least $0.0905 per share are expected to be consistent with the payout ratio at the bottom of the dividend policy range and represents around 90% of AFFO on a 1-year basis.

So turning now to Slide 19 and looking at the balance sheet. Here, we provide more detail on the change in value of PFI's investment properties valued at $2.25 billion at the end of the period. So during the period, we completed acquisitions in Hamilton and on Mount Wellington Highway in Auckland. We also deployed $30 million on capital expenditure with the majority of this being spent completing stage or getting near to completing Stage 2 of the company's Green Star development at Springs Road. In addition, as Simon mentioned earlier, full valuations were undertaken on 19 properties, resulting in a valuation write-up of $17.1 million or 3.2%.

Turning to the next slide, Slide 20, where we look at net tangible assets, which increased by $0.047 per share or 1.7% with the increase being the result of that positive interim revaluation gain and retained earnings with EBITDA slightly offset by a decrease in the fair value of our swaps. Speaking of swaps and moving on to capital management on Slide 22. First half of FY '26 saw us repay the $100 million PFI020 bonds as well as reclassified tranche C of our syndicated bank facility as green debt, aligning PFI's overall green facilities with the continued growth in PFI's green assets. After the end of the interim period, we announced the unconditional agreement to dispose of properties in New Plymouth and Christchurch for a combined $19.1 million with those proceeds being recycled back into that Green Star development pipeline. And looking forward, whilst the bank loan market remains very supportive of PFI, as announced this morning, we are considering an offer of 6.5-year senior secured fixed rate bonds to further extend the duration and diversify our borrowings.

Moving on to Slide 23. On this slide, the top chart shows our bank and nonbank facilities and the lower chart illustrates our hedging profile. As can be seen by that lower chart, interest rate hedging provides for an average of around 74% of the company's debt to be hedged at an average fixed rate of 3.07% during the second half of FY '26.

Turning to Slide 24. Here, we have a bit more detail on committed gearing. So following all committed acquisitions, divestments and projects and excluding any future revaluation impacts, development margins or general portfolio CapEx, we see gearing lifting to around 36.3%, well within PFI's target range. PFI has sufficient facilities available within our existing funding envelope to fund the company's near-term development pipeline and potential bond offer announced this morning, potentially providing further liquidity.

Moving now to Slide 26. This slide summarizes our progress against our sustainability targets. First, all significant new developments continue to target a minimum 5 Green Star certification with all completed developments achieving the standard and projects in progress remaining 100% on track. Second, our Solar Power target is to reach 1.4 megawatts by the end of FY '27. During the interim period, we progressed scoping work and tenant discussion with this initiative largely in the scoping phase. But pleasingly, an additional installation was secured as part of a lease deal post balance date. Third and finally, on LED lighting, our target is to achieve 80% lighting -- 80% of tenancies by FY '28 with 63% of the portfolio already converted, representing great progress towards that goal.

So that's all from me for now. I'll hand you back to Simon, and I'll be around for questions at the end. Simon?

Thanks, Craig. We're on Slide 28 now. I'm just going to touch on current market conditions. While e-commerce has grown steadily over the past decade, online penetration in New Zealand remains low compared to other developed nations, providing a meaningful runway for future growth. That structural theme remains an important demand driver for industrial and logistics assets. Looking ahead, CBRE expects online spending growth to remain resilient, broadly in line with recent history, supporting continued expansion into logistics and distribution requirements over the medium term. As a result, Auckland's industrial prime occupancy requirements are forecast to increase by around 30% by the end of the decade, reflecting ongoing demand from e-commerce linked tenants.

Turning to vacancy. We have seen some modest normalization over the past year with vacancy lifting from historically low levels. Importantly, however, vacancy remains around long-run averages and below levels typically associated with a softer market. Looking forward, as the economic recovery gains momentum and e-commerce continues to underpin demand, forecast net absorption is expected to exceed new supply over the next several years, which should place renewed downward pressure on vacancy rates.

Turning to Slide 29. Following several years of exceptionally strong rental growth, prime net effective rent softened slightly through 2025, driven largely by higher incentives. Importantly, this reflects a period of vacancy normalization rather than a structural shift in tenant appetite. Looking forward, CBRE expects rental growth to resume from 2026 before strengthening more meaningfully from 2027 onwards as net absorption once again outpaces new supply. This is consistent with prior cycles with periods of incentive expansion have been followed by renewed rental growth.

From a valuation perspective, improving vacancy, a return to rental growth and a more accommodative interest rate environment are expected to support yield firming over the medium term across both prime and secondary industrial assets. Taken together, CBRE is forecasting attractive total returns through to 2029, underpinned by resilient income returns and renewed contribution from capital growth as shown in the lower chart. Overall, this outlook remains supportive for PFI's portfolio given its income quality, leasing profile and exposure to well-located industrial assets.

Turning to Slide 30. This slide highlights our positioning in context of the current market environment and the outlook ahead. Following a period of exceptional rental growth, the industrial market has entered a phase of normalization, which is reflected in leasing incentives and near-term rental outcomes. Importantly, the forward indicators point to improving conditions and PFI's portfolio is well positioned to manage through this period with limited risk. From an earnings perspective, the portfolio remains around 9% under-rented, providing a clear runway for organic growth as rents reset over time. In the near term, second half FY '26 market reviews represent a meaningful portion of contract rent and remain materially under-rented even after the application of review caps.

At the same time, near-term lease expiry exposure is minimal. All material FY '26 expiries have been leased and the FY '27 expiries are at manageable levels with good progress already made post balance date to further reduce exposure to market conditions. This resilience is supported by strong tenant demand reflected in an average tenant retention rate of around 77% since 2021, underscoring the quality, location and functionality of the portfolio. Finally, PFI remains -- retains strategic flexibility through its approximately $325 million Green Star development pipeline, providing optionality to deploy capital selectively and in a disciplined manner as conditions and returns allow. Taken together, PFI is well positioned to navigate the near term and capture growth as market conditions improve, supported by embedded rental growth, limited near-term expiries and disciplined capital deployment.

Turning now to Slide 32. As many of you on the call today will already know, when we look at our portfolio, we split it into 4 categories or buckets. Over the next few slides, we'll take you through some of the key priorities for the company, including how these strategic allocations support our broader goals around capital deployment, earnings growth and sustainability. Looking at our priorities through the lens of our development opportunities first. Developments continue to be an attractive use of capital with current feasibility targeting initial yields on cost of 6.5%, providing a significant spread to recent acquisition yields. Target development margins of 15% to 20% allow us to create value that's accretive to NTA and supports gearing efficiency. Typically representing 5% to 15% of the portfolio, developments also enable us to regenerate older assets into best-in-class 5 Green Star industrial facilities, aligning with growing demand for sustainable space.

Moving over the page, Slide 34. On the horizon, we have several near-term development opportunities. Following the successful delivery of Stage 1 of the redevelopment of 78 Springs Road in October 2025, Stage 2 is nearing completion and tracking under budget and ahead of program. The balance of the site being Stage 3 could see the development of a 17,500 square meter warehouse and could commence in H2 FY '29 following the completion of demolition and asbestos removal works relating to the existing warehouse at the site. PFI settled the acquisition of 5.8 hectares of greenfield land at Spedding Road last week, providing us with the opportunity to invest a total of around $140 million over the next 3 to 4 years. I've got more on that in a moment. The early lease surrender at 92 to 98 Harris Road unlocked and accelerated access to a site long earmarked for development. Demolition of the existing structure is complete with the prime 2.63 hectare site to be cleared and held until an anchor tenant is secured.

We have a number of other development opportunities within the portfolio with more details on these provided in Appendix 4. But today, I'm going to focus on the near term. So moving through to Slide 35. Here, you can see the progress being made at Stage 2 of Springs Road, along with some of the key development metrics. Stage 2 is due to complete at the start of Q4 FY '26. And as previously announced, PFI has secured MiTek on a 12-year lease, over 6,500 square meters of warehouse and around 2,500 square meters of Breezeway Canopy. This underpins the second stage of the redevelopment of this site. Leasing inquiry on the speculative component being a 4,800 square meter warehouse ramped up during the first half of FY '26 and securing a tenant for this development remains a key priority for the company over the second half of the financial year. Based on current cost and leasing assumptions, we remain confident this stage will deliver a yield on value in excess of 6.5%, including land.

