Thank you for standing by, and welcome to the Dexus Industria REIT 2024 annual results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Gordon Korkie, Fund Manager. Please go ahead. Good morning. I'm Gordon Korkie, Fund Manager of Dexus Industria REIT. Thank you for joining us for the 2024 full year results presentation. I'd like to start proceedings by acknowledging the traditional custodians across the many lands on which we operate throughout Australia. We pay our respects to their elders, past and present, and remain committed to supporting reconciliation across our business. Today, I'll cover off on DXI's investment proposition and key highlights for the period, the financial outcomes, as well as providing some color on portfolio performance and an overview of recent market dynamics that we are seeing. I'll then hand over to Q&A, where I'll be joined by Chris Glasson, General Manager of Funds Finance. DXI's investment proposition is to generate strong risk-adjusted returns for investors seeking listed industrial real estate exposure. We deliver this by generating organic income growth from a national, well-located portfolio of high-quality assets that can reach 80% of the population within 60 minutes. Secondly, we conservatively manage the balance sheet to provide resilience and the flexibility to invest opportunistically throughout the cycle. And thirdly, we've taken an active but disciplined approach to portfolio management. We leverage Dexus' capabilities across transactions, development, leasing, and asset management to execute on these objectives. Turning to the highlights for the period. I am pleased to confirm that we've delivered on our upgraded guidance with FFO per security of AUD 0.174, up 1.7% on the prior year, reflecting our proven and long-standing active management approach and the resilience of the portfolio to generate a growing income stream. The result was underpinned by strong portfolio like-for-like growth of 7.8%. Leasing momentum continued in the second half, with Brisbane Technology Park now close to full occupancy. We also achieved re-leasing spreads of 28.3% across our industrial leasing, which will support future growth. During the year, we divested AUD 135 million of assets, which provides capacity to recycle capital into our development pipeline. At our investment in Jandakot, which was rebranded to ASCEND during the year, we achieved an average 5.3% yield on cost across two projects leased to Marley Spoon and Caddy. Construction began at our last mile project in Moorebank, with an initial lease secured at a record rent for the Southwest Sydney market. We retained balance sheet strength, with look-through gearing remaining below our 30%-40% target range, which positions us well amidst the challenging economic environment, but also provides us the flexibility to be opportunistic. Turning to the fundamentals of our quality portfolio. The diversified portfolio comprises interests in 89 assets, valued at AUD 1.4 billion, with 65% exposure to the East Coast. The portfolio provides an attractive and resilient income stream, with the portfolio being close to full occupancy, a WALE of 5.9 years, backed by high-quality tenant covenants and an attractive mix of rental escalators, with more than 50% of these linked to CPI, which provides strong defensive characteristics. We continue to actively position the portfolio to generate long-term performance and capture growth in the industrial sector. This included forward leasing to reduce future expiry risk on the stabilized portfolio amidst the softening leasing environment and ahead of the delivery of new supply into the market, while also retaining a disciplined approach to investing into our development pipeline. Turning to the tenancy mix. Our assets are leased to over 170 tenants across a well-diversified mix of sectors, which continue to perform well, including wholesale, trade, construction, manufacturing, and services. We have minimal exposure to third-party logistics operators, which have continued to withdraw and sublease space as growth continues to normalize, following the extraordinary levels of take-up experienced in recent years. Our top tenant is WesTrac, representing 16% of total income, with over 10 years remaining on the lease. WesTrac have continued to invest in the performance of the facility, including through large-scale on-site solar projects and automation. The remainder of our rent roll is leased to experienced national and global operators, including Amazon, Sandvik, and Kmart, to name a few. Turning to sustainability. The DXI portfolio continues to maintain its carbon neutral status, an outcome we largely achieved through our controlled assets, which has been supported by the installation of approximately 2.5 MW of solar across the portfolio. We continue to integrate sustainability into developments from both a design and a construction perspective, and at Moorebank, we've been able to crush and reuse concrete with a goal to recycle 80% of construction waste. Turning to the financials. We delivered FFO for the year in line with our upgraded guidance of AUD 55.3 million, or AUD 0.174 per security. The result is reflective of the strong operating performance across our portfolio, with like-for-like growth