Stockland Stock

Welcome to Stockland's FY '26 Results Briefing. There will be a formal presentation, followed by a Q&A session.

I will now hand over to Tarun Gupta, Managing Director and CEO, for opening remarks.

Good morning, and thank you for joining Stockland's Full-Year 2026 Financial Results Update.

Joining me today is Josh McHutchison, our CFO. And joining us for Q&A will be Kylie O'Connor, CEO, Investment Management; and Andrew Whitson, CEO of Development.

Before we begin, I'd like to acknowledge the traditional owners and custodians of the land on which we meet, the Gadigal people of the Eora Nation and pay my respects to elders past, present and emerging.

Over the last 5 years, our focus has been on reshaping our portfolio, embedding additional growth pathways and positioning the business for sustainable performance. This time last year, we said that FY '26 would mark an inflection point in both activity levels and strategic delivery. In this result, you will see that we have not only achieved this objective, but have done so in a rapidly changing macroeconomic environment.

Looking forward, we are confident that the strength of our multi-sector platform can provide further growth as the residential market moves through a more moderate phase of the cycle. FY '26 was a year of strong delivery with a step change in development volumes, continued growth in our capital partnering platform and active recycling of capital into targeted growth areas.

Funds from operations was up 10.4% to $892 million, with FFO per security of $0.369, at the top end of our guidance range. We delivered this earnings growth, while also further strengthening the balance sheet, with gearing reducing to 22.7% and NTA growing 4% to $4.39 per security. We maintained our focus on maximizing risk-adjusted returns, delivering return on invested capital outcomes consistently within our targeted ranges. And importantly, we have positioned Stockland for growth in FY '27.

I'm pleased to report today that the disciplined implementation of our strategy has translated to strong operational and financial performance across all parts of the business. In our residential platforms, we delivered record settlements and a 53% increase in sales, and we are well positioned with strong contracts on hand for FY '27. We have delivered a significant increase in volumes across our commercial development pipeline, completing projects with an end value of $830 million and commencing projects worth a further $1.2 billion, creating high-quality investment product for our partners and for us.

With the majority of our capital now allocated to our preferred sectors of living, retail and logistics, we are making good progress in capturing change of use upside within our workplace portfolio and maximizing the value of existing logistics assets through conversion to data centers. We have approximately 450 megawatts of power secured across 3 data center sites, along with a pipeline of 4 additional identified opportunities, all on land that we already control.

Growing our capital partnering platform is an integral part of our strategy, and we were pleased to welcome 3 new capital partners during the year, Morgan Stanley Real Estate, Mercer and EdgeConneX. In addition to these new partners, we have expanded partnerships with several existing investors. By expanding our third-party capital base and restocking our development pipelines in a capital-efficient manner, we have significantly scaled our platform, strengthened our market position and portfolio quality and enhanced our ROIC.

Over the last 3 years, we have increased group assets under management by $5 billion, with the addition of less than $1 billion to our net funds employed. And as a result, we have grown our high-quality recurring management income by an average of 25% per annum over that period. Creating something better for the people and communities we serve requires sustainability to remain embedded across everything we do, recognizing that the homes, communities and assets we create today will shape how people live, work and connect for generations.

We have delivered close to 10,000 affordably priced new homes and residential lots across the country, with almost 1/3 of these being delivered for first-time homebuyers. We achieved net zero Scope 1 and 2 emissions, marking a major milestone in our journey toward a low-carbon future and continue to advance initiatives designed to reduce our most material Scope 3 emissions.

In FY '24, Stockland has generated just over $800 million of social value and our employee engagement remained high at 84%, and almost 80% of our people own Stockland securities, aligning with the interest of our securityholders.

I'll now hand over to Josh, who will talk through the financials.

Thanks, Tarun, and good morning, everyone.

As Tarun mentioned, the consistent execution of our strategy has delivered strong operational and financial outcomes over the year. This result is characterized by a significant earnings uplift, a strong balance sheet and capital settings that support future growth.

Turning to the financial result in detail. Funds from operations was up 10.4% to $892 million, with FFO per security up 9.1%, at the top end of our guidance range. The Investment Management segment delivered FFO of $606 million, reflecting strong comparable performance and contributions from development completions. Pleasingly, we achieved this growth while also absorbing NOI dilution from the transfer of assets into partnerships during FY '25 and FY '26, together with investment in capability and platform expansion.

Development FFO was up 17.3%, driven by a step change in settlement volumes across our residential portfolios, growing development fees from increased activity in partnerships and a larger contribution from commercial development. We have continued to invest in growth while maintaining cost discipline. Across the group, total overheads have grown by 6.4% per annum over the last 3 years, while we have grown our revenue base by over 13% per annum over the same period.

Net interest expense was down, reflecting higher capitalization into projects, in line with increased activation of the pipeline. Statutory profit was up 20.2% to $994 million. This includes just over $200 million of net fair value gains for the period. Given the scale and duration of major project opportunities that we have secured, revaluations relating to properties under development are expected to comprise an increasing proportion of the group's valuation movements in future periods.

From FY '27, cumulative revaluation gains relating to these properties will be recognized in FFO when development value is monetized through a capital partnering or divestment transaction and becomes cash backed. This adjustment is not expected to have a material impact on FFO in FY '27.

Looking now at the results for the Investment Management segment in more detail. We've delivered comparable growth of 3.5% from our portfolio, primarily driven by another strong performance from the logistics portfolio and continued growth from retail. The logistics portfolio benefited from project completions and strong underlying growth, partly offset by lower NOI from the prior year transfer of $400 million of assets into new partnerships and $289 million of strategic asset disposals.

Growth in our retail portfolio was supported by strong re-leasing spreads and the completion of 3 new developments. We continue to actively manage the workplace portfolio, recycling capital from non-core exposures and positioning assets for future change-of-use development opportunities. Communities rental income comprises our established land lease portfolio, which contributed $17 million during the year and our smaller portfolio of communities real estate assets, which contributed approximately $8 million. Investment management net overheads increased 12% as a result of investment in capability across the business and the growth of operational land lease platform.

Turning now to the Development segment. Settlements were up 30% in our MPC business. By volume, the proportion of lots settled in joint ventures or project development agreements increased to 55%, primarily due to a greater number of lots settled in our partnership with Supalai. The MPC development operating profit margin was 21.2%, in line with previous guidance and reflecting further price growth in the Queensland and WA markets during the year, offset by a mix shift to lower-margin projects.

The land lease development business delivered FFO of $100 million, a 67% increase on the prior year. The business recorded 777 home settlements and transferred 3 communities into partnerships. The LLC development operating profit margin reflected a mix of settlements from lower-margin projects and increasing marketing costs associated with newly launched communities.

The commercial development business generated FFO of $35 million, underpinned by build-to-sell logistics profits and the transfer of 3 recently completed retail assets into the partnership with Morgan Stanley. Net overheads increased 13.1%, reflecting growth in the development platform as well as increased activation of our pipeline. Operating cash flow was broadly in line with FFO at $876 million.

We finished the year with gearing at 22.7%, down significantly from 28.1% at December, reflecting strong second half cash inflows from MPC and LLC settlements and further capital recycling. Our weighted average cost of debt for the year was in line with FY '25 at 5.3%. We expect this to increase to 5.9% for FY '27. We extended the tenor of our debt book, and we've maintained prudent levels of hedging and substantial liquidity.

Our capital management settings are aligned with our strategic growth objectives and our funding sources are clearly defined. In FY '26, we continue to effectively redeploy retained earnings, recycle our own capital and raise additional third-party capital. Over the last 3 years, we have raised or recycled an average of over $2 billion of capital per annum, maintaining a strong balance sheet position and enabling future growth.

I'll now hand back to Tarun.

Thanks, Josh.

We have a simple and effective business model. This leverages our end-to-end development expertise, together with investment management capabilities across our targeted sectors. The strength of our business model lies in the way our platforms leverage each other for product, capital, capability and opportunities, accelerating growth and enhancing returns. Our investment portfolio provides high-quality recurring rental income, embedded growth from its development pipeline and capital sourced from its growing partnership platform.

We manage Australia's leading MPC business, which generates attractive through-cycle returns and offers embedded adjacent use opportunities. Our land lease business has rapidly scaled into Australia's leading platform, with more than 10,000 existing and future homes and a pipeline that is sourced from our MPC platform. And finally, we have a scale opportunity in data centers, partnering with a leading global operator, with opportunities sourced from our logistics pipeline that we expect to contribute to earnings in FY '27 onwards.

Moving firstly to the investment portfolio, which represents the high-quality core of our business. The portfolio delivered comparable NOI growth of 3.5%. Strong leasing spreads in our essentials-based retail portfolio [Technical Difficulty] supported comparable growth of 3.1%, led by non-discretionary categories.

The logistics portfolio generated comparable FFO growth of 8%, driven by another period of [Technical Difficulty] rented, providing good opportunities to square meters of leasing during the year and is driving solid underlying income growth while also actively managing several assets that are being positioned for further development as either logistics or data center opportunities. Our commercial development pipeline has an estimated end value of approximately $16 billion, including approximately $9 billion in logistics, underpinning future growth and returns.

Three recently completed retail assets seeded our new convenience retail partnership with Morgan Stanley. And we have further opportunities in retail across our MPC pipeline. Leveraging our cross-sector master planning capabilities, we have secured power at several of our existing logistics sites for change-of-use opportunities into data centers, which I'll talk more about shortly.

Turning to residential for sale. Our Masterplanned Communities business delivered a 49% uplift in sales for the year and achieved just over 8,900 settlements, up 30% on FY '25 and above our target range due to a strong settlement performance in the fourth quarter, particularly in Victoria. Sales momentum was strong in the first half, with second half activity moderating as buyer sentiment responded to cumulative interest rate increases and uncertainty associated with tax changes.

Queensland and Western Australia remain the strongest market with demand moderating, but still exceeding available supply. In the New South Wales market, demand is concentrated to more affordable product. In Victoria, demand is stable but running below long-run volume averages. Apart from certain Victorian projects, customer incentives and rebates are running well below historical levels. We have seen cancellations and default rates decline during the year across the MPC business, now running below long-term trends.

Our MPC business enters FY '27 with over 3,800 contracts on hand at an average price above FY '26 settlements, providing good visibility in a moderating market environment. The residential market benefits from strong population growth, significant undersupply and favorable tax settings for new dwellings, which should support a return to equilibrium over the medium term.

We first entered the land lease sector 5 years ago, with the acquisition of Halcyon Communities. Since that time, we have scaled the business into a material earnings contributor. On a combined business, the business generated $137 million of FFO, up 40% on the back of a significant lift in development volumes, and expanding portfolio of established homesites and strong underlying growth in management income.

New project launches and continued demand for our product drove an 88% uplift in net sales volumes for the year and a 48% increase in settlement volumes. We are now actively trading from 17 communities, with 3 additional launches planned for FY '27, and our established portfolio totals almost 4,000 homesites. We also expanded our partnerships with Invesco and M&G Real Estate during the year, and we were pleased to welcome Mercer to our platform.

Moving on to our data center strategy. Our partnership with leading global operator, EdgeConneX, provides us with a clear pathway to monetizing the significant value upside embedded in our existing portfolio. By combining our land holdings and development and investment management expertise with EdgeConneX's operational experience, technical capabilities and hyperscaler relationships, we have created a distinctive end-to-end capability and platform for growth. The Stockland EdgeConneX data center partnership is focused on turnkey data center solutions for hyperscaler customers, primarily in Sydney and Melbourne. There may be sites that are not suitable for the partnership. And in those instances, there is a framework for us to undertake powered land sales or pursue other data center opportunities.

Moving on to our data center pipeline. In addition to the 450 megawatts of power secured across 3 sites, we have identified 4 pipeline projects within our portfolio, 3 of which have been endorsed by the New South Wales government's Investment Delivery Authority for a fast-track approval process. Given the progress we have made over the last 3 years in securing power and planning, we expect initial earnings contributions from site transfers in FY '27.

While progressing our data center opportunities, we are maintaining funding flexibility. The combination of partner capital and off-balance sheet leverage provides a significant funding capacity. And with our existing land at market value comprising a meaningful component of our equity contribution to the partnership, our cash equity requirements are staged and manageable. We expect data center funding, including land that we already own to total approximately 10% of group net funds employed over time, with capital to be recycled from other parts of the business, including our workplace allocation.

So in summary, our FY '26 result has demonstrated the resilience, agility and operational excellence of our portfolio through the cycle and the strength of our business model. Furthermore, our disciplined execution of strategy over the last 5 years has set up a focused and diversified business that is positioned for sustainable growth. In FY '27, the growth in other parts of our business is expected to more than offset a lower MPC FFO contribution. For FY '27, FFO per security is expected to be $0.38 to $0.39 on a post-tax basis. The distribution per security is expected to be $0.252, in line with FY '26.

We'll now open the lines for questions.

Thanks, Tarun. [Operator Instructions] Our first question today comes from Callum Bramah from Macquarie.

Just a couple in there. I just wondered, are you able to tell us what your current estimate is of the capital you'll need to contribute into the data centers? And maybe trying, I guess, come in a little bit closer on the contribution you're expecting in '27. Is that because you have good visibility into a contract as I understood that, that was kind of one of the conditions precedent required for you to seed one of the data centers into the joint venture?

Yes, Callum, thanks for the question. So yes, funding-wise, as I said in my speech, this will emerge 10% of funds employed. You know what's our funds employed today is about $15 billion. So, 10% of that is what we think our cash equity contribution is to the JV over the coming years, but that's over coming years. As you know, we just formed the partnership in March this year. So it's only been a few months. But we do have visibility and deals underway in site transfers that will be happening in FY '27, and that's included in our guidance. But the exact numbers, et cetera, will emerge, obviously, as the year progresses.

And just customers, so hyperscaler customer contracts and visibility on that?

Yes. So just to be clear, the site transfers can happen before customer contracts are signed. It's just the joint venture needs to be confident that there is enough interest and the sites are high quality. As you know, you just have to look at the 7 sites we put on our slide. They are very high-quality sites in strong availability zones. And since we formed the JV, EdgeConneX, our partner has been talking to hyperscaler customers in the more immediate sites that are further along the planning and power pathway. And as you would expect, we are getting some interest, but it's early days. And then signed contracts were not a condition precedent to site transfers, just to be clear.

And can I just clarify and maybe I'm reading into it too much, but the terminology around margins. So, I think you used the phrasing around 20% for your margins -- operating margins in MPC, whereas I think historically, it's been low-20s range. Is that a slight change you're expecting lower margins as we go into '27? And maybe in relation to that, is the margin on the contracts on hand in line with what you saw coming into or for this year? Or are they below despite the fact they've got a higher average price?

Yes. Thanks, Callum. A little bit of color around the margin outlook. There's a combination of factors that have impacted our margins moving forward. We've taken across the board, a view of more moderate growth in the near term given the change in market conditions. Over the last year or so, we've had some unrealized growth coming through our Victorian portfolio. And then we've traded out of a number of higher-margin projects, namely Elara, Newport, Willowdale. So, that's meant that our margin outlook is lower than prior year. But remembering a lot of this will be determined or the future outlook for margin will be determined by what we see once this market starts to recover.

A couple of years ago, WA was our lowest margin part of our portfolio. And we've seen margins grow there materially as that market recovered. So the margin outlook is influenced on a whole-of-life basis by our view of future growth.

The next question comes from Tom Bodor from Jarden.

Maybe another way to ask sort of the prior question around data center contribution. You've talked about growth in other parts of the business offsetting lower MPC contribution. Is there items outside of data centers that will be contributing that weren't contributing in '26? I'm thinking things like land lease sell-down profits or any other items we should be aware of?

Yes, Tom, I think what we, I think, are demonstrating in strategy and in execution is that we have multiple strong drivers of growth, which I touched on in my speech. And all of those drivers are now starting to contribute materially. So, I'll go through them. Management income, you've seen us grow that line, the gross line by about 25%. That trajectory there or thereabouts should continue. As you know, we formed 3 new partnerships recently, and our platform is growing. So, that high-quality line continues to grow.

Our logistics business, yes, we're doing site transfers, but there's also more development completions coming through. So, there's a good growth outlook for our logistics business. And then land lease, again, outside excluding sites transfers because we had some FFO contribution, the underlying business in both net income -- recurring income from rent and further development profits and margin, and we've guided to an improving margin in land lease are also going to be growth drivers coming into FY '27. And our retail business, let's not forget that we -- after consolidating after a few years, now we're growing that business because we've got high conviction in our convenience-based strategy coming out of MPC and we've got Morgan Stanley as our partner looking to grow with us.

So, number of growth drivers. And then, of course, data centers, which is the start of earnings contributions from that strategy. As we always said, the initial earnings would be site transfers. That is something we are confident on in FY '27. But that's just the start. There will be more in future years. We've identified 7 sites. And as we start to get into production, there will be development management, project management and other fees. Then we get capital partners. There will be further profit events, then development completions and then investment income. This is a long-term strategy for the group.

And is it right to think the majority of profits will be at completion? Or is that not the case?

No. As I said, site transfers, you're already starting those coming through given the value we've added over the last 3 years. The fees will start to accrue as well as production starts to take place in the joint venture. The real next material, I guess, profit event will be when we start introducing capital partners. But that we've got lots of times. We've got balance sheet funding capacity over time. But yes, initial, we've just started the strategy 3 months, 4 months ago by doing the partnership. So it's well underway.

And then maybe just one for Andrew on residential. I'd just be interested in how you're seeing residential prices evolving in the corridors in which you have projects at a national level? Like how much have you seen prices fall? And how should we think about going forward, the potential impact of that given your whole-of-life accounting policy?