Turning to Slide 36. On this slide, we set out the key development metrics for Stage 1 at Spedding Road. Stage 1 is set to commence in March and will proceed on a speculative basis with the completion expected in Q4 of FY '26. The initial stage comprises around 8,500 square meters of Green Star-rated industrial warehousing with a flexible design allowing for multiple units ranging from approximately 1,800 square meters through to the full building. The project is expected to involve an investment of around $40 million, including land and is targeting a yield on cost of 6.5%. That flexibility is a key feature of the plan for Stage 1 as it allows us to respond to a broad range of tenant demand, particularly for high-quality midsized warehouse space while positioning the project well to capitalize on any leasing momentum through the delivery period.

Moving on to Slide 37. Here, you can see a render for the plans at 92 to 98 Harris Road, again, with some of the key development metrics. Following the tenant's early lease rent in August 2025, we moved quickly to take advantage of the softer construction market conditions with demolition now complete. The site has been cleared and secured, leaving us well positioned for the next phase. Current master planning provides for a circa 14,500 square meter industrial facility. Redevelopment would involve around $40 million of additional investment, excluding land and is targeting a yield on cost of 6.5%, including land. Importantly, any redevelopment is expected to be tenant led. And now the site will be held ready, allowing us to respond quickly once an anchor tenant is secured.

Moving now on to Slide 38. We currently have 11 planned projects across Auckland's key industrial precincts, representing around $325 million of committed and potential capital investment. That figure excludes the value of land. These projects are expected to deliver embedded value progressively over the next 5 years as they reach completion and leasing activity captures market rents and development margins. Since the start of 2024, we have completed over 55,000 square meters of 5 Green Star-rated industrial space, all delivered on time and on budget, a strong track record we intend to build on.

Moving to Slide 39 and our core generic assets. These are established, well-located industrial properties with long-standing tenants providing stable income and low vacancy risk. The broad tenant appeal supports strong leasing depth and liquidity while modest maintenance requirements add flexibility. Core generic assets also include completed developments as we progress through our Green Star development pipeline, overall portfolio continues to improve.

Moving on to Slide 40. This slide highlights the acquisition of 505 and 507 Mount Wellington Highway, which sits firmly within our core generic portfolio for now. It offers redevelopment opportunity over the much longer term, given the acquisition has created around 3.3 hectares of contiguous industrially zoned land in the heart of Mount Wellington. At $36 million, this represents our first acquisition of scale since late 2021, delivering immediate income at an initial yield of 5.75%, supported by leases to high-quality tenants, Dave Russell in Johnson & Johnson. Importantly, the acquisition reflects a measured return to purchasing existing core assets as a means for growth as market conditions improve.

Turning to Slide 41. The last category for today, noncore holdings, sit outside the long-term strategic focus of the portfolio and are actively managed for value realization. Asset recycling is a key part of our capital management strategy. And since transitioning to a pure-play industrial vehicle at the end of 2021, we've divested $93.5 million of noncore assets at an average of around 2.5% above valuation, which doesn't include the recently announced divestments on the following slide. As announced on the 16th of February, we have agreed to sell 2 Smart Road and 18 Consent Street in New Plymouth, along with 41 to 55 Foreman Road and Christchurch in a single transaction for a combined $19.1 million, representing a small premium to the most recent valuations. Since acquiring the assets in 2017, we've delivered a combined property level IRR of around 9.8%. The proceeds will be recycled into our development program with settlement expected in late March 2026.

Moving on to the final slide. So to summarize, we are very, very pleased with this result, which reflects the disciplined execution of our strategy and the underlying strength of the portfolio. We've delivered strong earnings and dividend growth with AFFO up almost 10% even after normalizing for the early lease surrender at Harris Road and increased FY '26 dividend guidance to at least $0.0905 per share, representing at least 5.2% increase on last year's dividends. This performance has been supported by continued valuation growth, strong leasing outcomes and near full occupancy across the portfolio. At the same time, we've advanced our 5 Green Star development pipeline, maintain gearing below the midpoint of our target range, giving us flexibility as conditions continue to improve.

With a high-quality, well-leased portfolio and roughly $325 million of development pipeline, PFI enters the second half of FY '26 well positioned to deliver sustainable earnings growth and growing returns for our shareholders. Thank you for your time. That concludes the presentation. We would happily take any questions you may have.

[Operator Instructions] First question comes from Nicholas Hill from Craigs Investment Partners.

Congratulations on the solid results. Just a couple of questions from me. Would you be able to provide some more commentary on the post balance date progress you have made on the FY '27 lease expiries? What needs to happen from now for a contract to be signed?

So there's 2 reasonably large expiries that we've agreed commercial terms and are in the process of documenting. So both one is $1 million and one is close to $2 million. So circa $3 million has been agreed in principle and just waiting for documentation to be signed.

Okay. That's great. And then on your leasing, are you able to give an indication where the $3.1 million of contract rent was against the market assess rents from valuers?

Sorry, Nick, could you just give us a bit more color on that? So...

[indiscernible] 3.1 million leasing of expiries over the period, I believe, with -- I think it was like a 14 or so percent uplift on previous rents. Are you able to give an indication of where those rent fits or where those rents sit against the market assessed rents from the independent valuers, like were they above or below? I believe this is something you previously disclose.

Yes. Okay. Look, I don't have that detail in front of me. I think in a general sense, we were settling around or above those value assessed market rents unless there was a cap involved in some of those deals. So let me just have a look here. Nick saying we're about 8.5% above the market assessment when we look at the detail of those.

Next, we have Vishal Bhula from Jarden.

Congrats on the solid result. And apologies, I was a bit late to get on the call, so I may have missed the update on bidding. But could you provide a bit of color about what's actually going out there? Like is there a lot of development activity currently in that area? And is anyone else doing anything on a spec basis?

Yes. So the official opening of Spedding Road was actually this morning, Vishal. So there might be some [ fees ] on that. Yes, there's 3 people who have already started development works on site. So 2 adjacent to us and 1 across the road. So yes, if you go out there this morning, polar bathrooms are about 60% of the way through their development. They started ahead of title being issued. Transit bus have completed a electric bus terminal out there, and there's another large occupier across the road from us, CDB, who is an owner-occupier building 13,000 square meters.

So a lot of activity already on site ahead of settlement of titles, which gives us some confidence. We're building a single building structure of around 8,500 square meters that we can split into up to 4,000 -- sorry 4 separate units. So we call it a flexible building pod essentially. So we can service anyone from 1,800 square meters up to the full building depending on delivery. So yes, nice flexible building. We're pretty confident that during the build period, which I think in the presentation, I might have said Q4 2026, I meant Q4 2027 is when we'll be completing that.

Yes. And so probably a little bit of further color here, Vishal. There are some people who we understand may consider the speculum space out there as well. For instance, we understand someone might be doing 3 units ranging from 750 to 1,500 square meters and the like. But as best we can see, there's not a lot of additional space being put up out there. And then the broader kind of possible Westgate, that sort of thing. Again, there is a little bit of space out there that's available. But as Simon said, we're building a pretty flexible space there. It can go between anything between 1 and 4 parties. And we think that, that's the right place to be pitching the product in that market.

No, thanks for that comprehensive update. I appreciate that. And then on Harris Road, given you guys have done all the demo and prep work and you're just waiting to get a tenant before you had go, are you able to cap interest on that site now?

No. I think we just looking at Nick here. I think we don't have kept interest forward just sitting on our hands on that. So that's actively underway unless we're actively underway. We don't in terms of our numbers.

No, perfect. That makes sense. And then just lastly, before I give someone else a shot. Just in terms of your guidance, you have normalized for Harris Road to say be about 90%-ish payout. Are you able to give a bit of detail on what sort of investment boost you assume in that guidance?

Yes. I think the main item will be that we will be completing the Springs Road project through that period. And so obviously, that's a pretty significant project and 20% of the cost of that gets capitalized. [indiscernible] Sorry, 20% gets counted under investment boost for that. And again, you would have seen, I guess, slightly elevated maintenance CapEx this time around. Those items are also eligible for that as well, so.

Next, we have Paul Koraua from Forsyth Barr.

Maybe I'll just pick up on the guidance comment there. So you've guided to 90% AFFO payout of underlying that's sort of second year running now. What are you guys thinking about in terms of your 3-year rolling AFFO payout and what you need to see to maybe pick up that payout through '26 and '27. Obviously, your expiries for the rest of this year is pretty low. And as you roll into next year, you've now got 2 years running where you're paying right at the bottom of that range. So should we expect sort of a larger pickup through '27? Or what should we expect there?

