Thank you for standing by, and welcome to the Growthpoint Properties Australia FY 2022 results conference call. All participants are in a listen-only mode. There'll be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Timothy Collyer, Managing Director. Please go ahead. Good morning, and welcome to Growthpoint Properties Australia full year results for the financial year 2022. I'm Timothy Collyer, Managing Director of Growthpoint. Joining me this morning are Michael Green, Chief Investment Officer, and Dion Andrews, Chief Financial Officer, and together, we will take you through the presentation. I'll start this morning with a brief overview of our results, strategy, and sustainability highlights. Michael will then provide an update on our property portfolio, followed by Dion, who will give a more detailed review of our financials. Finally, I'll provide a summary and outlook. We'll then be happy to answer any questions you may have. Turning to slide four and the financial year 2022 overview. I'm pleased to be able to present another successful year for the group in terms of financial outcomes and operational performance. Our FFO for the financial year is AUD 0.277 per security. Consistent with our guidance, which was raised twice during the year and 7.8% above last year. On this basis, we were pleased to raise a distribution payment to AUD 0.208 per security, an increase of 4% on financial year 2021. Acquisitions of well-leased office buildings and a very strong leasing performance saw the weighted average lease expiry rise to 6.3 years. As a result of this leasing success and cap rate compression, the value of the group's portfolio increased by 7.9% or AUD 356 million over the year on a like-for-like basis. This was the primary driver of strong NTA growth, currently at AUD 4.56 per security. Turning to slide five. We have focused on our goal to provide security holders with sustainable income returns and capital appreciation over the long term. Growthpoint has a long track record of delivering value on our investment in high-quality assets. In financial year 2022, we made strategic, accretive acquisitions, investing over AUD 320 million in three high-quality office assets, predominantly leased to government tenants with a blended WALE of 7.2 years and a yield of 5%. Our further investment in additional DXI securities maintained our circa 15% holding in the fund and increased our exposure to industrial assets. We seek to maximize value of Growthpoint's assets and provide accommodation that supports our tenants' success. Properties leased to BMW and Symbion were expanded, and we continue to reinvest in the portfolio to provide a high level of amenity. The group's leasing performance was strong, with over 234,000 sq me leased, resulting in continued high occupancy of 97% and a high retention rate of 86%. We have also successfully executed on the group's growth opportunities in the year, as highlighted in the presentation. Moving to slide six. A major platform for the strategic growth of the group is the 100% acquisition of Fortius Funds Management, announced in early August. Completion of the transaction is anticipated this quarter, subject to satisfactory completion of conditions precedent. Fortius is a property fund manager with a 30-year-plus track record of delivering strong returns to its investors. Currently, Fortius has AUD 1.9 billion of funds in the office, retail, mixed-use property sectors, as well as seed funds. The founder and executive director, Ray Sproat, and CEO, Sam Sproat, will continue in the business with retention of staff to grow the platform within the Growthpoint Group. Our strategic goal is to grow the Funds Management platform over time, so it represents 10%-20% of group EBIT over the medium term. We are most excited about the prospects for the Fortius business and are pleased to be working with a fantastic team that has a clear focus on growth and generating strong investor returns. Switching now to sustainability on slide seven. Growthpoint is committed to operating in a sustainable way and achieving high ESG outcomes. We continue to make progress towards achieving our 2025 net zero target, including further property solar installation, and improving energy and resource efficiency across the portfolio. Major external benchmarks rate Growthpoint highly, including NABERS for energy efficiency, GRESB and CDP. The group was also recognized by GRESB as a sector leader during the year. We are pleased to again see positive results on employee engagement and alignment with the group performing well against our benchmark group. Our team has grown over the year, and we have continued to invest in our people and our employee offer, which allows us to reward, motivate, and attract a high-performing team. On slide eight, we've highlighted our total security holder returns compared to the S&P/ASX 200 A-REIT index. The group has outperformed the index over the short, medium, and long term as shown in the chart. In May 2022, there was a strong sell-off in the market, with investors responding to a changing economic environment with higher inflation and central banks raising interest rates aggressively. The A-REIT sector performance was impacted as was Growthpoint's. Over the long term, however, Growthpoint's TSR has consistently outperformed