Yes. Thanks, Tom. So, maybe I can just give you a bit of a view of each of the markets and how we're seeing things progress. Queensland and Western Australia are still the 2 strongest markets in the country. And we're seeing new releases, majority of them selling out on the weekend of release. We've gone from being multiple times oversubscribed to 1 to 2x oversubscribed for those new releases. Real focus on affordable product, and that's a theme across the country that we're seeing most demand for our more affordable product.

Queensland and WA, we've still been seeing 0.5% a month of sort of price growth coming through that portfolio at the moment, and that's obviously slowed from 1% to 2% a month that we were seeing 6 to 12 months ago. New South Wales is very much an affordability-driven market. Down in the Illawarra, where we've got more affordable product, we're still seeing good demand. The Northwest at Gables, where it's over $2,000 a square meter, demand has been slower. This market, prices have been moving sideways. There is limited rebating in the New South Wales market at the moment. So, we haven't seen large rebates being deployed. But very much a price-pointed market.

And then Victoria, Tarun mentioned that activity has being below long-run averages. So if you look at the latest national land survey data, it's annualizing running at sort of 8,000 to 10,000 vacant land sales per annum. That's below long-run averages that were more around $18,000 per annum. So, activity is still at a low level, but that market has stabilized. It's got a real affordability advantage now. You can get land in the growth corridors sub-$1,000 a square meter. And that's driving purchases, both first home buyers, but also interstate investors into that market. So, seeing prices there holding, but we are deploying rebates. And we've been doing that really for most of the last half as well. We spoke about that at the half year update, but seeing prices holding in that market as well.

The next question is from Richard Jones from JPMorgan.

Tarun, just in terms of -- I was just following on a little bit from the prior questions. Just the commercial development contribution was $35 million in FY '26. Just wondering if you can give us a rough steer of where that might be in '27, inclusive of data centers? Is that going to be a material change from that?

Yes. So, commercial development last year in '26 was mainly logistics, build-to-sell and a little bit of the Morgan Stanley transfer. So, we had some earnings from that. This year, it's going to be probably less than that, what we have noted. Obviously, the year still just started. So, we're not relying on a major contribution. So yes, not in those commercial development lines. But clearly, in data centers, as I've already said, we have good visibility of contracts that we're working on that will contribute to earnings on site transfers.

Okay. And maybe just a question for Andrew. Just the banks are saying that loan applications have stabilized in August. I know it's sort of early days. Are you seeing -- how are you seeing the volumes of, I guess, late July, early August and how that compares to sort of June, July? Just trying to get a sense as to whether the trajectory has bottomed or is still trending down?

Richard, from a net sales point of view, our Q4 net sales at around just under 1,950, they were roughly spread evenly over those 3 months. But we did obviously see a step down to the 512 in July. But we have seen a stabilization of those numbers at around those levels. We've seen inquiries stabilize. We haven't seen a continued fall in either inquiry or sales over that period. And remember, July, traditionally, for us is a lower month of sales. You've got a few seasonal impacts in there as well, particularly in the Southern states before you head into the spring selling season. So, that's how the market is looking. I wouldn't like to characterize that we've seen a step-up in August.

The next question comes from Lauren Berry from Morgan Stanley.

Question for Josh. You said in your presentation that you're moving to now wanting to recognize uplift on development through FFO. Can you talk a bit more about that change and whether that is being driven by the move into data center development?

Yes. Thanks, Lauren. Yes, we're very much -- we're making the change because of the evolution of our business, very consistent with our strategy. We are now seeing a number of large development opportunities that potentially span multiple periods in the future. So, what the new definition of FFO is doing is looking at that cumulative development revaluation gain or loss only when they're realized through a cash-backed capital partnering or a divestment transaction. So as you know, under the previous approach, when development value is created on investment properties, it gets recorded as a fair value gain and excluded from FFO.

So, we just think this really gives a more complete and consistent measure of the development performance of the business regardless of whether the assets held as inventory or investment property. But to be clear, there is no double counting. Any cumulative revaluation gains will be removed from the statutory revaluation adjustment through that FFO reconciliation. So, there's no ultimate change in accounting on how we treat these things. It's really just how do we better reflect the development value creation on these projects.

Sorry. And are you intending to put Stockland's share of the development gain through FFO? Or is it just simply when you sell down to a capital partner that, that share of it gets booked through FFO?

Yes. Very much only when we sell down. So when we sell down -- so it's cash backed as we realize that. So on the portion that we retain would continue to be revalued through fair value gains.

Yes. Okay. Great. And then on development, these days I understand that you're planning on booking land sale profits in FY '27. Can you talk a bit more about the timing of when you think that these projects are going to commence actual construction? And also give us a sense of which project is probably the most imminent and whether you would be looking to commence potentially without a contract in place?

Yes, Lauren, it's a bit early to get into that level of detail. We're just starting the financial year. The deals we're working on, as I said, we have good visibility. They include obviously transfers to EdgeConneX, but you will note we also have the framework in place to do powered land sales if they're not suitable for EdgeConneX, so they could take different forms of earnings contribution. But at the moment, the focus really is still getting planning and full power. So, power has been secured, but as you know, it takes 6 to 12 months for final contracts to be signed and some of these sites are working through that process and also DAs, et cetera, are still coming through. So, there's a number of conditions precedent that we'll have to satisfy during the course of FY '27, which we're confident on. And obviously, that's why we've included it, a contribution into our guidance. But as the year progresses, we will share that information with you.

The next question comes from Cody Shield from UBS.

Just first question on MPC. Looks like around 30% of MPC revenues went to JV partners in FY '26. Where do you see that landing for '27 and maybe for land lease as well?

It's going to be around a similar number for the year ahead, obviously, dependent on actual volumes coming out of each project, but we would expect the number to be similar. Within land lease, Cody, I might have to come back to you on that number.

Okay. No worries. Maybe just turning to July trading. Very early days, but are you seeing any noticeable shift in the mix of buyers that you're getting? Are you getting more investor activity post budget?

It's probably a bit early, Cody. Just -- we're obviously monitoring that as well. There is some volatility week-on-week, month-on-month, but probably too early to call that a trend. Ultimately, we think the changes towards new build product from a tax policy setting will support the new part of the market, but it needs to be confidence in stabilization of the broader housing market before you see that really play out in bigger numbers.

The next question is from Suraj Nebhani from Citi.

A couple of quick ones from me. Sorry to ask the data center question again, but it's hard not to. I guess, you outlined 450 megawatts of secured power approved sites across 3 of them. Firstly, can you confirm all 3 are slated for the EdgeConneX partnership and will be built out as fully fitted data centers?

I think what I'd say is the EdgeConneX partnership is to do fully fitted out hyperscaler -- hyperscaler fully fitted out data centers. In terms of the specifics of which site goes when, it's too early to say that. Obviously, we need to go through a proper process with our JV partner. There's a very defined process. We are offering those sites as they come up for conditions precedent and then they'll go through. But yes, I think that's what I'd say, Suraj, but too early to start to be too specific on each site transfer. We'll let you know when those start to happen over the course of the year in what happened, but it's just the start of the year.

And just other one on the funding requirements. So it's good to have the clarity on, I guess the percentage of NFE. We keep getting asked about, I guess, what could the potential size of the total capital be in the data center requirements, including the partner contributions? Can you touch on potential sort of end value or of maybe the power approved pipeline or some sort of stuff around the potential spend, maybe just per megawatt or something like that?

Yes. I think just the cost per megawatts approximating $20 million per megawatt as a general rule of thumb. I won't give you a specific one we are using. But as a general, you can use that. So if you use that, you can come up with a cost number. Obviously, value, again, you can make your own assumptions based on what's happening in the market. There's significant value creation. We put an indicative slide there using 100 as the base for you to work through.

But as I said before, the current secured pipeline and the others we're working on, we've got a long road ahead that we have good funding pathways for just on the balance sheet funding. But remembering, once customer contracts are secured, these assets become very valuable for capital partnering and that's our strategy. We've demonstrated in every sector. We've done that. So, over the next 2 to 5 years, we've got a lot of value to create and also funding that we'll be taking forward. But as we've articulated, we have good pathways on funding.

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

Just a question on what's the end value of the data center sites that they're being assessed on? Are you selling them in as powered land? Are you selling them in as completed data center? How much of the economics are you giving away to EdgeConneX? Just trying to understand and quantify the potential value uplift on this land.

Yes, Adam, the sites are going to go into the partnership at a fair market value based on, obviously, a zone site and a zone cleared site with power secured. So, we are fully capturing the value that we are creating, we, Stockland because we've been working on these sites for over 3 years, and we've owned some of the sites for 10, 20 years. So, our securityholders will be rewarded fairly for that. After that, clearly, EdgeConneX brings a lot of value through the technical capability and the operating capability and clearly the hyperscaler relationships. And after that, everything is shared pari passu.

Okay. Great. That's clear. And I just wanted to clarify. I think you mentioned that the revaluation uplifts in FY '27 will not be material. Is that correct? Or will they have a material contribution to earnings?

No, just to be clear. So, I think the change in FFO that I talked about in relation to development -- realized development gains, cash back realized development gains for our investment properties, it will be -- that will be immaterial for FY '27.

The next question comes from James Druce from CLSA.

Maybe just a question on -- one more question on the land profits, if I may. It sounds like that will be rolling or some of that will be rolling into FY '28 as well. Like do you expect to take all of those land profits through '27?

James, there will be -- this is a programmatic strategy for us. There is 7 sites identified. We are talking initially only a couple of sites in terms of what's in our initial guidance. So, there will be more sites in future years. And also the recognition will span more than 1 year, depending on the construction program. Obviously, with the developer, we'll have some development services agreements to prepare the site, service it, things like that, which will impact the profit recognition, but it will be over multiple years. It's not all in '27. This is just the start.

Okay. That's clear. Maybe just on the capitalized interest, it picked up from $180 million to around $220 million. I think that sounds a bit high this year. But can you just provide some guidance for the cap interest for next year, please?

Yes, James. Obviously, capitalized interest has increased as a result of the increased activation of our pipeline and the slightly higher interest costs. And as we look forward, we think it's going to be a similar level of capitalization next year, slightly higher cost, but yes, similar level of capitalization next year.

The next question comes from Ben Brayshaw from Barrenjoey.

Just a follow-up question on the release of COGS interest for MPC as a percentage of revenue seems to have ticked up for FY '26. Just wondering if you see that as a new normal run rate for FY '27 and beyond?

No. Listen, it was a little higher. It was included in FY '26, the sale of North Shore that had a higher proportion of interest capitalized, which was released through COGS. So, our expectation is moving forward that it should be closer to our previous range that we've guided in the order of 6%.

And then in FY '26, you recognized a capitalized interest headwind for MPC. Do you expect that to normalize? Or just any comments on FY '27 capitalized interest headwind or benefit for MPC, please?

Yes. Are you talking about the -- because what I think it was, what, 6.3% in '26. It was just above 6%. As Josh was referring to, that had North Shore in it, but we've also launched a number of long-dated projects that we've held in our portfolio, Rivermont and Botanica. So, you start to get more capitalized interest coming through there. Importantly, in MPC, we released through COGS more cap interest than we took onto the balance sheet over the last 12 months. So, you're not seeing a buildup. We've given that range of 4% to 6%. Next year is probably going to be towards the top end of that range as well with some of these longer-dated projects coming to market, which is a good thing for activation. And obviously, we continue to focus on that ROIC metric as well to make sure that we're allocating capital in a disciplined way.

And so just a question on the WACD guidance of 5.9%. It's quite a material increase on FY '26 when hedging in place seems to be broadly unchanged over the last 6 months for FY '27. Just wondering if you've done anything to alter the finance costs that is included in FY '27 guidance of 5.9%. Or is it just an increase in the floating rate?

It's really very much the increase in the floating rate. As you just suggested, our hedge is expected to be a similar level in '26 as to what it was in '25. But yes, it's really the increase in the underlying rate.

The next question comes from Claire McKew from Green Street.

Just a quick question on capital allocation priorities. Obviously, there's not appetite to really move the needle on gearing. So, you're beholden to rotating capital in partnerships. I'm just curious, given the levers you -- the material levers you have on the development side, where should we expect -- where do you see the highest and best use of that capital on the development front? Is it really reorienting to ramp up data centers and moderating logistics? Obviously, there's retail within the MPCs. If you can just give us some color on where you see that the highest and best use of your capital on that front?

Yes. Claire, yes, I think what I'd say is that at the macro level, our general capital allocations to living, retail and logistics is appropriate as we see the near and medium term. But within that, where we're allocating -- obviously, in some of our development business, we go through cycles. We allocated a lot of capital to MPC in the last couple of years. That has worked for us. But as Andrew said, we're very ROIC disciplined. Our ROIC in the MPC business through the cycle, we've demonstrated somewhere between 15% to 17%.

So, that implies if sales slow, we will pull some of the capital back from that business and allocate to other growth areas like data centers and logistics where we're still making good returns, including land lease. But over the next 3 to 5 years, what you should expect is that as we start allocating more to data centers, we will start to moderate our workplace, our office exposure. That is not as strong a conviction sector for us, but we will do that as the funding requirements come through.

We've already done it through change-of-use to higher uses to either data centers or build-to-rent or to resi for sale. So, that's a key source of funding and recycling that we'll do. We've been recycling $700 million of assets every year in a systematic way. And then you've got to remember, we're now starting to build a very strong track record in attracting blue-chip capital to our platform. And when we're doing new development, new starts, if we're putting 70% or 50% partner capital and off-balance sheet leverage within our guidelines, that provides a significant firepower to the group to grow our businesses. And we've demonstrated that last year. We raised about $2 billion of capital in that way. So it will be a combination of down-weighting of workplace and capital partnering.

Okay. That's helpful. And just -- I appreciate there's been a lot of discussion on the data center development, land profit coming through. But just really specifically, so you've mentioned it's cash backed. Obviously, once you contribute it into the partnership, there's no cash flow, rather the cash benefit is being driven by the fact that you've contributed that capital by virtue of the land profit. In turn, that reduces the burden on the remaining development costs. But I'm just curious because you baked that within that cost, correct, right?

No. When we sell down our land positions into partnerships, our capital partner or third-party JV partners settle it with cash, hard cash, and that is what we will be -- yes, there's no non-cash. This is hard cash that comes back, including any WIP or whatever is accrued to the land and any development margin that we're realizing on sell-down, that will all be cash backed in future years. That is the business model of the group. We're a developer across our logistics. We've got major projects coming through, as Josh said, data centers, retail, et cetera. So it's just reflecting the activity of a developer. When we sell our positions, we get cash and we recognize it in FFO.

Okay. So there's not a lag there in terms of just a lower -- okay, got it. And so just in that vein, if we look at, say, one of your projects like Cherry Lane, which is obviously a smaller one, just running some high-level numbers on that land -- potential land profit contribution based on broader market evidence, like has -- you mentioned that, that contribution will be negligible this year.

But when I run numbers on at least one of those assets coming through to the partnership, it has the ability just on that land profit to move the needle by perhaps like 3% to 5% of your FFO. So, I'm just wondering, can you give us a sense of the profitability you're expecting in terms of sales from land prior to the power secured and development secured versus what you're expecting to achieve on that transfer?

Yes. It really depends on our holding values. There are 7 sites that we've identified. So, it will depend on what our carrying value is. But general rule of thumb, if you've got logistics land and that secures power and planning, it can be anywhere from -- depending on what you're doing from -- at book value to 2x book value. So again, it will be site by site. So yes, I think the specifics, we're not going to get into in this call. But as you can see, we are already demonstrating through our guidance and what we will be booking through FY '27, significant value creation coming through, which will be cash backed.

The next question is a follow-up question from Suraj Nebhani.

Just one quick question on the Investment Management constraints. Tarun, I think you highlighted strong growth, 25% per annum growth over the last few years. How should we think about further capital partnerships potential? Are there -- and sort of going back to the previous question as well, is it primarily in the data center space or there's potential for more capital partnerships in other parts of the business as well?

Suraj, thanks for the question. It's Kylie here. So, you can see capital partnerships is very much part of our strategy, and we welcomed 3 new partners onto the platform this year. We also now have partners across all of our sectors. And so we expect to do a combination of growing those partnerships within the existing sectors and new partnerships as well. And of course, data centers will be a big part of that.

That's the last question we have time for today. I'll now hand back to Tarun for closing remarks.

Thank you. Thank you for joining the call, and we'll finish it here, but we're looking forward to seeing you all on the road show over the coming days and weeks.

Good morning, and thank you.

That concludes today's call. Thank you for joining us. You may now log out.

Good morning, and thank you for joining Stockland's Half Year 2026 Financial Results Update. Before we begin, I'd like to acknowledge the traditional owners and custodians of the land on which we meet, the Gadigal people of the Eora Nation and pay my respects to elders past, present and emerging.

Joining me today is Josh Mchutchison, our CFO; Kylie O'Connor, CEO of Investment Management; and Andrew Whitson, CEO of Development.

In the first half of FY '26, we delivered a strong financial result while continuing to invest for future growth. The execution of our strategy over the last 4 years has translated into strong operational and financial performance.

We have significantly lifted production volumes across our platform, activating more of our pipeline to deliver attractive, sustainable returns. We have positioned our MPC and LLC platforms to deliver for our customers and our security holders in an environment of a continuing structural imbalance between supply and demand.

Now turning to the result. Funds from operations for the period was $325 million, up almost 30% with FFO per security of $0.135. The result reflects a significant lift in MPC settlement volumes, higher fee income from development partnerships and a strong underlying performance from our investment management portfolio. Importantly, we have delivered this growth while maintaining balance sheet strength and risk discipline.

