Good afternoon, everyone. I think we'll. If you can take a seat, we'll, we'll start this afternoon's session. Hello, and welcome to the 2023 Qualitas Investor Day. I'm Kathleen Yeung, Global Head of Corporate Development, and I'll be your host for today. We're absolutely delighted to welcome so many of you in the room, and extend a warm welcome to those attending virtually. I can see a number of familiar faces as well as many new ones, and we're very thankful to everyone for taking the time to join us here. I would also like to welcome Andrew Fairley, our Chair of the Qualitas Board, who's also here, and also another Qualitas director, Brian Delaney, who you'll also be hearing from a bit later. Firstly, I would like to welcome, acknowledge the traditional custodians of the lands that I'm presenting from today, the Gadigal people of the Eora Nation. I would also like to acknowledge the traditional custodians of the lands on which those joining virtually are on. We pay our respect to elders, past and present. We have an extensive agenda planned for this afternoon, with presentations covering the breadth of our business, and you'll have the opportunity to ask questions at the end of each session. It's been nearly two years since Qualitas listed on the ASX, and since then, we've spent a lot of time discussing our business and the market opportunity with existing and potential shareholders. We hope to address some of the common questions we get asked, but most importantly, to share with you our vision for the future as a leading Australian alternative real asset investment manager. Our aim is for you to leave this room with a better understanding of the strategic growth pathway to help us deliver on that vision. You'll firstly hear from co-founders Andrew Schwartz and Mark Fischer, as they discuss our growth levers and what differentiates us from the market. We are thrilled to have Fiona Reynolds, Ian Woods, and Brian Delaney, members of our recently established ESG advisory group, for a panel discussion on integrating ESG into alternatives. One of our key investment strategies is build-to-rent, and Ashleigh McDonald from the GQ build-to-rent platform will join Mark Fischer to discuss our vision for that platform, a joint venture with Gurner. And to round up the afternoon, to share what we're seeing in opportunities in private credit, and to talk us through some investment case studies, we have senior members of our investment team, Mark Power, Gil Norwood, and Sam Khalid. But first, for some housekeeping. We'll be conducting Q&A at the end of each session through Slido. For those in the room, you will find information on your table with instructions on how to submit questions, and for those joining virtually, you can scan the QR code on the screen, or you can find details or on our event microsite or in the pre-event email that was sent to you. We'll also be taking questions directly from the floor. We will try and answer as many questions as possible, but if we can't, please feel free to put them through an email, and we'll get back to you. If you have any technical issues if you're joining virtually, please email our investor relations inbox at investor.relations@qualitas.com.au. Before we start the first session, I do have a responsibility to advise that the presentation shared today contains general information only, and Qualitas is not licensed to provide financial product advice in relation to Qualitas shares or any other financial products. Today's presentation does not constitute financial, tax, or legal advice, nor is it an offer, invitation or recommendation to apply for or acquire shares in Qualitas or any other financial product. Before making any investment decision, you should consider whether Qualitas is appropriate given your objectives, financial situation, or needs. Before we start, can I please ask you to turn your devices to silent? I'm delighted to welcome our Co-Founder and Group Managing Director, Andrew Schwartz, to open our first session of the afternoon to speak about our growth pathway. Good afternoon, everyone. I'm Andrew Schwartz, Group Managing Director, co-founder of the Qualitas Group. It's really a pleasure for me today to present to those in the room. Also, we have about 100 people who have joined us virtually, so welcome to those. It's great to have so many interested stakeholders in our business. Mark and I commenced the business some 15 years ago, and at the time that we did that, it was already evident that the financing markets were starting to fail to provide capital for those participants, particularly property developers. I think 15 years later, that thematic has only continued to play itself out, and in fact, I would say just continues to gain momentum. Really off the back of that, together with a very experienced team, Qualitas has continued to enjoy very high growth amongst the tailwinds that we've been experiencing. In many ways, I think Australia continues just to catch up with other parts of the world, particularly places like the U.S. and Europe, where traditional financiers, the banks, constitute about 50% in the market. As we know in Australia, the traditional financiers are the vast majority of the market, and groups like ours continue to gain market share year -on -year. In total, we've now done 270 investments since we started the firm 15 years ago, and as of today, we have 69 credit investments looking through all of our portfolios, and we have 10 equity investments. The reason I highlight those numbers is really to demonstrate that Qualitas is not a high-volume deal shop. We don't strive to do investments for the sake of doing investments. We're careful, we're selective, we know what we're looking for within our funds who have very specific mandates, and we execute upon those.... We really cherish our track record. It means everything to us. It takes a long time to build, and, to date, we now have, by definition, a 15-year solid track record. And we also really treasure the fact that we've got long-dated capital, which I'll talk more about as I move through the presentation. Just gonna go to, the next slide. So this, this is really demonstrating where we've come from and really the underlying growth of our funds under management. And I think that anyone objective would say Qualitas has really experienced exponential growth in its funds under management. Our current trajectory, based upon all of our various assumptions, business plans, strategies, we'd like to think we can get to AUD 18 billion by financial year 2028. Currently, committed capital is sitting at AUD 8 billion. You can imagine for a group like Qualitas, who I think has a reputation of being really conservative, that was a hard number for us to put out there, and one that we agonized quite substantially, and one that I also need to emphasize. For us, it's not a budget, it's not a forecast. It's sharing with you, our stakeholders, what we believe we can achieve based upon our current initiatives. And as I make my way through these slides, I will talk more about what some of those initiatives are, and why I think we have the potential to achieve that particular outcome. In fact, when you analyze the numbers, Qualitas has achieved 38% CAGR on its funds under management since inception of the firm. So in fact, to say that we're gonna go from AUD 8 billion to AUD 18 billion, assuming we can achieve it, is actually a slowing down of our CAGR from 38%-18%. So I just want to highlight that particular point on our growth rate, which no doubt we'll pick up more when we get into the Q&A. We'll just move on to slide 7. This is about how we achieve that particular outcome. Really, our growth strategy, in my mind, is simple, and it revolves around the following: deeply understand what the brand Qualitas stands for in the market. For us, it stands for real asset financing. We capitalize on what our significant strength is. We're known to be core expertise of real estate finance domestically in Australia. We have significant runway in respect of our current products, and we need to keep capitalizing in respect of that core level of expertise. In terms of our capital providers, our view in respect of institutional capital is not to try and have hundreds of institutional capital investors, but rather have a few investors that provide very deep levels of capital support to our firm. I think we have upside in respect of our business plan, by way of both the potential for geographical expansion, take our core expertise into markets that we think are showing very favorable conditions at this present point of time, but also look to product expansion, where we can develop products that meet the market and the thematic that's presenting, for our investors. Most importantly, I think Qualitas is a magnet for talent, and since we've listed the company from December 2021, we certainly haven't been short of people that are highly skilled and have wanted to work in our firm. Again, I'll talk more about that as I make my way through these slides. And focus on being a management fee-centric business, recurring earnings from our funds, highly predictable, and expand upon those fee streams. Just moving on to the next slide. I want to talk a bit about the tailwinds that have really underpinned our success for 15 years, and in my mind, they continue to amplify. The traditional capital sources continue to be in decline. Interestingly, for those that are an avid reader of the Financial Stability Report, this is not a plug for the RBA, but they do release it twice a year, and they've just released their last report. Talks about the role of the banks and the role of the alternate financiers. Basically, in the report, it notes that the banks themselves have reduced their participation in construction, real estate construction, and development loans considerably over the period. In fact, in discussions with our own investment team, they too have noticed the pullback by the traditional financiers in regards to those construction loans. Particularly, when you're getting into loans that exceed AUD 80 million-AUD 100 million type levels, we're finding that the traditional financiers are not hugely active participants in those markets. That void between the demand for capital and the supply of capital continues to be met by private credit. Groups like Qualitas, who are enjoying the fact that we have base rates increasing as a result of now 400, circa 400 basis point increase in risk-free rates, but also the fact that credit spreads have been increasing. And that's not a point particular to Qualitas or Australia, it's actually a global phenomenon, but our investors are really coming to enjoy those aspects. I think in many ways, global investors continue to be underinvested in respect of credit, and what we're seeing at the moment as a trend is, we have a view that property values will continue to recalibrate for the foreseeable future. In many ways, cap rates have been on property, and this is a generalization, but cap rates on property have been really relatively stable. Notwithstanding, we're seeing rises in interest rates, we're finding cash flows aren't keeping up with that underlying cost increase and interest rate increase, providing uncertainty in respect of equity valuations. Global investors understand that point, and they understand that on a risk, risk-weighted basis, a risk-adjusted basis, the credit is providing a much more attractive entry point into real estate relative to equity at this point of time. We're seeing that at Qualitas through increasing allocations being made to us from some of the world's largest investors. Lastly, on this slide, I'd point out, and I say this with some degree of sadness, a great degree of sadness, the geopolitical situation around the world. Australia is seen as a very safe place to invest and a haven for those that are looking for the type of investment thematic that we can offer in the safety and security of a country such as Australia. Just moving on to the next slide, and this is really about our leadership team and the dedication of my executive team, who help me steer and execute on our business plan. We meet as a group every week, literally. We talk about the objectives to achieving our outcome under our business plan, and we execute on that plan accordingly. I think that what you can see on this slide is that the average tenure of my executive team is 8 years, so it means that not only are we attracting best of talent, but we're retaining that talent within the firm. Since IPO, we have invested further in the platform, 13 new hires in Mark Fischer's team, 4 hires in our capital team. So really building out the origination, but also the capital raising through Dean Winterton's team, and also our fiduciary management and continuing to build that out. Now, obviously, we're on a mission to take economies of scale, increase our margins, so we're ensuring that our overheads are not getting ahead of our revenue. But we are taking this as opportunity to really capitalize on the market thematic, but also the ability to raise further capital. Just moving on to the next slide, and in particular looking at the real estate asset class and some of the challenges we're seeing more globally. And the truth is that real estate is a less liquid asset class relative to listed equities and bonds. It takes time to monetize real estate. It has transaction costs associated with it, and we have seen globally, both debt funds and equity funds have a mismatch between their asset and liability. And you are seeing that in particular in some of the offshore markets. You're seeing it in some of the office funds, where you've got relatively illiquid assets that are supported by funds where investors can redeem on a quarterly basis, and fund managers, GPs, unable to keep up with the quantum of those redemptions, particularly in those offshore markets where you've had equity values recalibrate. And having seen that through multiple cycles previously, we've worked hard at Qualitas not to expose ourselves to that risk. Proudly, we can say 92% of all of our capital has a near perfect match between asset and the underlying redemption or liability, as we like to call it, so we don't get caught out in that asset liability mismatch, which I think is prevalent in other parts of the market that we're seeing. I think also what that provides for us is really long-dated, sticky capital, great certainty in respect of the revenues that we can derive under our various funds. Just moving on to slide 11. At the time of the IPO, we did say that we think our business platform is highly scalable, and I think that it's interesting to see that if you take at 30 June 2023, we announced that we had allocated AUD 3 billion of capital, and of that AUD 3 billion of capital, AUD 1 billion had yet to be deployed. So at the time of balance date, we were earning various fees on the AUD 1 billion that had been allocated. It was predominantly in our construction and development portfolios. But as we move through this year and that money is now deployed, our base management fees are increasing. If I just try and express that in a different way, if hypothetically, we didn't do another transaction all year, and my co-founder, Mark Fischer, is about to get up and tell you how much momentum he's got in the business, I'm sure he's sitting there saying: "Why is, why is Andrew being hypothetical, that we've got no, no, momentum?" But if hypothetically we accept that assumption, our base management fees will continue to increase as we deploy that capital that we allocated in previous periods. And it should be of interest that taking our at the time of our IPO, our base management fee revenue and our principal income of AUD 18 million, in the short time we've been listed, we've tripled that number, and we've also increased our operating margin by 18%. Just on slide 12, I think in terms of the pathway from AUD 8 billion to AUD 18 billion, we're really focused on five key activities. The first one of those, in terms of looking for scale, is how do we use technology to really provide economies of scale? We're underway on really deepening our technology platform. In terms of existing funds, which is really the main pathway, it's larger funds. It's deeper commitments from our various investors. We want to further develop product. We're very active. Later, you'll hear about our sustainability, ESG sustainability initiatives. We're active on our tactical credit fund, which we're active on capital raising at the current point of time. So it's through greater product development, recognizing where we are in the market, but also penetrating other capital channels outside of institutional capital. Over the last period, we've made further investment into retail, really for the benefit of our listed fund, QRI, which we will only do through intermediaries. But also family office, which is a very important part of Qualitas, and advised wealth, which is also a very important part of Qualitas. We do think there's a role for inorganic M&A in Qualitas. I don't think we need to do it in order to achieve our AUD 18 billion, so I would say that's on top of achieving that particular firm. We're not rushing out to acquire anything and everything. It would. If we do it, it'll be selective, and it'll be acquisitions that we could not have otherwise done organically, by turning our minds and energy to it. And on the right side of that slide, we highlight some key metrics, which is 50% margins being derived from our funds management business. Base management fees between 90-100 basis points. Now, ultimately, that's