Yes. I think on one of the slides quite early on in the pack, we talk about sort of targeted earnings growth when you look at the slide that shows the dividend there, Slide 7, we talk a little bit around sort of targeted earnings growth and those sorts of things. I think when it comes to moving up that payout ratio, clearly, we have a number of moving parts when it comes to developments and some of those larger expiries and those sorts of things like that. And so as we tidy those sorts of things away, pre-commits on Paris, that sort of thing, you might see us start to move up that range there. But I would say it's a good position to be in to be at 90% rather than some who perhaps are further up that range there because it does give us the flexibility as we go into these projects and deal with these bigger leases.

Yes. No, that makes sense. It's just with some of the comments you guys are talking about with net absorption over the medium term looking pretty supportive as well as your development completions, it sort of looks like except for those development completions that you need tenants for, you guys are pretty well positioned to move up that range.

Yes, hopefully, yes.

Maybe we just move to some of the commentary around the leasing then on -- you're obviously [ Spedding Road ] you're now kicking that off spec. I think there was commentary last time around that having discussions with a potential tenant. And then maybe just on Stage 2, you said leasing interest has picked up for the half. Maybe any more color you can give on Stage 2 of that [indiscernible]

Yes. So Stage 2 at Springs Road, we noticed a noticeable sort of uptick probably in October, November last year. We haven't actually landed anyone yet. And as we said, that's a key priority for us going forward. It went a bit quiet through December and the start of January. So we're dealing with a couple of potential tenants, but we're not at paperwork with anyone at this stage for Stage 2. The Spedding Road tenant that we were dealing with failed to get offshore approvals for the deal that had been agreed onshore. So we are kicking the whole building off on a speculative basis. And as Craig said, we can deal with anyone from 1,800 square meters up we're probably not expecting too much tenant engagement. When you get down to that smaller size, sort of 1,800 square meters, [ 2,000 ] they tend to move a little bit later in the pace. So given we won't be starting until March and completing until April, May next year, we're looking towards the end of this calendar year is how we're thinking from a tenant point of view, but we're very comfortable with where everything else sits.

And so maybe just picking up on that and sort of more broadly, where has the tenant demand, I think, been the deepest in terms of shed size? Is it in that mid- to small size where it's been deeper or...

At the moment, I would say that, yes, there's probably -- if you look at the market currently, it's getting up around that 3% vacancy. There are several larger sheds that are available. If you wanted a 10,000 square meter shed, there's quite a few options out there compared to a couple of years ago. So yes, it seems to be the activity towards the second half of last year was in that sort of 1,500 square meters up to 5,000 sort of range. So it's that part of the cycle where there is some absorption to happen. I saw the retail figures that came out last night look pretty good for the last 3 months through to December 30. So that takes a little while to flow through, but there's definitely some better commentary coming through from various sectors. So yes, as we move through the year, we'd expect some of that smaller stuff to be swallowed up and then it moves up the range as people get more confidence.

I think -- sorry, just to comment on that, the key for us when we're looking at some of these projects, the likes of [indiscernible] yet to be leased part of Springs or Spedding. It's just about having a size unit that hits that out of the market or there is a bit of flexibility to flex up or down depending on sort of what's out there. And that's how we're sort of responding to the market dynamics in that way.

[Operator Instructions] Next question, we have Shane Solly From Harbour Asset.

I've got 3 questions, if I may. First one, it is a bit of a mixed economy out there. Can you talk about how you're positioning the portfolio versus other cycles? That's the first question. When you look at it slightly different positioning, how do you think you set for a mixed economy?

I think if you go back 18 months, Shane, we sort of recognized that vacancy was at historic lows. And the portfolio was close to 100% full, and we had some rather large expiries coming up through '26, '27, and we made a pretty conscious decision to get ahead of that. So a lot of what you're seeing today in terms of full occupancy was part of a deliberate management sort of action 18 to 24 months ago. So that's playing out quite well for us. As you know, everything moves in a cycle. So when it's very strong, that's the time to try and tidy things up. So it is mixed out there. We are at 99.9%. So we're very, very happy with that, and we think that's a strong result. So really just getting ahead of what we can control and that's engaging -- just good asset management, engaging with tenants early, being prepared to manufacture deals that work for everyone and keep that portfolio 100% occupied. And then I guess on the capital side...

Kind of building on that, there's also, I guess, the financial settings when it comes to the financial settings, as the question was earlier, we're at the bottom end of our dividend payout range. So that gives us some flexibility to deal with demand changes. We've got a pretty decent level of hedging there in terms of 75%. Committed gearing is very much under control. We've got liquid assets if we need to be matching that capital against some of our development activity. So I think there's a good suite of measures there. And that slide that we put the third slide under the market part of the pack as well, I think that kind of tries to capture how we're sort of thinking about our positioning at this point in time.

Second question, debt margins are coming in, they're falling. In terms of your guidance, what are you assuming in terms of debt costs?

I think with 75% hedging, there's not a huge amount of movement in that. Obviously, this morning, we've announced another senior secured bonds. So we'll look to put that in place if we can get the right demand profile and pricing for that. Yes, so we're clearly getting a little bit of benefit, 25% of our book is on those really nice low floating rates. But I don't think you're going to see a sort of material change from the number that we put out this morning in terms of our weighted average cost of debt. Clearly, we're sort of through the easing cycle now to the other side of it.

Just a final one. In terms of capital allocation, thanks for the detail there. So in terms of the best use of capital for PFI for the next foreseeable future, it is the development pipe is what you're favoring within the mix?

Yes. I think if you look at recent acquisition we made at Mount Wellington Highway, there was a strategic reason for buying that. It gives us 3.3 hectares in Mount Wellington, but we paid 5.75% for it, whereas the development pipeline is bringing in best-in-class assets typically with long leases at 6.5%. So there's a good margin there. There's better building quality and quite often really good underwritten income from tenants. So at the moment, that's probably the key focus, but we're always looking outside of that as well.

I see no further questions at this time. I will now pass back to Simon.

Thanks very much for taking the time to listen. And again, we're catching up with a lot of you either later on today or across the coming weeks, I would say, up and down the country actually, which will be good. So yes, as always, any questions, just feel free to reach out to Craig, Nick or myself. Thank you for your time.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning, everybody. [Foreign Language] My name is Dean Bracewell, I'm the Chair of the Board of Directors of Property for Industry Limited. Welcome to the 32nd Annual Meeting of PFI, and thank you for your attendance. I'm pleased to welcome you all today, whether you're joining us here in person or online via the virtual meeting platform. Firstly, mobile phones on silent, please. And in the case of an emergency, please follow the green exit emergency doors out here, I guess, out of the building. The assembly areas are located on Quay Street and the corner of Customs and Albert Street, depending on which exit is chosen.

I record that the notice of meeting was sent to shareholders on Monday, 15 September 2025, and we have a quorum present. So let's get underway. In order for this hybrid meeting to run smoothly, I'd like to confirm how questions and answers and voting will work. First, let's deal with the procedure around questions and answers. I confirm that any shareholder or appointed proxy is eligible to ask questions. For those of you attending the meeting virtually, if you would like to submit a question, the Q&A is always open. So please feel free to submit questions throughout the meeting, and these will be addressed at the relevant time. There will be time allocated for in-person attendees to ask questions during the course of the meeting.

We will try to get to as many of the questions as possible, but not all questions may be able to be answered during the meeting. In this case, questions will be followed up after the meeting. The second key procedure is voting. We will open the poll for virtual attendees now to give you plenty of time to vote. If you are eligible to vote at this meeting, you'll be able to cast your vote under the Vote tab. Once voting has opened, you can submit your vote for each resolution. You can change your vote up until the time I declare voting closed.

I now declare that voting is open on all items of business. I will give you a warning before I move to close voting. Should you require any assistance with asking questions or voting, you can type your query into the Q&A tab at any time and one of the Computershare team will assist you. Alternatively, you can call Computershare on 0800-650-034 and ask to speak to one of the administrators supporting the PFI Annual Meeting.

I'll explain procedures for voting in-person later in the meeting. Our agenda. I'll start with a few remarks before handing over to our CEO, Simon Woodhams. You'll then have the opportunity to ask questions or to make comments about the materials presented and the financial statements and auditor's report. Then as you have seen in the Notice of Meeting, we have five resolutions we would like you to approve. These resolutions will consider the re-election of Angela Bull, Carolyn Steele and myself, proposed changes to director remuneration following an independent review by Ernst & Young and the fixing of the remuneration of PwC as auditor for the ensuing year.