the A-REIT sector. Our return on equity was 14.3% for the financial year 2022, continuing the strong performance over a decade. This return measures the distribution paid and the change in net assets over the year against the starting net assets. The 16.7% return per annum over 10 years speaks to the group's track record of providing value. However, the group's security price is currently trading at a substantial 18% discount to our NTA. To slide nine. The macroeconomic environment is changing. Global supply chain disruption, the war in Ukraine, and a resurgence of consumer demand and opening up of economies post-COVID lockdowns have contributed to rising inflation. It is expected that inflation in Australia will move higher than the current 6.1% in late 2022 before declining. We note that construction costs have risen significantly, which will likely lead to higher economic rents being required in the market for new buildings. This should favor existing buildings where quality office accommodation and amenity is offered, with a flight to quality clearly exhibited by tenants. The RBA has raised the cash rate four times from its emergency setting of 0.1% to 1.85% in early August, while the market expects it to peak at over 3%. Unemployment is at a 50-year low and is forecast to remain low over the next two years, with low net migration currently and a shortage of skilled workers nationally. Slide 10. With this changing environment, Growthpoint is well-placed. Our office vacancy rate of 5% compares favorably to the national office market vacancy rate of 12%. Strong jobs and white-collar employment growth witnessed in the economy is a positive for the Office sector. Thei ndustrial property sector is a standout in the market, with record tenant demand, an historic low vacancy rate, and rise in rentals. Finally, we have seen the volume of commercial property transactions in the market to be very healthy, with foreign investment strong at around 1/3 of volumes. We expect transaction volumes to slow in the short term as vendors and buyers take time to consider the market and where pricing sits, with significant capital to invest in commercial real estate in Australia still present. That concludes my opening remarks. I will now hand over to Michael. Thank you, Tim. Slide 12 provides a summary of the strategic property acquisitions made since 30 June, 2021, with the group investing AUD 426.6 million in A-grade office assets, which includes the recently settled acquisition of the GSO Dandenong building in July 2022, post period end. Consistent with the rest of our Office portfolio, we sought out four high-quality, modern green credentialed assets, all of which are well leased to either government or large corporate tenants. With a blended WALE of 8.1 years and an average income yield of 5.1%, we believe that these acquisitions will have a positive impact on the group's performance for years to come. Slide 13 provides an overview of Growthpoint's AUD 5.1 billion portfolio. The group's well-balanced portfolio continues to be exemplified by a blend of modern office and industrial properties leased to high caliber corporate and government tenants. Over the 12 months, we extended the portfolio WALE to 6.3 years through our active leasing and targeted acquisition activities. Our continued 97% occupancy rate is a tribute to the tireless efforts of our asset management team, who pleasingly delivered an 86% tenant retention rate over the year. Growthpoint was also proud to be named an industry leader for landlord satisfaction when external experts, Brickfields, conducted our annual tenant engagement survey in February this year. On slide 14, we continue with our portfolio key metrics. Both our A-grade metropolitan Office portfolio and our well-positioned Industrial portfolio increased in value considerably over the 12 months. The increase in portfolio valuation reflects the group's consistently strong leasing performance and deliberate portfolio composition. Our Office portfolio increased in value by AUD 129.6 million, or 4.3% on a like-for-like basis. Approximately 80% of the group's office assets increased in value due to a combination of leasing success, yield compression, and the advancement of the BMW showroom development at 75 Dorcas Street, our asset in South Melbourne, Victoria. We remain confident in the outlook for the Office sector, and particularly metropolitan office markets. Our Industrial portfolio increased in value by AUD 226.4 million or 15.1% on a like-for-like basis. Growthpoint's Industrial portfolio is 100% leased at 30 June, 2022, with 99% of assets increasing in value over the year. Yield compression, market rental growth, and leasing success within the portfolio were the primary drivers of the value appreciation. The defensive characteristics of the group's portfolio are illustrated again on slide 15. As mentioned, we increased the group's WALE to 6.3 years over the year. Since Growthpoint's inception in 2009, managing lease expiry risk is something we've always been focused on, and this will continue to be a key focus of the group going forward. The chart shows that over the next two years, Growthpoint has 7% and 8% of income expiring in FY 2023 and 2024 respectively. A relatively manageable lease expiry profile. Moving to slide 16 and the leasing