Net tangible assets increased to $4.25 per security. And as anticipated, gearing ended the half at 28.1%. Over the last 4 years, we have focused on reshaping our portfolio, embedding additional growth pathways and positioning the business for sustainable performance. FY '26 represents a step change in delivery of our strategy, and we are seeing that clearly reflected across the business this half.

In our residential platforms, MPC and Land Lease sales were up 87%, reflecting higher project activation and improving conversion as we focus on increasing delivery into a supply-constrained market.

We have seen increased demand from first home buyers for our affordably priced product. We launched 4 communities during the half across Queensland and Western Australia, with 2 additional launches targeted for the second half.

We have created additional drivers for longer-term growth in sectors such as data centers, Apartments and Logistics, maximizing the value of our land holdings and leveraging our end-to-end capabilities.

We secured approximately 350 megawatts of power at 2 of our existing Victorian logistics assets, supporting future data center development. This brings our total secured power bank to approximately 450 megawatts. We are progressing final documentation for our data center partnership with EdgeConneX, exploring both near- and medium-term opportunities across our portfolio.

Across our commercial development pipeline, we completed approximately $420 million of build-to-hold projects and commenced a further $620 million of developments across Logistics, Town Centers and communities real estate. And we are pleased to have recently expanded our relationship with an existing investor by forming a new 50-50 partnership in the Land Lease sector. The new partnership will be seeded with 2 existing development projects, with an initial gross asset value of approximately $200 million.

Across our business, we are focused on maximizing our options for future growth while always maintaining our focus on risk, capital efficiency and sustainability. To that end, we have now met our target of net zero Scope 1 and 2 emissions. Importantly, this has been achieved through initiatives such as our rooftop renewable energy partnership, decarbonizing our footprint and generating commercial returns for Stockland.

I will now hand over to Josh to provide an overview of the financial results.

Thanks, Tarun, and good morning, everyone. As Tarun mentioned, the consistent execution of our strategy has delivered strong operational and financial outcomes over the half. The first half '26 result is characterized by significant earnings growth, a strong balance sheet and capital settings that support future growth.

Turning to the financial result in detail. Funds from operations of $325 million was up 29.5% on the prior corresponding period, with FFO per security of $0.135. The Investment Management segment delivered consistent FFO with strong comparable FFO growth, high IM fee income and build-to-hold completions, offset by the strategic recycling of assets into capital partnerships in the previous period. We have almost tripled development FFO, primarily driven by significantly higher MPC settlement volumes from our expanded platform and growing development fees, consistent with increased development activity in partnerships.

Growth in unallocated corporate overheads was consistent with the growth in our platform and investment in capability, increasing 8%. Over the last 3 years, our overheads across the business have grown by 4.6% per annum versus revenue growth of 9.3% per annum, and we remain focused on continuing to generate positive operational leverage. We expect total overheads across the business in the second half to be broadly in line with the first half result.

Net interest expense was down, reflecting higher interest capitalization into projects in line with increased activation of the pipeline. Average net funds employed across commercial, MPC and LLC development was around $700 million higher in first half '26 compared with first half '25 and a greater proportion of it was in active production.

FFO per security was up almost 30% on a pre- and post-tax basis to $0.135, and AFFO per security at $0.108 was comfortably above our distribution per security of $0.09.

Moving on to capital management. We have maintained a strong balance sheet position. As expected, our gearing finished the period at 28.1%. We expect gearing to moderate back towards the midpoint of the target range by 30 June 2026. This reflects a weighting to the second half for both MPC and LLC settlement volumes and group operating cash flow. Our weighted average cost of debt for the period was 5.2% compared with 5.3% for FY '25, and we expect this to trend up slightly over the second half to average 5.3% for FY '26.

Our fixed hedge ratio averaged 74% for the period, and we took advantage of a favorable point in the credit cycle during the half to extend our weighted average debt maturity to 4.8 years through the issuance of $400 million of 10-year medium-term notes.

We finished the period with $2.1 billion of liquidity, comfortably covering approximately $1.25 billion of drawn debt maturing in calendar year 2026 as well as providing future funding flexibility. Consistent with our previous guidance, we expect the FY '26 distribution per security to be in line with FY '25. The distribution reinvestment plan was in operation for the period, and we continue to actively manage our capital settings to support growth.

Now on to cash flows. Operating cash flow for the period was negative $315 million. This reflects an increase in development expenditure across our MPC, LLC and build-to-sell commercial development pipelines in line with increased pipeline activation and in advance of completions and settlements.

Consistent with FY '25, we expect second half operating cash flow to be materially stronger than first half, driven by the weighting of settlements to the second half. Overall, we have delivered a strong result for the period and invested for future growth while maintaining a strong balance sheet and ample funding flexibility.

I'll now hand over to Kylie to take us through the investment management result.

Thanks, Josh, and good morning. The first half of FY '26 has been another strong period for the Investment Management business, delivering consistent performance while also being positioned for further growth in future periods.

The portfolio delivered comparable FFO growth of 3.7%, underpinned by solid performance across all sectors. We continue to achieve positive leasing spreads ranging from 3.3% in retail to 32% in Logistics. New development completions are supplementing our growth and fee income from partnerships continues to build.

We delivered a solid financial result for the half while absorbing net operating income dilution from the strategic transfer of assets into partnerships in FY '25 and investing in capability and platform expansion to drive growth in future periods. We remain actively engaged with our existing capital partners to expand their exposure across new sectors and strategies, supported by the scale and diversity of our Development pipeline.

The Logistics portfolio was again a standout, generating comparable FFO growth of 7%, driven by positive leasing spreads of 32% on leases and renewals negotiated during the period. The team is driving solid underlying income growth from the portfolio while also actively managing several assets that are being positioned for further development as either logistics or data center opportunities.

The WALE at 3.3 years continues to provide us with access to positive reversions, with the portfolio 12% under rented. Over time, we expect this WALE to increase as new developments with longer leases come online and brownfield opportunities are converted.

Moving to Town Centers. We've delivered comparable FFO growth of 3.2%, with positive leasing spreads of 3.3%. The portfolio continues to benefit from its high weighting to essentials-based categories, while discretionary categories such as leisure, homewares and jewelry continue to show improvement.

Comparable specialty sales are in line with benchmark averages, while occupancy costs remain at a sustainable 15.1% and portfolio occupancy is high at 99%. In line with strategy, we delivered a new neighborhood town center within our Gables MPC community during the half. The center was delivered fully leased to Woolworths and 24 specialty stores with positive early trade performance.

Turning now to our Workplace portfolio, the majority of which is being prepared for repositioning, including mixed-use opportunities. A small increase in FFO was primarily driven by the completion of the final 2 buildings at Stage 1 of MPark in New South Wales. A total of 8,000 square meters of leasing was completed across the precinct, bringing overall occupancy to 74%, with 11 Khartoum Road now at 87%. The Workplace team remained focused on ensuring the highest level of operating income and adding value via development opportunities across the portfolio.

A growing component within the IM platform is our communities rental income, which is comprised of our established LLC assets and an emerging portfolio of childcare and medical centers located within our Masterplanned Communities. The assets deliver stable long-term earnings and an attractive Development pipeline, underpinning future growth.

Sector income increased by 10%, with the uplift supported by the addition of completed LLC and CRE assets during the period. The portfolio delivered comparable FFO growth of 2.1%, reflecting the relatively small size of the comparable basket.

The LLC operational portfolio now consists of more than 3,300 home sites under management, providing recurring rental and fee income with the majority of rental increases linked to CPI. Our significant pipeline comprising more than 7,500 homesites also provides future growth opportunities.

Approximately 29% of the portfolio was independently revalued over the half, resulting in an increase of $81 million on the 30 June 2025 book value. This reflects positive revaluation movements for both Logistics and Town Centers, partly offset by some devaluation across assets held for repositioning in the workplace portfolio.

Overall, the Investment Management business continues to deliver sustainable earnings from a diversified base of assets and new income streams with future growth opportunities supported by our high-quality Development pipeline and long-term partnerships.

Thank you. I will now hand to Andrew.

Thanks, Kylie, and good morning, everyone. The Development segment delivered a strong first half result on the back of disciplined execution of our strategy. I'm particularly pleased by the increased activation we've driven across our MPC and LLC pipelines, a strong uplift in MPC settlement volumes and growing demand for our LLC product. This positions the business well to continue to perform through the cycle.

Development FFO was $106 million compared to $36 million in first half '25, reflecting a significant lift in MPC settlements, disciplined project activation and higher fee income from our partnerships.

Our deliberate decision to upweight to the strong Queensland market, expand our platform and accelerate activation of our pipeline are delivering results. MPC settlements are up 60% over the half.

There were no commercial development profits this half. We expect this business to contribute to earnings in the second half with the completion of build-to-sell projects. We've also achieved strong leasing outcomes across our Logistics and Town Centers pipeline.

In Masterplanned Communities, settlements were up strongly year-on-year. The Development operating profit margin was 18.1%, reflecting strong price growth in Queensland and Western Australia. Consistent with previous guidance, we expect full year margins in the low 20% range. We end the half with 5,458 contracts on hand at an average price slightly above first half '26 settlements, giving us good visibility for the full year. Our focus is now on building our contracts-on-hand position for FY '27.

Net sales were up 87% on the prior corresponding period, reflecting higher project activation, the successful integration of the Land Lease portfolio and increased conversion. In January '26, we secured a further 418 net sales. This reflects the timing of releases to coincide with the launch of our summer marketing campaign from late January.

Our recently acquired Kings Forest project in Northern New South Wales delivered first settlements during the half. We're seeing good demand for this product, which is selling into the heavily undersupplied Gold Coast market.

We've continued to selectively restock on capital-efficient terms with our South Morang acquisition during the half, providing us with exposure to the infill Northeast Melbourne market, which continues to outperform the broader Victorian market.

On to our market outlook for the year ahead. Overall, we remain constructive on the residential market over the medium term as Australia continues to face a growing structural undersupply, with population growth supporting demand. However, market momentum is correlated to interest rates.

In New South Wales, tight supply is expected to continue to support prices despite affordability pressures. In Victoria, the recovery is forecast to gain traction, supported by normalizing listings with ongoing variability by corridor.

In Queensland, strong demand and constrained supply are expected to underpin sales volumes with price growth to moderate due to emerging affordability constraints.

In Western Australia, conditions are expected to remain robust, though lower investor sales point to a moderation in demand over time. These fundamentals support our confidence in meeting our FY '26 forecast.

Our Land Lease community settlement volumes for the half were broadly in line with first half '25. We expect a significantly higher volume of settlements in the second half as several new communities deliver first settlements. We're also expecting a higher operating profit in second half '26, with first half margins reflecting the settlement mix and higher marketing costs associated with new launch communities.

Contracts on hand increased to 637, up around 60% versus June at a higher average price. Our Land Lease sales were up 81% over the half. We're seeing strong underlying demand, particularly in the Queensland market. And our Victorian projects are now benefiting from the completion of community infrastructure, which is driving higher conversion rates. We're actively managing release timings to maintain our delivery time frames.

We've also seen continued price growth across all markets. This has been partially offset by cost escalation in the Queensland and Western Australian markets. Across our commercial development pipeline, we now have $1.2 billion of high-quality investment product under construction. This includes $800 million of logistics developments, which is over 90% leased and 3 essentials-based town centers within our MPC communities, with a combined value of $400 million.

The conversion of our commercial development pipeline into product generates attractive yields on cost, high-quality investment product for us and our partners and increased amenity for our residents. We're continuing to grow our powered data center pipeline with an additional 350 megawatts secured over the half at 2 of our logistics properties in Western Melbourne.

So overall, from a Development perspective, the disciplined execution of our strategy over the half has driven strong FFO growth. We're on track to deliver a step change in residential settlements over the full year and progress across our commercial development pipeline provides growth levers for future periods.

I'll now hand back to Tarun to conclude.

Thanks, Andrew. So to conclude, our first half '26 result demonstrates that the disciplined execution of our strategy is driving strong operational and financial outcomes. The macro environment, including interest rates remain uncertain. But we have a well-diversified, resilient, high-quality platform. And over the last few years, we have reweighted the business towards sectors, where we have deep capability in and that benefit from long-term structural tailwinds.

We are on track to deliver a step change in settlement volumes in FY '26 for both MPC and LLC, along with the higher production volumes across our commercial development pipeline. We expect commercial development activity, including our Sydney Logistics pipeline, data centers and mixed-use opportunities to provide multiple drivers of returns in future periods. And while driving growth, we remain focused on risk management, capital efficiency and sustainability.

We are reaffirming our guidance for FY '26 FFO per security of $0.36 to $0.37. Our FY '26 distribution per security is expected to be $0.252, in line with FY '25 and within Stockland's payout ratio range of 60% to 80% of FFO.

We will now open the line for questions.

Thanks, Tarun. We will now start the Q&A session. [Operator Instructions] Our first question comes from Lauren Berry from Morgan Stanley.

I'm just interested in the settlement guidance range of 7,500 to 8,500 lots, like you kept it the same versus where we were 6 months ago. It looks like if you add up your settled lots this half and the contracts on hand, that's getting you to just below the lower end of the range. So just interested in how you think -- how you're thinking about the range and what's the actual potential for you to get to the upper end?

Yes. Thanks, Lauren. Yes, we start the second half with a strong contracts on hand position on the back of that second half sales result, which obviously gives us good coverage for the rest of this year and then starting to build the bin into '27, which is positive. The main factors with regards to where we land for the year now are really down to 2 elements: one, settlement rates as we move into sort of the May and June period; and then the second one is just the completion of production and production is well progressed. It's really getting through all of the back-ended authority approval requirements to get registrations and call for those settlements. So they're the elements, but we're obviously pleased with where we are, and it sets us up well to be within our guidance range.

As you know, we still have a material skew to the second half in terms of our lots and FFO. And as the months and weeks progress from here, it will then illustrate where in the range we land. But as Andrew said, right now, we're positioned very well.

Great. And then on how momentum is going post all the chat about rate hikes, you noted in the call that resi momentum is very correlated to the rate environment. Are you able to give us a little bit more color on how like inquiries or visits to your display suites have been going in the last, say, 3 or 4 weeks?

Yes, I'll get Andrew to comment just on that specific question. But we have a quality, well-diversified business. The interest rate increase was only recent. It's really very early to see any impacts as you would have seen in -- when rates go up and also when they were coming down last year, it's really the second or third interest rate rise where you start to see a shift in buyer behavior. And then the sales impact, whether positive or negative, is sort of follow 6 to 9 months later. So it's that sort of response you'd see. And we'll be reporting on that in due course.

But as I said, in terms of our own strategy in our business, we -- as we look into '27 and beyond, clearly, we have a very high-quality residential business. Our scale is very different to before. Activation is 85% and the Land Lease business performing well. So that business is strong, but we've got many material drivers of growth that are now upon us, such as data center, Sydney Logistics and our apartments pipeline. So the business is well positioned to deliver sustainable performance. But this specific question on what we're seeing around the ground, Andrew?

Yes. Thanks, Lauren. On the sales office floors, we're not hearing any feedback from customers deferring the purchasing decision due to the rate increase or the outlook. So as Tarun mentioned, normally, there is a delay there, but we're not getting that feedback at the moment. In 3 of the 4 states, if we had more product to release at the moment, we would be making more sales. And you can see that in the national land survey data in the back of the deck, sales volumes, total market sales volumes in both Southeast Queensland and Western Australia have declined and a number of active projects have declined, and that is purely supply. That's not reflective of demand. And we're experiencing something very similar in our pipeline -- in our portfolio. And we do manage those delivery time frames, so we don't get out too far as well from sale to settlement.

The next question comes from Tom Bodor from Jarden.

I was just interested in your new Land Lease partnership. And is that effectively replacing an old capital partner that would like to be redeemed? Or is that an entirely new partnership?

Yes, Tom. So it's a new partnership into the Land Lease sector for us. As you know, we've got Invesco as our partner, and this will be a new partner joining us. They're one of our existing clients, and we'll share that there's a couple of conditions precedent to go. So we're just working through those. So it's pleasing one of our existing clients is looking at it. It's a different partnership.

The one you're referring to, which is in SRRP, which is Mitsubishi, they are recycling their capital. They've had a great experience over the last 5 years. As they've said publicly, the portfolio has performed exceptionally well. But as they're doing across many of the investments here in Australia, they're looking to recycle, and we're supporting them on that. That may actually lead to some other investor interest, but that it's too early to say that process has just started. They're using an agent to run that, and we're supporting. So yes, this new partnership is discrete, another one that we're doing in the sector, which again shows the demand for our platform and the pipeline, the quality of pipeline we have going forward.

Okay. Great. And then that decision by Mitsubishi to potentially sort of exit and potential for a new buyer, are you reliant on that to generate future sell-down profits in that business? Or can you generate those with the Invesco partnership? Just I noted you didn't have any sell-down profits this period.

Yes. No, we've got this new partnership plus the Invesco one, plus the SRRP will have capacity depending on the new investor, but that portfolio is stabilized now. So it started with 6 assets, 5 have already stabilized. And the last one is in another couple of years of sales to go. So that's a much more core stabilized portfolio, and that will attract the relevant style of investor, whereas the 2 partnerships we have now with Invesco and this new investor are more developed to core style.

So again, across the risk spectrum, we are populating that, but we've got enough demand coming through our partners. And also, we have our own requirement to access Land Lease earnings. As you know, we said around 10% of employed capital would be comfortable in Phase I of our strategy. We around that. So we, Stockland, also have a great need to continue to access those quality earnings. So the business is in a very strong setting going forward.

Great. And just a final one. I think in the outlook statement, you talked about an expectation for more commercial development profits going forward. Just interested if you could elaborate on sort of the timing of that uptick and how those profits might be realized? Is it developed to core? Or is it more developed to sell type?