Prior to voting, you will hear from each of the three directors seeking re-election, and you will also have another opportunity to ask questions on each of the resolutions. Following the resolutions, we will finish with a further opportunity for questions and answers when we get to general business. Finally, those who are here in person are welcome to join us for light refreshments and a more informal chat with the Board and management after the meeting. Before we get into the substance of today's presentation, I would like to point out that during the course of our presentations, our FY '20 (sic) [ FY '25 ] results have been compared to the unaudited results for the 12-month period from 1 July 2023 to 30 June 2024, which we will refer to as a prior comparable period, or PCP, which comprises the periods H2 2023 and FP 2024, unless otherwise noted.

This differs from the financial statements, which present FP '24 as a comparative period for FY '25 in accordance with the applicable accounting standards. Let me start with some introductions. With me in the room today are Simon Woodhams, our Chief Executive Officer; Angela Bull, Independent Director; Carolyn Steele, Independent Director; David Thomson, Independent Director; Anthony Beverley, Independent Director; Jeremy Simpson, Independent Director; and finally, Craig Peirce, Chief Finance and Operating Officer.

We also have several other members of the PFI and the team here in the room -- other members of the PFI team in the room here with us and welcome representatives from our auditors, PwC; our external legal counsel, Chapman Tripp; our Bond Supervisor, Public Trust and our share registrar, Computershare, to the meeting today.

We've signaled for some time and more recently formally announced to the market that Anthony Beverley will be retiring as a director at the conclusion of this meeting. Today, my fellow directors and I would like to recognize Anthony's exceptional contribution as a Director of PFI for more than 2 decades. Since his appointment as a director in 2001, Anthony has played a pivotal role in positioning PFIs for sustained growth while steering the company through a number of quite different economic cycles.

On a personal level, I've greatly valued Anthony's wisdom and experience, particularly following the transfer of the position of Chair from Anthony to myself in 2023. On behalf of the Board, I wish to place on record our acknowledgment of Anthony's key role in shaping PFI's growth story over the last 24 years.

I'd also like to note that the Board has determined earlier today that Angela Bull will be filling the vacancy left by Anthony on the Audit and Risk Committee, and this appointment will take effect from the close of today's meeting. Anthony, before you sign off from the Board today, would you like to say a few words?

Just [indiscernible] chair.

Thank you. Huge cheers. I think you should come up here. And I will stand aside.

Ladies and gentlemen, it is a very significant day for me actually. As Dean mentioned, I've been on the Board for 24 years, and that's sounds as grand as it is alarming, I think. And I've been trying to convince the directors this morning that no doubt the share price is going to close lower tonight. But I'm not getting many takers on that, but it's definitely one of those things you just don't check.

Yes. So look, 24 years, but I must say I don't quite see it as 24 years. I only see probably half of those years as being truly a director. I was appointed to the Board in 2001 by the then manager, AMP Capital as its appointee, and the Board then was chaired by [ Alan Lockey, ] if you recall. And [ Alan ] and the other directors were kind enough to let me stay in the room and just sit in the corner, but I kept my head pulled in for about 10 years as a manager appointee not really in fairness having too much to say because it was really governed by a very fiercely independent Board.

2011, I left AMP Capital, but AMP asked me to stay on as its nominee for a while. So I did that for a couple of years. And then AMP sold the management company. And the Board, for some reason, said you better stick on as an independent director, which I did. And then as Peter stepped down in 2018, I took over the Chair role and Dean has taken it over since 2023, as you heard. But just briefly, it's been an absolute privilege to be part of this business and machine.

I've been involved in a number of property entities and infrastructure entities in retirement village, and I genuinely believe that PFI is best-in-class. And the magic of PFI actually is pretty simple. It's in a sector that has always been, but has become incredibly preferred as a performance property sector. And in the early days, it was always retail and industrial that had the best returns and the least volatility when times got tough. That's now the industrial sector. Retail is in real trouble really, I believe.

But really, that sector is where we want to be and PFI has got a magic dominant position in that, and it really has set the company well. But simple business run well. But critically, it's always been governed and managed well. And what I mean by that is, I was really quite actively involved through the '90s, showing my age here actually, through the '90s and to where we are today. And the resurgence of property investment entities, listed entities after the terrible events of the 1980s and the crash and where the properties companies got to.

As those entities reemerged, property for industry was the only entity really that was set up with a proper governance structure and that it hadn't -- it was a company with an independent Board versus the other structures were pretty well all trust structures where you had a management entity that had a Board that was both the Board of the manager and the Board of the underlying investment vehicle. And it was a natural conflict. And while behavior was generally pretty good between them, the market really didn't like it, and there was a natural conflict. And I must say I was in the dark side of that because I was project manager and first CEO of what is now Precinct Properties, and we had that model.

So I've lived both sides. But PFI has absolutely benefited from having from the outset an independent governance Board. It simply was interested in shareholders. It had no other mandate, whereas the other entities had this dual purpose where they had to grow the manager and had to try and balance that thing. So PFI has always had a really great governance structure and has had a single focus, as I say, on shareholder returns.

And that's proven to be really worthwhile over the years. But look, today, we're in fantastic shape. The Board is as strong as it's ever been. The management team is absolutely the best-in-class. And so the company is really well set. And I'd just like to thank the Board and the management team for the great companionship and the support they've given me. I thank the shareholders for the support and the tolerance they've given me over the years and wish the company absolute very best going forward. Thank you.

Thanks very much, Ant. Okay. Turning now to my comments on PFI's performance and the outlook for the year ahead. We entered the financial year anticipating that we'll be operating in challenging conditions given the mood in the economy. While those predictions turned out to be largely correct, the Board has been very pleased with PFI's performance and the delivery of a strong result, which reflects our strategic positioning and the resilience of our core industrial portfolio. I'll leave Simon to step through our FY '25 results in more detail in a moment. But at a headline level, we were delighted to have grown our earnings to enable an increase in FY '25 cash dividends to $0.086 per share, which was an increase of $0.003 per share or around 3.6% on our annualized FP '24 dividends.

This result is reflective of the Board's conviction that investing in industrial property and managing that investment with a clear strategy and prudent risk settings can deliver reliable growth for investors through a variety of market conditions. We recognize that many New Zealand businesses, including some of our tenants have been operating in a challenging environment in the last couple of years.

However, industrial property is an asset class that has consistently proven its ability to weather difficult economic conditions. For PFI, that has meant that we've been able to deliver an annual -- an average annual total return, meaning the change in share price combined with all dividends reinvested of around 9.35% since our inception in 1994. Since 2012, we've also recorded average dividend growth in excess of 2% per annum. These strong and consistent levels of growth have arisen from having the hard work in industrial sector at the core of what we do.

PFI has and continues to invest in high-quality industrial buildings located in the most in-demand locations. These assets are well leased, well maintained and attract strong tenant demand. The result is a portfolio that is running at 99.9% occupancy and has achieved consistent rental growth over a long period of time.

More importantly, the Board and management team is optimistic about the year ahead and our ability to continue delivering for investors. In particular, in recent months, we have observed the valuation cycle turning and floating interest rates nearing projected cycle lows, which suggests that the operating environment has become increasingly supportive. For PFI, our focus during the next 12 to 24 months is on continuing to elevate the strength of our existing portfolio to deliver high returns over the longer term.

While we've made good progress over the last 12 months in closing the under-renting gap in PFI's existing portfolio, opportunities still exist to capture significant growth as scheduled market rent reviews take place with our tenants. Against the backdrop of very low lease expiries in FY '26, we are well placed to secure strong results on these rent reviews.

In addition to our stabilized portfolio, where we've continued to progress sustainability initiatives, development projects such as the multistage Springs Road project and the upcoming Spedding Road project represent strategic opportunities for PFI to develop high-quality 5 Green Star rated industrial estates and highly desirable industrial precincts. By continuing to regenerate in a sensible and measured way, we are setting PFI up to meet the needs of industrial tenants, both now and in the future.

Shareholder return has always been core to PFI's purpose and steady growth in dividends is a key part of that and is central to how we measure our success to you, our shareholders. Many of you will be aware that in early August, we guided to expected cash dividends of at least $0.089 per share in FY '26, which would represent an increase of at least $0.003 per share or 3.5% on FY '25 dividends. This guidance reflects the confidence that the Board has in our strategy and the ability of our talented management team to execute that strategy for the benefit of our shareholders.

I'll now hand over to Simon and look forward to rejoining you later in the meeting for further discussion and agenda items.

