Without further ado, I'll hand the conference over to our first speaker for today, Mr. Greg Goodman. Thank you, please go ahead, Greg. Thank you very much, Miles. Good morning and welcome, everybody. I hope you're keeping safe and well in these very uncertain times. Nick Vrondas is with me on the call. Throughout the year, Goodman has remained flexible and adapted to the changing conditions, enabling our business to deliver strong growth with the health and wellbeing of our people remaining a high priority. We've continued to build on previous years with operating profit of AUD 1.22 billion, up 15% on last year. The result highlights strong growth in our development workbook, high demand from our customers, and positive revaluation outcomes. Operating earnings per security for the year of AUD 0.656 is up 14.1% on the previous year, and statutory profit came in at AUD 2.3 billion when you include primarily the revaluations. Goodman is well capitalized with gearing at 6.8% and available liquidity of AUD 1.9 billion, including AUD 900 million in cash. Our partnerships, importantly, also have AUD 18 billion available for future investment. Market conditions are strong in our sector. Continued growth in the digital economy is giving our customers confidence to grow. Our global portfolio is well-positioned to facilitate their needs. Our development workbook increased during the year to AUD 10.6 billion. Our global work in progress is spread across 73 projects in 12 countries. Importantly, the development program has very strong margins. The depth of demand is leading to a high level of pre-commitments, with work in progress at 70% leased and an average lease term of 14 years. Projects completed in FY 2021 are almost 100% leased. Development undertaken on behalf of our partners remains consistent with prior periods at 81%. The activity is flowing through the partnerships performance and also the assets under management. Assets grew solidly through the year and now stand at AUD 58 billion. Our partnerships delivered average returns of 18%, with solid income and capital growth. With strong visibility into the development activity, we're forecasting growth in assets under management this year to in excess of AUD 65 billion, which in turn will be reflected in revenues in future periods. Regeneration of our existing brownfield sites is an important part of our global sustainability strategy, given their lower impact on the environment. Developing brownfield sites decreases waste, preserves greenfield land, and generates jobs where people live, reducing commute times and uses existing infrastructure. These sites represent more than half of our development land and will provide us with more development opportunities in future periods. One of our most important areas of focus this year has been to integrate ESG initiatives into everything we do at Goodman. We're focused on a long-term sustainable approach that leads to positive economic environment and social outcomes for our business, our stakeholders, and the world more broadly. This year, our global operations achieved carbon neutrality four years ahead of our target. Looking ahead, we're working with our contractors and customers to decarbonize our developments, a critical part of this solution to emissions reduction. We've established a framework to calculate the embodied emissions from our development projects globally, which will allow us to reduce and offset this in the future. Finally, throughout the year, Goodman Foundation continued its efforts to help its partners support their communities around the world. Now, I'll pass over to Nick for a few comments. Thanks, Greg. Let's turn now to slide 10 for the income statement. We'll first cover the operating profit, then discuss the non-operating items at the bottom of the table. Overall, though, FX movements reduced the translated value of our foreign income when compared to last year. This was collectively offset by the AUD 58 million benefit we got in the net borrowing costs. We'll go through the individual impacts along the way, in aggregate, it's worth noting that operating EBIT was up by nearly AUD 140 million on a constant currency basis. Looking specifically now at the movement in investment earnings. The average volume of directly owned assets is largely unchanged over the past two years. Our NPI has been stable. Investment income from our cornerstone interests in partnerships, on the other hand, was down AUD 15 million over last year, and this was exactly equal to the FX translation effect. Underlying rental increases resulted in AUD 13 million of additional income to the group, which equates to like-for-like NPI growth of 3.2%. The majority of this growth came through fixed increases, but we expect to see ongoing support from market rental increases in the locations we operate in. This was offset by the impact of capital transactions, which resulted in a AUD 13 million reduction in income. Some of this was due to the positioning of assets for redevelopment, which meant that we've made them intentionally vacant. The timing of disposals relative to acquisitions and development completions was also a factor. It's worth pointing out that the disposal program has led to some return of capital to ourselves and our partners. This slows the rate of income growth because we've reduced the amount of equity invested, and what equity we are investing is mainly going into development activity. Another significant driver, as in recent years, was that the net initial yield on the assets sold has been greater than that of the assets acquired. We continue to focus our portfolios on what we believe will be the better properties within our chosen markets, and that this will deliver rental growth and value creation opportunities to enhance total return in the long run. With ongoing investment and growth in like-for-like NPI, we expect our cornerstone investment earnings to increase over time. Management revenue was down AUD 52 million this year, but AUD 24 million of that was driven by the FX translation effect. Our net investments have been relatively stable, but it was the strong valuation gains over the year, especially in the second half, that was the biggest contributor to AUM growth. As a result, base management revenues grew by AUD 20 million over the year. Performance fees and transactional revenues contributed AUD 149 million this year, which is down by AUD 48 million over last year. The performance and activity levels in the partnerships continue to be strong, this reduction has just been the result of the timing of revenue recognition. We expect that fee revenue as a percentage of stabilized assets under management, will average about 1% over time, which is in line with this FY 2021 result. Given the prospects for growth in AUM and the ongoing performance of the partnerships, we believe that there's scope for growth in management revenue. Realized development income for the group was nearly AUD 720 million for the year. This is up by over AUD 140 million year-on-year, or AUD 175 million on a constant currency basis. In addition, nearly AUD 400 million of development gains are recognized by the group as its share of revaluations. As