activity during the year. The group leased 234,000 sq m across the portfolio, equating to 17% of portfolio income in FY 2022. We extended a number of key leases in both the office and Industrial portfolios, including leases to Fox Sports and Samsung in two of our New South Wales office buildings. Importantly, these two large corporate businesses extended their leases over the same amount of floor space that they were previously leasing from the group. We were also pleased to see Woolworths extend their lease for their major Queensland distribution center at Larapinta in the second half of the year, the group's largest industrial asset. Post-balance date, we have negotiated an additional 2.5-year extension to the Woolworths lease, resulting in a 7.5-year lease term from February 2022. Moving on to office markets on slide 17. Positive net absorption has been a feature of both CBD and metropolitan office markets over the last 12 months. Pleasingly, for Growthpoint, the metro market has outperformed their CBD counterparts with 100,000 square meters of additional net absorption. Over the last 12 months, we've continued to witness a flight to quality by office occupiers and an increasing interest from large corporate and government tenants in leasing highly energy efficient buildings. The group's A-grade, highly green credentialed Office portfolio is well-positioned to meet this demand. Growthpoint is the largest listed owner of metropolitan office properties with over 90% of our Office portfolio well-located in key metropolitan office precincts. Turning to slide 18. The industrial leasing market continues to go from strength to strength with 0.8% market vacancy rate as at 30 June, 2022. At a historic national low, and according to CBRE, the lowest worldwide. The low vacancy rate and high levels of tenant demand promoted strong rental growth across all capital city markets. On the ground, we are regularly finding that our properties are being competitively pursued by a number of potential occupiers when a lease expiry is approaching. I will now hand over to Dion to take you through our financial results. Thanks, Michael. Starting on slide 20, we again highlight our strong performance, delivering FFO of AUD 0.277 per security, an increase of 7.8% on last year. I'll provide some more insight into the key drivers of net property income result in the following slides. A couple of additional points to highlight in the year, as we have noted in the slide here are. We reduced our net financing costs over the year, despite increasing gearing to acquire new property as planned. This was largely due to the cost of debt decreasing for much of the year, following the group's significant refinancing activity in November 2021 and the restructure of associated derivatives. The cost of debt moved from 3.3% last June, down to a lower 2.7% at 31 March, before increasing again with a sharp rise in the cash rate towards the end of FY 2022. Increased operating expenses over the year were primarily driven by an increased headcount as the group positions for growth. This is, as opposed to the prior corresponding period, where we were focused on cost containment in the early phase of the COVID pandemic. This has led to the group's management expense ratio increasing to 0.4% around its long-term average. The distribution increased by 4% for the year to AUD 0.208 per security on a lower payout ratio than the prior year, and at the bottom of our payout ratio range of 75%-85%. On slide 21, we've highlighted the key movements to FFO and NTA per security. The key drivers of the FFO increase include an increase to net property income, driven by increased rent on the expanded net lettable area at 75 Dorcas Street, South Melbourne, further leasing at Botanica 3 in Richmond, and leasing a vacancy at the industrial property at 5 Viola Place at Brisbane Airport. The three properties acquired in FY 2022 added a further AUD 0.006 per security to FFO, although this impact was partly offset by the sale of the Quad assets in May 2021, which subtracted AUD 0.003 per security. The other key driver, as mentioned earlier, was a reduction in borrowing costs as the weighted average cost of debt reduced for much of the year following the refinancing of debt facilities and restructure of associated derivatives. NTA per security increased to AUD 4.56, an increase of 9.4% on 30 June, 2021. However, much of the increase was driven by the significant valuation uplift across both office and Industrial portfolios in the first half of the year. In the second half of the year, industrial property valuation growth was largely offset by a reduction in the value of the Office portfolio and Dexus Industria REIT share price reducing. Turning to slide 22, we see gearing increased by 370 basis points to 31.6% at 30 June 2022, remaining well below the group's target range of 35%-45%. However, pro forma gearing is set to increase to 34.3% following the settlement of the GSO Dandenong building in July and settlement of the Fortius acquisition expected before the end of September. This brings the group up to just below the bottom of our target gearing range, and we would like to remain around the bottom of the range at this time. We still have latitude to utilize our debt headroom for capital management initiatives such as the buyback