No, as Andrew said, it's -- yes, it's developed to sell in our pipeline. So develop to sell CP pipeline, and it will be between 14th of February and 30th of June.

The next question comes from Cody Shield from UBS.

Just first question, a substantial amount of those settlements in the first half, they went through the JVs. So what will that volume look like in the second half? And how should we think about it from a revenue or development margin -- sorry, development management fee perspective?

Thanks, Cody. So for the full year, it's going to be tracking at about 25% through the JVs. Yes, when you think about -- the way to think about it would be looking at the overall revenue figure and the margin in the low 20s, that's sort of the building blocks.

Okay. Got it. And then maybe just turning to buyer type. So it looks like you didn't really see a big jump up in first home buyer activity in Q2, which is surprising with the policy change there. So what are you guys seeing from that segment of the market at the moment in terms of demand? I know you touched on the broader picture, but just on that segment would be great.

Yes. I think you're seeing that Commonwealth government scheme driving demand for first home buyers right across the market and recognizing that when people apply for that scheme, it is upon settlement. So a lot of the sales that we're making potentially aren't flowing through to that data right at the moment. But we have seen an uptick in first home buyer inquiry given the supply-constrained nature of 3 of the 4 markets where we trade, that is having an impact on the availability of land for first home buyers as well. So that is definitely supporting underlying demand of the broader market and over time, is a positive for getting first homebuyers into homeownership.

Yes. We saw -- I think we reported a 50% pickup first half to second half '25. And that recovery in demand was underway before the Commonwealth support scheme that came. As we've said, 90% of our -- over 90% of Stockland product is eligible for that scheme. And we've been pivoting as we have for the last couple of years because of affordability constraints to provide more affordably priced products. So the combination of our own lot offers plus some support is driving that demand, which is really pleasing to see because the first home buyers getting into housing is a key plank of what we try and support.

Great. That's clear. And then just the last one on cap interest. So you had a big step-up there in first half. Is that going to subside into the second half?

Yes. Thanks, Cody. I think the average development NFE for first half '26 was around $700 million higher than for '25. So that's obviously a key driver of that step-up. And that's before we take into account our share of the debt and development partnerships as well. And I think perhaps an additional point there is the increase in the activation of our projects also drives a greater proportion of development capital that is subject to interest capitalization. So I think as we look forward, you would expect as settlements come through and whatnot, those numbers will adjust. But yes, I think they're the key drivers of what's driving that capitalized interest uptick.

The next question comes from Richard Jones from JPMorgan.

Andrew, maybe a question for you. Just in terms of the MPC settlements, it looks as though it was perhaps less of a skew than you originally guiding. I think you're kind of saying it was going to be a similar skew to last year, which had less than 30% of settlements in the first half. Just wondering if you can call out why you might have had a better settlement level and perhaps lower SKU than originally expected.

Yes. Thanks, Richard. Yes, the number is slightly less than last year, which is positively. Obviously, the prior year, we had the impact of some pretty significant weather coming through in that period, which pushed settlements to the second half. Yes, the number being slightly better, both our ability to accelerate production. It is a supportive environment at the moment for getting more supply on the ground and into market. So working with all of the regulators has been positive through this half.

And then completion rates, Richard, it's good to see the completion rates. And you can see that flowing through to both the cancellations and the default rate numbers over the half as well. So it's sort of a combination of those factors, which has moved us back to the more traditional 40-60 split. There always is a second half skew, but we want to get it more balanced.

Okay. And then just interested in your sort of high-level thoughts again, Andrew, just around migration demand. Obviously, we were in lockdown through late 2020 and 2021 and migration reopened in 2022, and we saw obviously a population surge. It seems to be around that 3- to 4-year lag that drives demand. So would you be expecting migration-led demand to be picking up across your estates?

Yes, Richard, your statue quote there are spot on. It is that 3- to 4-year delay that we've seen from new migrants entering the country, traditionally rent around Sydney and Melbourne, established that credit history and look to purchase real estate in that sort of time frame lag. So there is a thesis that we should see that increase that we saw post-COVID flowing through to demand over the next few years, particularly in the MPC space. And we are seeing good demand for that affordably priced product. And one of the benefits of our portfolio is we're able to remix our product in an agile manner. And we're planning over the next 12 months, how do we get more affordable product to market, how do we resequence, how do we remix to continue to lower that average price point because that's where we're seeing the greatest demand across all segments. That's first home buyers, downsizers and investors.

One more quick one. Just in terms of the data center opportunities, can you outline when you might expect the first project to kick off and how you're thinking about the funding structure?

Yes. We're now working -- obviously, firstly, very pleased we've got now 3 projects with power secured. As you know, power is the critical path on the strategy and in this sector. So that's pleasing. We're now working to get DAs, building approvals, that's sort of getting the sites ready, which will take a little while and then also executing final power purchase agreements in due course. So that's our focus.

The Edge partnership is in final documentation. So we're talking to them about how we activate the near term, the short-term and medium-term opportunities. So all that work is underway.

Timing-wise, we'll let you know in due course, unlikely we get anything started this financial year. But as we move into '27 and beyond, we'll provide updates once we start to get those conditions precedent on power, the planning approvals starting to come through, which the sites are zoned for. We're now applying for DAs and then clearly, customer contracts and customer interests on the critical path. So we'll share that in future periods with you. But again, as I said, pleased with securing power, which is clearly a special skill our business has given how much power activation we do right across our platform in the residential business.

The next question comes from Suraj Nebhani from Citigroup.

Just following on from Rich's last question about data centers firstly. Tarun, can you talk to the strategy there or any updated thoughts you have on that with respect to the realization of the upside?

Suraj, yes, the strategy is what we said in August. So I'll recap. We are looking to allocate over the next sort of 5 years over the plan period, about 5% to 10% of group capital into the DC opportunity. And that will come out of our Workplace and Logistics capital allocation, mainly downweighting the Workplace as we sell down our positions, which we've started to do, we'll fund majority of that 5% to 10% capital allocation. So that's the capital allocation part.

In terms of our value-add strategy, it's really -- we're playing developer here. We've got very well-located land across Sydney and Melbourne. As you've seen, we've added value already to that land by securing power and the planning approvals that are coming through. And from here, we'll be working with Edge depending on their requirements for the sites to get customer contracts, et cetera, there.

Funding-wise, you've got to think it's a 50-50 partnership with Edge. So our exposure is 50%, they'll be off balance sheet debt finance, say, 50% conservatively. And then our land goes in at 100% as our equity into the partnership at fair market value. So when you put the math together, you can see even with the power bank we've secured, we can quite easily fund it with that 5% to 10% capital allocation at the balance sheet level that I've called out. So we are still lining up the ducks. But in future periods, we will start to give visibility of timing of land profits and obviously, joint venture earnings as time progresses. So our first focus is get the power in place.

And Tarun, just on the end ownership model, and any thoughts you have there? Is Stockland planning to own this on the balance sheet? Or is it just develop to sell down the track or too early to determine that?

No, I think during the development phase, we'd like a substantial exposure because the returns profile is attractive. But when these assets eventually reach stabilization, as we do in all our sectors, we'll be looking to bring in the right institutional capital who own those developed to core style returns or core capital. But that's how the partnership will be structured. But initially, we want the development exposure, as I said. So that's the path we're following. I think what you're seeing is with the 3 power approvals we've got and the planning and there's more in the pipe, we have a lot of optionality now in terms of adding value and extracting that value out of this great pipeline.

That makes sense. Maybe just one more on the partnership side of the business. Obviously, you announced a new partnership today on the Land Lease side. Can you talk to where you're seeing most interest? Are you seeing interest on the retail side as well for a partnership or some other parts of the portfolio where you're looking for opportunities?

Suraj, it's Kylie here. Yes, thanks. We are seeing good demand from both offshore and domestic capital. And as you've mentioned, retail seems to be a bit more on the wish list for those groups. The other thing we're seeing out of the sort of Asia core funds, they've been actively sort of raising capital and have capital to deploy. So a little bit more of an interest in that sort of core to core plus type strategy. Living and Logistics are still probably the most sought-after sectors, but definitely a bit more appetite on the retail front.

The next question comes from Callum Bramah from Macquarie.

Just a couple of them. Maybe -- so on sales and sales momentum, I think you said 418 in January. I think that's up only a little bit really from 396 in the PCP. So maybe if you can just give color about how that's going.

The other bit is just on margins for MPC. I think you did 22.9% last year. You've had strong price growth. So can you just give me a little bit of your thinking around whether you should see further margin expansion relative to '25 or what the factors are that would prevent that maybe coming through?

Yes. Thanks, Callum. Looking at January sales first, there's a couple of factors to think about there. Traditionally, January is a lower sales month just because of the -- coming out of the Christmas close down. And that January number is a lot driven on timing of releases given the short period of trading that we have there. With our campaigns, we hold back releases to coincide with the launch of our campaign, which was in the latter part of January, combined with wholesale -- timing of wholesale transactions and then just normal releases. So yes, that January number can be influenced by those factors. We're seeing, as I mentioned, in 3 of the 4 states, if we had released more product, we would have made more sales.

With regards to the margin, yes, the mix influences those margins. We are seeing some margin expansion in Queensland and WA on the back of the price growth within the established house market, which is reading through to price growth within land. But that is being obviously offset partially by mix, and you're seeing that with the pickup in volumes in Victoria at a lower margin. So we're on track for that guidance range of the low 20s, which we had reaffirmed.

And maybe one just around cash flow expectations for '26. So can you just maybe reference -- I think you did $328 million for positive operating cash flow in fiscal '25. Are we expecting a lot larger number than that? And maybe my last one would just be around the medium-term note and the terms or rate on that, please?

Yes. Sure, Callum. Firstly, on the operating cash flow, as I said, the key driver of the number for the half was the increased investment in the development NFE, which is around $400 million between June and December. There was also some working capital movement and some other cash that was retained in partnerships for future deployment. So if we think about the sort of second half, if we just calibrate around the midpoint of our settlement range for MPC and LLC, that equates to about a $1.5 billion plus additional operating cash flow in the second half. So as an indication, we are expecting a stronger -- much stronger result in the second half. Where exactly it lands will depend, obviously, on a number of factors, including that final settlement -- those final settlement numbers as well as the development spend on our own balance sheet and through partnerships. But yes, we certainly expect a much stronger second half than first half operating cash flow, similar to what we saw in FY '25.

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

Look, the first question is just on the settlement guidance range, 7,500 to 8,500. I think you said 6 months ago that was driven by Victoria. I mean your 12-month outlook is the most positive of any other state. Just give some commentary on what you're seeing down in Victoria?

Yes, sure. Thanks, Adam. Yes, Victoria, and you can see it in the numbers quarter-on-quarter leading into the end of the first half, we've seen improvement in that market. It's moved through the bottom from a volume perspective. And in the stronger corridors, we are seeing some moderate price growth. So in the Southeast and the inner north, we're starting to see some price growth, which is good. You've seen a normalization of those resale numbers in a lot of those corridors, but it is still variable by corridor. The West, the recovery has been slower. Resale listings are still more elevated, and you're still seeing that in the outer north as well.

Overall, market volumes still running below those long-term averages of up around 15,000 to 20,000 per annum. So we still see the potential for further momentum in that market over the next 12 months. And that's both volume and the potential for some further price increases, but we are seeing it being variable. So I would describe it still as early-stage recovery in that market, but we're well positioned with exposure to all the main corridors and ability to manage our release programs down there to match the momentum that we see over the next 12 months.

Okay. And then just on margins, what's the spread between something like Queensland and West Australia versus Victoria?

Yes. We don't talk about margins for existing -- for specific states, we're in that low 20% range to get there. You've got some above, some below, obviously. So yes, that's what we're seeing, Victoria being at the lower end and now Queensland and WA being above the guidance range.

Yes. Great. Maybe just one more, if I may. Just on occupancy against the Investment Management segment, that's fallen across all, but you had some pretty strong comp growth. What's expected just for occupancy for the second half? Is that going to increase? Or how do we think about that?

Yes. Adam, so yes, if I look at logistics, we had a slightly decreased occupancy, and that's really just based on a couple of completions that have come in and time for leasing. We are pretty confident in being able to lease those vacancies over the period. Retail has remained really strong. You've seen some good numbers come out of the retail portfolio. So that will remain at that 99% sort of level. And then on the Workplace portfolio, that has really been the completion of the building -- the final buildings at MPark, which have come online late December, the last one, and we're active in the market on that space.

The next question comes from Ben Brayshaw from Barrenjoey.

I was just wondering if you could comment on the process to introduce a new partner into SRRP and I guess, how confident you are that a suitable capital partner can be found from that process?

Yes, Ben, it's Mitsubishi, our clients running that process. They've got an agent. It's a transfer of units, not the asset sales. So we're assisting them on that process, but it wouldn't -- I think that's all I can say at this stage. But it's an attractive portfolio is the other thing I can say.

And does that include the Stockland Communities partnership, which was established in the second half of 2023?

No, it doesn't.

Great. And just my second question is on MPC. Perhaps, Andrew, could you just comment on the contracts at hand in terms of average price so far as how that compares with first half settlement revenue per lot?

Yes. Thanks, Ben. So contracts on hand sitting at just under 5,500, and that's slightly above the average price for settlements in the first half.

The next question comes from James Druce from CLSA.

First question is just around just underlying growth. If you look at superlot revenue, that's picked up from $43 million to $121 million. It's normally pretty high-margin stuff as well. The capitalized interest has picked up from $81 million to $107 million on PCP. So if you actually sort of adjust for those 2 items, it looks like your half-on-half growth is on my numbers around 5%. Just given the commentary around August last year about a step change in the business, it doesn't really feel on that underlying basis that's coming through yet. Am I missing something?

Yes, James, the first half is only half the story. You've got to look at the full year impact of what we are doing. We put a lot of things into production. The earnings are coming in the second half right across the platform. So FY '26 is the step change year, not the first half FY '26. I think on a full year basis, we're holding our guidance. We're holding our lot guidance. If you look at those numbers, FFO is up in the 8% range. Our MPC settlements will be up 25% or so, given wherever you land in the range. And our LLC settlements will be almost up 50% and our Logistics business production is doubling. These are not insignificant numbers. They are step changes coming through. And then the earnings impact of that you will see on a full year basis. So that's what I can say. But the first half, so far, we're on track. And second half, we look forward to the next 4 months.

Okay. Can we just get a guide for the superlot revenue for the full year from Andrew, please?

Yes. We're -- yes, our normal range, James, sits in the 20 to 50 range. We're going to be top end of that, maybe just above. It depends on the exact timing because some of these are -- as you know, some of these are government contracts for things like school sites and other elements that we transact dependent on underlying demand and dealing with the counterparty delivers essential infrastructure as well. So yes, we'll be around that number.

So I'm not following on a revenue number, you did $121 million in the first half.

That's on a revenue number. Now I'm talking FFO.

Okay. Yes. Okay. That makes sense. And just on the data center sort of deal that you're doing with EdgeConneX, I mean you sort of announced that in August. I appreciate it's expanded now to a couple of other projects. Are you looking at doing a deal across all the projects now? Is that what's kind of been the holdup in finalizing that joint venture agreement?

As we said, James, we're in final documentation on that. We've got a big emerging pipeline. And as you say, they are the things we are more focused on [Technical Difficulty] which assets will fit which customer need. That's where all the energy is going in. So yes, we'll put out a note when the docks are executed, but our focus is on getting these projects lined up for customer interest now in the next phase.

We have another question from Suraj Nebhani from Citigroup.

Sorry, I just got cut off initially. Just last one was with respect to superlot revenue. I think James picked that up as well. That was up a lot versus the first half last year. What do you expect that in the second half to be, please or some guidance around that?

Well, I think as Andrew said, Suraj, it's the $20 million to $50 million full year contribution, which is pretty typical for our business last 2, 3 years at the upper end. That's the key number to look at. Revenue doesn't equal profit.

There are no further questions. I'll now hand back to Tarun for closing remarks.

Great. Thank you for your time today and for all the questions. We look forward to seeing you on the investor roadshow over the next few days. Thank you, again.

Good afternoon, ladies and gentlemen. My name is Katherine Grace, Stockland's Chief Legal and Risk Officer and Company Secretary. We'd like to begin this afternoon by acknowledging the traditional custodians, the land on which we meet today, the Gadigal people of the Eora Nation and pay my respects to the elders past and present.

Before our Chairman, Tom Pockett formally opens today's meetings for Stockland Corporation Limited and Stockland Trust, I would like to outline some procedural matters. Today's meetings are being held in a hybrid format with securityholders joining us both in person and online. We have designed the meetings to give securityholders the opportunity to participate in several ways. [Operator Instructions]

For securityholders who have dialed into the meeting via the teleconference line, please follow the prompts if you wish to ask a question. For securityholders in the room, we will invite you to ask questions at the relevant time.

The Chairman will shortly open the meeting, and at that time, the polls will be formally opened to enable securityholders and proxyholders to vote by selecting the voting icon and selecting your voting preference for each resolution on the online Lumi platform. To cast your vote, simply select one of the options. Your vote will be automatically recorded and there is no need to press a submit or enter button.

For securityholders or proxyholders in the room, you will be able to vote using the handheld device provided when you registered at the door. Once voting opens, in-room attendees will be presented with a list of today's resolutions on the voting keypad. Use the track board to highlight the resolution you wish to vote on and press the green square to confirm. The resolution text will appear, and you can bring up voting options by pressing on the green square. Press 1 to vote for a resolution, 2 to vote against or 3 to abstain. To move on to the next resolution, you can press the green square or return to a full list of resolutions by pressing the red triangle.