usual, the revaluation income sits outside of the operating profit. It does, however, demonstrate that we create significant value through the process of site identification, achieving planning outcomes, and project delivery, and that we've continued to execute these core functions very well. Another feature of the developments that we've been highlighting recently is the impact of their larger scale and therefore longer time frames. This has resulted in the extension of the development period for the projects in WIP to an average of just over 19 months. That means our annualized production rate from WIP has increased from just under AUD 4 billion a couple of years ago to AUD 6.6 billion as at June 2021. This increase in the volume of work is what's driving the revenue growth and providing enhanced visibility into our development earnings going forward. We remain enthusiastic about the demand prospects for our developments, we expect to maintain strong activity levels in FY 2022, which bodes well for future revenue. As foreshadowed at the half year result, our borrowing costs were down AUD 55 million on last year. The stronger Australian dollar over the course of the year gave us an AUD 58 million benefit, which offsets the impact of the translation of the other line items we discussed earlier. This outcome is consistent with our hedging strategy that's been in place for a very long time now, and some years it's up and other years it's down. In FY 2020, for example, we had an AUD 30 million cost, which offset the translation benefits relating to the other line items in that year. The other main driver of this reduction in the expense was the repayment of high cost debt that has been occurring over the past couple of years. Partially offsetting that benefit is the reduction in interest earned from our cash on deposit, and a reduction in capitalized interest. Our net weighted average cost of debt is currently around 1%, so borrowing costs will remain low in the near term, and any volatility will probably come from FX movements. Our tax expense was down due to the changing nature and origin of our income. As far as the non-operating items are concerned, we saw our share of the total revaluation gains of AUD 5.8 billion increase to AUD 1.3 billion this year. Cap rate compression was again prevalent, as were rental increases. As you can see, development valuation gains also represented a significant portion of the total valuation result. With the strength of demand for our assets and the contributions from development likely to continue, we believe that valuation growth will persist in the near term. As usual, we exclude the accounting cost of the employee long-term incentive plan, but we include the tested units in the denominator when calculating our operating EPS. The main drivers of the movement in the share-based payments accounting cost has been the volatility in security price and other valuation parameters. That's another reason why we treat this item the way we do. A few remarks now regarding the balance sheet on slide 11. The strong Australian dollar reduced the translated value of our net foreign assets and liabilities by AUD 0.3 billion. This was partially offset by the derivative mark-to-market gains flowing through the statutory income statement. The increase in the wholly owned assets portfolio was partially driven by valuation gain, but there's been AUD 160 million added through net investment and transfers of assets upon completion of their development. Our share of the stabilized assets within the partnerships were up by around AUD 860 million. Within that, our share of the valuation gain was AUD 1.1 billion, of which about AUD 160 million came from developments. Net investments and development completions added around AUD 100 million. In offsetting this, we had the FX translation and mark-to-market impact of -AUD 300 million. Our development holdings are up by AUD 500 million overall. This is net of disposals and completions. We continue to fund the growing workbook across the group and the partnership. Breaking this down, we added AUD 300 million through our share of the partnerships and AUD 100 million to our direct holdings. There were some non-cash movements. There was a -AUD 100 million impact from the FX translation and around AUD 200 million of valuation gains for properties that are still under development. Just pausing on that point, that includes AUD 95 million associated with properties that are subject to conditional contracts for sale. You'll find this specific disclosure in the audited financial statements. It's occurred because the development process straddles more than one financial year. With the lengthening time frames of our projects, these situations are likely to become more frequent. If and when those sales are completed, we'll reallocate those valuation gains to the operating profit calculation in future periods. They'll be offset against future valuation results, so we don't double count them. This replicates a situation that arises when properties are sold prior to their revaluation, which is what usually happens with quicker projects. Importantly, it remains consistent with the principle that operating profit is backed by cash. In terms of the direction of our working capital allocation going forward, there are two things to consider. Firstly, development cash flow in any given period can vary depending on the point in the program we're at relative to the settlement process for new projects versus the older ones. Secondly, in terms of trend, we expect that working capital allocation to developments will continue to move up in the near term in light of the increased activity levels. Given the confidence we have in the assets and the returns we're generating, we believe this to be a good use of funds at this time. Our cash holdings decreased by around AUD 860 million over the year. This was mainly due to the repayment of around AUD 700 million of loans and US dollars bonds. We also utilized some of our cash to fund investments into our developments and equity in the partnerships, but in the main, they were funded by retained earnings. This is consistent with the design of our long-term capital management plans and the distribution policy. There was also a -AUD 100 million impact from FX on our foreign denominated cash holdings. As far as the borrowings are concerned, FX also had a -AUD 100 million effect because it's all denominated in foreign currencies. This leaves us in a position where we're down to AUD 2 billion of interest-bearing liabilities. As a result, our net interest-bearing liabilities, net of cash, sits at just over AUD 1.1 billion. That's a good point to turn to slide 12. Consistent with our financial risk management objectives, we'll continue to operate our gearing within a range of 0%-25%, with the level to be set with reference to the mix of earnings and activity levels. In light of the growth in development activities, we aim to maintain leverage in the bottom half of this range for the foreseeable future. Gearing is currently lower than it was this time last year. Please note that we're expecting to increase development capital allocation in near term, and there are