gonna depend on the mix of our investor channels, where, like everybody else, we receive better fees from our family office and distributed wealth as opposed to institutional, but then we get a lot of volume of capital through institutions. So, ultimately, that will depend upon the mix of capital and looking for transaction fees around 30-40 basis points on our annual deployment levels. On slide 13, in terms of our development, it really is about having the right products, the right time to deliver that to market. As I said earlier, we... Qualitas needs to capitalize on its core strength. Real estate financing in Australia. It's a large AUD 435 billion market. At AUD 18 billion of FUM, we would still be a relatively small participant in the totality of the market that we think exists. Just capitalize on what we do well and grow our market size and share. Continue to develop out on the new products, which I've spoken about. Move deeper into private, and family office and advised wealth, and also, to look at over time, over that five-year period, some real asset adjacencies, where we take our core real estate financing skill but apply it to adjacent asset classes. Again, I'm happy to address that later in Q&A. This is my final slide, and then I'm gonna hand it over to my co-founder, Mark Fischer. Five key takeaway messages. Our aspiration is to double our firm to AUD 18 billion by FY 2028. Again, I need to emphasize, not a budget or forecast, but that is our aspiration, and that is under our business plan and our existing initiatives. We capitalize on the brand that Qualitas has built, the trust. We capitalize on the listed status of our company, our ability to use balance sheet to underwrite in respect of our funds. Thirdly, we take advantage of the fact we have multiple growth levers at our disposal, and also, capitalize on economies of scale. We attract and retain best-in-class talent. I think, in many ways, that should have been my first point, which is you can have the best capital and the best investments, but more importantly, you need the best talent, and I think Qualitas is poised for that, best talent, has the best talent, and continue to attract the best talent and show loyalty to its, its staff and the talent that it has, and stay focused on matching our asset and liability and having - achieving our track record, which is our single biggest asset. So on that very positive note, I'm now gonna hand over to Mark Fischer. Thank you very much. Thanks, Andrew, and it was interesting that, as Andrew started to talk about attracting new talent to the firm, one of our new staff members happened to walk in the back of the room at that exact moment. So welcome, Matt. Well done. I want to thank everyone for attending today. I always like these events. They're one of the exciting things throughout our year, and, for those that I haven't met before, I lead the investment team at Qualitas. So what I'm going to talk about is markets and what we're seeing, as well as how we're going on deployment momentum as well. As I reflect on what we achieved during financial year 2023, and, and Andrew touched on this briefly before, we achieved around AUD 3 billion worth of deployment, and what it did was really start to consolidate our market-leading position in the private credit space. At the same time, though, it was obviously a volatile macro environment, and when that happens, you need to focus on asset management. Thankfully, what we have managed to achieve heading into financial year 2024, is enter the year not only with significant dry powder that Andrew has touched on, not only with great deployment momentum, but also with a well-performing portfolio, and I think that's a very important point when I come to some of the competitive landscape later. Later in the day as well, just before I kick off, you're going to hear from some of my team to talk about more specifics on case studies. I just want to give a thanks to the entire Qualitas team about their efforts during the year. We obviously had some great growth. We had some great momentum, but most importantly to me, they maintained their discipline as investors during that period of time, and I think that's paramount. So if I get to detail today on what I'm going to talk you through, I'm going to talk about our three-cycle investment approach and how we think that will continue to serve us well. I'm going to touch on the history of Qualitas through cycles and the things we've done historically to manage the cycle. And then I'll give you an update on how we're going for FY 2024 as it relates to deployment, and then, as I said, touch on the market landscape. So those who attended Investor Day last year would have heard me talk about what do we look for when devising our investment strategies and what the key ingredients for success are. And over the 15-year journey, one of the things I think we've done well is focus on what differentiates us from the competitive set. We think that scalability and being a meaningful player in your strategies is important, not only because of what it means for you as a management platform in relation to execution and management efficiency, but typically, you also find great long-run investment strategies when you do that. But we are cognizant at the same time that while we might be in what is known as the golden age for private credit, we do need to keep our eye on the changing cycle and maintain our platform in other areas where we do have a significant track record, and that's, that's the equity strategies, which I'll, I'll touch on in a bit. The thing that allows us to remain agile, though, is focusing on what I think of as the client demands and needs. And when I say client, I mean both sides of that coin. Obviously, there are investor clients, the investors in our funds and what they are looking for. They're the people that entrust us with capital to manage and deliver returns, but then also what we think of as the users of capital, the borrowers and the partners that we have. In order to have a viable business, we need to make sure we are looking at both sides of that coin at all time. I think the deployment volumes we've achieved recently, as well as the funds growth we've achieved recently, speaks to the fact we're doing that well. The next point I'll talk about, and it goes together in a sense, is to have that market leading edge is a great asset of the firm, but we do need to consolidate that position while it is a good time for us. The markets are dynamic, they're cyclical, and we might have a great story and position in private credit now, but that can change, and it will change. We've been really doing that recently through some investments in the team. You saw in Andrew's presentation, investment in my team in particular. That's about attracting some further talent to the business, specifically in the credit strategies, and I think what that's doing is allowing us to continue to scale the deployment activities as well. What we've also done of recent times is establish teams within the investment team. We have established a credit team specifically focused on execution of that, as well as the equity team, specifically focused on those opportunities. And that's important because as I touch on where we're seeing the market, we are starting to see green shoots in the equity space, and it's important that we keep a team focused on that over time. If I leave you with just a clear point about where we're at today, we're very clear internally on where we're at on a meaningful market participant in the areas we specialize in. We think it's matched very well to current day client demands and needs, but we are conscious of remaining agile and allowing us to pivot the business when we need to into areas that are still our core competency, when that market cycle inevitably changes. If I move to the next slide, please. I'm going to talk about how we have managed this same issue of changing cycles over the history of the firm. The way I think about this is to break it down into four distinct phases or chapters of the firm. The initial one, which in a way is the DNA of a lot of the team, is to be an opportunistic investor. It's where we got our start. It was the post GFC liquidity crunch. We did our investing in equity and mezzanine debt. It was what we call total return style equity investing. Looking back now, the numbers were incredibly small, but they were some of the most lucrative and profitable transactions that we made as a firm. That was something we did for the first phase, but the catalyst really was around 10 years ago when we bought into the remit to become a private credit investor as well. The reason we identified that is because of what we were seeing in the equity platform. We were seeing in the platform, the difficulty in obtaining finance on the transactions that we were investing in, and we identified that as a strong opportunity. Initially, we started out in what we call now the Total Return Credit space, construction loans, and that transitioned at the same period of time that we began raising discretionary funds. So we moved the business to start doing private credit, and we moved the business to start raising funds. As we started to get momentum in that private credit space, however, and this fund started to really scale, we went to what I think of as the third chapter of the evolution, and that was that period of time that seems like a long time ago now, but the lower for longer interest rate cycle. What we did was we focused on delivering income products to our clients. If you go back to what I said before, we're very focused on what our investor clients' demands and needs are, and that was a period of time where they were looking for income. So we did that through our credit strategies, with the obvious example being the listing of QRI as an income-based credit vehicle, and then also in the equity strategies as well. A great example of that is the Food Infrastructure Fund. That ability to use our skill set, spot value, create income products when that was the environment we're in, is great testament to our ability to pivot through cycles. If we move to where we are today, I think we're set up for great growth because this new era, defined by rapidly rising base rates, has obviously resulted in liquidity dislocation in the market. It's not dissimilar to the first chapter that I talked about. However, where we are today is we are going into that cycle with a great amount of dry powder and a scaled credit platform. This is important for us because it allows us to continue to build and consolidate that position, but also we still retain that core competency in the equity side of the business as well. This next period, I anticipate, will allow us to build out that part of the business as values start to recalibrate and we see that lens come back into the market. So just to leave you with the key point here, we've demonstrated through the 15 years of the firm, innovation in how we go about investment strategies and innovation in how we meet client needs from a capital perspective. I'll move now to the slide that I'm sure some people in the room have been interested in hearing about, which is deployment. Obviously, when we did the full year results, there was some great news around the dry powder capital we had in the business, and I think a fair piece of feedback received was, "You now need to deploy that and put it to work." It is very early in the year, so I want to caveat this with the fact that it is a very challenging macro environment, but the momentum is good. Year to date, we have line of sight on around AUD 2.3 billion of transactions that we anticipate will close by the half year. If I compare that to this time last year at our Investor Day, and I talked about line of sight on deployment, we then had about AUD 1.7 billion line of sight, so it's up about 35% compared to where we were this time last year. I would like to caveat, though, with the fact that, and you'll see it on the screen in the dark blue area, a large portion of those deals are what we call mandated and yet to close. We are being incredibly thorough and vigorous in our due diligence. It is a volatile macro environment, so I would expect we may drop some deals, but equally, we have a lot of the origination team out there every day getting new leads and getting new pipeline. Consistent with what we achieved for the full year 2023, the skew remains in credit strategies. For full year 2023, we were around 95% of our deployment in credit. As we sit today on that visible pipeline that we have of AUD 2.3 billion, around 96% of that number is in senior credit. So while I'm starting to see the emergence of the new opportunity set in equity, it's clear that the main opportunity for us remains in credit. To my earlier comment, though, around what I described as chapter four and momentum, I want to talk a little bit about the consolidation of our market presence in the credit strategies. We've been very fortunate to attract some very experienced and well-connected origination capacity in our two core markets, being Sydney and Melbourne. And when I think about FY 2023 deployment, those resources had only just joined the business. There was no output from them being new to the firm. And with those key new hires in the market for FY 2024, we are starting to see pipeline from them, so we feel that the investment in the team is starting to show through our pipeline as well. I do want to talk about flexibility as it comes to deployment as well. We will always look to maintain the flexibility to pause or pivot our deployment if we see the market cycle change. We remind ourselves of this every single day. We cannot be forgiving of bad investment decisions within the business. It's what's built our track record, it's what our fund investors expect of us, and it's important that we don't chase deployment for the sake of it. It's what's served us well over the past 15 years, and we need to make sure if we see trouble coming, we can pivot to shelter from it. But if we see great opportunity, we really want to accelerate into that. What I'll talk about now as the final section is the current market landscape, and in particular, I'll talk about competition and the things that are driving deal flow. You've heard a lot about material withdrawal of liquidity in the market and less competition and some, what I call moderate return expansion. We are not in an environment of, lenders such as ourselves naming our price. It's what I describe, moderate return expansion. We're getting higher base rates, and we are getting expanded credit spreads, but there is competition in the market. However, the number of competitors has materially reduced. The theme you hear often in the market on other sectors generally is around bifurcation, and I think that applies here as well. There are competitors, they have capital, but the second tier have really fallen away. Those competitors are sophisticated. They have dry powder, but they are two significant offshore managers, and what we are doing in the business is using our domestic edge to win what we think are the best deals, to be there first, and to use our local knowledge to get the deals that we want to do. So whilst there is competition, we think we have a competitive advantage there. Beyond that leading pack, though, of ourselves and the two large offshore managers that I mentioned, it really has thinned out from a competition perspective, and I understand anecdotally, that a lot of the other management platforms are finding it hard to raise capital, but also potentially have some issues in their existing portfolios that need to be worked through. So this is the time where we are really looking for the transactions that we want to do. I think this theme, though, of bifurcation continues to the borrower community as well. There are high quality sponsors, and those high quality sponsors have availability of debt capital. They're being funded by the likes of ourselves, and in, in many cases, still the banks as well. And then there is the other tier of borrowers who are finding it incredibly tough to access liquidity. Typically, that other tier of borrower was serviced by second tier alternative financiers who are struggling to raise capital, and so there is a vacuum in that space. If I turn to sectors, similar theme. Residential, and you've heard us talk about it before, it's our, our core capability is incredibly well sought after, backed by strong fundamentals. But at the same time, if I move to the office sector, there are a number of assets in that space that are effectively unbankable. It's an interesting opportunity set. I think it will only change when we see movement in the direct property market. I think that recalibration of asset values is coming, but there remains more downside risk to that, in our view, at this point. Touching quickly to finish up on construction costs. Obviously, an interesting issue for us, given the exposures in our business. We're not currently seeing significant price increases in construction. The previous period of 20%-40% construction cost increases appears to be behind us. We expect now just moderate growth in construction costs through new enterprise bargaining agreements with unions and general inflation in materials. That's important because it makes it easier to forecast, but our view is the cost increases that have occurred over the past few years are baked in now. Replacement cost is materially higher, and what that will do is be supportive to asset values where you have strong fundamentals on the demand supply