Thank you all for standing by, and welcome to Goodman Group's first half results briefing. I'd now like to hand the conference over to CEO of Goodman Group, Mr. Greg Goodman. Thank you. Please go ahead. Yeah, thank you very much. Good morning and welcome, everybody. I'd like to begin by acknowledging the traditional owners of the land on which I'm presenting from today, the Gadigal people of the Eora nation, and pay my respects to elders past and present. Goodman has had a strong first half. Operating profit was up 28% on the first half of last year to AUD 786 million. Significant valuation gains of AUD 6 billion across group and partnerships saw the group's statutory profit exceed AUD 2 billion. We have over AUD 2 billion of liquidity available, and we've maintained low gearing, currently at just over 7%. All areas have contributed, with investment earnings up 19%, management earnings up 18%, and development earnings up 42%. As a result of the progress to date and the outlook for the remainder of the year, we're upgrading our projected FY 2022 operating earnings per security growth to 20%. The volume on the development workbook remains significant at AUD 12.7 billion, with the average value of our projects now exceeding AUD 3,700 per square meter, reflecting the quality, location and demand for what we're developing. Development completions for the period were 99% leased and 63% of work in progress is pre-committed, with an average lease term of 14.2 years. Our customers are wanting to secure locations for longer to offer themselves the opportunity of having more technology investment in their buildings and more infrastructure. Goodman has managed COVID-related disruptions to minimize impact. Despite increases in construction costs driven by supply chain, labor and material shortages, Goodman has maintained strong margins and has a yield on cost of 6.7%. Now turning to slide six. Goodman continues to grow organically through development activity, and this is increasingly reflected in the investment and management business performance. Total assets under management have grown to over AUD 68 billion, up 32% on this time last year. The AUD 6 billion of valuation gains across the group and partnerships and strong development completions of AUD 4.1 billion for the half have contributed to this. Partnership total returns for the year are expected to be around 20% and combined with assets under management growth, will continue to support future growth and earnings. Property fundamentals remain strong in our markets. Scarcity of supply and high customer utilization is supporting occupancy at 98.4%, an average global NPI growth of 3.4%. We continue also to deliver on our ESG commitments. We're making strong progress on our global renewable energy target and expect to reach around 200 MW of solar by June this year. This is already halfway to our 2025 target. We're on track to remain carbon neutral in our operations following Climate Active certification last year. Most importantly, we're well progressed to reduce the embodied carbon in our developments. We're working closely with our customers to help them achieve their own sustainability goals and investing in our own workspace to provide a greater flexibility for our own teams. Their resilience and agility have made this result possible, so I'd like to thank our teams around the world for their hard work. I'll now hand over to Nick for some comments. Thanks, Greg. Let's turn to slide 10 to look at the income statement. As we go through the results, we'll discuss each of the line items and why we're feeling comfortable with the outlook. We'll first cover the items that relate to our cash- backed measure of earnings, which we call operating profit, and then discuss the items at the bottom of the table. We've used the same cash- backed measure consistently for over 15 years, and we continue to believe that it best represents performance on realized profits. It excludes the fair market value gains on properties that are unrealized. It also excludes mark-to-market movements on our hedges and the accounting fair value estimate relating to our employee long-term incentive plan. Overall, FX movements have not had a material impact on the translation of our foreign income when compared to the prior corresponding half year period, so we can just focus on the key operational drivers of the results. That said, we are substantially hedged against movements in currencies and interest rates, so while they may change the shape of the results on an individual line item basis, they do not have a material effect on the bottom line operating profit. Looking specifically now at the movement in investment earnings. We're on track to see over 15% growth from this segment in FY 2022. Direct property net rental income is AUD 20 million higher than the same time last year. This was due mostly to the impact of the additional AUD 1.2 billion of assets added over the past 18 months. Through some acquisitions, but mainly through development completions, a significant portion of which you will see classified as inventory in the statutory financial statements. We'll talk more about that in a moment. There's been this more than offset the impact of the sales of around AUD 800 million over the same period. The CapEx and acquisitions that added to inventories is the largest driver of the difference between operating profit and operating cash flow for the period. With the growth in the workbook in the past couple of years, the capital needs for development have increased. This was expected and flagged. The timing of development cash flows also has an impact. For example, you can see that in the prior corresponding period, the operating cash flow was substantially higher than operating profit. Given the nature of these assets, some of them will come out of the portfolio, so we don't expect this part of the income statement growing over the next few years. The other part of our investment income comes through our Cornerstone interest in the partnerships. Over time, we want to grow this part of the business as we continue to expand our portfolio of assets under management and our investment in it. We also expect growth in rental levels to add to our income. Compared to the same period last year, Cornerstone investment income increased by AUD 18 million. Rental growth accounted for AUD 6 million of the increase, which is the result of the like-for-like NPI comparative. The net impact of acquisitions, disposals, and development completions contributed AUD 12 million to the growth in our share of investment income. Over the past 18 months, we have invested a net AUD 1.2 billion into the partnerships globally, AUD 700 million of which occurred in the past six months. Around 75% of these investments have been made for the purpose of acquiring development sites and funding development CapEx. The remainder has related to acquisitions of income-producing assets that are either for future