less asset sales from partnerships foreseen, so gearing is likely to be a little higher over the coming year. This is why our distribution per security is expected to remain at AUD 0.30 for FY 2022, which will enable us to sustainably fund our proportionate interest in the assets we're developing for the long term. That's all from me. Thanks. Greg? Thanks, Nick. In closing, after a robust year in FY 2021, we expect current development activity and strong returns to continue for the group. We anticipate the impact of COVID to be with us during FY 2022 year, and our adaptability and agility is going to be important. We've adjusted to this environment very well, and it gives us confidence moving into this new financial year that we've already adjusted to the climate. The group is forecasting to deliver FY 2022 operating profit of approximately AUD 1.368 billion, up 11% on FY 2021, and operating EPS of AUD 0.722, up 10% on FY 2021 year. Forecast distributions for FY 2022, as Nick pointed out, will remain at AUD 0.30 per security. Just in closing, I'd like to thank you for attending this meeting, but also I'd like to thank the Goodman people around the world for delivering on this result in very unusual times for us all as a global community. Thank you very much, and we are now moving to questions. Miles? Thank you so much. Ladies and gentlemen, we'll begin that Q&A session. Once again, if you need to ask a question, please press star one on your telephone and wait for your name to be announced. Our first question today comes from the line of Simon Chan from Morgan Stanley. Please ask your question, Simon. Good day. Good morning, Greg and Nick. First question, just on how much worth of disposals did you guys factor in for FY 2022 in your guidance? I noticed you guys sold about AUD 3 billion or maybe a bit more last year. Just what should we be expecting this year? I think in the next 12 months it's going to be minimal. I think we've done, Simon, what we wanted to do in the last four or five years. We've repositioned the portfolio globally. We've positioned that capital back into the infill sites, which we wanted to do around the world. Those infill sites are now starting to crank into production through 2022, 2023, and 2024. Most of where we want to position the portfolio for growth is done. It'll be relatively minor in the scheme of AUD 65 billion-AUD 67 billion of assets, it will be pretty minor. Great. Very clear. Thanks, mate. Then on your production rate of AUD 6.5 billion-AUD 6.6 billion, can you guys just give us a feel for when will that actually translate through to completions, if at all? I'm just trying to reconcile this production rate, going from AUD 4 billion-AUD 5 billion, there's now AUD 6.6 billion, yet your annual completions only gone from AUD 1.5 billion-AUD 2.5 billion. I acknowledge that stuff takes, you were saying 19 months to complete. Are we close to the point, perhaps back end of FY 2022, when we should see a pretty noticeable uplift in completions in AUM? Good question, Simon. I'll just make one comment. We're carrying a lot of work through this June 2021 into 2022. We're starting 2022 very strongly. I'll just pass over to Nick for a few other comments. Yeah, that was spot on, Greg. Yeah, Simon, I think I flagged this one year ago that we'll go through this transition process because we're dropping off a lot of shorter-dated projects and picking up a lot of longer-dated ones. Until that normalizes, it'll take a bit of time. FY 2022, we expect that there will be another step up, FY 2023, another step up again. That's the program. Sorry, when you say another step up, a step up in what? In completions. If the production rate remains around this 6.5 level- Yep over time, the completion rate should be get pretty close to that. It'll take a couple of years for us to get to that normalized level. It won't all happen in one year. Yeah. Okay. Fair enough. Mate, just putting that together then, I'm just struggling to see how your EPS growth expectation is only 10% for next year, right? Greg said you're not going to be selling a material amount of assets. Your completions is going to go up, throwing a little bit of reval. Is there something else I'm missing in putting all that together? Simon, I think we're looking at the world pretty realistically. We've got a world which is difficult. You've got supply chains that are challenged. We're just taking a sensible look at the world and putting a sensible number out, which we think AUD 1.36 billion is a good number. It's cash, it's operating profit. We would expect valuations to be also strong. We think it's just a prudent, sensible number at this point of the year. Can I just pick up on the point you made there, Greg? Supply chain's been challenged. Is that increasing your manufacturing costs of your sheds, et cetera? Is that something we need to be mindful? Yeah, look, good question. Out of the AUD 10.6 billion, there's about AUD 3.5 billion in concrete and steel and construction. It's actually not as volatile, even cost increases at the top line. Land and profit and risk is 65%-70% of the equation at the moment. Look, not from a profitability point of view. I think from a timing point of view, you've got to be realistic this year that things, with everyone dealing with the Delta variant, are slowed down certainly in the construction process in parts of the world. The good news for us is having a global portfolio and a global business, we can sort of work with those cycles as we actually have been in the last 18 months. I think 10% is a good number. It's a big number. It's a sensible number at this time of the year. That's terrific. Thanks, guys. Okay, we have another question in queue. I'll next go to Lou Pirenc from Jarden. Please ask your question, Lou. Yeah, good morning. A few questions from me, if I may. First of all, on your dividend payout, I mean, you flagged quite well that you wanted to bring that down. Do you have a number in mind, Greg or Nick, where you kind of want that payout to be, or should we just expect AUD 0.30 for the next few years? Yeah, look, it'll sit around 40%, is the reality, Lou. There is a lot of money going into our development pipeline around the world. There is probably an uptick on work in progress of AUD 10.6 billion, even closing in around AUD 11 billion during the year as well. There's just some really good opportunities for us globally that are big. They're infill, a lot of multi-storey. We think 40% for us, bearing in mind the growth we're experiencing and the demand we're experiencing from our customers, is where it'll sit. Great. As you say, the majority of that retained earnings will go into development, but you did increase your stake into GMT. I just wanted to see if you're seeing opportunities to take more stakes into your existing or future funds. Yeah, look, as the assets under management, Lou, grow over time, and I've said they'll grow through AUD 65 billion this year pretty strongly, yeah, there will be more investment in the partnerships as we go as well. Just remember, Goodman holds about AUD 1.8 billion of assets on our balance sheet as well, which are rotating. Some of those are getting ready for development. They