of 7.8% and 180 basis points of improvement in portfolio occupancy. In addition, capital management initiatives were instrumental in helping offset the full impact of higher interest rates. Distributions for the year were AUD 0.164 per security, reflecting a payout ratio of 94.1%. Net tangible assets per security reduced AUD 0.20 to AUD 3.24, mainly due to asset devaluations. Turning to the balance sheet. Our look-through gearing remained low at 27.3%, and we are well positioned to consider value-enhancing capital deployment initiatives, including our development pipeline. Even if we were to fully debt fund our entire development pipeline today, our gearing would remain well below the top end of our 30%-40% target range. We repositioned our debt book during the year, with average debt maturity increasing to 3.5 years, following AUD 208 million of facility extensions, which were executed at lower margins to deliver future savings. We also retired AUD 71 million of facilities to optimize headroom and reduce debt costs. Turning to capital recycling. We were deliberate in disposing assets early in the devaluation cycle to unlock the attractive investment opportunities within our development pipeline. Over the past two years, we have divested close to AUD 300 million of assets, with over half of this relating to the divestment of Rhodes Corporate Park, which increased our portfolio weighting to industrial by 10% to 89% today. Through repaying debt, we've afforded ourselves the ability to redeploy capital while withstanding the impact of continued devaluation pressure without any distress. We completed almost 44,000 sq m of developments at ASCEND at Jandakot across three projects, two of which completed in July 2023. The fully leased projects were delivered at an average yield on cost of 5.3%, compared to the 4.4% passing yield on the assets we divested to fund these. Looking forward, we'll continue to remain disciplined when deploying into our development pipeline by targeting yields on costs inclusive of capitalized interest of 6.25% and above. Given the development land is already paid for and fully expensed on our P&L, we can achieve incremental returns of 8% and above, which remains comfortably above our marginal cost of debt and is accretive to earnings. Turning to valuations. During the year, we independently revalued 100% of the portfolio. On a like-for-like basis, property valuations declined AUD 66.3 million or 4.6% on prior book values, with a weighted average cap rate expanding by 58 basis points to approximately 6%. Rental growth outcomes across the portfolio continue to support valuations and partly offset cap rate softening. Turning to portfolio performance. Our industrial portfolio delivered strong operating performance and accounts for 89% of total assets. Like-for-like growth was 6.3%, supported by 4.5% average rent reviews and double-digit re-leasing spreads achieved in FY 2023. Amidst the softening leasing environment and ahead of new supply being delivered, we continue to actively manage expiry risks, having forward-leased 36,000 square meters, while also capturing strong reversionary upside. During FY 2024, total leasing of approximately 72,000 square meters was undertaken, achieving a 15.7% re-leasing spread. The majority of the leasing was undertaken in the second half at a spread of 28.3%. Turning to ASCEND at Jandakot. The estate continues to perform well and delivered like-for-like growth of 4%, which was impacted by lower occupancy following the early departure of a tenant at 631 Karel Avenue, as disclosed at the half. Importantly, the departure culminated in a surrender payment equivalent to gross lease tail, and pleasingly, the asset is now 65% leased, with active inquiry on the balance. Turning to asset management. We delivered strong leasing at a number of assets, including at one of our largest, 2 Maker Place at Truganina in Melbourne, where we negotiated an early tenant departure, originally due for FY 2026, to unlock a 42% re-leasing spread across over 30,000 sq m. In Adelaide, we renewed or re-leased units across all four assets with no downtime. While the average re-leasing spread was small at 2%, it is noteworthy the leasing embeds the strong overrented yields these assets were acquired on, with new rents struck 11% above valuation assumptions. Turning to developments. The total cost of the development pipeline is AUD 250 million across more than 300,000 square meters, with projects in Sydney and Perth. Across our committed projects, we have AUD 23 million of remaining spend. Included within this amount is our last mile logistics project in Moorebank, located in one of Sydney's strongest in-fill submarkets and expected to deliver at an attractive yield on cost, ranging between 6% and 6.5%. We estimate a further AUD 140 million of capital will be required to build out the land holdings at ASCEND at Jandakot, where we are targeting yield on cost of 6.25% and above. DXI is well positioned to fund these developments within the constraints of the target gearing range. Turning to market dynamics. The long-term thematic for the industrial sector remains supportive, driven by population growth, which is expected to grow at 1% per annum over the next 40 years, which is one of