Thanks, Dean. Good morning, everyone. I think this is the first time we had to stand up here with glasses. So it sort of shows that up not quite 24 years in the seat, Ant, but I have been around for a little while now. Once again, thanks for coming along, everyone. It's great to have people in a room. We do enjoy as a Board and a management team the opportunity to talk through people what we've been doing over the last 12 months and to those online. So welcome. I'm going to talk you through the highlights of FY '25 and touch on some of the work we've done in the sustainability space and then give you a brief overview of some of the key development projects that we're working on as a team.

So if we just jump through the next slide, echoing Dean's earlier comments, we're very pleased with the company's performance over the last 12 months through the June 30. We've created a strong platform that we believe we can continue delivering shareholder returns off the back of. We reviewed around $73.2 million of rent during the period.

And those reviews delivered an average annualized uplift of 5.3%. In addition, around $8 million of rent was leased during the period at an average of 20.1% above the previous contract rents. And we also secured really high levels of early renewals, and that meant for the FY '26 period, we only had 1.6% of contract rent due to expire. So the company is in a really good spot.

This all contributed to a strong financial performance where we reported profit after the tax of $106 million. This was up from $152 million on the prior comparable period, incorporating fair value gains on the properties of $70.7 million as compared to losses of $90 million on the previous period.

The independent valuations contributed to our portfolio now being valued at $2.17 billion, and that was up about 3.4% from the prior year. Net rental income of $108 million was up around 12.7%, while adjusted funds from operations or AFFO, as we talk about, the earnings were $0.0959 per share. And again, that was up around 8.1% on the prior period.

Finally, we paid cash dividends for the period of $0.086, as Dean said, and this was up 3.6% on the annualized FP '24 cash dividends. And this equates to a rolling 3-year AFFO dividend payout ratio of 91%, which is at the lower end of the parameters the Board has set for dividend policy. So very pleasing.

Throughout the period, we took further steps to improve the key portfolio metrics, and you can see them set out here on the slide. We continue to own 91 properties, which is leased to 126 tenants. That was consistent with the prior period. And while we're always on the lookout for properties that will enhance the portfolio at attractive values, we found during the year the opportunities that would generate sufficient returns with few and far between. Instead, we focused on investing our capital into projects that we control, which was a better use of that capital.

This slide shows that contract rent increased around 12.6% to $112.3 million, driven by strong leasing, rent reviews and the completion of several development projects. However, it's perhaps the occupancy and the weighted average lease term or WALT as we talk about, that we're most proud of. As Dean mentioned earlier, it's no secret that economic conditions over the last 12 months have been tough, particularly in the Auckland region.

But despite these conditions, we increased the occupancy from 98.6% to 99.9%, so effectively, in our view, 100% occupied. And we extended the weighted average lease term from 5.07 years out to just a shade under 5.5 years. These metrics demonstrate that PFI has performed strongly in attracting and retaining high-quality tenants who are often been happy to renew early.

Sustainability has continued to be core to our activities during the period, and we're pleased with our progress against our sustainability strategy. Highlights for the year included achieving 5 Green Star ratings for the completed new buildings at our Bowden Road Estate and Springs Road developments, being recognized in the sustainable property category at the Property Council Awards with an excellence award for Bowden State and a merit award for the Fisher & Paykel Appliances building at Springs Road, commencing construction at Stage 2 of Springs Road, which is also targeting a 5 Green Star rating, and I'll talk about this development shortly.

Installing solar at a further three buildings and achieving our solar installation target. Achieving Green Star Energy and Water pathway performance certification on a portfolio of four buildings for the first time. Green Star Performance is a sustainability rating tool we use for existing buildings as opposed to the new buildings that we're developing. And finally, achieving our target to have power metering and monitoring installed at 90% of our properties.

With progress made during the year, we met the solar and metering targets that we set back in 2022. So we completed a scheduled refresh of our sustainability strategy, and we set several new targets towards the end of the financial year. Our targets are now set out on the slide, and these will help to guide us in the coming years. The current targets now include continuing targeting 5 Green Star ratings on all new significant buildings, aiming to double our solar capacity across the portfolio in the next 2 years and a new target to increase the LED lighting in our portfolio with a view to increasing the energy efficiency of our core portfolio.

In summary, we're committed to continued progress in the sustainability space and recognize that this is an area that's critical in our ongoing ability to not only attract, but also retain high-quality tenants. From a capital management point of view, we went back to the bond markets for the first time since 2018 with a $150 million retail bond offer that was very well received and significantly oversubscribed. At year-end, our gearing sat at around 33% with almost $320 million of available headroom from -- sorry, existing facilities provided by a syndicate of supportive lenders. Our weighted average cost of debt has also dropped significantly over the last 12 months, and that's in line with more favorable interest rate conditions.

So again, in summary, our balance sheet and funding arrangements leave us well placed to continue to execute on our strategy. So those are the highlights over the past year. And for the remainder of the presentation, I'm going to shift the focus to our key development projects that continue to be a core focus for the PFI team.

So we currently have -- just on the next slide, currently have three exciting developments at various stages of planning and execution. We've deliberately staggered our development pipeline so that developments make up around 5% to 15% of our portfolio at any one time and that they can be delivered in a way that appropriately balances commercial drivers with appropriate risk settings.

Working through the slide on the screen. During FY '25, we are pleased to complete the final stage of Bowden Road, and we now have a 5 Green Star rated core asset that is leased to high-quality tenants in Tokyo Food and Daikin Air Conditioning. We've also completed Stage 1 of our development at Springs Road and are well underway with Stage 2 of that project. We're also actively progressing planning on several development opportunities at Spedding Road in Whenuapai, Northwest Auckland and Harris Road out in East Tamaki.

So in the last couple of years, we have provided shareholders with frequent updates on our multistage project at Springs Road. We're delighted to continue with the progress that has been made. We're just waiting for the slide to jump over. Here you go. In October 2024, the first stage was completed and successfully delivered. And that -- following that, a 15-year lease to Fisher & Paykel Appliances commenced. And part 2 of the stage has been pre-let to MiTek on a 12-year lease with construction well underway, and we're tracking both ahead of program and under budget, which is very pleasing. On the screen now, you can see some of the renders for the plans at Stage 2 of Springs Road along with some of the key development metrics.

The balance of the site being Stage 3 could see the development of a warehouse of around 17,500 square meters with timing on that development likely to be tenant led, and we'll continue to keep you updated on that as our plans firm up.

Turning to the Spedding Road. Titles for 5.8 hectares of greenfield land at the site are expected to be delivered before Christmas. This property provides us with an opportunity to invest up to $130 million into a new industrial estate in a part of Auckland, where we believe that's been severely undersupplied in both industrially zoned land and industrial buildings of quality and scale. Assuming we receive titles in the anticipated time frames, we expect to take advantage of the favorable construction market to start the first stage of construction in the first quarter of the 2026 calendar year. We'll also be working in parallel to achieve some tenant commitment here. We've set out some of the key development metrics for Stage 1 on this slide.

As can be seen from the render, the flexible multiunit layout is designed to appeal to a broad range of occupiers, particularly those that are seeking smaller, high-quality warehouse space. And consistent with our sustainability strategy, we'll be looking to achieve a 5 Green Star rating on this property.

We've been the long-standing owner of a property at 92 to 98 Harris Road out in East Tamaki, over which the lease was surrendered post balance date and around 3 years early by the tenant in return for a significant surrender fee of about $5 million. Alongside the receipt of these funds, this has unlocked an accelerated access to a site that we've long earmarked as a future development opportunity. 92 to 98 Harris Road is a prime 2.63 hectare site, which currently only has 27% site coverage, along with some obsolete buildings, as you can see on the aerial photo there. And this, from our point of view, helps to make it a very attractive redevelopment opportunity. While we're still working through design and feasibility options, early concepts suggest it could support a 14,500 square meter warehouse. Again, we'll be targeting a 5 Green Star rating at this site.

For now, the site will be cleared and secured, and we'll continue to progress plans in parallel. So in summary, each of these development opportunities position us for sustained growth and value creation in the coming years, and the team and I really look forward to sharing further progress updates with you in future meetings.

So while the focus of today's meeting is to reflect on PFI's performance over the last 12 months, I thought I'd just take a quick opportunity to bring up-to-date what's happened in the last 3 months. As at 30 September, our portfolio remains 99.9% occupied, and the WALT has remained stable at 5.23 years. And our cash collections have remained very healthy over the first 3 months of the year. As I signaled earlier in the presentation, we have very low levels of lease expiry in FY '26, which has meant there's been reasonably low levels of new leasing activity in the last 3 months.