will be developed, and then that will free up additional cash for investment as well. It's a combination of the two items. Certainly assets on the balance sheet that are rotating plus the retention of the cash flows. Great. Thank you. Okay, your next question in queue comes from Sholto from Jefferies. Please ask your question, Sholto. G'day. Thanks everyone. Just touching on some of the points made. If you look at the production, AUD 10.6 billion of WIP averaging AUD 6.6 billion in production based on the 19 months, it's not hard to see your development earnings being AUD 900 million-AUD 1 billion with a 15% all-in margin. Just trying to understand how you get to that guidance. Obviously, it seems a bit conservative, based on what you're saying around COVID and the timing and things like that. Can you elaborate on that, the development work and how you see that translating to earnings? Yeah. Look, good question. I suspect this will be a question we'll get all week. Look, we think 10% is a good number because it's a strong number backing up on a very good result this year. Its cash flow and operating profit are very much aligned this year, very close. For 2022 will be the same. We think 10% is a good number. If during the year we feel more inclined, we're doing a little better, we'll let you and everyone else know. We just think it's a good number. Is it conservative? I think it's sensible for all the reasons I've outlined. Are we confident? Yes, we are very confident in the numbers we're putting forward to you today. Okay, just on the payout. Your gearing did tick up a little bit from December, about 200 basis points, but you had net debt broad unchanged. Your revals were quite strong. Was that just the FX impact that made that at the translation at the end that made that gearing a bit higher? Nick, do you want to jump on that one? Yeah. FX did affect it because it did tick down just right at the end of the financial year. The rest of it was just the net cash flow movements. I guess it's a good signal when you've kept your dividend flat for several years now, and you're saying, obviously, the WIP's gonna smash through AUD 11 billion, and your flag in increasing gearing. I guess you're pretty confident that you're gonna keep investing more into the partnership developments, hence why the payout ratio will remain low so you can keep growing your share of that pipeline. You're comfortable leaving the dividend flat for a couple of years until you grow into while that investment is elevated? Yeah. Well, look, we're talking about this year, why don't we just deal with this year? We're comfortable at AUD 0.30, because we think that then provides the capital to grow the business. In saying that, we are seeing really strong customer demand, the longer the world is disrupted, the stronger that demand will get. Effectively, we're seeing that in all our regions around the world. We've got demand that's two or three deep per project, effectively. That demand's strong. You'll see us putting product into the market to make sure we cater for very good customers in the portfolio. In doing so, we're pulling forward sites that we thought we might develop in a year or two's time. I think they're gonna be activated earlier as well. A lot of that is infill, as well. We're in a pretty robust environment for Goodman around that development business. We just need to manage, obviously, the capital going into it and making sure that we're managing the balance sheet conservatively, which is where we want it to be, bearing in mind we have a lot of active earnings in the P&L. Yeah. Then just on the P&L, I noticed you flagged the management earnings apart from asset sales and currency, but also the timing of performance fees. Would the sum get pushed into FY 2022 in the first half, did they? What were the number of performance fees? I think you said on the call AUD 149 million this year. AUD 48 million down. Yeah from last year. Yeah. Yeah. That was the number. I think you want to look at primarily, we gave you a number for the average performance of the partnerships. I think it was 18%. We believe this year will be another very strong year, as was the last two years with mid-teens performance. I think extrapolate that out and you could imagine that we are pretty strong in regard to aggregate performance moving forward, certainly if the conditions prevail. The business is performing well, the partnerships are performing well, and there's a big buildup of performance in all those partnerships, primarily all around the world. Yep. Just finally, this may be for Nick, with an undevelopment profit of AUD 780 million, how much was non-cash again? I may have misheard that on the call, which is obviously a timing issue before they complete. Nick, you can take that one. Yep. The number you're referring to, Sholto, that's in relation to the conditionally contracted properties- Yeah where we had the revaluation. Yeah, it's at AUD 95 million. Okay. What was it last year? Do you have the PCP number? There wasn't last year. It was the year before. It was about AUD 19 million. At the end of FY 2019, we had AUD 19 million that was conditionally contracted that then got treated the way we've consistently in FY 2020. In FY 2021 - Yeah there was no reversal. Yeah. We've got the AUD 95 million, so that over the next couple of years, that will come out in the operating profit. Yeah. All right. Thanks very much. Yeah. To be clear, there was no AUD 95 million in AUD 700 million of development operating profit. Correct. Those are the revaluations. That's not in that number. Okay. All right, thanks. Good result. Thanks, everyone. Thank you. Okay, we have another question in queue. I'll next go to James Druce from CLSA. Please ask your question, James. Hey, good morning, Greg. Good morning, Nick. My first question is actually pretty basic. Wanted to get some color on the distribution of the WIP. How much of the AUD 10 billion or so would be in the top five assets, say? Look, it'll be well spread. It's well spread around the world. I think there's 73 projects. The projects are just getting bigger. An average project is AUD 120 million or AUD 130 million now. Okay. As a follow-up, just talking to some of the buckets of demand, is there anything to call out across pharma, e-commerce, and fresh food over the period? Yeah, all of the above. Pharma obviously is for all sorts of reasons, including vaccine storage and things of that nature. Look, I think you're going to find healthcare and things like that as a big sector, and we're seeing that grow pretty strongly. The longer this pandemic goes, the more entrenched the way we're living, also means that we're spending more online, and we think we'll do so. That's accelerating the trends. I think the world will be at 40% online sales through retail sooner than was forecast 12, 18 months ago. We're seeing big moves in getting supply chains ready for that, getting supply chains ready so they're not vulnerable. We're seeing a tremendous amount of work going on in e-com, and we're seeing it now in fresh as well, which I think there's a lot of articles and a lot of talk about fresh, and that's happening globally. Pharma's been probably the