the highest rates amongst advanced nations. The structural shift towards e-commerce is also expected to continue, with online penetration rates expected to increase 3.5% per annum to 2030. Together, population growth and e-commerce are expected to generate incremental demand of between 2.3 and 2.6 million square meters annually. In the near term, we expect demand from non-discretionary segments to hold stronger, while the third-party logistics sector is expected to remain subdued. Overall, demand continues to outpace new supply, given the lack of immediately available service land and construction cost pressures. In 2024, uncommitted available supply remains 1 million sq m below the average take-up levels for the five years pre-COVID. New supply will likely be held in check, given the high economic rents to unlock new opportunities, driven primarily by the resilience in land values and high construction costs. This bodes well for continued rental growth, albeit at lower levels compared to recent times. Turning to BTP. We delivered exceptionally strong performance with like-for-like growth of 16%. We leased over one-third of the park, which supported a 12 percentage point increase in occupancy to 98.1%, which continued the improvement we saw in the first half. Demand was broad-based, reflecting BTP's relative value proposition, offering rents almost half of that within the Brisbane CBD office market. Leasing was executed at positive re-leasing spreads of 3% and were struck 6% above value on market assumptions, while incentives remain approximately 20 percentage points lower than the Brisbane CBD office market. As in past periods, we've continued to achieve strong retention levels, with 73% of the space retained or backfilled within 3 months. These factors continue to support a very attractive income yield of almost 8%. Turning to the outlook. We are well-placed to continue delivering long-term value for investors. We remain focused on enhancing our portfolio to drive organic income growth, diligently pursuing value-enhancing investment opportunities, all the while ensuring that we maintain a strong capital position. Our earnings profile is resilient, and our balance sheet provides us great flexibility to perform well, regardless of the economic environment. FY 2025 guidance is for FFO per security of AUD 0.178, reflecting growth of 2.3% on the prior year, and distributions of AUD 0.164, which reflects a distribution yield of approximately 6% for our investors. Thank you for joining the call. I'll now hand back to the moderator for questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from David Pobucky from Macquarie Group. Please go ahead. Thank you, and good morning. Congratulations on the strong result. Just first question around BTP. I think previously it was spoken about divesting that asset at some point in time, but given the improved occupancy at the asset, how are you thinking about that on a go-forward basis? And have you been approached by any capital partners interested in the asset? Yes. Good morning, David. Look, obviously, the asset's performing exceptionally well, throwing off a pretty strong yield, close to 8% for us at the moment. In terms of our view, look, it hasn't really changed. Our focus, though, does shift to making sure that we can optimize the opportunity, the longer-term opportunity, and make sure that we get a pretty good price on that in due course. So there's a question around timing. In terms of offers, we have been approached numerous times, on that asset, as you always do on a range of assets. There is one party we are discussing one of the assets with, but look, it's early days. You know, there's some optimism in some of the discussions that we are having, but I don't think I can really discuss it, you know, any more broader than that at this point in time. Thank you. That's clear. Appreciate it. On the balance sheet, gearing sits at 27%. So So that provides runway for, for deployment. Are there any acquisitions that have come across your desk that, that are of interest, or is it-- that something that you'd be looking to, to pursue? Well, we're always looking at opportunities within the market. I think it's fair to say that we've got a pretty reasonable development pipeline that at the moment is just throwing off, you know, much more attractive return parameters for the fund. That's where our focus is. We'll continue looking at the opportunities within the market, and, you know, it's fair to say that at some point we'll hopefully be active on the East Coast. Thank you. And just one last final one, just on the development opportunities. You're targeting a yield on cost on future developments of 6.25%+. I think that compares to circa 6%, at the first-half result. Is there anything to kind of read into that? Not really. We've seen cap rates at Jandakot increase by 50 basis points over the last year, so it was really making sure that we preserve the risk-adjusted returns on the developments moving forward. And that's really the extent of it. I think we still remain pretty excited that we can achieve, you know, yields on costs inclusive of capitalized interest north of those levels. Thank you. Really appreciate it. Good luck over the remainder of the year. Thanks, David. Thank