side. I'll just touch as well, given I've got a little bit of time, on the equity space as well, given we are seeing green shoots there. We're seeing it both across what we call total return or opportunistic equity, as well as income equity. We are starting to see in the opportunistic space, the recapitalization deal flow, where people have troubled transactions that need to be recapitalized. The team that we have focused on that are actually busy screening transactions on that at the moment. The way we're accessing that, though, is using our credit capital that is able to price for risk and getting great downside protection, but with profit shares and equity kickers to allow us to earn beyond debt style returns. And in the income equity space, the REIT reporting season was incredibly interesting. I think it started to make the disconnect between buyer and seller come closer. We have been incredibly close on a number of off-market acquisition opportunities recently, where I think we just missed pricing by a small amount. And I feel that there is a potential during the next year that we may click on that and potentially make some deployment into that space, too. So before we jump to Q&A with Andrew, I'll just recap for you a few key takeaway points. I think we have flexibility in the platform to pivot our strategies as the cycle changes, and we've shown that over the past 15 years that we can do that. I think we've got great momentum in the deployment side of the business, but we are remaining incredibly vigilant on the macro picture. Finally, I think the competitive landscape has materially changed in our favor over the past little while. I'll leave it there and pass, I think, to Kathleen, who is going to come up and conduct the Q&A. Thank you. Thanks, Mark. A number of key messages there for us. We'll take Q&A now. So if you'd like to raise your hand if you have a question, and if you have questions online, please put them through Slido. Over there. Oh, right. Hi, good afternoon, David Pobucky from Macquarie. Thank you for hosting us this afternoon. Just in terms of your FUM target, would you mind piecing or helping us piece together kind of how you get there, by FY 2028? I mean, how much of that can be deployed, and how much transaction activity is required per annum, to get there as well, please? Hi, David. So I've just got to get used to Mark and I being on stage together with these bright lights in our faces. That one's incredibly bright. But basically to get there, and assuming we're doing it predominantly using existing products, means that we've got to near on double our FY 2023 deployment, is what I basically assume. So there's effectively... Assuming we can raise the capital, which is, you know, fundamental assumption is probably your next question. It ultimately revolves around increasing the size of the origination team and larger check sizes in the market. Now, interestingly, if you look at real estate as an asset class in Australia, it has been escalating for, you know, many, many years now, and so check sizes generally are increasing, project sizes are increasing. You know, Mark talked about the fact that construction costs are rising in the market, which is really being met through higher end realization values, larger projects. So I think that, you know, one of the areas that Qualitas has really made a name for itself is our ability to participate in some of the largest real estate, construction and development transactions occurring in Australia. So, it's a long way of saying it's a combination of, more people, more, slightly more volume of transactions. You know, we've, in previous periods, reported that we do roughly 40 new investments a year, of about, between AUD 70 million-AUD 80 million per average investment size. So it'll be an increase on the 40, and will be an increase in the average investment size as well. And really just capitalizing on, on the existing products. I think some of the opportunities that I noted in my overview was really about upside to our ability to achieve that particular number as well. But maybe I've said one thing, David, on it as well, and I touched on it in the phases of how the firm has evolved. I think income products are a key part of it. They generally have a longer duration for us than the total return products, where you deliver returns for investors through exiting the position. And I think a lot of the opportunity we're seeing, particularly in the credit space, is just an expanding universe of income credit opportunities. The banks are retreating even on longer-dated passive commercial real estate financing, and I think that's a big way to maintain the growth in the portfolio, particularly from the deployed capital perspective. Thank you. Just one last one, if I may, before I hand it over. Just in terms of potential funding from a co-investment perspective, if you wouldn't mind touching on that, please. Sorry, the question being the adequacy of capital available for co-investment? Is that, is that the question? Yes, to reach the target. Okay. I think we've got sufficient capital in order to get there. And from our point of view, you know, we did say at the time of the IPO, we're seeking to achieve between 15%-20% ROE on our own capital that we're actually deploying into co-investment, and we measure that by way of the primary return we earn from the investment in the underlying fund, but also the various management fees and transaction fees that we receive from the fund itself, relative to the capital we're deploying. And so, if I'm wrong, and I don't think I am, but if I'm wrong on we need to do further capital raise, then I think we're in the world of raising for the right reasons. You know, we've... You know, we're achieving 15%-20% ROEs in that particular environment. We've got, you know, more funds and more opportunity that we need to co-investment for. The one thing that we will sacrifice is our underwriting capability as a firm, which we really treasure, and we have been extensively using. You can see that in our results coming through as principal income, you know, in our revenue line. So the more we continue to put into co-investment, the less capability we'll have in our underwriting, and potentially that's something, you know, Qualitas separately looks at, you know, as it looks to achieve its ambitions. I think draw attention to as well, the ADIA SMA is a great example of this. If you look at our co-investment in the initial capital commitment versus our required co-investment for the second capital commitment, there is a disparity there. As the scale of these commitments are getting bigger, there is a view that that percentage may come down over time as well, and we're starting to see that. Hi, Sholto Maconochie from Jefferies. Thanks so much for your informative presentation. I really appreciate it. Just a couple of questions. You've been very disciplined in your DD and deployment. Have you seen any distress in your portfolio, or that it's been captured in the DD already? We, as a general process in the portfolio, we run reviews on every single investment, somewhere between four to six weeks, depending on which strategy it is in, and we run a traffic light rating system on how we think about it. And if I take a step back from that and think about, well, how many transactions have we categorized in the red category versus previously? There's no notable increase in that, and we've been, I think, incredibly forensic on what we call the back book, so going back on existing transactions and almost re-underwriting them. There are instances, particularly on construction projects, where there has been cost increases. Typically, and almost without exception, thinking about it right here, right now, sponsors have funded those. We obviously, in underwriting transactions, though, if there is cost expansion, run scenario analysis on it to say: What if we had to fund a cost expansion? And typically the mathematics works. So there's no distress there. What we look carefully at is, in a world where base rates are 4% and a bit, and everyone has a sense of the types of margins we charge on assets that aren't generating cash flow, how long can borrowers hold on for? So we're very, very focused on that. But typically, in those investments, we have interest reserves as additional collateral items. We have prepaid interest, et cetera. So we're not seeing it yet. What we are seeing outside of our portfolio, and, and this, you know, this is anecdotal, is we are starting to see on some exposures for lenders, where interest is not being paid. They are starting to move on that rather than giving grace, but we're not seeing it in our portfolio at this point. Maybe one thing I'd add, and Mark, I don't... if you've got a different view, you'll express it. We spent a lot of time looking at other markets in other parts of the world, and if you look at places like the U.K., many parts of the U.S. at the moment, there's clearly a fair amount of distress that's happening in those markets, and the office sector would be a great example of where there's a lot of distress in those markets. And interestingly, in Australia, and this is a general comment, we're not seeing the same level of distress as others are seeing, you know, our counterparts are seeing over in Europe, U.K., and the U.S. Our view around it, and it doesn't mean there's no stress because, you know, the newspapers are not short of calling out some very high-profile developers who have got caught short with significant amounts of land at the wrong time of the cycle. So I'm not saying there's no distress, although thankfully, you know, Qualitas has steered clear of those situations. But interestingly, our observation is a lot of capital and a lot of profit was made by developers in the last part of the cycle. And by and large, Australian developers are actually relatively, and I'm generalizing, relatively cashed up, and they've been relatively patient getting themselves through this part of the cycle, allowing land values to adjust if they're going to adjust. We're seeing that in some cities more, more than others, before they're reloading into the next stage. And what we're not seeing widespread is developers turning around and saying, "Oh, we need to cut this land, and, you know, we need, we need someone to rescue us," as a general comment. And I think it's because there's lots of liquidity in the market. There was a lot of profit. We're dealing with a thematic where we're short of residential. I mean, I think most people know the statistics in the room, but Australia is a country short of residential. Vacancy rates are relatively low, you know, sub 1%. Sadly, rents are escalating. Residential rents are significant escalation rates, which I think is a sad, a sad fact. But, you know, the end result of that is, has kept distress out, largely out of the Australian market as a, as a general comment. Do you share that view, Mark? I do. The exception that I expect to see, and this is some of the transaction flow that our opportunistic equity team are starting to see, is where people have completed assets with fixed contracted cash flows, are now on the wrong side of base rates and are over-levered on those and need to do a recapitalization of it. But that's a very difficult situation for some owners, and I think maybe the last 12 months has been categorized by let's hope we get through this cycle more quickly, and maybe we're at peak rates and coming down again. That's clearly not the world we're in, and that's why I think we're starting to see some of that recapital deal flow. Typically, what it looks like is us putting in preferred equity or mezzanine capital to pay down senior debt in order to deal with that, and earning, you know, base levels of return with some level of equity kicker on the transaction. Thanks. You raised some really good points and issues there in the preso. If you look, you talked about construction costs not gonna come down, they're moderating and the escalation. You've got cost of capital up from debt and equity, and there's a big spread, say, apartments between house price and apartments, so the demand and not a lot of supply. But affordability is an issue. If I'm a developer today, does, is it find it harder to fund? Does it, as a developer, have to get squeezed on the margin rather than the heaviest cycle that you talk about, the super profits they've made? Does it just mean developers put product where their margin, lots of them are going forward, given you can't push price 30% to cover the increase? There's a few points in that. One, one goes to: what is the funding model of a property development in Australia? And then the second one, I think, goes to affordability and ability to escalate revenue. They are linked in a major way. If you think about historically, how, I'm talking about residential in the main here, how residential development was financed historically, it was about acquire the land, get a planning permit, enter into a presale campaign for, depending how good the project was, 3 weeks to 18 months to get presales, then approach your builder, and then approach your financier, and off you go. If you do that model now, the mathematics does not work. The model's been flipped on its head. People need to lock in their production costs first, and then go procure revenue. If you think about it from just a general business perspective, it was madness to sell your product before you knew what it would cost to produce. So that has changed. But what it means is, because they're not pre-selling anymore, and they need to do that in order to have a locked cost base, the banks will not finance that. So you're in the world of alternative capital, which is higher. And so the developers are having to take a view on revenue escalation in order to justify commencement. We are seeing it across the portfolio on great projects that are well-located, well-conceived. Revenue is escalating materially, which goes to your second point about affordability. Well, how can that still be affordable? My personal view, and I think it's a house view, unless Andrew will correct me in a moment. This is the start of a great transition in the housing mix in Australia. The typical purchase of a three-bedroom townhouse with a small backyard, it's no longer the reality. That purchaser, with their budget, will buy a two-bedroom, two-bathroom apartment because it is the only thing that is affordable. And the reason for that is we've got vacancy below 1%, construction cost is not coming down, cost of capital has gone up. So either we have no supply, which is just unrealistic when we have somewhere between 450,000-500,000 net migration into the country in a year, or prices have to go up. If prices have to go up, it means you purchase a different product to meet your needs. And I think that next decade, probably longer in Australia, is about that. Thanks very much. I think we can take one more from the floor, and then we've got a number that's come through from Slido. So, Ollie? Oliver, from E&P. You know, just on the office potential financing opportunities, how are you thinking about the LVR, and I guess your- C ollateral that you're lending against there? Is it the credit of the, you know, tenant, or are you actually just looking at the land value or alternative use, et cetera? Like, how are you thinking about that, given the potential long-term secular risk that they're taking? Sure. Firstly, we're not doing a lot of it. We're seeing a lot of potential profit. We're actually not doing a lot of it, given the views we have on it. And the first part about what LVR might you be, it's not about LVR, because I think what the value is, is an open question. And so we look at sizing on what we refer to as a debt yield. So what do we think maintainable long-term net income is on that asset, and what is that as a percentage of our debt exposure? That, that's the way we size and think about debt on, on those sorts of assets, because the V is... I won't say it's anyone's guess at the moment, but it is, it is volatile. So that, that's sort of how we think about debt sizing. But then, sort of views on the sector more generally. I used the word bifurcation about four times in my presentation, but it's the same thing here. There. If you, if you look at tenant demand in that market, there is strong tenant demand for certain assets and there is no tenant demand for others. And it really goes to: What is the purpose of the office for that tenant? If, as a business, you have staff performing high-value tasks that require collaboration, they need office space. They are paying very big rents in order to achieve it, and vacancy is incredibly tight. If it was processing an administrative-type office work, there is no demand for that office space as well. And so the sector will split into two. We're trying to be obviously in the first of those categories, but more interestingly for us, as someone who's looking for higher returns in what we do, transitional use is something we're looking at a lot. What is underlying land value, to your point, and what else can be done with this property? We're not taking a general sector view on office. Just one overlay comment to that, and I agree with everything Mark has said. But Ollie, one comment I'd make about it as well is, it also comes down to where you see opportunity and who's your client. And it's one thing to say, you know, opportunistically, there'll be a right time to get into office because of valuation adjustments, and Australia hasn't suffered anywhere near, you know, many other major cities around the