last six, nine months, a big move on pharma, yeah. Okay. Finally, just a question around data centers. How do you describe what you're doing in that space at the moment? Is it an intentional adjacency or a mere product of good real estate? Can you talk to the customer set in data centers, which is a potential customer for Goodman Group? Yeah, look, there are big guys around the world. The biggest data center operators are the Microsoft, the Amazon, and people of that ilk, the Equinix. It's an ilk. What we tend to do and do in most cases, if we're going to own the asset long-term, we'll build a pretty generic building that stores data, and if it's not storing data, it can be storing goods. I think we've done that pretty effectively over the last 12 years when we've been operating in this sector. We're not pulling it out as a special sector for Goodman. It's storage, not of boxes, but of data racks. We build primarily, if we're going to own them long term, generic buildings. From time to time, if the building's a bit specialized, we might sell the land or we might do a land lease for 25- 30 years to the customer, and then they can build what they want to build. We handle it in different ways, but we're not building specialized buildings for data center. What we are doing is building buildings that are generic, which stores data, which can convert to something else in the future, is the way we approach it from an investment point of view. Okay. Thank you. Okay, your next question in queue comes from Richard Jones from JP Morgan. Please ask your question, Richard. Good morning, Greg. We're obviously seeing phenomenal investment demand for industrial assets in Australia. Can you put the demand in Australia in a global context? How does it compare to the other markets you're operating in? Yeah, good question. It's the same everywhere. It's the most popular asset class globally at the moment. I think there's numbers all around the world that sort of bear that out. It doesn't matter whether you're in the U.S., China, effectively in Europe, there's a lot of money, a lot of capital being raised, primarily for core assets. The development activity and the amount of competitors really hasn't changed. It's the same people, a few different faces, but that's always remained relatively competitive. Around core assets, big demand globally, and I think, Richard, we marked the book to 4.3% globally as the global cap rate. That was AUD 5.8 billion of revaluations globally for all our partners in Goodman. I think you'll see that'll move again this year, primarily off the back of real growth and cash flows. We're seeing, at Goodman partnership level, very good market rental growth because we've chosen our locations and backed them, and that's paying off. There's a lot of 4%, 5%, and 6% sort of growth rates now coming in a lot of markets, which will impact then the valuations over the next few years moving forward. I think valuations are going to, for Goodman, will have another pretty solid year, but the amount of money looking for core industrial is very strong. Okay. Just on the development workbook, you talked, I think, in the last couple of quarters about a significant ramp-up coming in the U.S. and sort of a gradual ramp-up in the U.K. Hasn't seemed to have happened or been a big driver of the growth in WIP in the last couple of quarters. Should we expect FY 2022 to see the U.S. become a more significant contributor? I think you talked previously more than AUD 1 billion of starts near-term. Yeah, look, that is in the process of starting in the next month or two. We've got 1 site which we've graded, ready to go. That's about AUD 600 million. There's another site we're pre-letting that's about another AUD 600 million. Those are going to kick off this half primarily. We're just regulating what we're doing sensibly. We're watching, obviously, construction costs around the world. For us, it's not so much around the cost, it's more around the timing. There's plenty of margin in it. Getting the timing right where we're buying steel ahead of time. We're doing things that are smart by procuring things at better prices and in bulk and things like that. I think from our point of view, pretty comfortable with work in progress at AUD 10.6 billion in June, the reporting date. Yeah, we've got a lot of stuff to kick off this half and the second half of the year, which will basically maintain, I think as we've said, a pretty big work-in-progress number over the next year or two, in that probably AUD 10 billion-AUD 11 billion range. Then if you extrapolate that out, which most of it's being owned by our partners, extrapolate that out, it gives you a pretty strong growth in your assets under management, probably around that 12%-14% a year. When you strap on some valuations, we'll be through AUD 70 billion in the 2023 financial year. Thanks, Greg. Okay, we've got another question in queue. I'll next go to Suraj from Citigroup. Please ask your question, Suraj. Thank you. Morning, everyone. Nick, just wanted to go back to the question around the development income accounting, the AUD 95 million number. Can you just run through how exactly that will come through earnings over the next few years? Will it be a negative reval in a way, but coming through earnings? Is that the way to think of it? Yeah. Nick, you got that? Yep. Just getting myself off mute. Yeah, Suraj, that's exactly right. It'll effectively be a negative reval because we don't want to double count it, right? If we don't do that in the future year, when you add it up over a number of years, you'll end up with more profit than we've actually generated. In the statutory financial statements, we'll keep tracking that for you so you can continue to follow it, and it's part of the audit process so that the numbers are verified. When we do our operating profit reconciliation, it'll be a notional reallocation as a negative reval in a future period when we bring it above the line to operating at the time when the asset sale is completed, and only when it's completed. If it doesn't, obviously we won't. Okay. Are there similar deals that we should expect to occur in the future, or this was more one-off in nature? I think it's gonna- Nick, you got that? Yeah. I think it will become more prevalent. Like I said, we had one deal in FY 2020. There's a few here and there's a few in the pipe that could go the same way as well. We'll have to keep calling it out so that it's clear. Yes, I expect that there will be more of these in the future. Okay. Maybe, Greg, just one for you. On the brownfield development sites, you obviously talked about the environmental benefits. I'm just wondering if you can clarify generally how that is higher margin than other industrial projects? Look, I think the barriers to entry with it are just way higher. The land is, in the main, because of the location of the property in and around the major cities, just way higher. The time and planning is way longer. Some of these projects, we've just bought a couple of sites in the last few weeks, a few hundred million British pounds and US dollars. Fundamentally, they won't be in the development pipeline till about 2024, 2025 by the time we