However, other notable highlights and milestones in the last 3 months have included the continued progress of Stage 2 at Springs Road, with some recent images on the building pre-lease to MiTek currently on the slide. The settlement of a bolt-on acquisition at Norris Ave, Te Rapa down in Hamilton, which is now leased to the same tenant who occupies PFI's adjacent property on the Te Rapa Road. This bolt-on acquisition provides greater scale and optionality to us in a desirable location within the Golden Triangle.

We were also pleased to release our third climate-related disclosures to the market in September, which is also the first time that part of our greenhouse gas emissions have been subject to an external assurance process. While this was a very detailed and intensive process, the Board and management found the process helpful and that it continues to shape and refine our sustainability strategy.

So in conclusion, I want to reiterate our commitment to delivering for you, our shareholders and other stakeholders in the room. As Dean mentioned earlier, the Board has set dividend guidance for FY '26 at $0.089 per share. This equates to an increase of at least 3.5% on the FY '25 dividends, which is entirely consistent with our strategy of delivering higher returns to shareholders over the long term. With a strong portfolio now valued in excess of $2.17 billion and clear growth opportunities ahead, we're very well positioned to deliver high returns to our shareholders.

Just before I hand back to you, Dean, I would also like to acknowledge Ant's retirement from the Board. Ant -- we had a nice meal with Ant last night on the Board. Ant was my first chair, and they say you never forget your first chair. So I am -- always enjoy the conversations I have with Ant. I generally ring him -- used to ring him on a Friday and he would be on a digger somewhere or shooting something called chopping a tree down. So it was nice to have that out of Auckland balance on the Board. So Ant, enjoy, I'm not going to say retirement, but enjoy your retirement from the Board. It's been a pleasure.

And then finally, I just want to say thank you to the shareholders and the stakeholders, but particularly shareholders who supported us, some of you for a very long time. I know there's one or two in there that were -- came on board on the DPF days back in the early 2000s, but there's still some original PFI shareholders. So we appreciate your support. And now as a management and a Board, we look forward to continuing to repay that support as we go forward. Thank you.

Well done, Simon, thank you. There's now an opportunity for questions or comments on the presentations or on the financial statements and auditor's report, which you can find from Page 17 of the annual report. For those of you in person here, if you could raise your hand, we'll get a microphone to you so everyone can hear both in the meeting and online. Can you please start by introducing yourself, your name and whether you're a shareholder or a proxy holder. And if you're a proxy holder, the name of the shareholder you are representing. For virtual attendees, if you wish to ask a question, please select the Q&A tab, type your question in the box and press send to submit. Okay. Any questions in person in the room?

Hello, [ William Kains. ] I'm a shareholder. I noticed the directors own very few shares in the company. Is that a reflection I have no faith in the company?

I think I can easily answer that one. The directors who own shares in the company, be it $1, $1,000 or $20,000 or whatever $100,000 -- whatever it might be, is absolutely a show of faith in the company. That is why they have invested in the company. I myself invest typically a year's -- equivalent of a year's remuneration that I earn as a director in the companies that I am the Boards on. And I'm consistent with that across all businesses that I'm involved in. Thanks for your question. Next?

[ Michael Scharf ], shareholder. How did you manage to get President Mark [indiscernible] for you and PFI...

Well, we've got a special treat for you today. He's here in-person, and he will sign that for you, if you like. He's also known as [ Ewan, ] puts a few buildings up for us, manages a few tenants. Thanks, Michael. Yes?

I'm [ Bruce Parks, ] a shareholder. A very positive presentation. What are the major risks you see going in the future?

Thanks very much for the question, Bruce. What I'll do, I'll pass it over to our Chair of our Audit and Risk Committee to talk about the risks, if you like.

Bruce, nice to see you again. Yes, the major risk, as we put out in our report is economic and market risk, health and safety risk. We're building big buildings. We have big buildings, financial risk. And we also have insurance risk. You'd be aware that insuring $2 billion of property is getting harder and harder to do these days. So we monitor that. And there is one other strategic risk. Thank you. Strategic risk, we are very conscious we've got to get our investments in properties right, not just for today's tenants, but for future tenants, and that's a big push behind our Green Star rating strategy. So I think that covers...

Yes. Thanks very much, Carolyn, and it's a fine question. The reality is, the resilience of this business has been because the company understands its risks and addresses those and mitigates them where they can. But ultimately, we're operating in the market, so we need the right buildings in the right place with the right tenants and the right management team, which we certainly have. Thank you. Next. Is there any questions -- sorry, one more question here in the room.

My name is [indiscernible] a recent new shareholder. So I would like to ask yourself and the Board, how do you see sustainability beyond just carbon emission?

Well, I will start with that. You've just handed the microphone back to our sustainability manager. In fact, would you like to introduce yourself and Sarah and give you a brief overview. Clearly, we're talking about the buildings, where we build them, the environment that we're operating and what have you. But I'll let Sarah answer that for us.

Thank you. Yes, I think the approach we have tried to take is to make it more holistic than just carbon emissions. So I'm -- for those of you who haven't met, Sarah Beale, I am the Head of Sustainability and Operations at PFI.

And Sarah wasn't expecting to be answering the question, right?

So we have spent a lot of time thinking about what does sustainability mean for PFI, and we have gone through a few iterations of our strategy. But each time we do it, we sit down, we think about what are the really material things for the company in terms of our impact. So for PFI, because we are constructing buildings, absolutely carbon emissions is an important thing for us. And similarly, operating buildings, we know that the electricity use will have a lot of impact. So that is naturally where a lot of our focus is placed.

But on top of that, we do have other things that we look at. So we understand that when we build and refurbish our buildings, there's material and waste impact. So we need to manage those. And we do that in two ways. We do Green Star buildings, which we've heard a lot about today. That framework includes thinking about what those materials are and how we can manage the waste. When we do our internal framework -- sorry, when we do our refurbishments, we have an internal framework that we work through, which also looks at materials and waste and how we can manage those.

And on top of that, we think about people and well-being because we have a number of staff that work for us, a lot of people in our buildings, contractors that work for us. So we have a framework that sits around how we manage the health, safety and well-being for those people. So we've put quite a bit of work into trying to think about all of our material impacts and how we can manage them.

Excellent. Okay. Great question. That's called cutting out the middleman, go straight to the...

Also another question from New Zealand Shareholders' Association around sustainability, it might be useful to say that -- that's okay. But since the PFI has obtained limited assurance of Scope 1 and 2 emissions from PwC in FY 2025. However, Scope 3 emissions remain outside the scope of assurance and other climate disclosures are not yet verified. This leaves investors with only partial confidence in the reliability of the reported data and the NZSA encourages broader assurance coverage in future reporting cycles. Can you please respond?

Love to. So yes, as mentioned, we have assured Scope 1 and 2 emissions so far. There is a question mark over whether we will be required to do further assurance in future years. That's currently being consulted on, and we haven't got guidance at this point as to exactly what we'll need to do. And I guess the thing that we think about is when we're doing these reports, we want to put out really certifiable numbers for you all. So we put a lot of effort into checking all of the numbers. There's a huge process that we go through to ensure that what we put into those reports is correct and backed up with evidence into the rest of it. So we do put a lot of effort into that.

And if we do go down the route of getting more assurance, I guess the thing that we have to balance is that additional cost and time for staff, which obviously does have an impact for our shareholders. And so just trying to find that right balance in the event that we do have the additional legislative requirement, which is still up in the air. So something that we will think about very carefully when that moment comes.

Thanks very much, Sarah. And for those of you who want to get a little bit of deeper learning on the sustainability strategy of the company, we've released our climate-related disclosure report to the NZX. It's a good meaty 50 page, I'd read, okay? So it's all there. Okay. Yes, please, Ant, yes, yes.

It's a really good question. And one of the challenges, so Sarah has really taken that from a company's point of view with a compliance hat on, and we do our very best to report information that's going to be helpful, your question really. The industry is really struggling, isn't it? The world is really struggling to get all this right because what's most important to the world is what we're doing proactively to try and make our business prosper, but in a way that works for the same but for the world that we live in and operate in.

And you've got a business that's got an imperative to grow and perform for shareholders and you've got to manage your emissions down. And the world just is not getting that right in terms of how you measure and bring companies to account. So there's a compliance framework, but there's also an imperative in terms of your behavior and your commercial outcome framework.

You've got to be out for the states moving backwards on renewable energy, that sort of stuff. So the world is really struggling. But we do our very best to try and get that right and report. Some of it's compliance, which really doesn't help the punter understand how well is this company actually doing in a growth environment, intensity measure stuff. So there's a reporting requirement, which we're really right on top of, but the world has got to get better and better at this stuff, and it's really struggling.