value add or redevelopment, or the acquisition of completed assets from the group. The average income return on our capital contributions to the partnerships has been relatively consistent at around 4%, with the low initial yield on their acquisitions being offset by development completions at a higher yield. The benefit of our strategy shows up in the long-term income potential and total return of the partnerships. Management revenue was up AUD 39 million over the first half of FY 2021. The volume of stabilized assets under management has grown by AUD 13.7 billion over the past 18 months to AUD 56.9 billion. This has been driven by strong revaluation gains, net acquisitions, and the ongoing completion of developments. As a result, ongoing management fees have increased by AUD 32 million or 18% since the first half of the last financial year. Performance and transactional revenues contributed AUD 74 million this half compared to AUD 67 million this time last year. The performance and activity levels of the partnerships continues to be strong, so the full year transactional and performance fee revenue is now expected to be over AUD 170 million. Overall, the full year management revenue is expected to be up by nearly 20% over FY 2021. Fee revenue as a percentage of average stabilized assets under management will be around 1% this year, which is within the range of what we expect over time. We believe that scope exists for the continuation of growth in management income over the long term. Development remains an important part of our business strategy. We create significant value throughout the development and asset management processes. It comes from the identification of assets in the construction of the portfolio, achieving planning outcomes, project delivery, and then effecting the leasing outcomes. We've continued to execute on these core functions very well despite the challenges the world is facing, so our margins have been sustained. Strong risk management, cost control, and rental increases have primarily supported these outcomes. Over the past few years, strong growth in development volumes has also been a significant driver of this segment. Our work in progress has nearly doubled since June 2020. The development period for the projects has increased from 18 months to 22 months, so our average annualized production rate has increased from around AUD 5 billion in first half of FY 2021 to nearly AUD 7 billion this half. As you would expect, our income has also grown strongly. Moreover, the lengthening time frames for developments and the pipeline of projects we control continues to provide good visibility to our earnings going forward. We see FY 2023 shaping up to be another good year. Realized development income was AUD 563 million in the half compared to AUD 397 million for the first half of FY 2021. This comparison has been somewhat influenced by timing issues that are coincidental. The first half is likely to be slightly higher than the second half, but we expect the full year year-over-year growth rate to be over 30%. I also wanna point out that in addition to the realized cash income, over AUD 300 million of our development income was recognized as revaluation gains that sit outside of operating profit. Of this, nearly AUD 145 million has resulted from properties that are subject to conditional contracts for sale. With the AUD 96 million we had as at June 2021, it brings the cumulative tally to around AUD 240 million, which we expect to close over the next 18 months. If and when those sales complete, we will reflect these gains in our measure of cash- backed operating profit at that time. We remain enthusiastic about the prospects for development demand, and we expect to maintain our strong activity levels, which bodes well for future revenue as well as growth in AUM. Growth in our underlying operating expenses has been moderate as our business continues to be focused on a narrow set of markets, which enables us to grow revenues without significant cost variations. Our employee base has not grown substantially, and wage inflation has remained moderate while recognizing current market conditions. We've had an increase in some of our compliance costs, IT expenses, and we've scaled up our charitable contributions again too. There's also been a timing issue associated with the accrual of our short-term incentive in operating expenses. This half, given that we are already above target levels and the full year projections are significantly higher than initially expected. This drove over AUD 45 million of the increase compared to the prior corresponding period. We expect our full year operating expenses to be in the order of AUD 350 million. We encourage you to analyze this on a full year basis to smooth out the timing issues. Our aim here is continue to keep our fixed costs relatively steady and instead to use at-risk variable costs such as STI and LTI plans to incentivize and align our people. Our borrowing costs were down marginally as the Australian dollar was relatively steady, and because we repaid some higher cost debt last year. Partially offsetting this is a reduction in interest earned on our cash and the reduction in capitalized interest. Our weighted average cost of debt is substantially hedged against interest rate movements, given the high volume of fixed rate debt and hedges we hold. We expect our borrowing costs to remain steady absent any material movements in the Australian dollar exchange rates. Our tax expense was up given the profitability, growth in profitability, and we expect this to continue in the second half of the year. As far as the non-operating items are concerned, we had over AUD 1.5 billion of revaluation gains in the half, which represents the group share of the AUD 6 billion in gains across the entire portfolio of assets under management. Cap rate compression over this half was again prevalent, as were rental increases. Development valuation gains also continue to contribute to the total valuation result with AUD 1.1 billion of the AUD 6 billion recorded over the half. Around AUD 0.3 billion of this was the result of developments completed within the period, and the remainder was from gains emerged on investment properties under development to reflect their significant progress. Another customary area of difference between operating and statutory profit is the fair value movement of hedges, which were down by AUD 120 million overall. Mark-to-market derivative gains or losses are reflected in the income statement because the group does not apply hedge accounting. These movements should be considered in the context of the AUD 133 million gain reflected directly in equity through the foreign currency translation reserve. The FCTR gain represents the translation of the foreign denominated net assets for which the group holds derivatives to hedge against exchange rate movements. In the prior corresponding period, the group had a mark-to-market gain of