demolish, plan. One's a data center site, so we've got to power it up and all that sort of carry on. They just take longer. You want more profit and risk because you need it, and that's the way we play it. Most of what we're looking at at the moment is very, very little is greenfield, ready to go. Most of it is long-term, strategic, 7- 10 years, some of it out. You might have income for four or five. You knock the buildings over within six. By that time, you've got it planned and ready to go, and then you're in and out eight years. A lot of the stuff we're doing now, we're making decisions on eight years' time. I think that when you look at our workbook now, that was because of decisions we made, some of those 20 years ago, and some of them actually 30 years ago. That's just the way we think. It's part of what we really like doing. We like trying to pick the good stuff. Backing the trends we're seeing for the next eight to nine years is the way we like to operate. Which then means, the competition around the world that is doing that, there's ones and twos of people that think the way we think, and you know who those are. Effectively, there's not 15. There might be one or two people that really take the long-term view, and they're fundamental real estate people, to be honest, not financing transactions or core buyers. They're real estate people that think about these things deliberately and very intimately over a long period of time. Sure. That makes sense. Just one final one for you, Greg. In terms of gearing, I understand the policy is unchanged, 0%-25%. Obviously, we've been through a pandemic. The outlook for industrial property is clearly very strong, and asset values are rising. I'm wondering why still maintain a conservative stance on gearing. Why not just increase it slightly, but within the range? I've probably been too long in the industry to believe things won't change. Effectively as well, that if you look at our P&L, it's a lot of active earnings, management fees, performance fees, a lot of development revenues. We just don't think Goodman Group is an entity that should carry a lot of leverage. I think the net debt equation of about AUD 1 billion is really, really good, and it makes me sleep at night. It might be a little higher than that from time to time, but it won't be a lot higher. I think the average leverage, though, around the partnerships is also worth the note. It's 18%, and that's where we're running anywhere between 18% and early 20s for the partnerships globally. Once again, we're selling that to the partners as being prudent, and we're more concentrated on really getting good sites that can regenerate good long-term returns. That means if we do strap on some lower-yielding, good infill sites that might be yielding 3% or 4% for a period of time, they can carry those with cash flow covers and things like that till they get to the development stage. Most of our partnerships around the world have got pretty substantial development books as well. I think you've got to look at the gearing and the gearing, the partnerships in context of what we're doing. As you know, we're not big core buyers. We're value add buyers pretty much exclusively now. Okay. Makes sense. Thanks a lot. Your next question comes from the line of Grant McCasker from UBS. Please ask your question, Grant. Good morning, Greg and Nick. I guess it sort of follows on from your remarks then around setting the business up for the long term. I see your LTI is now vested over a 10-year period, which I think is a pretty strong signal. Can I get a better understanding that the financial implications in the short and medium term in regards to the quantum and the impact on the P&L from shares being issued and the non-cash expense running through the P&L? I know this is difficult to forecast, but maybe one for Nick. I'll make a couple of comments. Firstly, I think the first thing is Goodman Group will maintain the five-year plan. That will be 90% of the population, 95% of the population. It's a good plan. It's appropriate. The 10-year plan is being taken up by about 22 people. Those are the people that are running big operations around the world or assisting running big operations around the world. Importantly, at Goodman Group, we want to make sure that all people in our business are partners, but in particular, those people that are actually influencing the program and those 10-year decisions on the land and the way they behave and the way they treat the environment, we believe it's appropriate that they take a really long-term view. They tend to be very entrepreneurial people. They tend to back themselves, which is good. They're very high quality in regard to our industry with a great depth of knowledge. It's not across the whole business. It's a portion of the population that are entrepreneurial. It's a scheme that is very strongly in favor of the company. I think for the employees, if you ask them honestly, the five-year scheme is a better one for them with a lot more certainty. I think this one carries more risk, and you need to back yourself, and you need to make good long-term decisions, which is exactly where we're driving to. There's a lot of short-termism in the industrial sector at the moment, probably a lot of sectors, no different to technology and other sectors as well. We want to drive through all that nonsense, and we want to make sure that our people are making good decisions for our investors and stakeholders for the very long term. To the accounting and the financial impacts, Nick, you can handle that. Look, the dilution impact, bear in mind, the period of time is going to be pretty marginal compared to the five-year plan, Nick. Yeah. Thanks, Grant, for that great question. I think the thing I'd like to focus everyone on is the dilution. I think Greg's right. That's something that we can reliably measure. What we'll encourage people to do is, if you believe that we're going to generate 10% per annum EPS growth, which is now the hurdle for full vesting, so it's up from what it previously was. If you believe we're going to do that, there are limits on how much stock we can grant under the rights. It maxes out at 1% per annum dilution. If you put that into your projections, then it can be no worse than that, frankly. I think that's the reliable measure. We can count the number of securities reliably. I think the accounting cost and how that moves around the P&L, I spend zero time thinking about forecasting it. I really don't think it, in my opinion and in the company's opinion, it doesn't accurately reflect the cost to investors. It's just, in my opinion, a relatively meaningless number, frankly. It could go up, it could go down. Depends on the stock price. It depends on the gammas, the deltas, and the vegas. Honestly, we probably don't really need to spend a lot of time thinking about it. No, that is great. You sort of answered it with the dilution comment and the 1%, but no, it is good to hear that LTI over a 10-year period should be applauded for it. Thank you. Thanks, Grant. Your next question comes from Benjamin Brayshaw from Barrenjoey. Please ask your question, Benjamin. Good morning, Greg and Nick. Just a question on your development