you. The next question is from Andy MacFarlane from Bell Potter. Please go ahead. Hi, Gordon. Yeah, just a couple quick ones from me. Just in terms of the DPS guidance, just wondering, you've obviously got—you're reflecting a bit of growth into 2025 for the earnings, but you're holding the distribution flat. Just wondering kind of what the thinking there is. Morning, Andy. Well, I guess in the last couple of years, we've seen our payout ratio tracking a little bit higher than where we've historically been. That was really on the back of the transformative acquisition at Jandakot, as well as, I guess, a very large increase in interest costs over the last year, last few years that we've had to absorb. So holding guidance is really reflective of trying to return more to a historical payout ratio, where we're looking, you know, in and around the 90% mark. When we look at where our projected earnings is relative to where we need to be to start looking to increase distributions, you know, we only need growth of 2.2%, and I think that's within striking distance. Hopefully we can look to grow our distributions in, you know, periods to come. I think just one other thing on the guidance, just in terms of what you're assuming on variable debt component within guidance for FY 2025. Sure. Yeah, sure. So at the time that we were setting guidance, we had regard to where the market was pricing, which was in the mid-fours at that point in time. We've chosen to hold our levels, just given the volatility. We've in the past, we've seen volatility where rates have moved around. You know, this is not the first time we've seen a retraction in rates only to revert, so we remain comfortable with that assumption. Where that leaves us is a all-in rates in the mid-fours, so you'd be expecting to see roughly a 75 basis point expansion across relative to FY 2024. For the WACD? That's right. Yep. Thank you. One last one. I just on, I guess, on, on that, your, your WACD is still pretty low, which has obviously been the benefit of some good hedging and things in the past. The hedging looks to be rolling a little bit. Just wondering how you're thinking about your hedging, as we kind of go forward. Well, I mean, 4.5%, let's say in FY 2025, I don't know if that's necessarily low. I think that's aligned with many in the market. We're not probably the only REIT in the sector to be, you know, faced with, you know, hedge books that are rolling off lower rates. In terms of our outlook, look, we've got very comfortable levels of hedging. We've got roughly 65% and above in FY 2025, and remain well-placed in 2026 as well. So we don't have to go into the market to do any incremental hedging at this point in time, but we'll continue looking at the opportunities, based on the curve and make the appropriate calls at the appropriate time. Okay. Thanks, Gordon. Thanks, Andy. Thank you. The next question is from James Druce from CLSA. Please go ahead. It's from me. Hi, good morning, Gordon and team. Just wanted to get a feel for the like-for-like guidance for NPI for 25. Sure. Morning, James. Well, look, for the period at hand, we obviously delivered a number of 7.8% as reported. Looking forward, we probably expect that to be more on the mid-fours. And really, the drivers of that is a much lower inflation print that we're expecting in 2025. In the prior period, that was circa 5%, whereas more likely to be 3.5% in the year ahead. We're also seeing probably a smaller contribution from the lease-up of vacancy coming through in the next period. And then we've got three months of downtime at 2 Maker Place, which is one of the important leasing deals we talked to as part of the result. Okay. So by just putting that math together, you're growing at 4.5%, that's roughly AUD 3.5 million of extra income coming through. Your hedging ex what happens with the floating is probably about AUD 1.5 million. Sorry, my apologies. So you're- I thought you were talking specifically in relation to NPI. You're talking more akin to the upgraded guidance, is that correct? Yeah. So no, just talking to... No, just talking to the outlook for 2025, really. ... Yeah, correct, but at a fund level. So, let me maybe step back. So the property FFO growth will be approximately 4.5%. I've spoken through the key drivers as part of that. Then we'll. So overall, that 4.5% will contribute roughly to a 7% increase, in terms of its contribution to FY 2025 growth. There'll be a drag of approximately 5%, coming through the financing lines, based on the 70 basis point expansion in your all-in cost of debt that I previously called out. And then there's a residual 0.5% contribution, mainly from developments, coming through in FY 2025. Okay, so if you, if you take out, on my rough numbers, if you, if you strip out the floating assumption that you've made and just look at the hedged increase or the increase in hedge rate over the period, plus your like for like NPI growth, it should be closer to 4% growth for 2025. Is there anything else to call out there? Well, look, it'll really probably depend on what your development leasing assumptions are. We have taken, I guess, a conservative view, given some of the thematics playing out as far as that's concerned. The two key leasing exposures are Jandakot