As advised in our Notice of Meetings, participants who have dialed into the meeting will be unable to vote using the teleconference facility. I'll be moderating the questions submitted online today from securityholders during the meeting. Questions may be amalgamated if there are multiple questions on the same topic. And please note that only securityholders may ask questions during the meetings. We will address the questions during the formal business of the meeting as is our customary practice. And while it may not be possible to respond to all questions during the meetings, we will endeavor to directly respond to any questions we don't get to as soon as practicable after the meeting is closed. A recording of the meeting will be available on the Stockland website shortly after the meetings conclude, and I will repeat these instructions later in the meeting before we commence the formal business.

For securityholders attending the meeting today in person, could you please ensure your mobile phones are now switched to silent? And I note that in the unlikely event of an emergency, you should follow the instructions of the Stockland staff.

Finally, as this is a hybrid meeting, technical issues may arise. If we do encounter any issues, we will have regard to the impact on securityholders and the Chairman may issue instructions for resolving the issue and may continue the meeting if it is appropriate to do so.

I'll now hand to Tom Pockett, our Chairman, to formally open the meetings.

Thank you, Katherine, and good afternoon, everyone, and welcome to Stockland 2025 Annual General Meetings. My name is Tom Pockett, and I am Chair of the Board of your company. As a quorum is present, I now formally declare the Annual General Meetings open.

Voting on resolutions 2 to 5 in the Notice of Meetings is now open via the online Lumi platform. I am joined today by my fellow directors who I'll now introduce. Tarun Gupta, who was appointed Managing Director and CEO in June 2021; Melinda Conrad, appointed in May 2018, and Chair of the People and Culture Committee and Nominations Committees and a member of the Risk Committee; Laurie Brindle, appointed in November 2020 and a member of the Audit, Risk and Nominations Committees; Bob Johnston appointed in October 2024 and a member of the Audit and People and Culture Committees; Chris Lawton, appointed on 1 January 2025.

I am delighted to welcome Chris to the Board and to his first Stockland AGM. He is standing for election at today's meetings. Chris has more than 40 years experience in professional services, including 25 years as an audit partner with Ernst & Young. Chris is a member of the Audit and Sustainability Committees. Kate McKenzie, appointed in December 2019 and a member of the Nominations, Risk and Sustainability Committees. Stephen Muton appointed in June 2016 and Chair of the Audit Committee and member of the Risk Committee. Stephen is not seeking reelection today and will retire from the Board at the conclusion of the meeting. I'll share more on Stephen's contribution shortly.

Andrew Stevens, appointed in July 2017 and Chair of the Sustainability Committee and member of the People and Culture Committee.

Adam Tindall, appointed in July 2021 and Chair of the Risk Committee and a member of the Audit and People and Culture Committees.

Penny Winn, appointed on 27 February 2025. I am also delighted to welcome Penny to the Board and to her first Stockland AGM. She is standing for election at today's meetings. Penny has over 30 years' experience in retail in Australia and internationally and an experienced Board Director. Penny is a member of the Audit and Sustainability Committees.

Katherine Grace, who you've already met is Stockland's Chief Legal and Risk Officer and Company Secretary; and appointed in August 2014.

Also in attendance today is Jane Reilly, who represents our auditors, PwC, along with members of the Stockland leadership team.

As you will be aware from the notice of meetings, there are 4 resolutions for your approval today. We will provide an opportunity for discussion and to answer any questions you might have when we deal with each of the formal agenda items. I encourage you to vote in advance of or during each resolution to ensure you have sufficient time.

I will now make some comments regarding Stockland strategy and results. The Stockland strategy has seen us fundamentally change the composition of our portfolio of assets since 2021. We have transformed from a balance sheet funded developer to an organization with a portfolio of high-quality assets that are creating value and sustainable growth through utilizing high-quality capital partnerships with major institutional investors.

Since launching the strategy, we have recycled $3.6 billion of assets, and delivered a total securityholder return over the same period of more than 65%. Most importantly, the strategy has set the foundations for future delivery.

Turning to FY '25. Stockland delivered a strong operational and financial performance. Our statutory profit was $826 million compared with $305 million in FY '24, with the statutory result for FY '25 including a positive net investment property revaluation of $197 million. This contributed to an increase in our net tangible asset backing or NTA per security from $4.12 to $4.22.

Funds from operations was $808 million or $0.339 per security, which was at the top end of our guidance range. Our full year distribution was $0.252 per security and represents a payout ratio of 75% of funds from operations.

Apart from our solid results, two key outcomes integral to our delivery strategy, where the finalizing of contracts to deliver the Waterloo renewal project with Homes New South Wales and forming 3 new partnerships in the logistics sector. Having secured several incremental growth opportunities throughout FY '25, the Board has determined that from FY '26, we will target a distribution payout ratio of between 60% to 80% of funds from operation compared to the previous range of 75% to 85%. The change reflects the Board's focus on seeking to balance consistent cash distributions with reinvesting capital to generate strong returns.

In FY '25, we made significant strides toward achieving our sustainability goals. We are on track to meet our near-term target of net zero Scope 1 and Scope 2 emissions by the end of 2025, with the core component of our Net Zero strategy being the delivery of a large-scale on-site renewable energy.

We also made good progress toward our 2030 target of creating over $1 billion of social value with our most significant contributions to date coming from our delivery of social infrastructure and education facilities across our communities.

Lastly, I would like to thank my Board colleagues and the executive team for their leadership throughout the year. On behalf of the Board, I would also like to thank the broader Stockland team for their ongoing dedication and commitment.

As I previously mentioned, Stephen Newton will retire at the end of this AGM. Stephen has made a wonderful contribution to Stockland. He has brought his expertise, knowledge and experience from his long career in the property industry to assist and guide the group over his time on the Board.

Stephen, on behalf of myself, the Board, the leadership team and our securityholders, we thank you for all your contributions in making Stockland successful, and we wish you all the very best in your future endeavors.

Ladies and gentlemen, can you please put your hands together for Stephen.

Turning now to the resolutions for today's meetings. The first item of business is a non-voting item to consider the financial statements for the group. Resolutions 2 and 3 relate to the election of Non-Executive Directors, Chris Lawton and Penny Winn. You'll have the opportunity to hear from Chris and Penny later in the meeting. Resolutions 4 and 5 relate to remuneration.

We have released the proxy results for all the resolutions ahead of the meeting and these are now shown on the screen. As you can see, all resolutions have solid support.

And finally, to our securityholders, my thanks to you, for your ongoing support and investment in Stockland.

I will now hand over to Tarun for him to make a few comments.

Thanks, Tom, and good afternoon, everyone. I would also like to acknowledge the traditional owners of the land, the Gadigal people of the Eora Nation and pay my respects to elders past, present and emerging.

As we come together today, I'm reminded of the words of our founder, Ervin Graf, a Hungarian immigrant to arrive in Australia on a temporary visa and who had a simple vision of bringing affordable housing to Australian families. He said, "Our purpose is not to merely achieve growth in profits but to make a worthwhile contribution to the development of our cities and great country." Ervin and his partners, Albert Scheinberg and John Hammond, had a driving belief and a defining vision to create something better, which saw Stockland deliver Australia's first affordable housing in 1952 at Sefton in Sydney's West.

Today, their vision lives on in everything we do for our people and our communities. And I'm pleased to share with you that we're making good progress. For our customers, as we grow, we continue to focus on delivering on our purpose of a better way to live.

Over the last financial year in our Master Planned Communities business, we achieved more than 6,800 settlements. And I'm proud to say that almost 34% of these were to first home buyers. This means we've helped over 2,300 Australians get a foot into the housing market last year.

And over the last 5 years, we have helped more than 12,000 first home buyers gain access to housing, which makes Stockland the largest supplier of homes to first home buyers in the country.

Over the last 4 years, we have bedded down the fundamentals of our strategy and have arrived at an inflexion point for the growth of our business. Our immediate focus is on growing our land lease communities, Master Planned Communities and Logistics businesses. And over the longer term to create a more diversified pipeline of growth in data centers, apartments and strategic partnerships.

I'll now focus on the year that has been. As Tom noted, we delivered a strong financial and operational result for FY '25, which was at the top end of our guidance range. Funds from operations was up 2.8% on FY '24 and reflected a material uplift in MPC settlements, higher development fee income and a strong underlying performance from the logistics portfolio. This was partly offset by the impact of asset sales over FY '24 and '25 as we recycle capital into growth opportunities.

FFO from Investment Management segment was $591 million, which was down 6.3% on the prior year, primarily because of the disposal of town center and logistics assets over the past 2 years as well as the transfer of logistics assets into new partnerships. The portfolio delivered comparable growth of 3%, which was driven by positive leasing spreads in Logistics, Town Centres and Workplace as well as growing income from our communities rental assets.

The Development segment delivered FFO of $460 million, up 11.6% on the prior year. The result was underpinned by a strong performance from the MPC business, which included a part year contribution from the acquired MPC portfolio and higher fee income from partnerships across MPC, Commercial Development and Land Lease.

There has been some improvement in MPC trading conditions in the Victorian market, which represents our largest MPC exposure and has lagged other markets for some time. Pleasingly, the acquired MPC portfolio is performing ahead of acquisition assumptions, and it has replenished our pipeline as we look to deliver materially higher settlement volumes at an increased number of activated communities. Across our MPC and LLC businesses, 82% of our development pipeline is now activated, underpinning future growth.

We finished the financial year in a strong capital position with gearing of 25.2%, which provides the group with significant capacity for investment into our strategic priorities. While delivering a strong financial result and driving near-term growth, we also secured several longer-dated capital-efficient residential and logistics projects that we expect to contribute to earnings in future periods.

From FY '27, we aim to commence construction at our Waterloo project, which will ultimately deliver more than 3,000 apartments in what will be one of Australia's largest and most significant inner-city renewal initiatives.

We formed 2 significant capital partnerships in the logistics sector in the first half of the financial year with leading global investors M&G Real Estate and KKR. And just prior to the end of the financial year, we formed a 50-50 partnership with John Boyd Properties to develop a world-class logistics hub at the Kogarah Golf Course site, which is adjacent to Sydney Airport.

And following the end of the financial year, we entered into an exclusive arrangement to form a 50-50 partnership with EdgeConneX, a leading global data center operator backed by EQT Infrastructure to develop, own and operate a portfolio of Australian data centers. Subject to documentation and approvals, this collaboration marks a significant step forward with a high-quality operator to activate our substantial data center pipeline in future years.

Now as we increase our rate of production and progress new value-enhancing opportunities, we are focused on calibrating our capital settings with our growth objectives. This includes utilizing Stockland's capital and that of our partners, recycling assets and leaning into our strong balance sheet position. In light of the significant incremental growth opportunities we have secured at attractive expected returns, the target distribution payout range has been amended.

For FY '26, we expect the distribution to be in line with FY '25 at $0.252 per security.

With our strong balance sheet, retained earnings and demonstrated access to third-party institutional capital, we are in a strong position to fund our growth. Two other essential elements for sustainable growth are a comprehensive ESG strategy and our focus on building and maintaining a high-performing, collaborative and innovative workforce. We made further progress during the year in implementing our ESG strategy in areas such as low carbon materials, partnering on renewable energy delivery and social value creation, and we remain on track to meet our net zero Scope 1 and 2 target this year.

And today, as you would have seen, we released our operational update for the first quarter of FY '26. Our Investment Management portfolio is performing well with continued strong performance across our logistics assets, and consistently positive results from our Town Centres portfolio. In the Development segment, our MPC business achieved more than 2,000 sales for the quarter, which is a strong result as we target higher settlement volumes for FY '26. Our Land Lease business recorded net sales of 206 homes, which is our strongest quarterly result to date, as we work to create scale for that business.

So after 4 years of disciplined execution of our strategy, our goal of providing sustainable growth for stakeholders is coming to fruition. We have positioned the business for a step-change increase in production from FY '26 across our MPC, LLC and logistics development pipelines. We have also established multiple drivers of sustainable growth in future periods, including capital-efficient, longer-term residential and logistics projects secured during FY '25. And we have good flexibility and line of sight of multiple funding options to support our growth.

With these pillars now in place, FY '26 marks an inflexion point for Stockland. Our focus is on high-quality execution and driving sustainable growth. With a clear strategy and a commitment to the people and communities we serve, Stockland is well placed to capture the opportunities ahead and to truly create something better.

So I'll conclude by thanking the Stockland team for their contribution to this year's results and by thanking you, our securityholders, for your ongoing support and investment in Stockland.

Thank you, Tarun. As noted at the start of the meeting, for those securityholders joining us today through the online Lumi platform, the polls are open to enable securityholders and proxyholders to vote by clicking on the bar chart icon. [Operator Instructions]

Securityholders that have joined the meeting by phone have the option of asking questions using the moderated phone line by following the prompts on the teleconference facility. But as mentioned in our notice of meetings, participants who have dialed into the meetings are not able to vote using this facility.

As I mentioned earlier, I'll be moderating the online questions from securityholders during the meeting, and questions may be amalgamated if there are multiple questions on the same topic. As mentioned previously, only securityholders may ask questions during the meeting. As noted by the Chair, we will address the questions during the formal business of the meeting as is our customary practice. And while we may not be able to address all questions during the meeting, we will make every effort to follow up with responses to any outstanding questions as soon as practicable after the meeting is closed.

Before Tom takes us through the formal resolution set out in the notice of meeting, I will run through the voting procedure. Voting on all resolutions will be by poll. As mentioned by Tom, the polls are now open in respect of resolutions 2 to 5, and you may cast your votes at any time from now until the close of the polls. A representative of Computershare Investor Services will act as a returning officer and determine the results of the polls.

For the securityholders in the room today, you will be invited to ask questions when we move to each item. And at that time, I would ask that you please come to the standing microphones in the aisles, state your name, organization or association and show your electronic voting device. Please direct all of your questions to Mr. Pockett as Chairman.

The results of the polls will be made available to the ASX as soon as we have concluded the meeting, and I expect that this will be later this afternoon.

If you are joining online and you need assistance with voting, please refer to the instructions available in the user guide, which is available on our website by going to the Investor Centre page clicking on the Annual General meeting link and then clicking on the online meeting user guide located towards the bottom of the page. If you are in the room today and you require assistance with voting, please ask a Computershare staff member for help. A simple majority will be required to pass resolutions 2 to 5 and must be passed by more than 50% of the total votes cast on these resolutions by securityholders present in person or by proxy and entitled to vote. Any open votes given to the Chairman of today's meetings will be voted in favor of all items of business.

I will now hand over to the Chairman for the formal business of the meetings.

Thanks, Katherine. We now move to the first item on the Notice of Meetings, consideration of the 2025 financial statements in the annual report. The Corporation Act requires that the financial report, the directors' report and the auditors' report for the year ended 30 June '25, be laid before the meeting. No formal vote is required on this item.

Ladies and gentlemen, this is your opportunity to ask any questions you may have about Stockland's performance and outlook. I ask that questions about resolutions 2 to 5 be deferred until we get to those resolutions.

As noted by Katherine, for those securityholders in the room wanting to ask questions, please come to the microphones holding your electronic voting device, state your name and direct all your questions to me as Chairman. Are there any questions, please?

Thank you, Tom. I didn't want to disappoint you.

Well done.

Firstly, I'd like to congratulate the Board and the Stockland team for outstanding results. I can understand the logic of moving to logistics centers. And you've announced your agreement or the arrangement, I should say, with EdgeConneX for data centers.

Because it's a build-own-operate, to what degree have you built in enough flexibility because data centers as you're aware are huge consumers of electricity and water, and the thing is, the demand isn't linear? It's somewhat exponential. So we don't sort of want a situation where the assets sort of effectively become obsolete or limited in a few years' time as it seems the data -- the energy requirements go through the roof? So that's the first question I have.

That's all right. Let me get that one. Yes, we've already built a data center out of Macquarie Center just for information. Basically, we built the box. We're not the operator out there. We have an emerging data center strategy. I think Tarun would be best to answer that and he can explain how Stockland and the joint venture partners are going to work together. So Tarun, you want to take that question?

Yes. It's a strategy that we are at the early stages of executing. We have a strong endowment in our logistics portfolio and the land positions we have in our business where we have some very strategic pieces of land that are in key availability zones that can support the delivery of data centers. So we wanted to see how we can optimize the returns from that endowment. As Tom said, we have developed a data center already at Macquarie Park. But as your question entails, model ideally will be to develop, own and operate. It's the operating part that we don't have that deep experience. That's why we have partnered with EdgeConneX, which is really one of the leading data center operators in the world. They have 80 centers operating around the world. And they have very deep customer relationships with the top 5 or 6 hyperscalers, which are the big large technology companies that we'll be looking to bring into our data center pipeline.

In terms of your question on the electricity, water and the sustainability of these data centers, that is a key area we are focused on. Obviously, EdgeConneX brings a lot of expertise in that. They have, on the water side, developed over the last 5 to 10 years, data centers that use very little water except for just potable water. So they have some very interesting technology that's being developed, where we can deliver that in a much more sustainable way. And on the energy question, yes, they are very energy hungry, these data centers. But our strategy working with the hyperscalers would be to access renewable energy, which is something we're still working on. But we are in the initial phases really looking to extract the development upside because we're a developer. We have the land positions.

In terms of long-term ownership, we will have a more smaller stake in the long-term ownership as the returns come down in these data centers. But we are at the early stage of the execution of this strategy. And with the Board, the management, we'll be very focused on the risk positions we take as we execute the strategy.

Okay. The next question is concerning the property valuations. You mentioned that you've sort of banked $191 million in revaluations. And I realize you've got a range of different methodologies for valuing the properties. I suppose one thing that struck me is you use benchmark if you're using the discounted cash flow method of sort of between a 7% and 7.25% discount rate, which seemed somewhat high. I also ask you to justify that, given long-term bond rates are sort of like for the quarter on 10-year rates. And of course, your cost of borrowing would be a little bit higher than that, nowhere near 7%, I imagine. And so when you come to the process of valuing, do you take a range of different methodologies and average? Or -- and I suppose it's justification for using the 7%. And how do you check that against the other methodologies?