book. Just in Slide 36, are you forecasting a yield on cost for project commencements of basically 40 basis points higher than six months ago, up to 6.7%? I was just wondering if you could just comment around what's driven the increase and broadly your expectations for where you see that trending over the next 12 months. Look, good question. I think the 6.7% is a function of making good long-term decisions on sites a number of years ago, I think go back to my earlier comments where we were rebasing the portfolio, looking at where we wanted our partners owning real estate, and we had a good hard look at it. At the time we were selling, we were also buying closer in and in higher growth markets. I think we're doing that again today right now with a view of five years' time. I think if we keep honest and we stay true to the process, and we buy not for expediency, but we buy for long-term performance, I think you'll find that we'll be doing pretty well on that line. It mightn't be 6.7%. I think that's a really good number. It'll be in the sixes, I suspect. The exits are probably, I think they're AUD 10.6 billion numbers on exits of 4.7%. You could quite easily see those exits being 4.2%, not 4.7%. That AUD 10.6 billion might have a little bit more in it, I suspect, when we actually get to mark-to-market effectively through the process. Look, yeah, I think we'll maintain sixes for a while longer, but it's all benched against where you think the exit is, and probably the exit for that global portfolio we're building at the moment is no worse than 4%, and it's probably unashamedly some of the best stuff being made in the world, and it would be some of the best available for our partners in the world as well. Greg, in terms of underwriting assumptions on land that you're currently active on insofar as acquisition is concerned, are you able to comment on your incremental yield on cost? Yeah. Look, I think if something's near term and it's easy, that would probably be a rarity for us because nothing we seem to do is easy. That's got a five in front of it. If things are hard and long, and like I say, things we're buying today, we won't even be in production probably for three or four years. I think we've been down in South Sydney working with planners and council on one multi-storey site for three years now, and it'll probably go another six to nine months, because we're going through a design award program now. Good stuff takes time, you've got this wall of demand coming through that wants the good stuff and wants it now, and it's really in a scenario globally where it's undersupplied. If you look around New York and you're looking at stuff in the Bronx or through Jersey, to go and actually get a contemporary modern warehouse, might be one or two available. The same in most of our markets around the world. The tension's on the rent and the cash flow growth. I think if we keep getting the cash flow growth in those locations of, say, 4% or 5%, beating the 2%-3% type averages, yeah, I suspect by the time you get through the production, you're still in that sort of range. Thanks, Greg. Okay, your next question comes from Alex Prineas from Morningstar. Please ask your question, Alex. Yes, good morning. Thanks for the presentation. I guess following up on that last question in terms of the sort of modernization of supply chains and the increasing investment in e-commerce. There's a journey going on where retailers are investing. Are there differences around the world in terms of how retailers are in that journey? Look, it's fair to say, good question, it's fair to say, if you look at Europe and the U.S., way more advanced than Australia. China's the same actually. I think just look at the penetration rates over there in regard to e-com, 330%. Here, I think we're still in the mid-teens. Might have spiked a little bit up because of people being locked in their houses in Sydney and Melbourne and Queensland. Effectively, we're quite a few years behind, and we're seeing work we're doing now in Sydney that is going to cater for the next three or four years to get to the sort of penetration rates where we're sitting in the U.S. and Europe. I think we've got a long way to go here. When I look at the workbook and the number of big boxes and automated sheds and things of that nature, certainly see a big pile of demand coming through. I think the thing is going to be the amount of land and the amount of infill sites and the amount of development you can actually get ready because of planning and infrastructure is going to be the constraint, but it won't be the demand, I suspect. Okay, thanks for that. Okay, we've got another question. I'll go to Peter Davidson from Pendal. Please ask your question, Peter. Howdy, guys. Good morning. Hey, look, I just wondered if you could decompose the like-for-like rent growth at 3.2 across the geographies. Maybe talk about what's happening with market rents. Also a query, is some of your portfolio under-rented, and if so, by how much? Finally, if you've got all this, Nick, the last one is just the leasing spreads. What's happening where you get vacancy and relets? Are you getting the bumps? I guess the whole drift of that question is really around these cap rates, which are very fine. Behind those cap rates is implied or expected market rent growth in. Therein the query. No, good one. I'll answer the last question first. A 4 cap works if you got 4 cap. 4 cap doesn't work if you got zero growth, in my opinion. That might be different in some investment houses, but that's the way we look at it. Effectively, you'll see the like-and-like with 3.2%. That is being held back effectively by the construct of the leases, which might be fixed bumps or might be CPI plus margin type markets running ahead of the like-for-like, probably by a good 1% or 2%. Some markets in the world, it's almost double that. I go back to the scenario, in the big infill markets around the world, around the big cities, there is more demand than there is supply, and you can't get supply quickly enough as well. Planning and environmental concerns in regard to what everyone's doing is also going to make it a longer-term program as well. You're going to have this scenario, I think, particularly in the locations we are globally, where you're not going to be able to meet that demand quickly. Effectively, planning environmental issues means it takes longer, vis-a-vis you need more rent, and you also need more capital and patience, which I think is what we've got abundance of. I think patience is the big thing. Nick, do you want to hit a couple of those other points just around the rent growth? Yeah. Oh, just on locations, Pete, if you look at our numbers around the world, Japan's probably, we're actually getting 1% now. That's more like rental growth, maybe even 2%. Where the rent growth is really strong is U.K., particularly infill U.K. U.S., where you've had almost a double-digit for the year in infill locations. Australia is starting to see it big in infill, a little less so in greenfield. Effectively, China has bounced back pretty well. They're in the 4%-5% range. Hong Kong's been pretty flat for the year, to be clear, that's diluting the number a little