and Moorebank. Firstly, as far as Jandakot is concerned, I mentioned that we're in advanced discussions with tenants there. The commencement date remains unknown, but, you know, we remain, I think, well-placed on that. But just given the size of category, some of those leasing decisions can take longer, and so we've assumed a February 2025 commencement. As far as Moorebank is concerned, the PC date is December, which intersects with, you know, the Christmas period, which is traditionally a slow period of time as far as leasing is concerned. On the back of that, we've assumed one quarter of contribution in FY 25. I think maybe once you adjust those, hopefully you get to a number more akin to what you're expecting. Yeah. Thank you. Thank you. The next question is from Murray Connellan from Moelis Australia. Please go ahead. Morning, Gordon. Quite a good result on the re-leasing spreads from the industrial portfolio. I was wondering whether you might just be able to comment on your expectations on the outlook there. Is that sort of reflective of where you see the average balance of the portfolio relative to market or you know, maybe we can phrase this in the context of what your views are on under renting versus market rents? Yeah. So look, I think as past periods, we've always talked to our market or our portfolios being broadly market rented, with the industrials being slightly over-rented, oh, sorry, under-rented, and the BTP portfolio being slightly over-rented. Look, we still see a good opportunity to continue to drive rents. Despite that, we've got a track record of outperforming value assumptions. And when you look at the industrial portfolio, there's a mix of tenancies that are over-rented, largely on the back of specialization. So those tenants generally have a high value and use. The economic rents to replace that type of operation is much higher than the assumptions that valuers have adopted within our valuations. So look, we remain well-placed, I think, to maintain, if not grow, that part of the book. And then by definition, given that over-rented component, that means there's a component of the portfolio that's also under-rented. So I think there remains a really strong ability to continue growing rents in the years ahead. Got it. Thank you, Gordon. Thank you. The next question is from Adam Calvetti from CLSA. Please go ahead. Hi, Gordon. Congrats on the result. Look, you, you're pretty positive on the supply and demand dynamics in the industrial market. On slide 16, you've actually pushed some of your uncommitted developments, which I assume is in Jandakot, into FY 2026. What's been the reason for that? Look, morning, Adam. There's no real science to it. Look, I guess we provide that timeline as a guide only. We're not necessarily committed to deploying X dollars in X number of years. What's important to us is to ensure that we're getting good outcomes and capturing the right level of value out of those developments. So it probably aligns with, you know, an historical run rate. But as I mentioned, we're not really committing to delivering X dollars in any given year. It's all about making sure that we get the right return profiles from that development pipeline. Yeah, okay. Thanks. And maybe just back to David, David's question, on the increased development costs. So not only have you increased, just the targeted development costs for new developments, you've also increased, Jandakot's development costs from 6% to 6.5%. Just trying to understand how, what were the drivers to that increase? I thought I answered it previously, but largely on the back of a 50 basis point increase in cap rates over the last year. We've also had a look at where the incremental cost of debt is at the point that we set that target. I think a combination of those two factors meant that we arrived at that number. So look, I think what it does demonstrate is, you know, ongoing momentum in terms of the return profiles that we can get out of Jandakot, as well as Moorebank. Right. So, sorry, just have construction costs decreased or market rents gone up? I'm just trying to understand the real driver there. Well, we're probably seeing an increase in market rents. In Jandakot, the construction costs would be broadly stable at this point in time, I would say, with different factors influencing that. Concrete and steel, probably a little bit softer than where it's historically been, but that's being offset by labor. Okay, great. Maybe just one more, if I may. Just on the tightening margin, how much in terms of the cost of debt, how much tighter have you been able to achieve? Yeah, relative to the historical facilities, we achieved roughly a 20 basis point saving. I don't think that necessarily represents the saving moving forward. We have been having discussions with many of our lenders who like what we're doing, and we have seen our expectation of market pricing come in, maybe half of the number that I just quoted. Great. Congrats on the result. Thanks. Thanks, Adam. Thank you. There are no further questions at this time. I'll now hand back to Mr. Korkie for closing remarks. Thank you all for joining the call. Look forward to connecting with you in the coming weeks. Thank you. That does conclude our conference for today.