No, we do, Natasha. We actually have methodology that requires us to -- or policy, which requires us to have external valuations done on our properties on a 3-year rotating basis. Quite often, we do more than a month or the year if certain factors in the economy say we should check these valuations. So we basically use external values who use a range of different methodologies, including DCF to come up with those valuations. So that's how the Board gets comfortable. And for those assets that aren't independently verified, we utilize the information that the external people have told us plus our own internal benchmarks and do an internal valuation on that. So that's the methodology. I won't comment on the 7 and the -- it's too hard for me to do it standing up here at the moment. But that's the process. So very much independently verified by external parties.

Okay. The next question concerns order remuneration. Apologies, Jane. But the basic orders actually increased by about 20%, which seems excessive. I know there are changes going on in the business, but it's not to that extent. So can you justify why the fees have gone up significantly?

I knew you'd ask that question.

I know you guys work sharp and think, what am I going to ask?

I know you're really good at keeping an eye on Jane's audit fees. I'm very glad about it. The main reason is the increase in the size of our business and the increase in the forward workload that we have put in place and the partnerships that we've put together. So they are the key drivers.

Now our auditors have to -- are required to audit some of the partnerships or all the partnerships that we have to ensure that they're all quickly accounted for. So it's a whole new piece of work. And there's been a range of other things that go along with that, some compliance matters and so forth that we've had to do because of a bit more complexity in our business. So that's basically the reason, the rates increase, just in accordance with the auditors moderate salary increases.

Okay. Don't entirely agree but we accept it.

Hello, Mr. Chair, Allan Goldin, Australian Shareholders' Association, holding proxies for 157 unitholders, about 2 million securities. As you mentioned and the CEO mentioned, you recycled about $3.6 billion worth of assets since 2022. At same time with your third party, you've done about $3 billion worth of third-party equity. Fantastic. But as you said, your business has changed. Business is changing fundamentally. And as you said, this is the inflexion year for that.

You're now going to become -- you're going to do a major expansion in logistics. In the next couple of years, your whole logistics portfolio will double the size of where it is today. I know you have partners with that, but there's still going to be a lot of expenditure. You're becoming a major player in the apartment buildings, not just with Waterloo but also with the other ones. You're also happily expanding your master plan and land lease communities. At the same time, your debt level has been increasing.

I saw in your operational update today, you said that the debt -- the gearing level will rise in the first half, but by the end, the year is going to be moderate. That's the beginning of it. You're -- we're looking at the next -- not just the next year but the next 2 years, in particular, you have a very big capital commitments that are going to come up. So what I want to know is are you going to do a capital raising?

No.

No? And that's a guarantee. For as long as you're here or...

As long as I say no. Yes. It's a good point, Allan. I mean we look, we do have an excellent portfolio of assets to develop over the next 2, 3, 4 years. We'll do that with our debt levels and with our capital partners. We have strict guidelines around where our debt levels we want to be within that context. And that's -- and we have -- and we model out the cash flows of our business over that period of time, and we model out the downsides that if certain things don't happen, how will we cope with all that. So we do manage debt levels and sensitivities to those debt levels quite tightly.

Tarun, do you want to add anything to that or?

No, Chair. I think we have a very disciplined capital management strategy. We don't commence developments or other initiatives before we can have a secured debt and equity capital strategy, like we've been doing progressively in our logistics pipeline, land leases, and we've got now 7 blue-chip capital partners, very large institutions from around the world that are supporting us in our pipeline. So we'll remain very disciplined.

Our main source of capital, as you noted, $3 billion of equity capital raised from institutional capital, which is our capital partners. That remains our #1 priority, but it's being supported by asset recycling because we are continuing to improve the quality of our portfolio. So you'll always see us recycle the assets that have reached their investment, optimum investment thesis, and we'll divest those. So that's second lever we're pulling. And then obviously, our balance sheet capacity. 20% to 30%, we are going to be within that target. Why it's going up in the first half is because, again, a lot of our settlements in MPC business are coming in the second half, but it should come back to the midpoint of our gearing range.

And then we've also got -- we are raising some shareholder capital and we are very thankful for that through our DRP, which is very well supported and some of the retained earnings as part further payout ratio. But for us to get retained earnings, we have to grow earnings. If we don't grow earnings, we don't get retained earnings. That's how we think about it. So there's multiple levers, but the main one is institutional capital partnerships.

Just on that, I do have a second question that's a different one. But, just on that, on the recycling, is there going to be a lot of recycling this year?

You should expect us to always look at the -- we've got 200 assets around the country. The ones at the bottom as a good investment manager should we are constantly looking at those. And you should expect us to recycle. Some assets we would sell. We don't want to sell the assets we have low conviction on to our capital partners. So they will be sold on market. You should expect -- some last year, we sold about $200 million to $300 million, similar number this year. And then we'll recycle capital into partnerships. Last year, we did about $1 billion. I won't say how much it will be this year, but it will be -- we're targeting a substantial number again. So you can see the business model is very active on those activities.

Right. Okay. My second question, as the CEO mentioned, the -- your largest MPC exposure is in Victoria, and that there was good progress in what was happening in Victoria at the end of last year. And then the update today said that has continued, that is strengthened, which is wonderful, which is fantastic. The comment that I didn't quite understand was right after that, where it said the New South Wales is constrained by supply and affordability issues. I wondered what supply issues are you talking about? Your access to lands? Or is it applications or...?

It's the supply of housing to the Australian community. So it's getting enough properties zoned for housing into the pipeline, so the supply of housing is sufficient to meet the needs. That's basically what the supply is.

So is that a delay in approvals or just getting...

No. It's actually -- the setting is quite -- now are quite favorable for us, particularly in New South Wales and in Queensland. The governments there have realized they have to generate enough supply. And so the settings -- and you would have seen it in those numbers that we released today, the settings for our MPC and land lease communities are quite favorable.

Great. And the affordability issue?

Well, the more supply, the more affordable housing becomes. That's the key. There's a questions at the back.

Darius Patrick. I just have one easy question. One might be more difficult. The easy one, what's the cost of -- average cost of debt at the moment?

It's about 5.3%.

5. 3%. Okay. I was on a Transurban AGM last week. They had at 5.5%, so just to compare.

We have a long-dated -- it's not spot. We can get spot rate at that rate or lower, but we have a long tenure. The average expiry is 5 years. So we have some long-dated bonds as we should to manage our risk.

You've got some luggage along the way. Okay. And my second question is in regards of the communities business, which you are doing a very good job trying to promote it, which is great. But I'm just trying to figure out the logic behind it because like, say, if I look at Victoria now, it's some out west areas where Stockland is building houses, correct, like Wyndham Vale. You can buy a brand new house, 4 bedroom for around $600,000, $650,000, right? But if you want to buy one of those things, it's actually cost you money, more money like $100,000, $200,000 more and you don't buy the land here. So what's -- like I understand, I mean, the more you can sell it at a higher price, better for us. But how does that work, if I can?

I think that, yes.

Yes. So now you raise a good point. It really depends on trade area by trade area. So -- and the amenity we offer for the land lease communities that you're referring to. So in typically the Halcyon brand, which is a brand in the land lease communities business is more upper to premium brand. So we are targeting that price point. It has a -- communities are positioned the, with a lot of facilities that wouldn't be there if you're just buying a house in a normal development. So we have a very -- swimming pools and cinema houses and yoga rooms, et cetera. So people pay a premium for that. And also the houses are of a certain quality that we develop. So it's where we position the product. And typically, we're selling at around somewhere between 85% to 110% of the median house price in that local area. So you really got to look at suburb by suburb to see what the relative pricing is. But they are -- we have good demand coming through as you saw in our quarterly report this quarter for land lease product.

I see. Thank you. You almost convinced me to buy one.

Up on the way up. Any more questions? Any questions online?

Yes, Chairman. So we've got 3 questions from Mr. Mayne -- Stephen Mayne that I'll read out for you. So, the first question chair is could the CEO please comment on the huge $4 billion-plus price at Living Co backed by the Korean National Pension Fund paid for Aveo's retirement village land lease properties in 2024, '25. His questions are, what does that suggest our land lease portfolio is worth? Did we participate in the Aveo tender? Does the CEO believe the ACCC would have allowed us to buy that business? And then once the dust settles on the land lease exit from its stake in Keyton, which is Australia's largest retirement living operator, where will we sit in terms of market share in this important growing sector? Just final question to that, is it fair to assume that ACCC would be unlikely to allow any of the 3 biggest players to merge? There are a lot of questions in there.

Well, there is a lot in that question. A lot of that is -- thank you, Stephen. The parts around speculating value, I don't think we'll comment on. Participating in the Aveo, no, we didn't participate. What was the last one?

The last meeting was in relation to the ACCC's view on the retirement living sector and whether it would allow any of the 3 biggest players to merge. Obviously, we are not participating in that market. So I don't think it would be appropriate for us to comment on the regulators' view. Is it, Chair?

No. Did we get all the elements of the question?

Yes. So I think that addresses those questions. Chair, the second question from Mr. Mayne related to -- actually, we've another question come through. So second question from Mr. Mayne is in relation to the meeting protocols today. So he congratulated the Board in relation to hybrid AGMs, in relation to our proxy disclosure. He's raised a question in relation to providing some scheme like around the number of securityholders that vote for each resolution, and I can confirm we'll provide that information to the ASX this afternoon. So there's no further action required on that.

Two final questions. I'll read out now. One relates to Mr. Newton. Mr. Mayne congratulates Mr. Newton on his 9 years of service for the Board. His question was whether it would be possible for Stephen to comment on what he regards as best practice -- sorry, on what he regards as the best 2 Board decisions made during the time on the Board and doesn't have any regrets.

No, Steve has indicated that no, he won't comment, but he thanks Stephen for the congratulations.

Thank you, Chair. Final question from Mr. Mayne also relating to another director. The question is after spending 8 years as CEO of our competitor, GPT, Bob departed the Board last year. Mr. Mayne's questions relate to the remuneration for Mr. Johnston. How has relatively recently appointed Independent Director, Bob Johnston managed the situation, having a large legacy equity position in one of our largest competitors. Has he sold down to avoid a perceived conflict of interest? And has the Chair taken an interest in this issue? Or is it a private matter?

Look, I don't think we are going to -- Bob is saying he has sold, yes. Thank you, Bob, you didn't need to comment. But yes, Stephen. So Bob has indicated he sold down. Yes, I think we will leave it at that.

Thank you, Chair. Mr. Mayne did comment that he does believe Bob has been a great hire, but it is not common for CEOs to retire and quickly join the Board of a competitor. That's the focus of his question.

Got a snap up good people there, Stephen.

Excellent. Chair, we've got no further questions online.

Great. Thank you, Stephen. Okay. I think we will continue. So no further questions. We'll note the financial report and directors' report and auditors' report and move on to other business. We will now move on to the election of non-executive directors.

Resolutions 2 and 3 relate to the election of non-executive directors for Chris and Penny. The biographies for each director are set out in the notice of meetings and are available on the website. We will now hear from each of them, and I'll propose a resolution for each of them in turn. Chris, would you like to come up?

Good afternoon, everyone, and thank you for your time today. My name is Chris Lawton and I'm seeking election as a non-executive director at Stockland, following my appointment in January earlier this year.

My prior career was in professional services with the last 25 years spent as an audit partner at EY focused on the real estate sector. During that time, I led EY's Oceania and then Asia Pac real estate sector teams.

I've had the opportunity throughout my career to work with a broad range of real estate companies both in an audit and in a transaction role who have been involved in most asset classes within the real estate sector. I believe, through my experience in financial reporting, controls, risk management and compliance, together with an exposure to a broad range of business models within the real estate sector, I can make a meaningful contribution to Stockland as it pursues its strategic objectives.

Since my appointment, I've had the opportunity to visit a number of Stockland's assets and ongoing projects and met with local teams and management. That's given me a great insight into the culture of the organization and the alignment to the group's strategic objectives.

I'm excited at the opportunity to contribute to Stockland and look forward to representing the securityholders in my role as a non-executive director. Thank you.

Thank you, Chris. Penny, would you like to come up?

Thanks, Tom, and good afternoon, fellow securityholders. My name is Penny Winn. And today, I'm seeking your support for election as a non-executive director to the Stockland Board, having joined earlier this year. I've had the honor of serving as a non-executive director for over 10 years on many publicly-listed companies such as Ampol, CSR Limited, Coca-Cola, Amatil and the Goodman Group. I've recently joined the Boards of Endeavour Group and Super Retail.

These experiences -- the experience I've gained through my own executive career have taught me valuable lessons, lessons that I will -- that I believe will serve me well -- help me to serve you well whatever challenges and opportunities may come along.

Prior to commencing my non-executive career, I had a 30-year career in retail, leading business divisions with specialization in logistics, information technology, customer engagement, business transformation and online retailing. I've worked for Grace Brothers, Big W, Woolworths, Myer and Walmart.

Stockland is a great Australian company with over 70 years of history, developing and operating assets and communities that are an integral part of life for so many Australians. The strategy developed by the current leadership is both exciting and attainable and its execution is being very well supported by a hugely talented team. Indeed, since joining the Board in February, I've had the privilege of visiting many of our sites and projects and have met with many of our great team members. I've been truly impressed by both the professionalism and the passion for the business at all levels of the organization. I believe I'm strongly placed to support this business during its next stage of its journey, given my experience in the important logistics and retail segments.

I hope with your endorsement today to be able to provide sound advice and good stewardship to the Board and senior leadership of Stockland as it navigates what can only be described as a very exciting future. Thank you.

Okay. We'll start with resolution 2 for the election of Chris Lawton to the Stockland Board. The resolution is shown on the screen. The election of Chris is unanimously recommended by the Board. Are there any questions?

Yes, Mr. Chairman, we'll be voting our undirected proxies in favor of this nomination. We just -- it's an ongoing problem, and this nomination just highlighted it. The lack of transparency of companies about the experience of their existing directors, their gaps that they have in their Board. It just seems to be getting worse. I mean, here, we have a good example to my mind, of course, as you know, because we've discussed this. If the company had been transparent and said that Mr. Newton is leaving this year, which we knew, that yourself and Mr. Stevens are going to be leaving next year. Therefore, your Board is going to have a requirement for a chartered accountant with real estate experience. Mr. Lawton fills that perfectly. Why was it set? The simple words, no one would have been upset about anything. I just don't understand there's always this idea that the Board knows best. And you guys are very knowledgeable and ladies, sorry. You're very knowledgeable, and you're very professional. But just share some more information, that's just a comment or whatever.

Okay. Okay. Thanks, Allan. We try and be pretty open in -- the directors have a term at Stockland for 3 periods, 9 years. And then the preference is that they stay the 9 years and then they retire. There's been an exceptional circumstances in the past where that was not the case, but that will, going forward, I would suggest be the process.

Yes, the Board spends a fair amount of time thinking through what it needs going forward in terms of director skills and that allows for people that we're retiring at different stages the future. And that's really the Board's responsibility. We try to be as open as I can. I told shareholders a while ago that this would be my last term, and it will be, I'll be retiring in 2026. So I think I told at the AGM, 2 years ago or whenever it was. So we try to be pretty open, but I think the discussion about skills and where we need new director skills, that's a Board matter. And once we conclude on it, we're quite open about telling shareholders what it is. So we can't do it at too far in advance because we still have people on the Board that are still there. We may not be able to find a replacement for them in the market. So we are cautious. Yes. Any other questions on Christian? Questions online?

No online questions, Chair.

Great. For those that have not as yet placed their vote, please take a minute to cast your vote for resolution 2 via the online Lumi platform or the electronic voting device. There's no more questions, so I'll refer to the proxy meeting on the screen? Congratulations Chris, on your election. Well done. Resolution 3 is for the election of Ms. Penny Winn to the Stockland Board. The resolution is shown on the screen, the election of Penny is unanimously recommended by the Board. Are there any questions from the floor on this resolution?

Mr. Chairman, Natasha Lee again. Firstly, I'm happy to support Penny, but I saw there was a bit of a headache into your 5%. It's not huge. Was that one proxy adviser or institution or what was he...

We don't normally detail who's voted for and voted against. But yes, it's only 95% for. Yes. That's the key metric.

Okay. You're being a bit cagey. The other thing is, look, I understand the argument about skills and things like that, but you try and have a reasonable amount of gender diversity on Board, but not only you, but most of the Boards do lack other forms of diversity. And I think that really -- you should be making more of an effort to having a board which better reflects the Australian community which are your customers and securityholders.

Yes. No, I agree. We in fact the Board know you have and rightly so. On gender diversity, the Board will have an opportunity. We'll have a few directors retiring just through the normal course over the next 2 to 3 years. And I think the Board will have an opportunity to -- I think we're about 30% now to get to 40-40-20, which is our goal. So that will be -- I think that's a good opportunity the Board shouldn't miss.

On other diversity, we were discussing that at board today and saying it's very hard to get more diversity on the Board, but it's certainly in the back of our thoughts, on the front of our thoughts as we're looking for new directors.

Allan, yes.

Mr. Chair, I like the idea of a director who's got actual operational experience. I think that's fantastic. And I congratulate Ms. Winn for that. I do have a problem, and I will be adding some of our -- all of our undirected proxies to that small number against this resolution. And the reason is, as Ms. Winn said herself, she is an experienced director. She has been a director for over 10 years. She's been a director with a number of large companies in this area. When she joined the Super Retail Board, it was at the beginning of the complaints made about the CEO. I know she just arrived virtually. But I would say, as an experienced director, which it comes into a decision like that, she's going to ask why? Why was it done this way? What was the situation? As this situation expanded over the next 20 months, again, as an experienced director, I would think that you'd be questioning.