bit. Now that is, with not a lot of supply going to the market, they're starting to bounce back. U.S., U.K., Europe's with a zero negative bond, 10-year treasury rate, and very low inflation, that's obviously, and the good infill's probably more like the 2%-3% range. Nick, would you like to make some further comments? I think you've covered actually most of it. Specifically, Pete asked about the reversions as well. I think that was the other part of the question. I think it goes with the rental growth that Greg was talking about. Big reversions happening in U.S. We don't have a huge reversionary portfolio now because it's still growing. Most of it's coming through the development business. As we are starting to get to reversions, they are quite significant. The South Sydney market, big reversions, double-digit type numbers. In those locations we are seeing pretty strong reversions. The rest of them are a little bit closer to the like for like. Mm-hmm. Okay. All right. Thanks, guys. Thank you. Thanks, Pete. Your last question comes from Stuart McLean from Macquarie. Please ask your question, Stuart. Good morning. Appreciate the time. I'll try and make these relatively quick. The AUD 65 billion of AUM that you're targeting to go through, does that just assume income growth on the reval side of things and the remainder driven by completions? Yeah, pretty much. That's right. I think when we're looking at forecasting valuation growth this year, we're primarily looking at the rental growth to come through. I think it will be a combination of both, though, to be honest. I don't think our book at 4.3% is finished yet. I think it's better than that when you look at what's happening at the moment. I expect there will be a combination of the two, be rental growth. To Pete's question before, yeah, in our view, 4 cap s are 4 cap s only if you can actually get good growth. They're not 4 cap s if you can't. I think you want to see that rental growth coming through, but I also think there's probably 20- 30 points in it as well, just where we're seeing things getting marked around the world now and where we're seeing things trade at volume. Certainly, it's good industrial global cap rates, 4% currently. Great. Thank you. On slide 28, has the management and development margin, it seems like it's grown by 8% to 75% over the last five years. What's the trajectory there? How do you think about that operating expense line item going forward? Nick, you can grab that one if you want. Look, I think if you're trying to extrapolate from that revenue and cost of goods sold equation, it's not going to help you that much because that is dependent upon the nature of the contracts and the mix of the types of developments we're doing. Some of them is profit on sale, some of it is fixed price contract, some of it is fee for service and related. I think you should just look at the net line and look at it relative to the production rate, look at it relative to return on assets and overall margins on the projects rather than trying to extrapolate that line item, because it can be quite volatile. If you look back over the years, it has moved around significantly depending on how we structure the transactions. I encourage you to look at it that way rather than trying to extrapolate out from that. Yeah. It's more about on slide 28, management and development income was AUD 1.2 billion. Operating expenses were almost AUD 300 million, so 75% margin. Do you expect operating expenses to now start growing in line with management and development income, or should we expect flat operating expenses of that AUD 294 million going forward? Oh, as a total- Look, I can grab that one if you want, Nick. I think from a cost point of view, we've got really good infrastructure and people around the world. I think also with the 10-year plan, there's a lot of people that are going to give the rest of their career to Goodman, which I think is great. Effectively, we've got a very solid cost base and incrementally around assets under management and development, we can do more with the cost base we've got. It'll grow as we add people, but it won't grow to the extent anywhere near where the revenues will grow. Effectively, we have a margin over costs of probably 80%-90% is the reality because of good infrastructure we've already got all around the world. Great. Thank you. A final one from me. Greg, you mentioned that WIP will be circa AUD 10 billion-AUD 11 billion going forward. Production rate around that AUD 6.5 billion, give or take, over the next two years. Development has been the driver of earnings, eventually, if WIP stops growing, how do we sit back and think about growth for Goodman on a three-to-five-year view? I'm not expecting guidance, if development earnings might not be growing, what does that mean more broadly for the business, how do you counter that? Yeah, I think you'll see it through the investment line and hopefully growth in cash flow because of the locations we've chosen. We think that'll start to stand out. The big driver is the assets under management, where for the last six or seven years, we've had the handbrake on effectively because we've been selling, I think, AUD 25 billion of assets. We've built our way through it by cranking up the development side of the business, which was a sensible thing to do with the change and the structural change we've seen in industrial. If you look forward three to five, you could imagine assets under management sitting at AUD 100 billion. You could see close to AUD 1 billion of revenues coming off those AUD 100 billion by themselves. I think the other thing on development, we're in a very big world. You've got to apply $0.73 sort of US-type dollar value in Australia to the US dollars. Effectively, can we do $5 billion or $6 billion, $7 billion US dollars globally pretty consistently around the world? Yeah, we can. We extrapolate out to $10 billion-plus, particularly with what we're seeing around the world on the structural demand, and the way people's lives are changing, which have been accelerated through COVID. When we talk about through COVID, quite frankly, we're going to have to learn to live with COVID. I don't think it goes away anytime soon. Those trends we're seeing are only accelerating. Our customers are more determined, and we're pedaling pretty hard to make sure we can cater for them and have the right locations. I think you'll see a four or five-year development program, pretty large, but you'll see the assets under management growing, which will start to move the earnings profile back to management. Not away from development, but the percentages in management will just be bigger. We think development will be pretty consistent, and will still grow quite strongly. Great. Thank you. That's all for me. Thanks, mate. With that, there's no further questions. I'll hand the call back to you now, Greg, for any concluding remarks. Look, thank you, Simon, and thank you very much everyone for your time that's gone through the hour. That must be a good session. Thanks very much. Okay, ladies and gentlemen, that does conclude today's conference call. Just once again, thank you all for participating, you may now all disconnect.