Thanks, Ant, for adding to that. Okay. [ Joe, ] just check, do we have any questions online?

Yes, sure. We've got another couple that you might like to answer, Dean.

Well, I will decide who answers. Thanks, Craig.

Ricky from the NZ Shareholders' Association has been quite active actually. We've got another two from Ricky. This one reads, the company does not participate in the IOD's future director program designed to develop and mentor the next generation of directors. NZSA expects NZX 50 companies to participate as part of the responsibility to develop and mentor the next generation of directors. Will there be any change in PFI's approach going forward?

Well, we'll note the Shareholders' Association's concern and question. And we do listen to the New Zealand Shareholders' Association. We respect their opinions. We respect their direction. At an appropriate time for the company, we may well consider, but it's not on our current work plan to bring another director onto the Board, be it a -- sorry, a future director onto the Board. But in time, we may well do so. So we'll see.

Great. And then as a further governance question, Ricky also asked, the annual report includes a collective skills matrix. NZSA prefers the matrix to attribute skill sets to individual directors to demonstrate how they contribute to the governance of the company. Can you comment?

Yes. It's an interesting one, this one. What the NZSA is asking is we put each director's name down with their own particular skills, whereas at the moment, we bundle the director skills and just present them to you. We back that up with the bios of each director, which is on the company website. So it's not a long bow to draw to look at the skills are in the matrix and read about the director if you're so interested to understand the skills and experience they do bring to the Board.

We also put ourselves up for election and talk to those skills and experience. So we know what the NZSA has to say. We also have other shareholders who prefer it bundled. So for the time being, we've stuck with the status quo. Once again, these things are under constant review. We'll see what happens in years to come. Thank you.

There's nothing more online.

Okay. Any further questions in the room? One over here.

[indiscernible] I am a Shareholder. You've got an accumulation of properties in Neilson Street. Do you really see that you've got all of the properties there to develop further? Or are you really thinking in terms of adding to it before you start developing that?

Yes. Neilson Street, what a wonderful part of town, heavy industrial right in the lane for PFI. And I'm going to hand it to Simon to respond to your question.

Yes. For those who've tracked PFI over the last 5 years, we have been accumulating properties in and around Neilson Street. There's probably one last property that fits the jigsaw puzzle. I think in total, we've got nearly 6.5 hectares there, maybe 1 more to go. The properties we've brought allow us -- there's one right down the back, which is currently leased by Fletcher's, and they'll be finishing up on site in late 2027. So we've always had a view of redeveloping that site down the back in '27, '28.

So the properties we bought in the last couple of years have allowed us to control easements and access in and off the site. So we're in a position where we can start redevelopment without whether we pick up the last one or not. But it's been a project of ours, not only Neilson Street, you would have seen in recent years, bolt-on acquisitions has been something that we've been focusing on. So it's -- yes, that's what we've been working on.

Thanks, Simon. Any other questions in the room? One more over here.

I am a shareholder [indiscernible] and when I see the last 5 years performance, it seems that the company has done very good because like the assets are almost same. So my question to anyone who is on the Board for more than 5 years that, was that expected in 2021, like whatever the company plans are, have the market help you in achieving those company plans and objectives? And what is your goal for the next 5 years? Because I think it's a dividend yield-based company for an investor. So for a retail investor, it's just the dividend yield that we will target, buy the shares from [indiscernible] the dividend yield. So what's the plan for the next 5 years? Will the dividend yield will be better than the bank equity or like that?

Okay. I might just hand it to our Chief Finance and Operating Officer to respond to that question. Did you pick that up, Craig?

Yes, that's fine. Thanks for your question. I guess when it comes to dividend yield, we always give out a sort of 1-year ahead forecast. So we don't tend to give a 5-year forecast. As has been mentioned in this presentation, last year, we went up around 3.5%. This year, we're forecasting another 3.5%. And I think if you look at the track record that we've had over the sort of last decade or more and the sort of recent activity, that's, I guess, what we're trying to signal towards is a company that's growing its dividend regularly at about that quantum. So yes, I think you could infer from that, that's what we're looking for, but we don't give formal guidance around 5-year plans or anything like that.

I think the other part of your question was around we were a couple of billion. We've been 5 years long and you're sort of back to a couple of billion. Obviously, 5 years ago, we sort of came through that period, came through the COVID sort of times and everything like that. So portfolio went up quite a lot in value and went down a little bit in value over that time. We also sold a few assets, bought a few assets, these sorts of things. So again, we don't sort of, I suppose, forecast or publish a view about where we're trying to go in terms of asset value.

But what I would say is we have a pipeline of development opportunities. It's around $350 million. So if we were to simply complete all of those opportunities and keep everything else the same, we would be roughly $2.5 billion at that point. So yes, the company plans to keep on trying to grow both its dividend and asset base whilst trying to maintain the appropriate risk settings. So when we think about risk, I guess the main one is around gearing, keeping that gearing under control for the benefit of all.

Well described and answered. Thanks very much. Thank you. Okay. Any last questions in the room? There appears to be none. Any further questions online? Okay. Great. We'll now move to the resolutions to be voted on today. I've been advised that 315 shareholders representing 159 million -- I'll better say, 159,468,779 shares or 31.75% of the company's shares on issue are represented by proxies. Voting for the resolutions will be conducted by poll. For the purposes of the poll, I appoint the company's registrar, Computershare, to carry out the poll.

The procedure for the conduct of the poll for in-person attendees will be as follows: Voting papers have been provided with the Notice of Meeting. Pens where required will be distributed now. Please put your hand up and let the Computershare team know if you require one. If you do not have a voting paper, please see a Computershare representative at the registration desk, who will provide you with the paper. Indicate your vote for, against or abstain by placing a tick in the appropriate box. If you are here as a proxy for a shareholder who has not marked proxy discretion on their proxy form, your vote will be automatically counted in accordance with the voting directions given by your appointer, but please sign the voting paper provided when you arrived at the meeting.

Where you are a proxy holder and you have been granted a discretion on how to vote the resolution, please use the voting paper provided when you arrived at the meeting. After receiving -- after recording your vote, please remember to sign your voting paper, which would be collected by the Computershare team.

Having collected the votes, they will be taken to a separate room for counting. The results of the poll will be announced via NZX as soon as they are available. Please note that the Board recommends that you vote in favor of each of the five ordinary resolutions.

Turning to the resolutions. The first resolution is that Angela Bull, who retires and is eligible for election, be elected as a director of the company. The Board considers Angela is and will continue to be an independent director, if elected, and supports her election. Angela was appointed as a Director of PFI in February 2023. She is an experienced director and executive in property investment and commercial developments. Angela is also a qualified lawyer with significant expertise in environment and property law. There is a profile of Angela in the Notice of Meeting. Angela, would you like to say a few words?

Thank you, Dean. [Foreign Language] Good morning. Just ladies and gentlemen and shareholders, thank you for the opportunity to speak with you today as I seek re-election. I joined the PFI Board, as you've heard in February 2023 because I was really excited about the quality of the portfolio of assets and the strength of the management team. And as you've heard already this morning, this is a portfolio now running at 99.9% occupancy and has achieved consistent rental growth.

It's a company to be proud of and one that we now talk about as being best-in-class. My background is in commercial property and law and after a number of years in the law firm environment, I was the General Manager of Property at Foodstuffs North Island for 10 years, responsible for buying land and building supermarkets. From 2016 to 2023, I was the Chief Executive of Tramco Group, which is a privately held company managing three substantial land portfolios and predominantly in Auckland and then across the North Island.

Since the beginning of 2023, I have focused full time on governance, and I'm now a professional company director. I've been very mindful of joining businesses where I believe I have the skill set, passion and time commitment available to add value. I work hard at my governance career, and I ensure I've got the necessary time for preparation, professional development and attendance in all of my Board roles. I now have a complete portfolio as a director with three listed companies, including PFI and three private companies. I've had a career of adding value to business through property development, commercial solutions and working for results focused businesses of scale.

This has really resonated for me during my time on the Board at PFI, where the wider industrial property context has had its share of challenges over the last 3 years, a reflection of the wider economy, but PFI has demonstrated throughout its resilience and strategic focus. By balancing development with a long-term focus on existing tenants and commercial metrics, we have seen reliable growth for shareholders and a high-quality property portfolio. I believe I can contribute to the Board and add value for you in continuing to deliver all of these things well. Thank you for your support.