We're talking about the complaints coming from the senior person in the company responsible for governance. If that senior person and another person is saying there's a governance issue, going and having a hurried outside external examination isn't really going and giving -- acting as a director in the interest of everyone. So that's why we're going to vote against it. I'm sure that if I ask Ms. Winn, hopefully, she would tell me, she learned a lot from that experience and it was a very helpful learning, but we just have that problem.

Okay. Thanks, Allan. Yes. Obviously, I can't comment on that experience in Super Retail, it was complicated, messy, all sorts of things, but anyway, thanks for your question. Are there any other questions from the floor? Okay. For those -- there's nothing online?

No questions online, Chair.

For those that have not as yet placed their vote, please take a minute to cast your vote for resolution 3 via the online Lumi platform or the electronic voting device. If there are no more questions, I'll refer to the proxy voting, which is shown on the screen. Congratulations, Penny, on your election. Well done.

Resolutions 4 and 5 relate to remuneration. Our executive remuneration framework is designed to reward executives where strategy delivers results in value creation and superior long-term securityholder returns, the Board spends considerable time each year assessing the performance and remuneration outcomes for the group and senior executives and considers a range of quantitative and qualitative factors in its decisions, which we have set out in detail in our remuneration report. The Board is pleased to see that the reward framework and outcomes are aligned with securityholder returns and that is working as intended.

Resolution 4 seeks your approval of the remuneration report for FY '25. The resolution is shown on the screen. As securityholders will know, this is an advisory nonbinding resolution, but your Board gives great consideration to the views of our investors on the important subject of executive remuneration policy. Are there any questions from the floor? No. Have we got any questions online?

Chairman, we have no questions online in relation to the remuneration report.

Okay. If you have not already cast your vote, please take a minute to cast your vote for resolution 4 via the online Lumi platform or by using the electronic voting device.

If there are no more questions from the floor, I'll refer to the proxy voting, which is shown on the screen. As you can see, over 97% of the proxy votes have been cast in favor of the resolution.

Our next resolution, Resolution 5 relates to the grant of performance rights to Managing Director and CEO, Tarun. The resolution is shown on the screen.

The Board proposes to offer participation in the performance rights planned to the Managing Director, Tarun Gupta, who is eligible to participate in the plan as an Executive Director. Tarun's participation in the performance right plan forms part of his usual remuneration arrangements since commencing his role as Managing Director and CEO in June '21.

The Board, excluding Tarun, believe that his participation in the plan on the terms and conditions described in the Notice of Meetings is an appropriate equity-based incentive given his responsibilities and commitment. In line with the ASX Listing Rules, securityholder approval is sought for the grant of these performance rights to Tarun. The details of which are set out in the explanatory statement attached to the notice of meetings.

The directors, other than Tarun, unanimously recommend that securityholders vote in favor of this resolution. Are there any questions from the floor? Allan?

Mr. Chairman, I'll be casting our undirected proxies in favor of this one as I have with the remuneration. The structure is great. I still have a question about the hurdles. If we look at the -- this particular one where I have the problem, I mean, look, the idea of going and getting 300% of your fixed annual remuneration is very generous. I'm sure that you all believe that the CEO deserves it, and that's great. My question is if -- not question, but if you're going to give that amount of bonus, you've got to have some big hurdles. I have you know questions on both of your hurdles, that 8% actual TSR sounds nice unless you look at the record of the company. It's not that big. It's not that big for a lot of decent companies. It's big for a small company, but not for a company that's in the top 50. It's not. That's first.

Second one, you're doing a comparative group of other listed REITs? Yes, great. I just have a problem with, yes, I understand, excluding Goodman, that's a nice one to exclude, this year, it would have been good because it didn't perform very well as far as TSR, but there's a lot of differences. You're trying to do the same model in the way that you're funding now. It's very similar to what Goodman has been doing for years as is when we know better than me even that this is very successful, but it's different. A lot of their money is overseas. A lot of the developments are overseas. I understand those differences.

A lot of the other ones, some of the other ones you have excluded, I don't see where the differences are compared to other ones you have kept in. I just think that there's been a lot of little picking here and there to go and get a comparative group, didn't like that, okay?

Okay. Thanks, Allan. Let me cover that. The benchmark is 8 to 13, I think it is, on absolute TSR. So just bear in mind the LTI hurdles for Stockland for the 5 years prior to Tarun's starting never vested. So when Tarun and the new leadership team started, we needed a team and a strategy that would deliver strong TSR for Stockland. And as I mentioned, it was 62% or 63% total shareholder return over the last 3 years. So they are working. The higher incentives only kick in at the higher levels of return for both absolute and relative TSR.

In regard to the index of companies, we spend a lot of time making sure that the comparators that are in there are relevant to our business. And some of the companies just aren't relevant, such as Charter Hall. But nearly all the other companies in the index are in. So we do spend time. We haven't changed it. And it's been pretty steady over the time of -- or it's been exactly the same over the time of setting those hurdles.

So anyway, I think we've got a pretty robust structure. It's working for shareholders. And when I was on the road show and the majority -- nearly all investors were very comfortable with the structure and the way it worked. We do and we'll review the hurdles every year as part of our rem review.

Any other questions from the floor? No? Online, Katherine.

No questions online, Chair.

Okay. So once again, please take a minute to cast your vote for resolution 5 through the Lumi online platform or by using the electronic voting device.

If there are no more questions, I refer to the proxy voting, which is on the screen. As you can see, over 98% of proxy votes have been cast in favor of the resolution. That was the last item of formal business. Persons wishing to cast a vote who have not already done so should now place their vote through your electronic voting device or the online Lumi platform.

If you need assistance in the room, please speak to a Computershare staff member. For securityholders joining online, if you need assistance with voting, please refer to the instructions available in the online meeting user guide available on our website. I will just take a small pause and proceedings to allow any final voting. There's a couple of people, they are voting.

[Voting]

I think we're okay. Okay. Thank you, ladies and gentlemen. The polls for voting will now be closed. The final results will be announced to the ASX later this afternoon. That concludes the business of the meeting, and I now declare the meeting closed. Thank you for your attendance, and good afternoon. Thank you.

Welcome to Stockland's FY '25 result briefing. [Operator Instructions]. I'll now hand over to Tarun Gupta, Managing Director and CEO, for opening remarks.

Good morning, and thank you for joining Stockland's FY '25 Results Update. I'm Tarun Gupta, Managing Director and CEO of Stockland. Before we begin, I'd like to acknowledge the traditional owners and custodians of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to elders past, present and emerging.

Joining me today is Josh Mchutchison, our CFO; Kylie O'Connor, CEO of Investment Management; and Andrew Whitson, CEO of Development. I'd like to welcome Josh to his first Stockland result, having joined us only 2.5 weeks ago. Josh joins us at an exciting time in our journey. I'd also like to take this opportunity to thank Alison Harrop for her contributions to Stockland. Alison played an integral role in the establishment and implementation of our strategy during her 4 years as CFO, and we wish her all the best.

As you're aware, we have been focused on the disciplined execution of our strategy over the last few years. Our strong financial and operational performance in FY '25 has been driven by this strategic execution and the establishment of new growth drivers for Stockland. As we discuss the results, you'll note 3 things. First, we are positioned for a step change in production from FY '26 onwards across our development business. Second, we have put in place significant pillars to support longer-term growth. And third, we have increased financial flexibility to fund our growth plans.

Turning to the FY '25 results. Funds from operations for the period was $808 million, with FFO per security of $0.339 at the top end of our guidance range. The result reflects a material lift in settlement volumes from our MPC business, higher fee income from partnerships and a strong performance from the Logistics portfolio. Our balance sheet metrics remain sound with gearing sitting around the midpoint of our target range and positive revaluations driving an increase to NTA per security. And we have delivered returns on invested capital within our target ranges for both recurring and development income.

While delivering a strong financial result, we're also making significant progress in executing our strategy. The portfolio of 12 actively trading master planned communities that we acquired in November last year is now fully integrated and performing ahead of expectations. Across our MPC and LLC businesses, 80% of our development pipeline is now activated, underpinning future growth. And we expect new project launches to drive further activation of our residential pipelines in FY '26, alongside a higher level of production across Logistics, Town Centers and Communities real estate.

In addition to activating more of our pipeline, we also accelerated our MPC development expenditure in Victoria in anticipation of our recovery in that market. As Andrew will discuss, that recovery has now commenced. While driving near-term growth, we have also secured several longer-dated capital-efficient opportunities that we expect to contribute meaningfully to earnings in future periods. In April, we finalized contractual terms to deliver alongside our consortium partners, one of Australia's largest and most significant innercity renewal initiatives at Waterloo and Sydney. As you may recall, we formed 2 new significant capital partnerships in the Logistics sector in the first half of '25 with M&G Real Estate and KKR. In June, we formed a new 50-50 partnership with John Boyd Properties to develop a world-class multi-story logistics hub at Kogarah Golf Club site, adjacent to Sydney Airport.

And we're pleased to announce today that we have entered into an exclusive arrangement to form a 50-50 partnership with EdgeConneX, a leading global data center operator backed by EQT Infrastructure to develop, own and operate a portfolio of Australian data centers. Subject to documentation and approvals, this collaboration marks a significant step forward with a high-quality operator to activate our substantial data center pipeline in future years. We will update you as we progress the partnership.

As we increase our rate of production and progress new value-enhancing opportunities, we are focused on ensuring that our capital settings are aligned with our growth objectives. We have both flexibility and line of sight of funding options, utilizing both our own capital and that of our partners. Since we announced our refreshed strategy in November 2021, we have raised $2.9 billion of third-party equity to fund our growth, and we continue to engage with high-quality institutional investors on new opportunities across our platform.

We have also been active in recycling our own capital with approximately $3.6 billion of workplace logistics, retirement living and Town Center assets sold over the last 4 years. In light of the significant incremental growth opportunities that we have secured at attractive expected returns, we have reviewed Stockland's payout ratio range and determined that from FY '26, we will target a distribution payout of between 60% and 80% of FFO compared to the previous target range of 75% to 85%. For FY '26, we expect the distribution to be in line with the FY '25 distribution at $0.252 per security. With our strong balance sheet, retained earnings and demonstrated access to third-party capital, we are in a strong position to fund our growth.

Along with our capital management settings and capital allocation framework, 2 other essential elements for sustainable growth are our comprehensive ESG strategy and our focus on building and maintaining a high-performing, collaborative and innovative workforce. We made further progress during the year in implementing our ESG strategy in areas such as low-carbon materials, partnering on renewable energy delivery and social value creation. And we remain on track to meet our Net Zero Scope 1 and 2 target this year. I'm particularly pleased to see us maintain a high level of employee engagement and a high level of employee security ownership with over 80% of Stockland employees now owning securities in Stockland. FY '25 was a big year of focused execution for the Stockland team, and I'm proud of their achievements.

I'll now hand over to Josh to take us through the financial results in more detail.

Thanks, Tarun, and good morning, everyone. I really do feel I'm joining Stockland at an exciting time given our strong financial position and the opportunities ahead of us. I'm pleased to present my first financial result as Stockland's CFO, and I'm looking forward to meeting many of you on our results roadshow.

Turning now to the result. Funds from operations of $808 million was up 2.8% with FFO per security of $0.339 at the top end of our guidance range. On a comparable basis, the investment management portfolio delivered growth of 3%, underpinned by positive leasing spreads across the Town Center, Logistics and Workplace portfolios. The overall contribution from the Investment Management segment was reduced due to strategic capital recycling over the last 2 years to fund our growth. Development segment FFO increased by 11.6% on the back of strong settlement volumes from master planned communities, which came in above our target range and higher development management fee income from partnerships.

Unallocated corporate overheads were down by almost 7%. On a combined basis, overheads across the investment management, development and unallocated lines were up by less than 2%, reflecting disciplined cost control as we scale the business. Net interest expense was down compared to the previous period. Cash interest costs were up slightly, reflecting a stable weighted average cost of debt and marginally higher average net debt. However, a step-up in the level of project activation across our MPC and LLC development books has resulted in a greater proportion of interest costs being capitalized. These costs are expensed in cost of goods sold in FY '25 and future periods. The effective tax rate was 8% for the period, up slightly compared to FY '24 due to a higher proportion of development and fee income.

Moving on to capital management. We have maintained a strong balance sheet position. As expected, our gearing finished the year just above the midpoint of our target range at 25.2%. Similar to FY '25, we expect gearing to increase in the first half of FY '26 before moderating back toward the midpoint of our target range by 30 June 2026. This reflects an expected weighting to the second half for MPC settlement volumes and group operating cash flow. Our weighted average cost of debt for the year was 5.3%, in line with FY '24, and we expect this to trend down slightly to 5.2% for FY '26. Our fixed hedge ratio averaged 76% for the full year, down slightly from 79% in the first half.

We finished the period with $2.9 billion of liquidity, comfortably covering approximately $900 million of drawn debt maturities over the next 12 months and providing funding flexibility. We also continue to take advantage of opportunities to term out our debt, issuing $400 million of 7-year domestic medium-term notes during the year. The distribution reinvestment plan was in operation for the December and June distributions, and we are actively managing our capital settings to support growth. As Tarun mentioned, we have recalibrated our target payout ratio range, and we expect the FY '26 distribution per security to be in line with FY '25.

Now on to cash flows. Operating cash flow for the full year was positive $328 million. This reflects a significant turnaround for the second half, which was largely driven by the timing of MPC settlement receipts and development spend. We expect operating cash flow to be stronger for FY '26. However, it is again likely to be weighted to the second half given the anticipated timing of MPC settlements. Overall, we have delivered a strong result for the year and invested for future growth while maintaining a strong balance sheet and funding flexibility. As Tarun mentioned, we're in a good position to fund our growth given the strength of our balance sheet and access to third-party capital.

I'll now hand over to Kylie to take us through the investment management result.

Thanks, Josh, and good morning. FY '25 was another active period for the Investment Management business with strong operational and financial performance and considerable progress on strategy execution. We have again demonstrated our ability to effectively recycle capital to fund our growth ambitions and seed new partnership opportunities. The investment management portfolio delivered comparable FFO growth of 3%. Logistics was a standout with 7.1% growth, followed by Town Centers at 3.2%. We've achieved positive re-leasing spreads across all sectors and occupancy remains high for Logistics and Town Centers.

FFO of $591 million reflects strategic asset recycling of $980 million of Town Center and Logistics assets over the past 2 years as well as the transfer of $800 million of Logistics assets into the newly formed partnerships with M&G Real Estate and KKR. Management fee income was up by 6%. Ongoing management fees from assets in partnerships continue to grow, and this year's result included a performance fee from one of our partnerships, partly offset by lower fees from M_Park.

The Logistics portfolio generated comparable FFO growth of 7.1% and portfolio occupancy of 97.8%. We achieved positive leasing spreads of 29.4% on new leases and renewals with over 367,000 square meters of leasing activity. The portfolio remains approximately 17% under-rented compared with market rents. The result reflects strong leasing outcomes across several assets as well as the contribution from recently completed developments across the Eastern Seaboard.

Having optimized value through active asset management, we divested 5 assets for a combined value of $289 million with the proceeds to be redeployed into higher returning opportunities, including our $10 billion logistics development pipeline. The portfolio WALE at 3.1 years reflects the net impact of leasing success across stabilized assets and shorter lease terms at several assets that are being positioned for brownfield redevelopment.

Our strategy for the Workplace portfolio is to maximize operating income while preparing the assets for redevelopment. We see significant opportunities to create longer-term value through the master planning work being undertaken, including change-of-use strategies. While FFO declined slightly, we delivered solid leasing outcomes at Macquarie Park and Piccadilly with a 12-year lease at Giffnock Avenue boosting the portfolio WALE to 6 years and re-leasing spreads to 5.4%.

Turning to Town Centers. We have delivered comparable FFO growth of 3.2% with positive leasing spreads of 3%, marking 4 consecutive years of positive spreads. The portfolio continues to benefit from its high weighting to essentials-based categories, while the discretionary spend in categories such as apparel, jewelry and homewares has continued to strengthen. Comparable specialty sales are considerably above benchmark averages. Occupancy costs remain at a sustainable 15.1%, and portfolio occupancy is high at 99%.

Our Communities rental income derived from our established land lease communities and an emerging portfolio of childcare and medical centers rose 20% on the prior year. The uplift was underpinned by growth in the number of occupied land lease home sites, which is expected to increase in future periods, providing high-quality recurring rental and fee income. The portfolio delivered FFO growth of 3.1% for the year. Approximately 79% of the portfolio was independently revalued during the year, resulting in an increase of $197 million compared to FY '24. This reflects positive revaluation movements for both Logistics and Town Centers, partly offset by soft market conditions and assets held for repositioning across the workplace portfolio.

In line with our strategy to scale our capital partnerships, we welcomed 3 new partners to the platform in FY '25. In the first half, we formed 2 partnerships in the Logistics sector with global investors, M&G Real Estate and KKR with a combined initial portfolio value of approximately $800 million. We also expanded our land lease partnership with Invesco, transferring 5 properties into that partnership. In late FY '25, we established a new joint venture with John Boyd Properties, also in the logistics sector, taking us to 8 partnerships across a variety of sectors and strategies. With the strength of our existing portfolio and significant development pipeline, we are well placed to expand existing partnerships and to attract new capital.

Thank you, and I will now hand to Andrew.