AUD 215 million reflected in the income statement and a AUD 415 million loss in the FCTR. The net result of these movements is reflected in the statement of comprehensive income, but excluded from operating profit calculations. As usual, we also exclude the accounting cost of the employee long-term incentive plan, but we include the vested units in the denominator when calculating our operating EPS when they actually have an impact on security holders. The accounting cost has continued to increase mainly due to the valuation inputs and the rising security price. A few remarks now regarding the balance sheet on slide 11. Again, the FX impact on the balance sheet when comparing December 2021 to June 2021 was not material. Despite the sales over the half year, the wholly owned asset portfolio has increased in size. This was primarily the result of over AUD 500 million of assets being transferred in from development, around AUD 350 million of acquisitions, and revaluation gains of over AUD 90 million. Our share of the stabilized assets within our cornerstone investments in partnerships were up by AUD 2 billion over the half year. Around AUD 1.3 billion of this was the result of the valuations, and the remainder was due to net investments and the completion of developments. Compared to June 2021, our development holdings are up by nearly AUD 150 million overall. We had a AUD 300 million increase in our share of the partnership development capital allocation. The investments, expenditures, and revaluation gains from projects still in process exceeded the volume of assets completed over the half. Our directly held development capital was down by AUD 150 million due to sales and completions exceeding acquisitions and development expenditures. Noting again that some AUD 500 million of inventory was classified as stabilized property post-completion. Our cash position decreased by around AUD 200 million since June. The cash generated from our retained earnings funded the vast majority of the investment we've made, which is consistent with the design of our long-term capital management plans and the distribution policy. That's a good point to turn to slide 12. As we said before, we'll operate our gearing within a range of 0%-25% with a level to be set with reference to the mix of earnings and activity levels. In light of the continued growth and developments, we aim to maintain low financial leverage for the foreseeable future. In addition, we continue to invest in the business to generate strong returns and fund its growth sustainably. That's why our distribution per security is expected to remain at AUD 0.30 for FY 2022. The board will consider the distribution for FY 2023 in the coming year once we have concluded our annual budgeting process. That's all for me. Thanks, Greg. Thanks, Nick. Now let's move to slide 20. Our strategy is to provide essential infrastructure for the digital economy is delivering around the world. Strong demand from our customers is expected to continue as the structural changes in the way we live, work, and shop are being entrenched, driving the need for more efficient and timely supply chain solutions. While the pandemic caused an acceleration of the structural shift to online, e-commerce continues to grow and is forecast to account for almost a quarter of all retail sales globally by 2026. This is up from 18% from last year. This impacts supply chains across industries and should continue to sustain broad-based demand and drive positive property fundamentals for our business. We remain focused on a development lead strategy, which is providing access to well-located assets for customers, the group, and our partners. It should contribute stronger management and investment earnings growth into the future. With the AUD 12.7 billion in work in progress, the outlook for developments remains strong into FY 2023, given the depth of demand and the volume of work we have in hand. Our business is performing strongly across all segments, reflecting our disciplined strategy, which has been over many, many years. COVID-related disruptions so far in FY 2022 have had less impact on the full year projection than we had initially assumed. Consequently, we're upgrading our market guidance for FY 2022 and operating EPS growth projected to be 20%. Thank you, and we will now go to questions. Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. If you need to cancel your request, please press the pound or hash key. Our first question comes from Grant McCasker at UBS. Please go ahead. Good morning, Nick and Greg. Just one question this morning. You've talked about the capital intensity of the business stepping up, but it's a big step up this period. How long do you see it elevated for? Then also, if you look at sort of the acquisition run rate is also a big step up. Is this the new run rate for the business that so you can sort of maintain the current levels of development and WIP over the medium term? Yeah, look, I'll kick it off, and then Nick will follow on with a couple of comments. We've got a really good infrastructure, which is primarily our people around the world and their ability to seek out and their ability to find value. That's taken many years to build and some very good people. We have a particular way of doing things at Goodman, which we believe is a little bit of our IP regarding what we're looking at and what we're doing. In the last six months, we would have picked up AUD 3 billion worth of really good infill redevelopment type stock, value add stock that comes into production probably 2025, 2026 and some in 2024. That's in an environment where, you know, you're pushed on values, it's competitive. We are way ahead of seeking out what we need and what we want and effectively understanding really well where the customers are heading. When you look around the world at the moment, the inability to get one building in L.A., there's hardly any space around New York. We're full up in Sydney. We're full up in our major markets in Europe, where there's just, I think, our European partnership is 100% leased. You sort of see the opportunity with the customers. Our job is to find them what they want, where they want it, and that's where we're spending our time. It's a big world. That is our main focus. Managing our assets, but also then finding opportunities for our customers. All we do, it's what we focus on. It's what I spend every day of the week on. Every week, we have an investment committee meeting. It's exactly what we go through and exactly what we look at. I think we're the success around that area is a product of how we operate and what we do and what we focus on. We're not looking forward. We're not chasing property that's on the market. It's well bid. There's 15 buyers, there are portfolios, there's M&A activity. We're not even focused on any of that stuff. It doesn't get past muster. It's just tremendously focused. I think if we stay that way, and we put one foot in