world. For Qualitas, the vast majority of our capital comes from offshore, and they are full on office. And if anything, you know, most global investors are trying to offload office at this point in time. So not, notwithstanding, you know, we may think of it as debt and, you know, well secured. For a lot of our investors, they aggregate our portfolios with their... You know, in terms of their reporting, their portfolios, and the last thing they want is, you know, Qualitas necessarily turning up and saying, "You know, here, here's a great, you know, debt transaction we've put into your portfolio on office." And so what it means is there is some contagion effect between what's going on in other markets around the world in office and what's going on in Australia in our office markets. Because if you take that to the nth degree, it takes liquidity out of the Australian market as well for office. So at some point, it's going to become compelling for everybody, but I think there's a global capital redirection at the moment away from office. So I think it's the most disliked sector globally from, you know, from institutional investors at this point. Thanks, Andrew. There are a number of questions on Slido. I can actually categorize these into... So here's up to the Qualitas team around, construction and resi stocks, so we'll address those later on. But there are a couple that goes to our growth, Andrew. So the first one is: What market share will that size fund give us? And I presume it's the AUD 18 billion. It's still relatively small. You know, when I first started presenting the size of the commercial real estate debt market 10 years ago, we were just a touch over AUD 200 billion for the total market, and some 10 years later, that market's more than doubled to AUD 435 billion. I'm guessing, it's a wild guess, but it escalates at about 3%-4% per annum. Some years significantly more than that and other years less. But I'd say by the time we're getting to 2028, total market is probably closer to AUD 500 billion. If we're 18 now, that's 4% of the total market. So I think still, you know, relatively, relatively small. You know, you, you gotta remember that the banks in Australia command about 85%-90% of the total market, the banks and the ADIs. So every 1% market share that they give up releases about AUD 4 billion to the alternate sector, and the market grows every year as well. And so we see that through a lot of the numbers, where we can look at the underlying portfolios of the banks, how, how much of it is property versus corporate loans and other receivables. And property's been on the decline for quite some time. The introduction of Basel III earlier in the year, the further capital requirements that that's put on the banks. I think you know, this has lots of runway. It's a big opportunity. We're not going to swamp the market at AUD 18 billion. So hopefully that answers the question, Kathleen. Yeah. So great. Probably the last one, which is actually a really good one to finish on. We've spoken about a number of things that's going on in the market, but if you could nail it down to three things that excite you about the current market and three things that give you concern. So I'll start with you, Andrew, then move over to Mark. Sure. Was it ASX and then- Yeah, three. Top three- Okay. And the top three that are easy points. I guess, and some of it I said in my presentation. Just, on the positive side—actually, let me start on the negative side, and then I'll end on a positive note. The three things that probably concern me the most about the market at the moment is just, contagion effect with other parts of the world, and, whether you just get, you know, the withdrawal of capital more generally because people decide to sit on the sidelines. You know, it's hard to ignore what's going on geopolitically. You know, whether that just people say: "Well, until the world sorts itself out," notwithstanding, we hear how compelling Australia is, notwithstanding we hear how compelling residential is. We just want the world to sort itself out a bit before we start writing sizable checks. To be clear, we haven't seen any of that to date, but, you know, it's always something that, you know, one factors in. I think that our portfolios are in particularly good shape. We... I'm not just saying it, you know, we asset manage every six weeks. You know, I think we've got a very good handle on the relativity of risk within the portfolio. But, you know, if Qualitas was to lose its track record in some sort of way, in an unexplained fashion, we are in a risk business, so we should assume, you know, some things become more difficult over time just through the effluxion of time. But if we were to hurt our track record, I think that, you know, that would give me cause for concern. I'm struggling on a third, Kathleen, and- That's right. We're running out of time. And then on the really positive things, look, I think great brand. I'm really honored that, you know, we've got the quality and the caliber of the people that we've attracted to our organization. And I think we're really dealing in best of class. And as I said in my overview, the last 3-6 months in particular, the quality of CVs and people who are really wanting to join us has been first rate, and I think that's one of the most significant opportunities for us to capitalize on. I think that just as I said, the overall market dynamic we find ourselves in with the shortage of capital, that this whole resi story, you know, sometimes I find myself amazed that I'm still trying to convince people how compelling the residential story is in Australia on a supply. And I'm not sure what they're waiting for when you talk about sub 1% vacancy rates, you know, 10%-20% rental escalations, 400,000-500,000 population growth. What is it that people need to be convinced about in... I've been investing in real estate for 40 years, and I honestly say, hand on heart, I have never seen a better opportunity in that 40 years than residential for Australia, given those set of dynamics. I think we are poised to play into it, and it's our major pathway to AUD 18 billion. Thanks, Andrew. I'll say, I'll give one of each. Okay, great. Really quickly. It's clearly a great time for private credit, but I know how specialized and hard this can be, and how diligent and across markets you need to be. So I get concerned about other new entrants coming in, making a big splash and making lots of mistakes and what that might mean for our industry. But what I get excited about is I know how hard it is, and I know how good our team is, and we're going to do an amazing job of it to stop some of that happening. So it's that two sides of the coin about watching big competition in, trying to capture what we're doing. Amazing. Thank you. Please join me in thanking Andrew and Mark. Moving right along. Thanks, Mark. I'd like to now welcome our next presenters for our ESG panel. The session will be moderated by our Head of ESG, Jason Rackley, who has been with Qualitas for over 6 years, who was also most recently our Head of Transaction Risk. Jason is joined by our ESG advisory group members, and we feel very fortunate that they've chosen to work with us, and I won't be able to do justice to their credentials in the time that we have, but I'll try. Fiona Reynolds is the Chair of the ESG Advisory Group, and brings over 25 years experience. Most recently based in London as Chief Executive of the Principles for Responsible Investment, a UN-supported network of investors representing 121 trillion in assets under management. She additionally chairs the UN Global Compact Network Australia, which seeks to mobilize Australia's leading businesses to create a sustainable future. We welcome Dr. Ian Woods, who is a founding member and Deputy Chair of the Investor Group on Climate Change, which aims to raise awareness on the potential positive and negative effects of climate change, and encourage best practice investment analysis. He's also a Chronos expert sustainability network member. Also joining us is Brian Delaney, who is not only a member of the ESG Advisory Board, he is also, as I mentioned earlier, Qualitas Board Director. He has over 35 years experience in the funds management industry, holding senior roles globally, including being a founding member of QIC's ESG Advisory Committee. Please join me in welcoming them to the stage. Thanks, Kathleen, and good afternoon, everyone. Look, I'm really pleased to be here to moderate this session with our ESG advisory group today. As Kathleen said, Fiona, Ian, and Brian have decades of experience in ESG and responsible investment, and we're really fortunate to be able to tap into that to help us shape our ESG strategy, going forward. Today, we're going to talk a little bit about why we set the group up, a little bit about the work that the group will do, and then we're going to talk a little bit also about the sort of some of the trends and, and issues that we're going to be facing into as we build our strategies out. We've got about a. I think we've got about half an hour, so there'll be some questions at the end, but we'll get straight to it. So Brian, I'm going to start with you, if that's okay. From a board perspective, what motivated the board to set this group up, and how does it sort of fit into the governance structure of Qualitas? Thanks, Jason, and afternoon, everyone. Firstly, I'd hate everyone to think that Qualitas started their journey on ESG when we listed back in 2021. As you've heard from Andrew, Qualitas has been going since 2009. I had the benefit of being on the advisory board prior to the listing. But having observed the business, Andrew and the team have been on this journey for quite a while. So I wanna make sure people don't think we woke up after listing and said: "Wow, what's this three letters mean?" And each of E, S and G, you say them all together, and people think that they're all one word. They're actually three different things, and each of the focus of those three different things you need to think about. So obviously, after we listed in late 2021, we need to consider a range of factors. For those who are directors in the room, if you go to the AICD ESG day, which I did a month or so ago, they scare the bejesus out of you that you need to be all across this. But of course, there's ASX reporting guidelines. There's our own risk appetite, which we set, as a board. There's shareholder expectations, there is our investors' expectations, and as Andrew touched on, to be able to attract and retain quality people, you need to have a story about what you're doing in this space. Because like my daughter, my 28-year-old, my 25-year-old, they wanna know what you're doing to make the world a better place. Of course, they're interested in what you're gonna pay them as well. They wanna know about that. So all of these factors led to the decision to establish this ESG advisory committee focused on that future roadmap. I think it's critical to our long-term sustainability. Andrew shared with Mark some numbers that we put up for five years. If we're going to achieve those, this committee is gonna have a big impact on how we get there and the way we get there. Without embarrassing some people on the stage, a clear decision about how serious we were was appointing Jason to his role. You know, we took him away from Mark's investment team and said: "We need a focal point, someone who's gonna spend every day thinking about this and help us develop that roadmap." And then finally, at the risk of embarrassing my two friends here, you don't attract the quality of these two people who are both known domestically and globally as subject matter experts, both from an asset owner perspective and an asset management perspective, and get them to be sitting here if you don't have a story that they believe in, 'cause they do their DD, and you're serious about where you're going. So I'm delighted that they both joined. I've known them both for a long time, but I think it's important that you, as the audience, realize that with the expertise I've got each side of me, I feel really comfortable that we're gonna be able to take this journey, and make it meaningful for Qualitas. Thanks, Brian. It's a great, great response. Fiona, you're the chair, so can I ask you, so what drew you to Qualitas and you know, what does success look like for this group? Sure. So what really what interested me in Qualitas was, first of all, yes, I've worked with investors on sustainability issues for, you know, a very long time, and I was in London for a long time. When I came back to Australia, I really wanted to continue to work with investors on sustainability. I wanted to work with Australian organizations who they didn't have to be the best at everything already, but they needed to have a commitment to what they were wanting to do and to have aspirations in the space. And to me, that means that it really has to start at the top. And what really impressed me was when I met with Andrew, I could see that from the top of the organization, there was great commitment. And then I talked to some of the board members. I know Andrew Fairley as the Chair, and I could also tell that the board was extremely, extremely committed. I've worked with lots of organizations and met lots of organizations over my time, where you can have a fantastic ESG person, they can be the little person in the corner near the back door, that nobody knows their name. Used to be the case many years ago. That's me, Fiona. Yeah. And unless the board and, you know, the senior executive are bought into this, that person just struggles to get anything done. So that was something that really attracted me to me. I could see that there was a commitment, a passion, and a desire to, to get things done, and a willingness to bring in external people to help that happen, which not everybody wants to do. And I think there was also an honesty to me about where Qualitas was at. As Brian was just saying, it's not that Qualitas hadn't been thinking about these issues, hadn't been doing anything, but there was also a recognition that we don't know what we don't know, and there's still a lot that we need to do if we're actually going to be best in class. Mm-hmm. And a commitment to do that, and hence getting full-time resource for those sorts of things. And I know Qualitas is at the financing end, but I also think, obviously, that the real estate sector is an extremely important sector if we're thinking about sustainability from the point of view of decarbonization, how we go about that. It's an important sector socially from a housing perspective. It's an important sector as well from many other issues that you need to consider: supply chains, modern slavery, et cetera. So there's a lot of interesting issues there. And so from the advisory board and chairing the advisory board, our role is to really think about all of the issues that are coming our way. And if we think about Australia, since the... In a very short sp-... space of time, a lot has happened with sustainability in Australia. So we've seen that the government had set, has set a net zero by 2050 target. It's also said that by 2030, we're going to have to reduce emissions by 43% from 2005 levels. Now, to do that, there has to be huge changes across the economy, and that's going to affect every single sector of the Australian economy, whether that's agriculture, whether it's real estate, whatever it is, land use, et cetera. Everything is going to have to have big policy changes. So some of the things that we're looking at, including what's happening internally about implementation and how we go about it, but what are those changes? How do we stay ahead of those changes? We don't want to sit back and then just find ourselves being victims of regulatory change and being run over by it. We want to know and be planning and be ahead of the game, and that's what we're doing, and then working with the team to ensure that we really embed sustainability across the whole organization. Because you don't have success if it just sits in a little pocket. It really does have to be embedded across the organization, top down, bottom up, to make that work. Now, we're relatively new. We've had two advisory meetings, advisory committee meetings so far. We've got a lot of work ahead of us, but it's also a great committee, a great team, and we're, you know, really excited about the work to come. Great. Yeah, and you segued nicely into some of the work that we're gonna be doing, and, Ian, I want to talk to you about that. So we've set ourselves, as a group, some reasonably ambitious objectives for ESG over the next 12 to sort of 24 months, and a lot of that is focused on, you know, improving our reporting and disclosure. But we've also got product development that we're working on, trying to work out ways that we can channel capital into more sustainable development, particularly in the residential sector, and Mark and Andrew talked strongly about how much conviction we've got in residential. I want to ask you what do you see as the most pressing priorities for us in the short term? And also, there's lots and lots of focus on reporting and disclosure, and does that detract from having sort of real-world impact, and how does a firm like us actually have some impact? Yeah. Again, thanks very much for inviting me to be here today. It's good to be here. I think in terms of priorities, I think you've sort of started on the, in the, right area in terms of focus, 'cause there is a lot of change from a regulatory perspective, compliance perspective with regard to