Thanks, Kylie, and good morning, everyone. I'm really pleased with the double-digit growth in FFO that was delivered by the Development segment in FY '25 despite the headwinds in some markets. We've delivered higher settlement volumes across our MPC and LLC businesses as well as a significant lift in the rate of production and leasing activity for our logistics development platform, and we expect this to translate into additional commercial development profits and rental income in future periods. We've also driven a significant lift in fee income this period, reflecting a higher volume of development being undertaken in partnerships. We anticipate this line will continue to grow strongly.

Turning to MPC. We delivered just under 6,900 settlements, above our target range for the year. A key contributor to this result was the successful integration of the newly acquired portfolio, where we've delivered a better settlement performance than we've budgeted for. This portfolio is seeing strong customer demand for new releases and achieving pricing above our acquisition assumptions. Our development margin was largely in line with the prior year with solid like-for-like price growth in most markets, offset by a mix shift towards some lower-margin projects. We expect a further mix shift in FY '26 with some of our highest margin projects trading out. Importantly, we have good visibility into settlement volumes for the year ahead with over 4,000 contracts on hand. For FY '26, we're targeting between 7,500 and 8,500 settlements with a greater portion of settlements under joint venture or PDA arrangements. And the development margin is forecast to be in the low 20% range.

We've seen good momentum in our MPC sales rate over the last few quarters, achieving over 1,800 net deposits in Q4. We're seeing an underlying improvement in both inquiry and sales in the Victorian market with other markets continuing to perform well. This positive sales momentum continued into July with just under 760 net sales secured during the month. We expect residential market fundamentals to remain positive in the year ahead, driving increased demand in most states. With the anticipated recovery of the Victorian market to accelerate and broaden, driven by relative affordability and a lower level of resale stock on market, we forecast a more favorable interest rate environment and ongoing supply constraints to support further price and volume growth in Queensland and New South Wales, notwithstanding affordability challenges. And while we believe volumes in the WA market will stay at around current levels, we expect to see further price growth in that market over the year ahead.

Moving to our Land Lease business. We delivered 526 settlements for the year. While this was considerably higher than FY '24 settlements, it was below our original forecast due to the impact of weather events in Queensland and lower sales in Victoria. Increased settlement volumes drove FFO, but this was offset by lower gains from communities transferring into partnerships. We have good earnings visibility into the year ahead with 398 contracts on hand at a higher average price compared with FY '25 settlements. For FY '26, we're targeting 700 to 800 settlements at an average margin in the low 20% range. Sales volumes were up strongly for the year, reflecting a positive response to new launches and stronger purchaser sentiment in Victoria in Q4 on the back of improving conditions in the established market. We're now trading from 15 communities, and we're on track to launch 4 additional communities during FY '26, supporting further growth in settlement volumes as we continue to scale the business.

Moving to our $10 billion Logistics development pipeline. We continue to see solid leasing demand for our infill and greenfield projects and have secured over 260,000 square meters of leasing over FY '25. This includes the first 3 stages at Kemps Creek and a lease to DP World at Yennora as we commence the first stage of what is expected to be a significant redevelopment of this intermodal asset. We expect to deliver between $1 billion and $1.2 billion of new product over the next 2 years, including around $300 million in build-to-sell projects in FY '26.

We're currently delivering $230 million of neighborhood retail town centers that will all start trading in FY '26 and have identified a further $500 million of future opportunities across our MPC portfolio. Delivering retail and community real estate provides essential amenity for our communities, high-quality rental income for our investment management portfolio and product for future partnering opportunities. Overall, the Development segment had a strong year. and we expect to deliver materially higher production volumes from FY '26 across our MPC, LLC and Logistics platforms. With improving customer demand in Victoria, residential market conditions are now supportive in all states. Over the past 12 months, we've accelerated our development spend in Victoria, which positions the business to capture stronger levels of demand.

I'll hand back to Tarun to close.

Thank you, Andrew. After 4 years of disciplined execution of our strategy, our goal of providing sustainable growth for stakeholders is coming to fruition. We have now positioned the business for a step change increase in production from FY '26 across MPC, LLC and commercial development pipelines. We have also established multiple drivers of sustainable growth in future periods, including capital-efficient, longer-term residential and logistics projects secured during FY '25. And we have good flexibility and line of sight of multiple funding options to support our growth.

With these pillars now in place, FY '26 marks an inflection point for Stockland. Our focus is on high-quality execution and driving sustainable growth. We have positioned the business well to leverage the anticipated improvement in market conditions. For FY '26, FFO per security is expected to be in the range of $0.36 to $0.37 per security on a post-tax basis with a similar weighting to second half to FY '25. The distribution per security is expected to be $0.252 per security, in line with FY '25.

We'll now open the lines for questions.

[Operator Instructions] Our first question comes from Tom Bodor at UBS.

I'd just be interested in some of the new things you're doing across the group, things like Kogarah Golf Club. I think I saw some stuff in the press around some land in Northern New South Wales, data center developments that could be quite material. Just be keen to understand how you're thinking about funding these projects going forward. Do you intend to keep them on balance sheet through the early phases of delivery? And what are the capital requirements? And would you consider raising equity at the Stockland level to fund this?

Thanks, Tom. Yes, we've secured, as you pointed out, some significant long-term opportunities. First thing to note, all of them are -- the new ones we've secured are either staged land payments over periods of time or they have conditions precedent and it's sort of capital light initially, which allows us to get further planning approvals, secure where appropriate tenant pre-commits, et cetera, and third-party debt, including over time, bringing in capital partners into those deals. So they are very capital efficient.

And then in terms of the funding requirements, when we look out the next few years, obviously, we've got very strong now support from institutional capital coming through, as I said, $3 billion raised in the last 3 years. But in addition to that, at the Stockland level, the retained earnings and the distribution reinvestment plan is providing more than ample funding for us to continue to fund our requirements over coming years. And that's how we're thinking about it. So we're well funded going forward.

And how should we think about those commitments? Are they really obligations for you to purchase the land if certain preconditions are met? Or do you generally retain optionality to not purchase if at a future point in time, the development doesn't work?

Yes, they're all different. But at a high level, for example, Waterloo is a payment in kind because we deliver social housing as part of the development. So it's going to be delivered basically the land payments in kind. On the Kingscliff project we've secured in Northern New South Wales, that has staged land payments pretty typical to what we've been doing as business as usual in our other acquisitions. And then the Kogarah Golf Club, we paid a small amount now. Future amounts, it's a stage development. There's going to be 3 stages and the land payments are tied to the activation of those stages, at which point we'll be bringing in third-party debt and potentially third-party capital as well. So there's a lot of flexibility in the way we have structured these deals.

Our next question comes from Lauren Berry at Morgan Stanley.

Just another question on funding. Looking at FY '27, obviously, you've got a lot of new projects coming through, Waterloo apartments, et cetera, and you've changed the payout ratio range to 60% to 80%. The guidance implies 70%. Can we assume that, that payout ratio will probably decline to the lower end of time as you've got more development CapEx going out the door? Or the other way to put it, will EPS continue to grow at a lower rate than FFO over the next couple of years?

Thanks, Lauren. So I won't repeat what I said to Tom before about the various options we have, but more on the payout ratio. We are flagging we are in a growth phase now. The repositioning of the strategy and the organization has given us some very strong visibility, not just next 3 years, but beyond. And the cycle, the residential cycle, including capital market cycle are becoming more supportive. So we will be activating more production across the pipeline. And really, the payout ratio, the way we think about it is our aim would be to maintain the absolute distribution, but the ratio -- if we keep growing FFO, the ratio will start coming down. Therefore, to get our retained earnings coming through to fund the growth, we will have to create the growth is how you should think about it. So if we create good earnings growth, then some of it we would like to retain to continue to fund further growth.

Great. And then my other one is on resi. You said a couple of times in the presentation that the Lend Lease acquisition is doing above your expectation. Can you just give us a bit more color in terms of metrics about what's performing at now versus feasibility, and maybe what you think you can get it to over the next 12 months, please?

Yes. Sure, Lauren. When we acquired it, we were talking about 2,500 net sales per annum. Over the last half, we delivered just over 1,200 settlements out of the Lend Lease portfolio. So we're at that sort of level. We thought it might have taken us longer to ramp up. And then the other area that we've seen has been revenue growth, particularly Southeast Queensland. We've seen strong revenue growth across those projects that we acquired there. WA, we've continued to see double-digit growth coming out of WA. And then while Victoria has been flat, we've seen rebates reducing in that market, and then New South Wales continuing at around that 5% range. So all of that has positioned that portfolio ahead of where we pro forma'ed when we entered into those contracts, which were back in December '23, even though we didn't settle on it until 12 months later.

The next question comes from Suraj Nebhani at Citigroup.

Just a couple of quick ones as well, Tarun. I guess on some of these larger industrial developments like the Kogarah side, you have announced a couple of new capital partnerships this year with M&G and KKR, are they likely to participate in that? And are there any first rights or something like that across those partnerships?

Yes. So yes, we did, as you say, announce the 2 partnerships. They are different strategies. So the KKR and M&G are more core plus style capital that they are deploying. So that's not for development capital. Obviously, we've done on Kogarah, it's a 50-50 joint venture. So our partner, John Boyd Properties will be funding their half of their requirements. On our half, initially, we're balance sheet funding it. But as I said before, as the stages start to take place, and we're still a couple of years away from getting all the planning approvals, et cetera, and pre-commitments in place, then we will have the option to either fund it ourselves or bring in capital partners. Now our existing capital partners, and there are others, who have appetite for develop to core style capital. But it's too early for us to get into those discussions given there's some planning and pre-commitments to go. And we generally don't have specific first rights in our platform. They're quite discrete. If we do it, it's quite limited with our capital partners.

And just one -- another one on the new partnership announced today with EdgeConneX. So can you just provide a bit more color on how that came about? And what's the sort of structure that you see, I guess, Stockland's ownership of data centers down the track? Or what's the sort of structure that you see in terms of realizing capital and profits down the track out of that opportunity?

Yes. So Suraj, firstly, today's announcement is really about aligning a high-quality global operator to come in together with Stockland's land positions we have, and they are very well located and it's a deep pipeline to combine those 2 skills of our land development skills with their technology skills to offer a compelling end-to-end solution to hyperscalers and technology firms to come into those precincts. So that's what today's announcement is about. Over the course of coming periods, we'll share with you more insights on the size of our data bank and how we generate, I guess, the long-term revenues from it.

But the JV is a 50-50 JV. So EdgeConneX and ourselves will fund 50% of the capital. We will derive fees, which we'll share. It's flexible to bring in third-party capital as we go down the risk curve as we again get pre-customer commitments and get planning and construction contracts in place. So it's that similar technology we use in the rest of our portfolio. And we'll keep you updated. The first seed asset for this is likely to be the M_Park project in Macquarie Park here. It's 100 megawatts. We've already got zoning and power secured. We're working through further planning projects there. So that's how it's structured.

But from a capital point of view, we're obviously only 50% of the stack. We'll put in off-balance sheet debt, say, 50%. We can gear this up above 50%. So we're down to 25% in terms of theoretical capital going into the JV. Then you put our land, which will go in at reasonable fair market value into the JV. So once you put our land as equity, the incremental capital required for Stockland is very manageable, and we've had regard for that over the plan period over the next 5 years. So we will share the data bank as we start to get more power secured. We've applied for power on multiple sites in Sydney and Melbourne. But really, it's once we start getting power, we will start talking about the size of the opportunity.

The next question is from Callum Bramah at Macquarie.

Maybe just while you're on it, Tarun, just around the treatment of the transfer of the asset, if you do transfer in M_Park, do you take a profit on that or it just moves through NPA?

And then my second one, Andrew, I think you alluded to a mix shift in the MPC projects in 2026. I think that, I assume, weighs down the margin for otherwise what would have been, I guess, expected a higher margin given the volume you're doing? Are you able to just talk us through that?

Thanks, Callum. Yes, I'll just answer the land one. So generally, it depends whether it's held in inventory or investment assets. But generally, it will be in inventory when we transfer because it's development activity. And if there is -- the aim would be to order -- transfer it at fair market value of the land for its use, which will be data center. So in the future if that is above the inventory value, then there may be some land profits coming through. But again, those will become clearer as we start to get down the journey. The first project is still not this year, likely next financial year. So we'll share that with you. But yes, there could be some land profits, too.

That transfer won't occur in '26 or is not included at least in guidance?

No, no. The M_Park is the first seed asset, and that's likely based on current planning programs in FY '27. So there's nothing in '26. And Andrew, you want to take the other question?

So the mix shift in '26, you're going to see more settlements coming out of Victoria with the recovery in volumes that we're seeing in Victoria. That's a lower margin portfolio than New South Wales and Queensland. And we've got some specific projects in New South Wales that are nearing completion. So they're going to have lower settlement volumes because they're coming to the end of life. So that's the predominant mix shift that we'll see that would have a negative impact on the margin. What's going to positively impact the margin is the ongoing price growth that we've spoken about. We've seen Southeast Queensland 15% plus, WA around 10%, and then New South Wales sitting at about 5%. So that will continue over time to flow through to the portfolio and offset that mix shift.

Our next question comes from Ben Brayshaw at Barrenjoey.

Andrew, I was wondering if you could talk about market conditions for MPC in Victoria. Just what you're seeing insofar as demand from first home buyers and/or investors that may have contributed to the increase in the fourth quarter net sales?

Yes, sure, Ben. Yes, you can see in the numbers in the pack, the increase in Victoria Q4 on Q3. And we've seen that continue through into those July numbers as well. But the recovery has been variable by corridor. The strongest corridor being the Southeast, followed by the North and then the West has been lagging. What's driving that is really the resale stock overhang. You've seen it absorbed largely in those other 2 markets where they're either at or below long-term averages, but we've still got a reasonable amount of stock in that Western corridor, which we think will be absorbed during the year, and you'll see that market improve.

When you look at the buyer type, it has been the investors that have come back first in that market. We've seen a pickup in first home buyers, but your first home buyers are still sitting at 35%, around that number. Yes, long-term averages in Victoria are more around 50% plus. So we think first home buyers still -- maybe it's confidence, maybe it's timing, maybe it's resale stock, but we would expect to see them returning to the market over time as well. The strongest selling product is our more affordable product, single-story, double garage, your 300 to 350 lots. We're seeing demand for that product from first home buyers, investors, builders. So yes, that's where we're seeing the strongest demand.

The next question comes from Richard Jones at JPMorgan.

Again, sorry, but the question is for you, Andrew. Just in relation to the comment you made on, I guess, the sales mix changing in relation to fully owned lots and JVs and PDA in FY '26. Can you quantify roughly what the variance will be on that mix shift from '25 to '26?

Yes. So in '26, we'll see about 50% of sales by volume will be through joint ventures or PDAs. So the way to think about that, it's about 25% of the revenue going through that channel.

And what was that for '25?

It was in the 20s, the low 20s for '25. Obviously, the Lend Lease portfolio stepping up for a full year of trading is what's going to drive that larger volume flowing through.

The next question comes from James Druce at CLSA.

Tarun, you talked to a lot of growth opportunities. You talked to an inflection point. You've got a lot of confidence in the next 2 years and beyond. It sounds like you're sort of talking to an accelerating earnings growth profile. Is that the way we should be thinking about it?

Well, I think we've given guidance for FY '26, which is accelerating from FY '25. It's 6% to 9% range, which is solid. I won't talk about beyond that. We'll give you guidance for '27 when we get close to it. But I think the point is that -- we spoke earlier in the call about the long-term drivers. They are not the ones that are driving earnings growth in the next 3 years. Next 3 years is really the progress we've made in replenishing our masterplanned communities backlog, the Land Lease business that is scaling up, and the Logistics pipeline that is increasing its production on our existing land positions. They are the things to think about in terms of the trajectory of earnings growth, but also our settlements and production. So I think that's what we're pointing to.

And of course, the market conditions in terms of residential are becoming more favorable on the back of interest rate declines. And in the other part of our business, which is, again, capital partnerships and management income is a key part of our strategy, as cap rates stabilize and valuations are starting to increase again, institutional capital will be more attracted to core, core plus strategies, which will provide opportunities through our non-resi development backlog as well. So they are the things that are more near term. And then we've got secured some longer-dated opportunities beyond 3 years, which I spoke about earlier in the call.

Okay. And it sounds like -- I mean, there is a lot there that you're working through. Are you still seeing sort of an acquisition-rich environment at the moment? Like how do we think about further opportunities at the moment in terms of acquisitions?

Yes. We're very selective on what we're buying. So it's usually what we've secured the apartments pipeline in Waterloo and the Logistics and other assets. We're generally not buying across the sectors. In MPC, we have to replenish our backlog because we are now starting to go through about 8,000 lots plus per annum. So that's why we looked at the Kingscliff opportunity, which is a corridor we don't have a business or project in. So that's attractive. So we'll be always doing something in MPC, but we do look at the cycle.

MPC, we've got a lot on our plate, selectively here and there -- sorry, LLC, we might pick up 1 or 2 assets. So we're not particularly acquisitive. It's very targeted, very strategic on the right sort of deals where there's capital-light and longer-term earnings potential. Really, our focus is on the $56 billion development pipeline that is not long dated, that is zoned predominantly or getting close to zoning, so that we can get into production. And that's where most of the earnings momentum is going to come from the development business contributing to absolute earnings, but also providing product for capital partnerships to drive management income growth. You saw that jump from about $60 million to $100 million last year on the back of the deals we've done. And that line in management income is likely to continue to grow at a greater rate than our overall revenue growth.

Our next question comes from Suraj Nebhani at Citigroup.

Sorry, I just had a follow-up, but it's been answered.

Thank you. That is the last question we have time for today. I'll now hand back to Tarun for closing remarks.

Thank you again, everyone, for joining in. We're looking forward to seeing you on the roadshow commencing tomorrow. So thanks for joining the call.

Thank you, everyone. That concludes today's call. Thank you for joining us. You may now log out.