front of the other, and we stay humble and we stay sensible. We don't get excited. We absorb the costs and the changes and the changes we're seeing around, you know, interest rates potentially, and that might lead to value and how you approach that. We just keep our feet on the ground and focus on what we do well, and what everyone's been trained to do in the last 20-odd years, and particularly in the last 10 years. Yeah, we can do more, and I think you'll find the business will be very capable of maintaining our current levels because the customers need it, right? You've got to bring it back to the customer. Do they need it? The answer is yes. Can we create it and find it? The answer is yes. I think, Grant, and I think we've spoken about sort of our capital management probably on every call, which is good, and we should. I just wanna stress, we don't go out with acquisition volume targets or anything like that. There's no, you know, prescriptive plan that we have to buy X billion dollars worth of real estate in a quarter, in a month, in a year, or whatever. It's really more about what opportunities present themselves that we feel comfortable, and then having the sufficient sort of capital resources to finance those in a sensible way is the way we look at it. You know, we've had an active period, but that's not to say that there's gonna be a run rate that's consistent. It could be more, but it could be less. It could be substantially less if the opportunities aren't there and aren't right as well. It's really just looking at our capital management plans and how we finance ourselves. Specifically looking at what's happened this half and what's happening this year, what we've been saying is that with the ramp-up in activity levels, there will be an increase in working capital allocation to development. We flagged that, I think, some time ago. I think this year will be a period where that step-up occurs. In the second half, you know, there's more inventory accumulation that you'll see, as we're getting our inventory levels up to, you know, the production rate. That will start to turn over. A lot of that inventory that I talked about a little while ago around the AUD 500 million, for example, that's on the balance sheet. That's now held, is generating investment income. That won't be there long term, and that would liberate, you know, AUD 500 million of cash to be reinvested back in the business. The working capital for development will step up to a level that is consistent with the current production rate. Depending on where the production rate goes from there, but if it stays steady, that working capital should be relatively steady within bounds. It does move around period to period, depending on the timing of the cash flows and the sales. The real long-term structural driver of our investment is the equity interest in the partnerships. Those developments when they're built and completed, we wanna hold a long-term interest in that income-producing property. That's where the ongoing financing needs come from, and that's why our distribution policy is set where it is, 'cause that generates, you know, a significant amount of free cash flow over time that broadly matches with our investment needs to fund our share of the completed product. What that also does is as the portfolio of investment properties or our share of investment properties in the partnerships grows, it adds capacity for a little bit of leverage to increase as well. When we talk about the mix of earnings, as we see our stabilized portfolio growing, you know, we can add a bit more leverage because it's got more, you know, investment property in the mix. That means that we continue to believe we have a strong sustainable funding plan. And our settings are approximately right. You know, always tweak things, but approximately right, and we're comfortable with how we're set at the moment. Yeah, look, if the situation changed, Grant, you know, obviously we'd review it at the time. At the moment, we're comfortable with it. Excellent. Thanks for that. I'll leave it there. Phenomenal result. Thanks. Thanks, Grant. Our next question comes from Suraj Nebhani at Citigroup. Please go ahead. Oh, hi. Morning, everyone. Maybe just a couple of questions from me. Nick, you were just talking about the demand from equity investors, you know, still being there, and you still wanna hold a lot of product. I think in the past you have mentioned how, you know, the allocations across the investor base have been pretty low. Can you talk about how the allocations are to industrial and you know, where investors want that to get to? Yeah. Look, just from. Greg here. Just from my point of view, I think we've stated in the presentation there's about AUD 17 billion of undrawn equity and leverage in the partnerships. Effectively, over the next few years, we're well catered for with investors. In fact, you know, there's a few capital raisings going on around the world or planned in our partnerships as well on top of that. I think, we're really strongly followed as far as the private equity is concerned. I think bringing it back to what we do and how we do it, bear in mind, 89% of our development is actually for this half in the partnerships. We're really creating a track record of performance in those partnerships, which is very important in attracting capital. Effectively, that means there's people knocking on our door wanting to participate with Goodman because of the way we do things, the way we invest our own capital in the partnerships as well, extensively. We, as we sit here at the moment, on average around the world, everything's on track for total return for the half. That's why we're very confident to make the statement the partnerships in totality will be about 20% for the year. The business plan for 2023, which we've been going through, and budgets for all the partnerships good. A lot of that's coming from in the next 12 months around real rental growth in the markets that we've selected, and that's why we've selected them, anywhere between, you know, 4% and 10% rental growth in the half around a lot of our markets. I think being a fund manager, it's about performance. We know that. You are what you eat. So you are what you own. If Goodman owns good assets around the world, and let's say comparatively right at the top end of the managers in the world in regard to what we own, I think that's not an arrogant statement, it's just a truthful one. Our closing in on AUD 70 billion assets around the world are really, really good and there's hardly one I wouldn't keep. If you look at that, you could then imagine why we're attractive, particularly with the returns, and most of our partnerships, if they're not off the top in their sector, they're very, very close, in whatever country they might be domiciled. Yeah, strong demand, and we've still got AUD 17 billion in our partnerships to go, and we are raising some, incrementally around the world as well. Thanks. Thanks