reporting, for listed, both listed companies but also funds. And so you'll see some reporting associated with the International Standards Board, Accounting Standards Board, IASB, with regard to sustainability reporting, which, most companies will have to, address. But there is also some regulation the government is bringing in on disclosure on climate change. Some of you may be familiar with the Task Force on Climate-related Financial Disclosures, and the government's regulation will effectively mean both listed companies, and funds will need to start reporting against that. There's some significant reporting requirements. Obviously, reporting is an output, and the key challenge is, is to get the inputs or the processes in place to make sure the reporting is meaningful. That's the other challenge, and there's two aspects to those inputs. There's one is just the data that you need, and the other ones is the skills and capabilities to take the data and, and create meaningful reports. I think in terms of, as you say, I think you picked up a good point there about reporting for reporting's sake. I think the other priority is it, is it isn't just reporting for reporting's sake, is that you use this information to, make better investment decisions and, better understand the possibilities and the opportunities in, in your business. I think as soon as reporting is just seen as a compliance mentality, I think you miss a lot of the points. I think one of the challenges is really getting value out of that reporting. So I think that's absolutely a key area of challenge. I think the other area is, and Andrew and Mark highlighted this, the property and the residential area especially is in an incredibly interesting position at the moment, and I think as a result of that, even from an environmental and social perspective, when we talked about affordability, there's some really interesting opportunities in that space. And you might see it as just, well, that's just a business opportunity, but it also comes as a result of social and environmental pressures, which are driving those opportunities. So I think, I think getting, you know, products and funds and positioning that capitalize on those drivers is another really important, really important area. You touched, Brian, on data, and it's something that I think is really important. I come from a risk background, so data is important. Yes. We're in private markets, so I think data is a real challenge. I was actually at a meeting this morning with one of our borrower clients who are trying to do lots and lots of great things, and they own predominantly industrial assets, and they can't even get electricity usage data out of their tenants. So you know, how are we gonna measure and track our impact if we can't get good data? Yeah. It's- You are in a really difficult position. Having talked to people globally on this issue, credit, private markets, and also the size is an incredibly challenging area. I think what you're gonna find is that some of the regulatory push, and also just some of the market dynamics will create an environment where data become available. That's not gonna happen overnight, so you still need to work in before that. I think what you think about when you think about data is, don't wait till the data is you feel 100% sure about the data before you start. Start with what you can get. Absolutely recognizes uncertainty and the challenges associated with it, but use it with understanding the uncertainty. And I think through that process of using that data, you'll understand what the important one, what the important data is, what input, what data. You know, I'm uncertain about this area, this particular data area, but to be honest, it doesn't matter. I can be out by a couple of orders of magnitude, and it makes no difference whatsoever. So it helps you really focus on the areas of importance. But to work that out, you've got to start by just working out how you answer the question. So I think no data or problems with data is not a, not an answer to, or not a response to say, well, I'm not gonna do anything. You have to start, work on it, and then you'll work out where to prioritize. Mm-hmm. Well, if I can add to that, I think that, you know, we can't make the perfect be the enemy of the good. And over many, many years in this space, I've heard many people saying, "We can't do this, we can't do that because we don't have the information, we don't have the data." And if we sat back and just waited for everything to be perfect, we'd be so far behind. So, as Ian was saying, you, we just have to get moving, work with, work with the data. It will continue to improve, but it's never going to be, hold the answer to everything that you want to know in one piece of, one piece of, data. There's much more work in thinking about building sustainability into what you do than one piece of data on a spreadsheet somewhere or in a computer system somewhere. Yeah. And speaking of being behind, I think, you know, I think we're currently tracking to about 4.5 degrees of warming. So, that's not a great outcome. Fiona, I'm gonna come back to you because I wanna talk about... And I know with PRI, you've got a lot of experience in this area. I want to talk about the skills gap. Lots of people talk about there being a skills shortage in this space, and I guess I want to ask you, how important is education and training in an organization like ours in terms of embedding ESG into the culture of the organization? Well, it's really important because, as you say, there is a huge skills gap globally when it comes to sustainability. It's a very... Well, it's not new, but it's a very growing area, particularly in the investment space. And you've got a lot of people in the investment space who've been doing things for a certain way for a long time, and now they're having to rethink how they're doing things, and you've got to retrain people, and that's not always easy. So one of the key parts of the strategy that we have at Qualitas for the committee, the work that we're doing, is about training across the organization. Obviously, we need the right training for the right people in the organization. You've got the board level, where that's an oversight role, and they need to, they need to understand certain things. Then you've got other staff who might be in sales, et cetera. They need to understand these issues, but at a different level. And then you've got those who are doing the sort of deep implementation, due diligence, et cetera, who really need to understand this in a different way. So making sure that we're getting the right skills to the right people, the right training. But having said that, the whole organization needs to understand the risk to the business, sustainability risks, what's material, why we're doing this, what the plan is, and how we're going to get there so that we are all, from the board down, on the same page and the same journey, basically. Yeah, I think the top-down aspect is. Yeah I mportant. It's not just the investment teams that need to be trained. There's also skills gaps at board level and at senior management level, so that's really critical, I think. But I don't think we can have an ESG conversation without talking about re-regulation. Mm. There's lots and lots of acronyms that get tossed around, and I think we're about to get a new one in January with, in Europe, with the ESRS. There's something coming out every day. What are the things... I'm interested, Fiona, in your view, but also Brian's, from a board director point of view. What are the things that, what are the regulation things that we should be looking out for and expecting to see? Australia's probably a little bit further behind regulatory-wise. Yeah. So I think in Australia, well, I'm not, not that I think, I know in Australia at the moment, one of the key concerns in the investment community, but also in the corporate sector, is the greenwashing focus. So ASIC has really been focusing on greenwashing, and it's going to continue to. It's making it one of its priority areas. In the budget, it was given an extra AUD 4.3 million for the next 12 months to focus on its surveillance on greenwashing. It's scaling up 40 new staff that it's trying to employ in this space. It's already issued 11 infringement notices within the investment space. There's 3 civil proceedings that are going, that ASIC is also proceeding with. Two of those are to retail super funds, one is to an investment manager. Very... So it's very focused on, are you doing what you're saying that you're doing?... So this is something that we're trying to have a laser-like focus on, because investors need to be very clear that they can state ambitions, but they need to be clear about what their ambitions are. They need to be clear about what they're doing, how they're going to get there, how they're going to measure those things, and then how do they report against them. Investors are getting in trouble if, you know, from a labeling perspective, if they're out there using language that just is sort of a bit woolly and it's not really what they're doing or what they say on the tin is not what's in the tin. So we have to be very careful about greenwashing. Green hushing is also becoming a point of discussion, whereby investors are very concerned about, "Well, maybe if ASIC is so focused on greenwashing, I should say nothing and be safe." But the regulator's also saying, "That's not good enough. We need to actually know what you're doing because you need to be disclosing this information to people." So we've got to get that balance, balance right. In Australia, we're also developing our own taxonomy, so that's something that will impact all investors. That's being developed as we, as we speak. It's been out for consultation. Now Treasury is working with the finance sector about how what does it finally look like. There's climate-related financial disclosures that are coming our way as well. So a lot is happening in the sustainability space. We're also seeing globally that there's a lot of focus, not just on financial-related disclosures, but now there's a lot of focus on biodiversity issues. So there's the Taskforce on Nature-related Financial Disclosures. This is something we also want to look at Qualitas and making sure that we're ahead of the game, that we know what this framework is going to mean to mean for us. And I think that we, you know, there's a lot of regulation that will come from a sector basis. As I said, as we transition to net zero, every sector of the economy is going to be impacted, and we're looking at sector pathways. So what does it mean for this sector? What does that mean for the property sector? What changes will be there? So it's not just at this level, it's also at the sector level. And then, of course, you know, there's a lot of regulation happening across the globe, and some of those impact us. I think one of the benefits that Australia does have at the moment, because we are a little bit behind, is that we can look at what's happened in Europe, and we can look at what's happening in other parts of the world. And although people might talk about the fact that Europe's very well ahead in sustainability, it doesn't mean that they get it all right, and far from it, and they often bring things in, and they don't work. So now they're going through big reviews of things that they're doing, SFDR, which is sort of their labeling system. So we can sit back and look at those things and have the advantage of saying, "Well, what worked and what didn't work? How do we avoid doing that in Australia, and how do we make sure that we can learn, learn, learn from others as well? Brian, you mentioned the board, the Directors Institute and being scared, and I mean, what's your take on it? I mean, is this focus on greenwashing actually kind of stunting companies' ambitions in this area, do you think? I mean, I don't think so, although we do tend to spend a lot of time talking about it to board members. I've. My chair's in the room, and he's quite passionate about making sure that we. It's everything on the tin, as Fiona said, we're doing. But I think that's just good practice. I mean, if you're worried about greenwashing, then you should be. If that sounds a bit illogical, in other words, you're doing something that you shouldn't be. You know, I've been in this industry a long time and, you know, marketing gets ahead of facts sometimes, dare I say it, so you just gotta make sure they're aligned. Mm. I'll just add one thing to Fiona, because she's right on top of the regulations. One of the other hats I wear is chair of association, where all the big industry funds congregate, and I get the benefit of listening to the CEOs and the CIOs. And not only is regulation changing, but the demands. All of you are members of a super fund, unless you're on your own, and therefore, the people that run those, okay, are very cognizant of the risk they're running of your money. So they're expecting and demanding much higher levels of, if you like, you know, reporting and information to make sure on your behalf, they're actually doing the right thing and they're doing what they're saying to you, because you're becoming more active. You're becoming more active about what you want to see invested in and what you don't. There are some legal cases against some of the funds in this country that have played out over the last couple of years where that's come before. So I just add that aspect. It sounds scary. It's not. At the end of the day, if you do what you say you're doing and you can prove it, you shouldn't have to worry. Mm. Yeah. If we look at the civil proceeding that's happening, one of them in Australia, it is because people who were investing in a fund were told that it was not—it did not invest in any fossil fuels- That's right. for example. Now, if you then find out that, well, in actual fact, it is- Mm Then that's clearly misleading. I think, though, that there is a big difference between being misleading, deliberately misleading, with that, than best efforts. And I do think that with regulation, the regulators need to be careful that they don't stifle innovation, because we're in a situation that we haven't been in before. A lot of the sustainability issues are new. We have not decarbonized the global economy before. People, investors and companies are setting net zero targets for 2050. They're setting shorter term targets. Do they know everything that's happening in the world right now, and how everything's going to impact them, and what policy changes are going to happen all the time? Some things are out of their control. We need to have, without people being dishonest, we need to make sure that we allow for innovation, and we allow for trial and error as we're going through huge, huge changes over the next few decades. Yeah, genuine intent. Yeah. Maybe if I can just pick up on- Yeah Fiona's comment there. I think there are two key aspects of avoiding greenwashing. One is just being transparent about the uncertainties, about if you're not really sure, that's fine, but just be really clear about what the uncertainty is in terms of what you're putting out there, and the quality of the data that you're using. And the other aspect, especially when it comes to targets, of achieving targets over a period, is what are the contingency factors which influence whether you'll be able to achieve that target? So be really clear about what's in your control and maybe what might be out of your control or for which you're relying on external aspects which you're relying on. Just be really clear about that, and also how you're trying to influence, though you don't have control, influence those external factors to help you meet the target or whatever you've said you're going to do. So I think they are two really key points with regard to avoiding greenwashing. Just be what you are on the tin and be realistic about what you're gonna do and how you're gonna do it. Hey, now my clock is flashing red at me, and I've only got one job, and that's to bring this thing home on time. So, but I do want to talk about trends. So, you know, lots of focus on climate, which is understandable, but there are other parts to ESG apart from climate change. Maybe I'll start with Ian, because some of... What are some of the things that we need to be thinking about in terms of issues going forward, and the next big issues in ESG? Yeah, I think issues around biodiversity are definitely the things which are coming forward, and significantly, certainly globally. A couple of the other issues I would say are more on the social side of things. I mean, we've got the Modern Slavery Act being revised here in Australia, and there's requirements there. But I think there will be some other social issues which actually probably provide some opportunity in this space. One is, what we're gonna do about aged care and aged care provision of aged care, both from just the capital requirements for aged care buildings, given the aging population. And the other one is the whole issue around affordable housing and increasingly people getting older without having paid off their house. I think there are some real interesting social issues there, which is definitely in the property space, which I think are going to be growing issues. Brian? Really quickly, for those who know me, you would be surprised I'm going to say this: diversity and inclusion is a massive issue. I've been in funds management for 40 years. I'm the dinosaur that they're talking about when they say they need to remove them. So the great thing that I've observed is