Hold on. Thanks very much, Angela. The resolution is that Angela Bull, who retires and is eligible for election, be elected as a director of the company. Is there any discussion on this resolution? Anything online, Craig? Please mark your voting papers for Resolution 1 or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. Thank you.

The second resolution is that Carolyn Steele, who retires and is eligible for election, be elected as a director of the company. The Board considers Carolyn is and will continue to be an independent director, if elected, and supports her election. Carolyn was appointed as a Director of PFI in August 2022. She has a background in investment management, capital markets and mergers and acquisitions and currently chairs PFI's Audit and Risk Committee. There is a profile of Carolyn in the Notice of Meeting. Carolyn, would you like to say a few words for us?

Thank you, Dean. [Foreign Language] Greetings, greetings to all the people and to the many chiefs gathered here today. It's my pleasure to stand for re-election to the PFI Board. I stood in this very spot about 2.5 years ago, and I noted PFI had a great team and a great portfolio. And I continue to believe that these two aspects will drive superior shareholder returns for PFI shareholders. So what do I bring to this team? Well, as Dean noted, my background is in finance, investment management and capital markets.

My background includes a Bachelor of Management Studies. My qualifications include a Bachelor of Management Studies with first-class honors. And my professional background includes 10 years investment banking, where I worked on capital structure mandates and M&A transactions for large New Zealand and Australasian companies. I've also worked in investment management, where I've been responsible for acquiring and overseeing large Australasian companies.

So these roles required me to exercise a really high level of financial and commercial judgment. And I think it's this judgment that stands me in good stead as a professional director over the last 9 years. So my current Board roles as well as PFI include ASX-listed Vulcan Steel, Oriens Capital, WEL Networks and also the ANZ Bank of the New Zealand branch. So in summary, I think my skills and experience suit PFI as a very large assets business, and I kindly ask that you support my election. And if successful today, I look forward to contributing to PFI's ambition to grow and to create value through active portfolio management, through really smart investment in development and through enhancing our operational performance. [Foreign Language] Back to Dean.

Thank you, Carolyn. The resolution is that Carolyn Steele, who retires and is eligible for election, be elected as a director of the company. Is there any discussion on this resolution? Craig, anything online?

Nothing online Dean.

Thank you very much. Please mark your voting papers for Resolution 2 or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen.

As the next resolution is in respect of my re-election, I would like to call upon our People Committee Chair, David Thomson, to chair this part of the meeting.

Thank you, Dean. The third resolution is that Dean Bracewell, who retires and is eligible for election, be elected as a director of the company. The Board considers that Dean is and will continue to be an independent director, if elected, and supports his re-election. Dean was Managing Director of Freightways Limited between 1999 and 2017. And since that time, he's established a strong governance career. Dean has been a Director of PFI since November 2019, and he currently chairs our Board. There's a profile of Dean in the Notice of Meeting. Dean, would you like to say a few words?

Okay. Thanks, David [Foreign Language] As David mentioned, I spent my career at Freightways, primarily in the transport and logistics sector. At Freightways, we lease many industrial buildings throughout New Zealand. We own some key -- throughout New Zealand and Australia, we own key strategic sites, and we develop some of our own buildings. I've spent a good deal of my working life in and around industrial areas of New Zealand visiting customers and doing business. I've worked in the same suburbs, in the same streets and often in the same buildings that PFI operates in.

In addition to PFI, I also sit on the Boards of Air New Zealand, Port of Tauranga, Northport Group and the Halberg Foundation. I chair the Health and Safety Committees of Air New Zealand and Port of Tauranga, and I am a member of their respective people committees. The companies I'm involved with are ones where I have some affinity and interest.

During my tenure at PFI, I've endeavored to bring the benefit of my knowledge and experience from the logistics and transport sectors in addition to the commercial realities of running a sizable business. I joined the PFI Board around 5 years ago with the expectation I was joining a high-quality company and team. I like it when a plan goes well, and this one certainly has.

The business has shown real resilience as events in the broader market, including COVID, New Zealand's long-running recessionary environment where we're trying to drag ourselves out of and big swings in interest rates contributed to challenging marketing conditions. The resilience shown by this business over many years is a credit to this management team and to directors past and present.

With regards to this Board of Directors, shareholders can rest assured they have high-quality representation compatible with the quality of this business. I've thoroughly enjoyed my time on the PFI Board. I seek your support today to continue as a Director of PFI for a further term. [Foreign Language] Thank you.

Thanks very much, Dean. So the resolution is that Dean Bracewell, who retires and is eligible for election, be elected as a director of the company. Is there any discussion? Anything online, Craig? Please mark your voting papers for Resolution 3, or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen. And I'll now ask Dean to resume chairing the meeting. Thank you.

Thanks, David, and thanks, shareholders, for your support. The fourth resolution is that the directors are authorized to fix the fees and expenses of the auditors, PricewaterhouseCoopers. Is there any discussion from the room on this resolution? Craig, anything online?

Please mark your voting papers for Resolution 4 or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen.

Resolution #5. The fifth and final resolution is that the directors are authorized to fix the remuneration of the directors of the company from the close of this meeting as per the table shown in the explanatory notes of the Notice of Meeting. In setting the proposed rates, the Board commissioned an independent review of the current level of director fees by Ernst & Young. A summary of Ernst & Young's report has been made available to shareholders on PFI's website.

In requesting this review and setting the proposed directors' fees to be put to shareholders, the Board has also taken into account the increasing complexity, time commitments and responsibilities required of its directors at a Board and committee level, together with the performance of the company. The proposed rates are set out in the Notice of Meeting. And if Resolution 5 is approved by shareholders today, the set rates will apply from the close of this meeting.

The fifth resolution is that the directors be authorized to fix the remuneration of the directors of the company from the close of this meeting as per the table shown in the explanatory notes. Is there any discussion firstly in the room? Thank you. Craig, is there any discussion online?

No, Dean.

Okay. Please mark your voting papers for Resolution 5, or for virtual attendees, select your voting choice from the options shown under the Vote tab on your screen.

We will just give you all a moment to finalize voting, and then I will close the poll.

[Voting]

All good? Okay. The poll is now closed. Thank you. Computershare will now collect the voting papers from shareholders in the room. The results of this vote will be released by PFI to NZX later today. Thank you.

We will now open up questions on general business from shareholders and proxies if there are any. If there is something you wish to put to the meeting, please raise your hand, and we'll get one of the microphones to you. A reminder to please state your name and whether you are a shareholder or proxy holder. If you are attending virtually, press the Q&A tab on your computer, tablet or mobile and then type and press send to submit your question.

As mentioned earlier, we'll try to get to as many of the questions as possible, but not all questions may be able to be answered. In this case, questions will be followed up after the meeting, if we run out of time to address all questions -- sorry, that's all good. Any questions from the room? Yes, at the back, just microphone right beside you there.

[ John here, ] I am a shareholder. Why have we moved from Eden Park to downtown?

We were here last year, John. Wow, we were here. It's okay. It's okay. But....

I've been to everyone except last year.

Yes. I know we were here last year as well, John. But look, it's just come down to size and dollars, okay? Eden Park comes with a big bill. And whilst it's convenient for parking and all that sort of stuff, we know, we're just trying to keep this thing practical because it all goes to cost at the end of the day and impact shareholders' returns. Yes.

Okay.

Yes. Do we have any other general questions in the room? Anything online? Well, that's the case. Oh, we have one more question here. Good for you.

So I see that company is doing a bit of a borrowing also. So the question I think is for the finance field. So like I see there are some derivatives hedge for interest rates. So why -- my first impression is that company has a very good reputation because clients are from across the industry, people are preferring to take a lease with PFI. So how about exploring the borrowing in U.S. dollars because it might be cheaper, all I think -- or are all our bonds in New Zealand dollars only?

Yes, all of our borrowings are in New Zealand dollars. So that's, I guess, takes the currency risk out of things. You obviously could borrow in U.S. dollars and then take on currency hedging and these sort of things like that. But our preference is to keep it simple and borrow in New Zealand dollars. There's plentiful supply of New Zealand dollars available to us as a business. We get very competitive finance from a range of lenders, and we're very comfortable with that approach.

Thanks very much, Craig. Any other general questions in the room? All right. Well, I think we should all have a cup of tea. Okay. Thank you for your continued support of PFI and for your attendance today. That ends the formal part of the meeting, and I declare the meeting closed. For those here in the room, please feel free to join us for light refreshments and further chat. Thanks very much, cheers.