for that, Greg. Just one follow-up on that is, you know, obviously the negative longer-term interest rates are now supposed to rise, you know, and, you know, depending on what the view is, you know, people are talking about 2023 or 2024, or whatever in average rate rise. I'm just wondering, you know, what, how much scope do you think industrial cap rates, you know, have to go down from here, you know, if rates are about to rise? You know, what does that mean from a medium-term, you know, business growth perspective? Yeah, it's really good question, and one obviously that everyone around the world is looking at the moment. How do you price assets moving forward? I think it's pretty simple from a Goodman point of view. We look at the growth and the cash flow. When we look at an investment, whatever it might be, whatever country it might be, we look at the growth and cash flow. Now, I think if you're growing your cash flows at, say 3%, 4%, 5% +, I think the returns and where the valuations are make sense. I think where the problem is moving forward in our sector and probably other sectors as well, property sectors in particular, but it can apply to equities and technology and anything you wanna choose. If you don't have cash, growth and cash flow, valuations are gonna be challenged, I suspect, in a rising bond market as total returns need to be higher. That's why we've selected what we've selected around the world. That's why we're doing what we're doing around the world. That's why we have low leverage, so it doesn't have a big impact on the total return. That's why we've a lot of hedging on our long-term debt, effectively giving us a number of years to adjust. It really comes down to the growth and the cash flow. If you've got a 4% cap and you're growing at 4% or 5%, investor's gonna be happy. If you've got a 3.5% cap rate and it's growing at 1%-2%, you're probably in a bit of trouble. I think it's gonna start to bifurcate the markets. I think you're gonna see quality assets in whatever sector, around the world perform on average way better than the not so good assets around the world. Once again, it can be in any sector. That's what the world's turning their mind to, and that's why you'll have volatility in the equity markets. Ultimately, that'll spill over into the property markets. I think you'll get rewarded for the quality of what you own and what you have, but it's gonna come back to the growth in that cash flow, which is, as we all know, have been around long enough, that is the Holy Grail. Thanks. I think that makes sense. I'll leave it there. Sure. Our next question comes from Richard Jones at JP Morgan. Please go ahead. Hi, Greg and Nick. Just looks like in the half you've had a more balanced contribution in terms of development starts across the four regions with Europe and U.S. kicking up a bit. Just interested in where you see development trending over the next 18 months and maybe with particular reference to, you know, growth or slowing in those four regions. Yeah, look, good question. We believe work in progress will be pretty consistent, firstly. Certainly running into 2023 into 2024. I think you'll find the markets like Australia, we've got a lot of forward-looking opportunities which we're clicking into this half, and that will then carry through into 2023. We have a number of really good sites we've been buying in the last year or two in Europe, particularly around the U.K., but most notably around the major cities or the major ports in Europe. So I think you'll find there'll be some actually some more inventory on balance sheet around some of those big sites at the moment as well, and going functionally to multistory. I think Asia will be pretty consistent, but some of the big projects in Hong Kong will clearly wind down, you know, big data center project, as well. We've got a very good workbook and long workbook in Japan, so that's probably gonna pick up a little bit. China's doing actually really well around Shanghai, Beijing, down in Shenzhen, where I think their work in progress will be approaching AUD 2 billion, as well. A little bit down on Hong Kong. A lot of that Asian WIP, though, and very different to WIP versus where the profits originated from a cash basis. The Asian piece of it is generating, certainly not 40% or 50% of the development profit, way less than that, would be half that amount. It is primarily done or all done effectively in China and Hong Kong in the partnerships where there's a lot of valuation increment and uptick, which is generating then real performance and long-term performance fees. That's where the big development profits have actually been emerging in Hong Kong, and actually China is inside those partnerships, which then means we've got some, hopefully some good rewards in the future with some really good performance because of those. Okay. Just a follow-on question. Just in terms of your investment stakes in the development partnerships, you've obviously got much higher stakes in the U.S. and U.K. Just interested as those workloads are ramping up, is there any thought on lowering that exposure? Look, I think the U.S., we're still getting what we would see overall in capital allocation terms. We're still not where we wanna be in regard to ownership, so there's no near-term change there. In, certainly, in the U.K., it's around 33 and a 1/3, so there's three of us and we have a 1/3 each. I think that'll remain around those levels. In continental Europe as well, you know we do quite a bit of joint venture development with our partnerships, so 50/50, 50 on ours, 50 on the partnership. Like I said before, there's some really exciting sites we've been buying in the last 12, 18 months, which we'll bring through to production as well in Europe. No, look, I think the settings are about right where we're at the moment. I think 89% in the partnerships, but half is probably in the partnerships or what's committed to third parties is one of the highest numbers we've had. I think it is, yeah. Yeah. Which is pretty reflective of the way we're looking at the business, trying to make sure that we allocate our capital and rotate our capital and get ahead of whatever might be out there as well. If there is a change in the markets, you know, we wanna make sure that we are ahead of the game, and I think that's why you'll see that number probably pretty high in the second half as well. That will. A lot of pre-selling going on at the moment. No, look, I think the settings will be around where they are for the next year or two anyway. Thanks, Greg. Thanks, Rich. Our next question comes from Stuart McLean at Macquarie. Please go ahead. Good morning, and thanks for your time. First question is just on the AUD 3 billion of acquisitions. Is it possible to provide an end value that you'd expect there coming from acquisitions? And those at 1x, 2x, just to get a bit of an idea of what acquisitions today means for WIP in outer years. Yeah. Because these