program, as well as funding future growth opportunities where we see good value for security holders. As I touched on earlier, our distribution payout ratio is at the bottom of the target payout ratio range, introduced at the beginning of FY 2021, of between 75% and 85% of FFO. On slide 23, we take a look at our capital position moving into FY 2023, clearly one of the most topical points at this time. Our weighted average cost of debt at 30 June was 3.4% after being as low as 2.7% at 31 March. The rapid increase in the cash rate is increasing the cost of floating debt with an average floating rate of 2.8% assumed across FY 2023. We have little debt maturing over the next two years, having refinanced AUD 715 million of debt during the year and adding a further AUD 350 million in new facilities to finance the group's growth, all at pleasing margins. We do have AUD 190 million facility due in December 2022, and we're in late stage negotiations to replace that with AUD 200 million of new facilities with a weighted average tenor of a little over five years. As at 30 June, 61% of debt is fixed for an average of 3.8 years, with no hedges rolling off in FY 2023. I'll now hand you back to Tim to wrap up. Thank you, Michael and Dion. Let's go on to slide 25. Our presentation today highlights that the group and its portfolio is performing well against the backdrop of changing economic conditions. Our portfolio metrics are strong, and we have executed on key strategic goals, including entry into Funds Management. This will be a key focus of the business going forward. Our balance sheet is in good shape. Given this position and factoring in higher interest costs on floating debt going forward, we provide FFO guidance of between AUD 0.25 and AUD 0.26 per security for financial year 2023. This level of earnings has enabled us to increase the distribution guidance by 2.9% in financial year 2023 to AUD 0.214 per security, while maintaining our FFO payout ratio in the target range of 75%-85% at the midpoint of guidance. We remain committed to providing our security holders with sustainable income returns and capital appreciation over the long term. Thank you. That wraps up our prepared remarks this morning. Thank you very much for your attendance today. Thank you also to the Growthpoint team, external stakeholders, and our security holders for your continued support in financial year 2022. We'll now open up the lines and are happy to take your questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Annabelle Atkins from JP Morgan. Please go ahead. Oh, hi, Tim and team. Thanks for your time today. Just wondering, post-June 2022, what you have left to spend on the 75 Dorcas Street redevelopment and what yield on cost you're looking at on that development. Oh, hi, Annabel. It's Michael here. There's limited spend, and we've finished this month, so in August, we're going to the opening of the new facility later this month. I'm not exactly sure. I think it's AUD 23. Well, I think we've spent AUD 23-AUD 26 from memory to 30 June, and yield on cost was 7.25%, I think, from memory. Yeah. Okay, great. Just another question. Michael, you said you were confident in the outlook for suburban office. Just looking at your valuations for your Office portfolio, you had, I think it was 15% of assets lowered. Just, can you just talk to what you're so confident about on your valuations going forward? Sure. I mean, what we've seen across. There's a very good chart in our presentation on the state of the leasing market on slide 17, which gives a really good indication of the net absorption that we've been seeing across the metro markets across the country. We've done some really strong leasing across our portfolio, and what we've noticed is a real strong support from tenants and a number of parties looking out to the metropolitan office markets in lieu of the CBD market. From an occupancy standpoint, we think that's very positive. We've seen a number of our assets face rental growth. Whilst a lot of incentives have plateaued over the last 6-12 months, we have noticed face rental growth coming into the market. That gives us a positive view of the world from that sense. As far as the properties that have gone backwards, it's really limited to a couple of, assets where specific leasing, occurrences have happened. By and large, the portfolio grew in value over the 12 months. Okay, great. Just, one final one. You talked about the increase in leasing you've done. What kind of spreads are you seeing on these leases? Sure. It's an interesting spread across the portfolio. It's about -7% across the balance of the portfolio. That's a bit misleading because we did have a couple of long-term industrial leases which rolled off after 15 and 10 years respectively. There was a bit of a reversion on those. For example, if you exclude Larapinta from the equation, there's a positive leasing spread of 4.5% on the Industrial portfolio. Office? It was a similar sort of story. It was around 6%, - 6%. It was actually a bigger negative spread on the Industrial portfolio than the Office portfolio, but principally because of a couple of long-term leases that rolled off. Okay, great. Thanks so much for your time. No worries. Thank you. Your next question comes from Ben Brayshaw from Barrenjoey. Please go ahead. Good