real. And I'm a big fan of quotas. I know it might be controversial, but frankly, things change at glacial speed in our industry if we don't put targets on. And so I've seen a huge improvement in that, but we've got to stay the course because, you know, as a father of 2 highly successful daughters, you can't be what you can't see. Yeah. So, as I said, I've been in this industry a long time. I'm seeing rapid change, but we've got to stay the course. I'm picking on female/male diversity. There are many others that we need to think about. That's the most obvious. Yeah. Fiona? Well, picking up on that, I think, yes, gender diversity still needs to be something that's focused on, but we need to be looking at many other forms of diversity as well, and I don't think that there is enough focus on other forms of diversity. I think obviously, human rights is a big and growing area, and there's going to be... There already is happening around the world, a lot more focus on human rights due diligence, and that will happen here in Australia as well. Getting more into supply chains as well, looking at modern slavery and human trafficking in great detail. So, as well as greenwashing, a lot of the new discussions that are coming up are about blueh ushing. Mm-hmm A nd social housing- Mm-hmm A nd social washing, and blue washing as well. So it's not just. It's certainly not just in the green space. Yep, great. So I want to bring the audience in. I think we've got... Have we got time for some questions? Yeah, for one. For one question. Okay, that lets me off the hook easier, doesn't it? We've got time for one. Have we got any from the room, or are we going to Slido, or— We've got... I've actually, the one that's come on Slido, which I haven't released yet, is actually quite interesting, but I will go to any in the room first. No? I can't see any. Okay, so the one that's come through is around what we're seeing, you know, coming through on the U.S. around the negative sentiment towards ESG, which seems to also be spreading now to Europe. What are your views on this? And is this more political rather than actual intent, and the targets are too tough? Good question. Okay, so in the U.S., there's a big backlash against ESG by some of the states and the governors of those states. They're mainly in Republican states, and it is a purely political issue. It's not an investment issue. But in those states, in some instances, they're basically banning you from thinking about ESG issues, which seems a bit bizarre. I mean, if you're an investor and you're not considering climate risk, for example, that doesn't seem like a very sensible or good thing to do. It's going to be interesting to see what happens, and I think a lot of what happens will depend on the elections that come up in the U.S.? So while U.S. investors are still continuing down their path about ESG issues, a number of them are pulling back, and a number of them are being a lot quieter. They're worried about these issues. Some of the U.S. states have said: "You will not be able to manage money for us, for the state, for the state pension fund, if you're, you know, talking about ESG issues." Very difficult for global investment managers, 'cause on the one hand, you manage money in Europe, on the other hand, you manage money in the U.S., and you're trying to balance both of these things. So there's a lot to play out. I do think on the flip side, in the U.S., though, and on the positive side, the U.S., 12 months ago, implemented their IRA, the Inflation Reduction Act, and that is huge incentives to invest in the new economy and invest in climate solutions. And this is a capitalist society where, basically, incentives work, and it's changing the market, and it's changing the way people are investing. So I think it's counterbalancing some of the other things that are happening in the U.S. Any lasting comments from you, Brian or Ian? I would just say on that aspect about what's happening in the U.S., I think it fundamentally shows, from my perspective anyway, a misunderstanding of what drives value in a company. What drives value in a company is an ability to execute a strategy, and as we just heard Mark and Andrew say, it's all about people, and if there is ever a social issue, it's people. So it's how do you get the right people doing the right things with the right counterparties? That drives a lot of good businesses, and that's. You can put a social issue label on that, or you could just say it's good business. But I think understanding that is something which is really important. Yeah, and at the end of the day, we need to keep politics out of investment- Yeah and think about what are actual risks to businesses, what are opportunities, what is it about doing good business, and how, and how do we do good business? And it shouldn't be about politics at all. Yes. On that note, thank you. What a great insight from you both. Great discussion. Yeah. So thanks, Fiona, Brian, and Ian, for your time and insights today. It's been great, and yeah, that's- Yeah, thank you. That's a wrap. That was nice. Moving on, I'd like to welcome back our Global Head of Real Estate, Mark Fischer, joined by Ashleigh Macdonald, Operations Manager for GQ Build to Rent Victoria. Ashleigh has over 14 years experience within the hospitality and operations sector, holding various management positions. As the GQ Operations Manager for the newly established Build to Rent joint venture between Gurner and Qualitas, she's been tasked to deliver on the vision of delivering world-class service and state-of-the-art amenities. Welcome to Mark and Ashleigh. Thank you. I thought we were going to have a technical difficulty there with Ashleigh's microphone, but it looks like it got sorted. This panel is to discuss what I think one of the most exciting enablers of growth at Qualitas, which is what we refer to as the GQ Build to Rent platform with the Gurner Group. It's something where we're going to touch on operationally how we are progressing in this strategy, and that's why Ashleigh has joined us today. Kathleen gave a brief introduction on Ashleigh, but I'll go into a little bit of more detail before we start. Ashleigh is responsible for the operational side of the Build to Rent assets, and her background is in the hotel space, where she led the operations team at Crown Towers, Melbourne, which I'm assuming everyone knows, but is one of the most highly regarded hotels in the country. But also she supported the opening of the Crown Towers in Perth as well. So when you think about Build to Rent and what we're trying to achieve there from a customer service perspective and the opening of new assets, she had an incredible background that we think is directly relevant to what we're trying to do. The format today is, I'm gonna ask Ashleigh about all things relating to customer service and operations for Build to Rent, and then based on the script I've been given, Ashleigh's gonna ask me some questions about our overall ambition for the platform. So hopefully they are not too tough. But before we kick it off with some detail, maybe, Ashleigh, I'll invite you, if you want to make any opening comments. Yeah. Well, I started with GQ in June, so I came off the back of obviously working with Crown for a while, and, well, a long time, and then I was working with a developer in New South Wales. And so since my sort of inception into GQ, it's been interesting. I've got a crash course in Gurner and Qualitas, and we really were at the ground. So we're working heavily on our lease-up and our marketing strategy. We are working on our first year budget furiously and cutting it and recutting it, working with suppliers to try and make sure we've got that right. And then doing a lot of really careful curating, I think, of the FF&E and how we're actually going to convert this from a development into an operational building that we're happy and proud to operate. So it's been interesting. It's gonna get even more interesting, and I'm really looking forward to the launch of our first building, which is Beach House in St Kilda in early 2024. Thanks for that, and stole a little bit of my thunder there around the- Sorry. Excitement of Beach House, St Kilda, which we'll touch on in a minute. But I might just start with some high-level points around the GQ platform and how we measure it. And if we measure the platform by what we call gross committed assets under management, so that's the acquisition capability of the platform. We believe that AUD 3.2 billion of gross asset capability. It's the number one build-to-rent platform in the country by way of that measure. We have four assets underway in the platform, and we have an incredibly strong pipeline of transactions under our control that will deliver around 3,600 units in the future. As Ashleigh just mentioned, one of the most exciting things for us about the platform is that in early 2024, the St Kilda asset, which is referred to as Beach House, will be opening. And we're really excited about this being the ability for us to demonstrate what we're talking about and what we're looking to achieve in this space, both from a physical product perspective, but also from a customer service perspective. And I, I'm sure some of the things that Ashleigh will start to talk about in a moment will bring some of that to life for you. I think at a high level, though, multifamily is a well-understood asset class globally, but it still is a new concept in Australia. And the way that I like to think about the GQ platform is it is akin to a startup in a sense, but it's backed by two very established but fast-growing entrepreneurial businesses as its parents. And we see that as a great thing for the enormous market opportunity that we're talking about. Andrew gave you his view earlier around his conviction level in the residential sector. I almost wanted to quote, "Best thing he's seen in 40 years," but I think the fundamentals truly do show that. And part of bringing Ashleigh on, early into this platform was to make sure we get the customer service part of this right. So maybe to kick it off, I'll hand over to Ashleigh now to talk about and give some color to the audience about who the target market is in terms of our tenant customer and what the strategy is to attract and retain those tenants. Ashleigh? Yep. So we have determined our target audience being 25- to 39-year-old renters for this asset and for the fund, or for the platform, I should say. I don't think anyone needs to be told, but I'll say it anyway, that 31% of Australians were renters in 2022, but of that, 60% reference in a household a person under the age of 35. So we've gone round and round trying to sort of determine who—what that market mix is and what the subgroups within that age bracket are, which, you know, come into millennials, modern family, urban professionals, people purchasing their second home or, or in a position where they would want to. People that obviously can't afford to buy a house, and would really like to. I think there's a general sentiment around renting is, is negative, and I don't think it's controversial to say. But we intend on obviously targeting people, and any build-to-rent operator will be targeting a very different approach because renters will be the core of what we do. So we've gone around about how we target those people. They'll obviously value a range of different things, being flexibility, you know, being close to the action, lifestyle, convenience, security, all of those things. So our campaign for launch, everybody's going to be watching. I've been told that, you know, "Don't screw it up." And so we've gone around and round about how we'll target people. We'll do a really curated campaign. There's obviously a lot of anticipation about our first asset. We intend to leverage... Obviously, Gurner has a really, well-established success rate in BTS, and we will take the learnings that they have, in BTS and apply them, appropriately in what we think build-to-rent will like to see. There'll be an off-market campaign that will give us the opportunity to test the market first, and Gurner has definitely seen a lot of success in their off-market campaigns. We will have a multi-step approach, and it talks a bit to the question around how we also intend to retain those residents, is that starts when we're leasing up. We need to choose the right people. There will be an interview stage, to get into our building. It won't be a doors fly open and everybody come on in. We want to make sure we're really, really carefully targeting the appropriate building residents to support that sense of community. We'll speak to a few things in the campaign. The building and amenity are going to speak to themselves, speak for themselves, and I really cannot wait for people to see. This building is going to be very, very special, and we've chosen really, there's really intelligent choices being made through the entire building, whether that be on materials and finish, to create that sense of luxury, while also being fit for purpose in a rental market. We have some flexible floor plans. It will create a big sense of personalization that I think renters are really craving. It's kind of like you take what you get. That will definitely not be the case. We have a wide range of floor plan types that will create that sense of personalization. We obviously talk a lot to lifestyle, and I think it might be the next slide. Is it about? Yeah. So GQ, across all our buildings, is going to have a huge level of amenity, being, you know, just for Beach House alone, we've got bowling alley, co-working space, private meeting rooms, spas, private dining rooms, private dining rooms with spas. There's a lot in there. It's absolutely amazing. So the amenity will obviously feature heavily in our lease-up. And then this notion of service, which obviously is why they, why I'm here, hopefully. So, I think we reference a lot, and people have done it already, referenced this sort of a hotel-style concierge, and I think unless you frequent five-star hotels, you might not actually know what that means to you. But if we talk about the service that we intend to deliver, it's going to be carefully curated, and it was something that we saw a lot of success with at Crown Towers, and we went for a Forbes Five-Star Award. We were the first ones to get that in Australia, along with the Darling in Sydney, and it took us 2 years. And one of the things, the greatest learnings we took out of that, was that service looks different to you, as it does to me, as it does to probably everybody in this room. And the real key to success is being able to achieve that, whether that be asset to asset of what people need, and I think that's going to be the real benefit of the two local powerhouses that are Gurner and Qualitas. That we are really going to be curating a sense of personalization that people won't have seen in rentals before, and that will come out heavily in our campaign, and it's what we're really going to be riding a lot of that experience on is how we target people that can deliver that five-star service. So I think I'll just touch on it, but just to wrap that up, I think one of the biggest benefits we have is that local knowledge, and it's not gonna look different, it's not gonna look the same at Beach House as it will to the future assets. And we're gonna really lean on that local knowledge to make sure that, you know, we're successful. And I think it's gonna make it really hard for people to replicate that. Yeah. I mean, I definitely agree with the localized point. I think one of the things about residential real estate in particular is it has to respond to its local neighborhood. And we've seen, if you look at other multi-family or build-to-rent markets globally, the local experts in those markets know that a building in this neighborhood needs to be different to a building in that neighborhood. And I think one of the advantages of the GQ platform compared to some of the competitive set is we collectively have been doing a lot of residential for a long time, and I think we have that local knowledge to allow us to do that. But if I go to more broadly other success factors, in this space, in order to be a standout leader in this space, we really do need to drive operational efficiency in this platform, and I touched on it before around having two well-established, entrepreneurial and growing parents behind the business. What that allows us to do from a more, let's say, nuts and bolts perspective, is to really get the operations of the management platform efficient. So to just bring that to life a little bit, we do not need to hire, day one, the full finance and accounting team into the platform. We leverage the resources that exist within the parents to do that. And what that allows us to do, I think, is grow the platform more quickly. We're putting all the power and might of the two parents behind it in order to get that happening. But also it allows us, we think, to get best in market talent, and Andrew and I touched on this both in our earlier presentations. I think it applies equally to GQ as well. Don't want to embarrass her, but I think that's why Ashleigh's here. Having those two parents behind it allows us to get the best talent into what is a startup type industry. So I'm gonna put you on the spot a little bit, Ashleigh, and ask you, what was it that attracted you, coming from a business with great reputation like Crown, to a business like GQ? I think. Well, when I read the ad, I remember where I was. I was sitting in my office, and I read this ad, and I actually didn't even apply for it