sites are valuable and they range from Queens through to Hamburg, through to Paris, through to infill in Tokyo, through to infill in Sydney, through to infill in New Zealand, you would assume that the land values are high because of the location. So AUD 3 billion would convert to probably AUD 6 billion-AUD 7 billion effectively, and completed value with the land value being a high portion of it because of that is what we do. When I said to you a bit earlier about AUD 3,700 per meter on development value, you wanna reflect on that a little bit. When you overlay that in Goodman Group's portfolio globally, I think James running around at about 3,300 per meter is our average value of our buildings around the world on a per meter basis, which when you look at the locations and the globe where we are, China's a little less obviously with not too simple, and Australia's relatively high. Places like the U.K. now are at the extreme end of that number, as well. When you look at the quality of what we've got and the value of what we've got over 3,000 a meter, I think you'll find it's one of the highest in the industry of any large portfolio globally. I just wanna reflect on that a little bit too, 'cause that goes down to land value and location. Now, in the last probably five years, because of our sales program of about AUD 30 billion, where we've been selling at the lower valued on a per meter basis and the reorientation of infill, and what we're developing at the moment, I think you'll find that number is reflective of, land value, and that's reflective of what we're doing moving forward as well. Great. Thank you. Second question is on the management fees. I was just wondering the sustainability of performance fees as a percentage of AUM on a go-forward basis, given we're likely to come towards the end of the cap rate compression story. Just what does that mean in terms of sustainability of performance fees and percentage of AUM? Yeah, the good news is for Goodman partners around the world, and I touched on this a bit earlier. Because we're doing so much of our book and so much of our work, and we're buying and we own really, in my view, some of the best industrial in the world, without being arrogant about it's a really good portfolio. The embedded performance now in that portfolio, because there's development profits that are going in there's rental growth in some locations of even 10%, 15% for the half, properties in a market like L.A. You can imagine there's some really good embedded performance. That embedded performance, all things being equal, will look out five, six years. In the current market, with the current performance, and the current strategy, you know, we'll feel very confident that that performance, you know, will carry forward into the future. The performance that has been generated, and that is embedded now in those partnerships, in many instances, actually provisioned through their balance sheet and provisioning, will emanate over the next number of periods, and that could be out three, four, five years. Great. Thank you. My third question is just on those development profits that are being taken below the line this period and recognized above the line in outer years or outer periods, I should say. How do we think about the evolution of that going forward? Is it a couple of key projects that are going to sort of the drivers of this and we shouldn't expect to see similar amounts booked below the line going forward or is there still opportunity to do that? If we just get an idea of the evolution of that number, please, going forward. Yes, look, it's not something we try to forecast, to be honest with you, because it's just a netting of, you know, the contracts and it's peculiar to individual transactions. We don't have a budget for that sort of thing or anything like that. But having said that, you know, by June this year, I think we've said before, you know, we expect it to be at least AUD 250 million, just based on the transactions that we have in front of us, so we're pretty close to that now. Then if there's a couple of other transactions that come through, that number could grow by AUD 50 million-AUD 100 million on top of that. It just depends on the timing of when those contracts are executed, what their position is in terms of completion or not at period end. My view is that it will be a more prevalent item in the future just because of the nature of the transactions that we have and the long duration of the asset through the development cycle. Could it be substantially higher? Yes. I can see a scenario where it could be, you know, AUD 100 million-AUD 200 million higher at a point in time. Could be up AUD 450 million, for example. It could also be zero at a point in time. It just doesn't mean anything other than it's just the timing of the project contracts and completion. I encourage you just to really just focus on, I suppose, the end sort of operating profit and, you know, below-the-line gains that we're generating out of our development overall. Then the timing of recognition is really a function of the contractual terms rather than anything else. I know that's not a direct answer, but I think it's the best answer I can give you at the moment. No, that's fine. That's really helpful. If I can look at the guidance then of about AUD 1 billion of development revenue, and if I add back that AUD 250 million, let's call it, so it comes to AUD 1.25 billion, and production is AUD 7 billion. I'm talking about 18% of production in terms of EBIT coming from development, if that back-of-the-envelope math is broadly correct. Traditionally guides about 14%. How sustainable is that 18% number on a go forward? I would exclude the AUD 240 million from that because it's not in the sort of numbers for this year. I would stick to the AUD 1 billion, and that's around 15%. 15%, if you look at where we've been historically, I think it's been the last couple of years around 14%, 15%. If you look at the pipeline and look at the profitability we've got embedded within the book at the moment, certainly for the foreseeable future, like into FY 2023, that is a reasonable assumption. What Greg was talking about, activity levels, you know, expect to remain pretty constant. Leading to that, a production rate that's relatively constant and a 15% share of the margin is a really good estimate at the moment. It could be a bit higher, but, you know, that'll be more timing related than changes in project performance. A lot of it's now pretty well locked in in terms of the expected outcomes. Great. Thanks, Greg. Thanks, Nick, for your time. Sure. Our next question comes from James Druce at CLSA. Please go ahead. Hey, good morning, Greg. Good morning, Nick. I'm just interested in if you could provide some comments on what really surprised you sort of every three months to upgrade from, you know, 10% in August to 20% now? Is it just some conservatism from the get-go, or is it the pace of cap rate compression, or