morning. Hi, Tim. I was wondering if you'd just step through or discuss, please, the Fortius funds platform. I'd just be interested in your, I suppose, color around the composition of the funds, the maturity profile and just the overall strategy to, I suppose, maximize that going forward. Yeah. Thank you, Ben. Just going back a step, you'll know that we've been looking in the market for an appropriate Funds Management platform, and we're, you know, obviously very enthusiastic about our acquisition going forward and the team there at Fortius. We think they're fantastic. Fortius principally is in well unlisted funds, firstly, but many of their funds are value add. They have syndicate investors, typically high-net-worth individuals and private investors, but also institutional cornerstone investment investors into the funds as well. You would have seen the large institutional investor names in the presentation when we announced the transaction. They have a diverse range of investors and principally, yeah, they are value add. Principally, there's a term in between five and seven years for the investment and typically, Fortius fees. Involve acquisition fees, then investment management fees, and then quite often a performance fee at the back end. We expect to assist growth of that business, but also offer a wider range of products to the market, across different sectors. You know, core plus value add, we're expanding the fund offering over a period of time. Tim, is it your expectation that you will potentially co-invest in some of the new product offerings, you know, going forward? Yeah. One of the attractions of the group is that we have a large, you know, capital base to support growth of the business. That capital base may be, you know, underwriting of assets, co-ownships, taking co-investment stakes in funds, and the like. Yes, we want to use our capital base to support growth of the business. We look forward to, yeah, co-investing in new funds alongside the investors in those funds. Great. Thanks, Tim. Thank you. Your next question comes from Ed Day from MA Financial. Please go ahead. Morning, Tim. Thanks for the presentation. Just a quick one on guidance. Clearly there's some variability with regards to interest rate expectations, but what are your inclusions from Fortius, one, and then also what are you assuming in terms of like-for-like growth from industrial and office? Yeah. Thanks, Ed. Look, the guidance really, the variability or the range is dependent on the interest rate. As we said, we're forecasting a weighted average or an average floating rate across the year of 2.8%. I've seen other figures out there from other funds that are released slightly higher, slightly lower in some instances. That causes most of the variability. Clearly, we have the full year from the three properties bought in FY 2022, and most of the year, 11 months of the year from the GSO Dandenong property, so that will drive NPI forward. As far as Fortius goes, that will depend on, A, when it sells, so we need to reach financial close. We're expecting that before 30 September. But B, also, the level of fund growth across the business in the year. As Tim mentioned, it is really a transactional business. Its contribution to our result will very much depend on our ability to drive some of that fund growth across FY 2023. We take all of that into account in our guidance, but it really, the big swing factor really is that interest rate. Are you able to give a feel for your expected fund growth out of Fortius? No. Look, not at this time. Ed, you know, as Tim said, we are looking to be able to bring our capital to bear and certainly help that business. As Tim also mentioned, we are expecting a period of some quieter transactions within the market. It depends when we reach financial close. There's too many variable factors really to be providing guidance at this time on that. Okay. Thank you. Thank you. Your next question comes from Stuart McLean from Macquarie. Please go ahead. Good morning, and thanks for your time. First question is just on the balance sheet and the ability to fund growth. You're at 34% on a pro forma basis, and saying you want to stay at the lower end of the target range. In light of just the volatility of asset valuations, you know, they could come down, gearing could increase off the back of that. Like, how do you think about funding growth initiatives at the moment? Yeah. Thanks, Stuart. Obviously, we're looking at all of those aspects. We're very conscious of, you know, where property valuation sits. You know, it's possible that they may move down in the period ahead, but certainly by no means certain, especially when we look at industrial rental growth, how strong that is coming through. You know, we do have a target range for a reason. It's 35%-45%. We do wanna stay around the bottom of that range. At the moment, we've certainly got headroom and the ability to invest if we see good value, and, you know, we wouldn't be shy to do that. There are other funding sources available to us. You know, we could potentially look at asset sales if we wanted to help control the gearing as well. We've got a lot of strings or levers we can pull when we're looking at that, and that's incumbent upon us across the year to manage that gearing level where we are comfortable with it and