because it spoke so much to my background that I thought it was a bit of a joke. And so I emailed my resume to the recruiter, and I was like: "Hey, can we just have a chat?" And so he was so passionate about Gurner and Qualitas, and I knew a little bit. I was out of the industry, so I knew a little bit. Did a lot of Googling, and obviously, the reputations behind both of those companies are really, really powerful. I then had to Google what build to rent was, and try and make sure that I had a really strong understanding of where that was going. That was so interesting. Obviously, there's so much information in the U.S. and the U.K. about what build to rent was, and then not a lot in Australia, but obviously really a lot of interest in what it would become. So I think to summarize it, going through the recruitment process was incredibly interesting. You didn't know this, actually, but I had seven interviews to get this job, so hopefully I am the right person after all of that. But I had to do presentations on how we would lease out this building. It was very, very interesting to go through the experience, and really gave me the opportunity to make sure that this is what I wanted to do. I think even going beyond that, we've recruited since, and we've just hired our senior property manager and we're hiring our facilities manager. But the amount of people that want to be part of this is truly, truly staggering. So whether that be build to rent in general, but a lot of people that we have met with have a really deep understanding of who Qualitas and Gurner are, and they want to work with them. It's amazing. I think, just to the point about seven interviews, which I didn't know, but one of the things we did in bringing people into the operational side of the platform was actually ask them to do case studies. And so we got them to do some mystery shopping at other build to rent assets that are operationalized and to give us feedback on how they felt about customer service in those buildings. We have well-formed views about what we want to do compared to the competitive set, and I remember Ashleigh's case study on it. It was perfectly aligned with how we're thinking about customer service. I think this is the bit, though, where you get to ask me some questions. Mm-hmm. So happy for you to fire away. Yeah. So what do you think this platform looks like in a few years' time, and how many assets will we add each year? I mean, I think, I think we've talked about the platform and growth aspirations generally, and I think about size of total residential market, and then I think about penetration of build to rent in that market. And the story is not dissimilar to what we talk about in private credit. Incredibly large addressable market, very small penetration at the moment, but taking a cue from what has happened in overseas markets about growth of that.... And I think if you look today, and I'll refer to the statistics because I'll get the rounding wrong, but today build to rent is about 0.2% of all residential dwellings in Australia, whereas it's 5.4% in the United Kingdom. Now, I think the United Kingdom is really only five years ahead of us on that journey. So what you can see is there is a great runway. Go back to my investment thematics earlier, great runway on the strategy and a reason for us to be a dominant player, and that's what we're attracted to in the platform. But also go back to the fundamentals point, this interplay between the skilled migration growth coming into the country, the difficulty in getting supply introduced to the market for cost of capital reasons, construction cost reasons, makes us think that this is part of the new way in which supply will be delivered. It's not our view that the sole way that housing stock will be delivered is build to rent. I don't think that is the case, but it will be a meaningful part of new supply, and I think that's an exciting thing for us as a business. And I think, you know, to talk about how many assets we might add, I'm always one who's hesitant to give specific numbers on that. But we think about this as something where we can do between 2-4 quality transactions per year, and these are large, scalable transactions. So that's how we're thinking about the scale. You referenced before that we're obviously leveraging on all the experience and I guess the talent within Gurner and Qualitas in funds management and finance, development, marketing. We've got 5 FTEs that have been added to the platform. What does the structure, the independent structure of GQ look like in the future? Yeah, I mean, the objective is, as you know, to have a self-sufficient platform ultimately. And I said it before, I think about this akin to a startup, but with two great parents who are accelerating it forward. So we are, as we've said, and as you are, adding direct FTE into the platform. And so what it means at this point in time is we are investing in overheads, we're investing in costs in the platform as we start to operationalize and build it up. At the moment, what's happening is we have direct staffing in the platform. We have recharges occurring from Qualitas and recharges occurring from Gurner that go through the cost structure of the platform. But I don't think of it as purely just overheads. I think of it as an investment in the platform. We will continue to make those investments in the people within the platform, with the objective of making it a standalone platform for so long as we see the growth trajectory of it. And when I think about it, I don't like to put a date precisely on when we think this might be a highly profitable platform, albeit, you know, our projections, and this is not a forecast, is by FY 2025, we should be able to see a level of profitability in the platform. But if we see the opportunity set continue to evolve, then we'll invest more in it to continue to grow with the objective of at the end of that growth stage, it'll be just a much bigger platform. I think the opportunity set is huge, and so we're not afraid to invest in the platform. It's not dissimilar to the types of things we think about at Qualitas. GQ is a funds management business. We're looking for similar margins on the activities and, you know, we think it's got a similar ramp-up profile akin to the Qualitas business. It's been interesting since I've started, and because it's very much like we're a startup and doing things that really set the foundations for a business. But we've been able to move at a drastic pace because of who we have supporting us, and I've found that really, really amazing. I think that people would... Well, maybe the people in the room might assume that a AUD 5 billion target under management is pretty achievable now that we're at AUD 3.2 billion. Do you agree with that? Look, a AUD 5 billion gross asset target for this platform in the, you know, medium term, let's say, I think is certainly achievable. A view we have, and it's in the DNA of both firms, I think is, this is about finding the right assets. And it takes time, and I think we're incredibly picky. If you think about the assets that we have in the platform today and their locations, they are great urban locations in the neighborhoods we want to be in. But also, we acquired all of those assets off market, so this is through private networks and relationships, and that takes time. We're not gonna, again, acquire assets for the sake of it, and we're gonna find the right assets because ultimately, this is a business where we will own these assets for a long time. If you think about our model here, it's what I'd describe as, people call it build to rent. It is built to hold, built to core assets, and so we intend through this platform to be owners of those assets for a very, very long period of time. This is not a quick development exercise and then flip it out for a profit. We want to own these for long duration, and that means the assets have to be right. We have to have a view that neighborhood will perform over a long period of time, so we'll take our time to get that. I think AUD 5 billion is achievable. The size of market is big enough, and I think the team we're assembling is very capable of doing that. I think this is the last question, but given you established Equity Fund Two not long ago, and it hasn't been deployed, what's the rationale behind going for Equity Fund Three? Yeah. So we were, I think, blessed in the platform with the first fundraising being quite significant, which was AUD 1.2 billion on a gross asset basis, and we set about deploying that capital. It has a skew to Melbourne. We then received a re-up commitment for Fund Two. It has a AUD 2 billion gross asset target in Fund Two, and that was intended to pursue the Sydney market. We had expected a material retreat in asset values, land values, development site values in Sydney. That hasn't occurred, and so we have been patiently waiting. In the meantime, we have pipeline of transactions in Melbourne, and so we'll be looking to launch Fund Three in order to capture that Melbourne deal flow that we have under control. The way I think about it is, Fund One was a mix of Sydney and Melbourne. Fund two is specifically targeted on Sydney, and Fund Three will likely launch to capture Melbourne. Okay. I think we're flashing red. Yeah, we've got questions, Kathleen, coming through. If anyone's got a question on the floor, to raise their hand. Yep, over here. Hi, everyone. Thanks for the presentation. Sholto, I'm calling from Jefferies, by the way. It looks pretty nice, the product in Melbourne, a lot of amenity. What sort of premiums do you get underwriting for that sort of product to justify the extra amenity? Yeah. I think, I think, there's a lot of conversation about amenity and how amenity will solve everything in build to rent, and that's gonna drive premiums. I think a lot of build to sell has historically, particularly in Melbourne, had a lot of amenity, but what this is about is thinking about your point of sale. So the reason Ashleigh is incredibly important to the platform is our point of sale to the customer is when the physical property exists, and they're walking through it. That's very different to build to sell, which often, at least in history, was on a pre-selling basis. So if I had a gym and I had a this and I had a that, as long as it was in the building somewhere and you talked to it, maybe you would capture a pre-sale. Not the same when you're renting it. Ashleigh and her team need to be able to make the amenity function. So this is as much about the functionality of and the usability of the amenity. So I think that's critical. I don't think we're talking about materially bigger physical areas in the buildings compared to what's been delivered for quite a while in build to sell. It's the way in which it works. On the specific question about premiums, we do underwrite a premium to market rent. It's not significant. In my view, it's materially less than some other players are doing, but what we really focus on is the comp set and how you do it. It's not... St Kilda is an excellent example. If you understand St Kilda in Melbourne, it is heavily dominated by apartment living in that neighborhood. Majority of it is 1960s and 1970s, walk-up, 3-level apartments with zero amenity. My comp set is not at St Kilda stock. My comp set is new buildings with similar level of amenity to what we're delivering, and that's the best exercise to draw to, is other comparable buildings that might not be right next door but are nearby. And then we do apply a small premium on top of that. Now, premium, I think, comes from a few things. It's not a premium for the sake of it, it's a premium, really, you know, this is probably three or four things, but probably the two most important ones are quality of service offering, which we've talked about, but also inventory control. If you can control the inventory and the release of the inventory, we do think there's a premium that you can extract on those rents. Just finally, you're very profitable in your other funds. Is the investor type a bit different? Like, the total return looking 7.5 unlevered, 7.5-8% on a 10-year view. Is it more of that total return rental growth play with some capital value rather than initial sort of build to sell? Yeah, it's interesting because we've debated internally, where would we categorize this in the, in the way we think about that, and that's why I used the phrase before, it's build to core, right? I think that if these core assets existed, you would see significant demand from income-based investors for these assets. They don't exist, so you have to create them, and you need to have the capability from a development, design, delivery perspective, operational perspective to do it. So I think about it as build to core. That's not a new phenomenon. It happens, as you would know, in a lot of the big wholesale office funds have been doing build to core for a long time. It happens in the logistics sector. It's just the same thing here now in residential, and what it means is you do get a blended total return. There's development profit in the hold period, and then there's a great period of income collection as well. Thanks very much. Great. Are there any other questions from the floor before we go to Slido? One down here, Kate. Sorry. Thanks. Oliver, from E&P. Just on, you know, I guess the... Historically, you've had, you know, two different playing fields, and obviously, the federal government's done a lot to even out, you know, the, the part that they can, and then some of the states look like they're doing their part of the effort. The thing that was really interesting was obviously the Victorian government's drastically lowered the land tax threshold. I mean, how far away are you now, where if you're a, even an individual, you're actually not much better owning these things in your own name as opposed to, you know, in a, in a REIT, for instance? The question being about how much is the support on taxation measures? Yeah. Like, the historical big issue that has led to individuals owning all the apartment stock is the fact that, you know, they've got a land tax threshold, you know, stamp duty thresholds and stuff like that, right? Mm-hmm. It seems like with the most recent changes that at least the Victorian government's done, you know, those, that benefit is drastically reduced. Sure. Right? Sure. Because the threshold now is so low. Yeah, I think, I think my view on this is the majority of... Well, build to rent, in a sense, has already existed for a very long time. It's just its ownership form was individual mom and dads within a building of 300 apartments, and they would make them available for rent. And the way that product got delivered was through investor channel, pre-selling of apartments, and then they would get it 3-4 years later and go and rent it out in an uncoordinated fashion. Go back to my earlier presentation. That model is incredibly difficult because of the pre-sales market at the moment. There's no catalyst for the mom and dad investor to commit 3-4 years in advance to buy that rental apartment. And so what that has done from a supply perspective is, the majority of build to sell now is owner-occupier, targeted higher-end product, and there's minimal, if any, supply of investor-grade stock. And therefore, the only mechanism to do it, I think, is through build to rent. To the question of land tax concessions and so on, and the mREIT, I think it's all helpful. I think there needs to be some clarity around a number of them. There's been some great announcements, but perhaps not as much follow-up on the actual detail of some of those things that need to happen. But I think the industry is happening already. You've seen sophisticated global investors commit to multiple platforms in this space, notwithstanding those constraints. The one I worry about a little bit is the Thin Cap issue that's going about that I'm sure you've heard of, where there is perhaps not the right exemptions in what the government are proposing on Thin Cap, given the majority of capital, if not all of the capital in this space, is foreign. That would be an issue, but there is plenty of advocacy going on at the moment to try and deal in that issue. So tax will get better over time, but I don't see it stopping the sector where we sit today. Are you worried about any submarkets at all where... As obviously the pipeline is growing pretty drastically, is there any submarkets where you can see at least a short-term challenge in terms of leasing up? Because obviously, you know, these are large buildings- Sure. And they're targeting a kind of tenant that's not, you know, the whole market, right? It's a sub, subset of that too. Yeah. I think, first principles on real estate is always to look not only at supply that's coming, but future threat of supply as well. And so that's again, why we are focused on specific areas. But what I would say is, and pick Southbank as a market, so we have an asset in Southbank, in Melbourne. It is probably one of the most high-density postcodes in the country from an apartment perspective. Do we hold concern around ability to lease up a building in Southbank? The answer to that is no. The vast majority of residents who want to be there, want to be in apartments. It goes to, how good is your product? And one of the things I think can happen in those markets is the bit of hopping from building to building. When a new building comes along, a renter moves. They've signed a 12-month lease. I'll just move to the new building next door. And so our challenge, and this is part of Ashleigh as well, is