what within the businesses continue to surprise you so much? Oh, look, I think when we set out the year, and we look at the year, and we look at our people around the world, and you realize how hard they've been working. They've been locked down in COVID, and you don't quite know how the year's gonna go. I expect when we started the process this year, which is, you know, well before. It would have been eight months ago, nine months ago before we got to, you know, this point. You've just gotta take a bit of the human element as well. You're not too sure how that's gonna work out, how the supply chains, borders, and all these sort of things. Look, I think, to be fair, we had a pretty conservative look at it when we looked at it. It hasn't quite been as disruptive as we thought. People around the world have done a great job in procurement, development, timing, cost. And then we're in those locations that are really clicked pretty well, and the rental growth's clicked as well. Yeah, a combination of things. You know, when we're looking at it would have been eight or nine months ago, wouldn't it? It was, yeah, June last year, so. Yeah. Yeah, we were, you know, clearly being pretty circumspect and pretty careful. Yeah, I think, Druce, see what I mean, you know, had it panned out differently and, you know, the cost disruptions and time disruptions had an impact, you know, we wouldn't have been here at +20%. There would have been no reward coming out with an aggressive forecast and then not being able to hit it because of the COVID excuse. We'd rather be conservative and appropriate in our guidance and then update as we go, which is what we did. I mean, as Greg said, I think the timing issues have been well managed, and the cost issues have been well managed. I think that's the bulk of the reason for the upgrade. I mean, you can see the performance fees we talked about, when was it? In the quarterly, I think in August, we were guiding to around AUD 150 million. That's looking more like AUD 170+ million. Yeah, that's all driven by you know, the relative performance on the developments, but also there's been a bit more cap rate compression. You know, that's had a bit of an impact, too. The bulk of it is really the timing and the cost pressures on the developments that we're trying to have some sort of buffer for. Yeah. Okay, that makes sense. Maybe can you talk a little bit about what you're seeing in terms of cost inflation in your development book? I'm just trying to get a sense of the sensitivity of interest rates to your development yields, given the generally quite long lead time that you have. Look, the biggest sensitivity you wanna run is rental growth right at the moment, to be honest. There's some really good stuff coming out of other operators around the world, but also, you know, a lot of the major agencies around the world that have good analyst teams. In some of these key locations we're in around the world, there really is not a suite available, and I'm not exaggerating. The rent is the one you don't want to underestimate. Now, we've got to be careful, and we've got to try and add value with our customers and what have you. That's why our customers are recognizing it as well, and they're actually going, "Well, guys, how do we put more in the building? How do we invest more in the building? How do we get more out of it? 'Cause I know I've got to pay AUD 200 a meter for it, because that's the game, and there's, you know, only one available. So I think you'll find that that is the biggest thing that's occurring in the prime locations. As far as costs are concerned, we think they'll probably start to flatten out in the next 12 months, but it's been anywhere between 10% and 15% the last 12 months, depending on where you are. But that's where we've kept it. We've then probably put another couple of percent on that being building carbon neutral buildings. So we've been offsetting carbon. That's about, you know, 1%, 1.5% cost to construction. The right thing to do, and customers appreciate it. You know what? You're gonna end up with a more valuable building in the long term. If you think long term, you'll do it in a heartbeat because it's the right thing to do. We're putting solar on everything. We've got all the tricky things in regard to making sure we've got the water allocations right, the measuring systems. We're making sure we've got the right amenities for our customers, so they've got better experiences and health and safety issues and, you know, all the things that go into it. I think you'll find that our buildings anyway, as from a standard building, we've probably added 3% to it, carbon neutral, plus all the other things we're adding to it. We like to think we build one of the best, you know, around. Once again, I'm not trying to be arrogant. It's just a fact, because we think about these things over the next 10 years. That's the way we see it. Look at the rent. Look at the rent around the locations we're in, and I think you'll come to the conclusion that the returns and the growth and the asset values around those is the cash flow gonna drive it certainly in the next year or two. All right. Fantastic. That's it for me. Congratulations on another fine result. Thanks. Our next question comes from Alex Prineas at Morningstar. Please go ahead. Good morning. I was just interested in the in terms of performance fees on new partnerships and new projects versus older ones that you've had in place for some time. Is there any trend up or down in terms of either the what the hurdle level is to reach the performance fee? Well, and secondly, if assuming you do reach the hurdle, you know, the amount of fee that you retain. Yeah, just interested in I guess new fee structures, what the trend is there. Well, in the last that we have seen in Sydney in the last few years, but look, generally speaking, as you probably would see in your own business as well, the hurdle rates have been coming down over the last few years. If you were doing anything a year ago or even the last six months, you know, the hurdle rates have been coming down and the performance would be kicking in earlier. That's been the general trend because investors are accepting lower returns in a very, very, very low interest rate environment. Most of ours are not set in necessarily the last 12 or 18 months, but a lot of them actually work off floating arrangements as well in regard to floating benchmarks and things like that, or market benchmarks in some areas. No, look, we're pretty well set where the benchmarks are, globally. We haven't had a lot of pressure on. I think if anything, the pressure of the money coming in has given managers in general, the opportunity of setting lower benchmarks. I don't know whether we've been pushing that hard on that. I think we're always, with the risk, reward type scenario, more development, what have you, we tend to be, yeah, up a little bit from where a lot of others are, just with basically