where we think investors will be comfortable with it. Certainly it won't restrict us from investing, we don't think. Okay. You're happy to ride gearing up into the 30, into the higher 30s, if that's the opportunities that present themselves, and you'd be happy to sit up there? Well, we did mention we wanna be around the bottom of the range if we can. I wouldn't say high thirties would be around the bottom of the range. You know, again, we always look at the opportunities as they come. We don't set anything in stone. We are within our range, but our goal is to stay around the bottom of the target range at this time. Okay. If you were to redeploy, goal to stay around the bottom end, what sort of assets could you look to recycle, Dexus Industria REIT, for example, does that remain strategically core or any other types of assets that are on the corporate balance sheet? Yeah. Look, we haven't identified any assets specifically for sale. There's nothing on the market. DXI is of course a liquid asset for us. We've always said that could be a source of funding if we saw the right opportunity. I would note, though, that at the moment, you know, that's yielding at its cost, and its forward distribution around 5.8%. There's no CapEx or incentives on it. Again, we always have to line it up against other investments and make sure that we're getting the best returns for our investors when we're looking at our opportunities. Yes, that's a source. Other assets on the balance sheet could be a source, but we haven't separately identified any for sale at this time. Just one more on the balance sheet. Just that target range, 35%-45%. Yes, you're at the bottom end there, but it's probably the more aggressive target range among the REITs. How do you feel about 35%-45% as a target range more broadly in the current Australian environment? Yeah, look, we're currently below the bottom of that range still as well. I'd just like to point that out, even on a pro forma basis. You know, we've always had that range for a long time. It's probably been a little higher than other rates for a long time. We've always been really comfortable as our assets have all been income producing. We've got a long WALE. You know, debt has been cheap for a long time. You know, utilizing debt has been a very smart way to go. You know, we'll always look at all aspects of our business and continue to make sure they make sense. I would note as well, our LVR, for example, is at 60% under banking covenants, whereas many have 50% covenants. The headroom on our LVR where it would get uncomfortable, in those sorts of terms, is a long way away from where our gearing range sits. Yeah, at the moment, we're comfortable where it is. Great. Thank you. Just a final one regarding guidance and underlying FFO back 8% or so at the midpoint of the range. I appreciate interest costs are a headwind. There are also the acquisitions that are going to come online. Just wondering if there's any other kind of leasing holes that are coming through the P&L in FY 2023, which could drag like-for-like earnings growth? Nothing specific. No, Stuart. I mean, we've as I mentioned during the presentation, we've got 7% of FY 2023 income up for, you know, potential lease or expiry. That's just something our asset management team will deal with as they always do. We've, you know, we leased 17% of our portfolio over the last 12 months. It's not something that's sort of out beyond the wit of man, that's for sure. Each of those expiries will have a probability factor lined up next to them with, you know, rents, market level incentives, et cetera, also being combined in there. That will be part of our forecast, but that's not something that is particular, that hasn't been sort of well flagged to the market. Okay, great. Thanks very much for your time. Thank you. Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Alex Prineas from Morningstar. Please go ahead. Thank you and good morning. Just a bit of a follow-up on Fortius, where you described their approach as value add. Does value add really mean a fair bit of development? If so, you know, Growthpoint's historically been probably more of the prudent end of things in terms of taking on development risk. I was wondering, yeah, does that sort of presage a change in risk appetite at Growthpoint? Thank you. Thank you, Alex. No, we don't believe so. I mean, the type of value add, they are not generally speaking developing greenfield sites or they're typically refurbishing, repositioning, re-leasing, re-strategizing properties, both commercial, retail, and mixed use. There's typically existing improvements there, and it's an upgrade to existing buildings, typically. You know, they manage those risks of the works and the leasing through their investment. And it wouldn't affect Growthpoint's risk profile. We'll still maintain a very high quality, well-leased commercial and Office portfolio backed by government tenants and large corporates as well. Yeah, we think it's a good combination of different sectors of the market as well. Okay, thanks for that. Thank you. Again, if you wish to ask a question, please press star one. We'll pause for any final questions to register. There are no further questions at this time, and that does conclude our conference. Thank you for participating. You may now disconnect.