static, stable portfolios, as well. You can imagine the last few years, the hurdles have probably been coming down, not going up because of just the total return. Everyone's been willing to accept less. Now, I think that's probably changing as we sit here today. Yeah. We probably don't have too many data points for you to draw conclusions on. I think it's, we haven't really set too many things recently, so. Okay. Thank you. Thanks, Alex. Our final question comes from Sholto Maconochie at Jefferies. Please go ahead. Oh, hi, everyone. Just a few quick ones from me. Just on the production, I think it was AUD 6.8 billion at, you said it'll be averaging AUD 6.8 billion at the quarterly, recently, and WIP's flat. What's driving an extra AUD 200 million, given WIP is still flat? Just mix and timing? Yeah, timing. Yep. Yeah. If you look at it from the quarter, it looks like Asia was down a little bit, and Americas. The growth is in U.K. and Australia and New Zealand. Over the next 12 months, we see Asia sort of continue to come down as Hong Kong rolls off and increases across the board in U.K., Europe and Australia. Is that the way to think about it? Yeah. Yeah, I think that's reasonable. Bear in mind, we are actually looking at some stuff in Asia at the moment, so not necessarily going to be the case. Yeah, I think that's not a bad way of looking at it. All right. Just on the leasing spreads, like for like, went up a little bit. Can you talk about what you're sort of seeing in your core markets on the spreads, given you talk about rental growth? Yeah. Well, you've probably seen it around with a lot of the other results. Obviously our big U.S. friends, that's a pretty good benchmark for what's happening, I think with their quarterly as well. In the good markets around the world, you know, rents are moving, they're moving quickly and that is just demand, supply. There's no supply in the core markets around the world. To get them up and down, build them, it's not a nine month transaction. It's a two, three year transaction in the markets we're in around the world, primarily. They take a long time. You've got the scenario at the moment where, I think there's only one or two buildings in L.A. at the moment available, and we're building them. I think that's the truth of it. Of any size, yeah. Yeah, of any size, yeah. Knocking around Sydney, it's the same. You head out west now and there's land that can be developed. People are paying well over AUD 1,000 a meter for it. They actually need a decent rent to make it actually work, not have a two in front of it. Effectively as well, the infrastructure is taking longer and there's more green belts and things you've got to be taking care of. There's more environmental issues. Everything's taking longer. Demand's there now, and it can't be fulfilled. Rents are moving in those markets around the world which are hard to supply, which are the markets we are in and why we like them, because the barriers to entry are high. You're gonna see 4%-5%, you know, the low end. You're seeing in the last six months, we've seen 10%, 15%, and even 20% in some parts of the world. Yeah. U.K. has, I think, gone a little too far. I think there's people running around with 30% type growth rates in the next or for the last 12 months in rents. Some of those are coming off very low historic rents. Yeah, there's some big moves. Want to be a little cautious about it as well, because you've got to have the eye on the customer and what can you do for the customer to make the building work for them? What can you do for them to get more out of it? That's where we spend our time with our customers, is right, the building's 200, so how do we get more in it? How do we get it out quicker? How do we make the transport better? You know, do we throw drones on the roof? Whatever it is, we'll work on it and try and make it work better for them. I think that's the game now, and I've said it before, I think most customers and, one of our big customers I think was talking the other day about, you know, their real estate spend. I think you'll find that customers are gonna go, "Who's a good manager? Who's a good partner? How do I get more out of my building? How do I have. If I'm paying more rent, how do I get more out of it to make my business more productive? That's what we work on. That's technology. It's additional floors in buildings. It's better systems for cars and electric vans and trucks and things and make it easy. Better amenities is a huge thing as well. There's gymnasiums going in some of their buildings now for the people that work in them and things like that. Then just finally, if you look at the, you get that reversion because you've got a sort of circa five-year WALE and the stabilized. The WIP's got a 14-year WALE. The lease terms have sort of reviews every five years in those longer leases or to capture any reversion to market in the WIP? Well, the reason why our like-for-like I think is 3.4% 'cause it underlies the structure of the rental arrangements. When the market on that is probably more like double that, it would be 6%. Yeah, you're with some of your big customers, you're doing fixed reviews for, let's say, 10 years. Now, they might have been 2.75s a year or two ago. They're probably 4s today. You can actually get a bit more. Yeah, the structure of our rents, which gives you security of cash flow and gives them security of cash flow, a lot of them won't get to market till the end. Bearing in mind that globally we have probably 25% of our rents, 20% of our rents come up every year to market. Again, we're capturing some of that every year, and that'll probably push that like for like up on average over the next year or two, I would've thought. Great. Thanks. Overall Goodman Group's under rented, relatively significantly now around the world. Yep. Thanks very much. That underpins the valuations. Yeah. That goes into the valuations. Yeah. Thanks. Speak soon. Thank you. Bye. Just one final question, from Ben Brayshaw at Barrenjoey. Please go ahead. Oh, thanks, Greg. I was just wondering if you could clarify whether the WIP has been revalued this period, just given the compression in the global cap rate to 4%. No, I don't think it has. I think it's primarily working on feasibilities, and it's probably. It's only marginal. Only marginal. Yeah. I think it'll be around AUD 4.3 billion, something like that. The exits on that which like is modest, you know, where we sit today, maybe it's right in 12 months, I don't know, depending on where cap rates go, but it's around that, it's around that sort of number. No, not in any great extent. It's on the conservative side of where value sits today. I think the quality of that book could quite easily have a AUD 3 billion in front of it, but we haven't done that. Thank you. Thank you. We have no further questions. Greg, I'll hand back to you for closing comments. All right. Well, thank you very much for your time today, and have a good one.