tenant retention in that. Yes, we'll have the new shiny building for maybe the first one or two years. We need to make sure we have tenant retention. And one of the things I, I sort of really liked through our process of bringing Ashleigh in, is when she talked about experience at Crown Towers. Not always the best physical product, but what they did really well was service, and that drove their rates, and it drove their occupancy, and in our case, will drive tenant retention. So as long as you have a solid physical product, and you do the service part really well, then we're not concerned about that issue. Hmm. Maybe a final one from me if I- Yeah, no, go for it. I mean, in Europe and the U.S., you've seen quite a lot of, you know, the large shopping centers kind of become living centers, and they've put in rental housing, et cetera, and often they partner with a BTR, you know, specialist. I mean, is that a potential opportunity here? It sounds like you're kind of land constrained more than any other constraint at the moment in terms of getting sites. I don't think we're constrained by pipeline of opportunity. I think, you know, both the shareholders are very active in private market, so finding deal flow is not necessarily the most challenging thing. And I caveat that a little bit with Sydney, which is incredibly expensive, and I think needs an adjustment in development site values. But of course, we talk to other landowners of what we think are great parcels of land who may have a need to introduce residential to it. Our model is to be off-market partnerships, really work private networks and relationships to get deals. It's not a model of paying the highest price in an on-market process. So of course, we talk to landowners who we think have those attractive things. The consideration there always is, free land is not necessarily a good thing. So you may have an amazing shopping mall, but in the wrong neighborhood to really drive rental outcomes from a residential perspective, and even if the land is free, it's not gonna make a difference. So it needs a combination of ability to work with the existing, you know, retail use to your example, but the metrics from an income perspective have to be right as well, and that's not always the case. Thank you. Okay, thanks. We've got time for two here. The first one is, can you clarify the connection between Qual's AUD 18 billion and what you've just shown at AUD 5 billion for GQ? Yeah, I mean, and maybe there's a specific follow-up for your team, Kathleen, to give the calculation basis on it. So when we talk about this platform, we talk about gross assets inclusive of debt, and the reason for that is that the investor base in these funds like to measure their capital commitment. When we translate that back through to the Qualitas Limited, we remove the debt and focus on the equity component, and then we take our 50% share of it, given it's a jointly owned platform. So maybe the specific number, we'll follow up with, but if I recall, it sits around AUD 600 million worth of the AUD 8 billion FUM in this strategy. Great! And the other question is around financing for Build-to-Rent. So you are providing the equity into these funds. How does one who provides the debt? Is it alternative or the traditional banks? And are they sizing it on forecast market rent? And is there appetite, like, is there education that still needs to be provided? Yeah, well, it's actually an excellent question. One of the things we worked really hard on was to get the Big Four Australian banks to support the platform. So, I won't name the names, but, on the two projects that are well progressed in construction, the two financiers are two separate Big Four Australian banks. That was, I have to be honest, one of the hardest things I've done in my career, was to educate them on that. It's, it's non-recourse financing. It's project financing of a new sector with full rental patronage risk. But we got two of the banks to support the platform. That was very important to us. I think it will move beyond that, and we are starting to see some quite competitive terms from some non-bank participants. To be clear, Qualitas doesn't finance from a debt perspective, this platform, so we use third-party debt in there. I would say the debt capital is available. They are very conservative on their forecast rental underwriting, so it reduces leverage quite materially, but it's enough to get our underwriting mathematics to work. Great, and maybe a last one for you, Ashleigh. Probably a follow-on from Ollie's question around leasing and marketing. Build-to-Rent, the first asset is out in the market. How are you finding that in terms of the marketing and appetite for the leasing? We have people knocking on our door to work with us. It's actually really difficult to wade through them all. But I think at the end of the day, everybody's just waiting and watching to see what we do here. I think the marketing budget we've cut and recut and cut again several times, and we're yet to actually feel comfortable enough to get sign-off because we just wanna understand. We don't want to go through a traditional, "Let's just chuck everything online and hope that people rent it." And we certainly have taken some learnings of what other BTR operators have done, and we've got the benefit of using some of those learnings. But I think we'll benefit from the anticipation in the market for sure. And then I think we need to strike a fine balance between putting out what renters need in order to make a decision about the fact that that's where they want to live, and the fact that, you know, we are in this sort of premium element, affordable but premium. So there's gonna be lots of people that wanna live in our building, and we already have a list of people actually, that do wanna live in our building and are trying to find out more and more information. We'll hold that back until such time that we're really, really comfortable with how we want to approach it. But I anticipate it being very successful, just simply based on the response that we've had so far. The interesting thing for us is the first building happens to be incredibly prominent in Melbourne. It, it's quite a big building. It's visible from a number of main arterial roads, so there's natural interest in the building, which I think will help. So to Ashleigh's point, it's about how and when we release it. There's no point in having 400 people ready to lease now when the building's not finished until Q1 next year. So that anticipation and then ultimately a release is, is what we need to do well. Great. Thank you. We're gonna leave it there. I think Build-to-Rent is something that we're really excited about. We have now actually caught up on time, so if you could come back at four o'clock. There's coffee and tea outside, and we will go into private credit after the break. Thank you. Welcome back, everyone, to the afternoon session. As we move into the next part of today's event, you'll hear from senior members of our investment team on the private credit opportunity, and we've included a few case studies to bring what we do to life... To start us off, Mark Power, our Head of Income Credit, will present on real estate credit and the evolution of opportunities within this asset class. Mark has over 34 years of experience in property lending. He's been at Qualitas for six years, and before that, almost 16 years at one of the Big Four in their corporate and institutional property lending division. At Qualitas, he has responsibility for both the investment outcomes and the growth of our income credit, business, and investment strategies. Please welcome Mark to the stage. Thanks, Kathleen. And I'd like to say I'm delighted to be talking to you today, regarding the evolution and opportunities in private credit. And the way I like to really think about private credit these days is, it's kind of the new black, or fast becoming the new black, in terms of the investment universe out there. I thought a really good place to start. We might go to the next slide, please. A really good place to start is just the sheer size of the market and what's playing out more broadly in the CRE credit space. So you'll see there on screen that the sheer growth of private commercial real estate credit on a global scale. So if you turn the clock back about 10 years ago, globally, it was a market of around about $47 billion. Now, the growth since that period has been absolutely phenomenal. So you're basically talking about a compound rate of growth of 19% per annum, and the market as today sits at $259 billion. So you've got an enormous amount of capital flowing into this sector globally. So then you ask yourself, well, why are you getting those really strong capital flows into the sector? And it's all around the really attractive risk-adjusted return that you can actually earn in this space. And the chart there on screen, on the right-hand side, I think evidences that quite nicely, and that's showing returns over the last five years in global CRE credit. So what you will see there is that the average return in this space is around about 8% per annum or thereabouts. But by the same token, which rates really well in terms of absolute returns to other asset classes, but the volatility or the risk in that particular sector is really low. So you're talking about the third highest level of return, but the lowest level of volatility, and that's been recognized by institutional investors and resulting in some really strong capital inflows coming into the sector. And if you think about how that plays out locally, I mean, the returns that you're getting locally in private credit are actually larger than what's indicated there on screen. So you're talking high single digits, low double digits, depending upon the level of risk that you want to embed in any portfolio of loans. So why is this actually. Look, I think the question that then comes to mind is, why are you able to get those sort of returns in this space? Why are you able to cheat the risk return curve so effectively? So if we move on to the next screen, and I'll talk about how that's playing out in Australia, but it's also relevant to how that's playing out globally as well. The answer to that question that I pose is really all around regulation. Regulation is driving these outsized returns for the sort of risk that you're able to get in this sector. How that's played out here in Australia is, and it really started in earnest back post GFC. APRA, as a regulator, looked at the financial system and wanted to ensure that the financial system was sufficiently strong to better withstand any further shocks. Let's say GFC mark two or thereabouts was around the corner. They wanted to make sure that the financial system was very, very strong, and one of the ways in which they decided to approach that issue, and the lever that they pulled, was to essentially de-risk the traditional financiers' balance sheets with respect to their exposure to commercial real estate credit. And that's played out over a long period of time, and the approach was done really on a twofold basis. One, it was to ensure that the absolute dollar exposure, so the exposure that those traditional financiers had in the commercial real estate lending markets as a percentage of their gross lending assets, that that was reduced significantly. So just coming out of GFC, that number was around about 10%. So 10% of the traditional financiers' balance sheets was invested in commercial real estate loans, and in fact, some of the banks was even high. One bank in particular, their exposure at one stage was as high as 19% of their gross lending assets. Now, if you wind the clock forward to today, APRA, in conjunction with working with those traditional financiers, has now got that figure down from 19% or 10% down to 5.5% today. That's a massive shift in the position of the traditional financiers' balance sheets. But it wasn't just a matter of quantum either, it was the nature of that exposure. So APRA effectively has squeezed an enormous amount of risk out of the traditional financiers' balance sheets and their commercial real estate exposures. They've done that in a couple of ways. One, by way of directive and instructing them in terms of where they want those financiers to participate, but also in the capital provisioning models as Basel I, II, and III, which has essentially driven focus within those traditional financiers to a very low-risk exposure within commercial real estate loans. So effectively, the sandbox that the traditional financiers now participating in has been reduced significantly, and what we're looking for in the alternate space is to find those pockets of value where we can participate just outside that sandbox, but in doing so, we get exponentially greater returns for just taking on board, potentially, a little bit more risk. So you'll see there on screen, on the right-hand side, how that's actually played out in terms of market share of those traditional financiers over that period of time. So you'll see, as a percentage of the ADI, or the Approved Deposit-taking Institution market here in Australia, the market share has reduced from circa 87% back to sort of 72%-73% today, and that shows no sign of abating. On a quarter-by-quarter basis, we're continuing to see that number track down, which obviously provides really great opportunity and runway for private lenders, such as Qualitas, to point into that space. So that's how we're thinking about sort of the macro environment and the strong tailwinds that we've got coming through the sector. Then we start thinking about, okay, how do we then take full advantage of that and invest in the right parts of the market? Because often people will ask you, "Well, what are your thoughts on the property market? How is the property market performing?" But the reality is, there's a whole lot of different sectors within that market, and sub-sectors within that market as well. So, our role as manager is to ensure that we're finding the right pockets within the market, where we think that the risk position aligns with our risk appetite, but by the same token, looking for pockets of illiquidity where we can get outsized returns. So at the moment, the market is quite interesting because you do have a fair amount... There's a fair amount of divergence within the actual sectors. So you look at something like residential, which has been mentioned, so the fundamentals there, exceptionally strong, very comfortable investing in that market. Industrial, once again, very much undersupplied in terms of a market, and we're seeing very strong rental growth through the industrial markets. Now, industrial was bid down very heavily in terms of cap rate compression, prior to the elevation in interest rates, so there's some valuation issues there. But the core fundamentals of that sector are still really sound. But then you go the other end of the barbell, and you've got commercial office, and obviously, commercial office has got some real challenges at the moment, and those challenges are structural, on the back of the market as it adjusts to the whole work from home, work from office environment, and what that means, not just for the amount of office space, but for the type of office space that remains relevant moving forward. Just next slide, please. So I've spoken a lot about CRE private credit. To give you a good sense of exactly what it is, I thought I'd bounce through the core loans that we actually participate and invest in within this strategy. And there's essentially two types of loans, what I'd describe as pre-completion, and then two types of loans post-completion of an asset. So the pre-completion, firstly, is are land loans. We've got them up there as land. I prefer to describe them as pre-development land loans. So these are sites that we're providing funding to, primarily infill city sites within 10-15 kilometer radius of the major cities here on the eastern seaboard. And they're expected to be activated into a live construction project within the course of the next 6-18 months. So we don't take zoning risk on these sort of sites. The majority of these sites have either a level of planning or are advanced to some degree in terms of planning or DA applications. They're essentially pre-construction loans prior to that site moving through to its next phase. And ideally for us, if we were to fund a pre-development land loan, we'd then look to fund the construction loan within our construction debt fund series, or alternately, that loan may be refinanced to another provider. The sort of returns you can get in this space, and this is why I say we're cheating the risk-return curve. So the sort of returns on a growth basis, anywhere from 625 basis points to 750 basis points over the 90-day swap rate. So you're talking IRRs of 11%-12% on loans to really experienced well-credentialed, liquid developers on sites, which if we were forced to put them to market, would be met with really strong demand. Then if we go over to construction loans, which is another core part of what we do here at Qualitas, and those loans can be either first-ranking positions or alternately mezzanine or second-ranking positions behind traditional financiers. And often people think about construction lending as the riskier part of the curve on private credit, and it's fair to say there are inherent risks associated with construction. But by the same token, those loans that we do provide into this space are heavily structured to take into account the inherent risk in any particular loan. So for us, provided we're extending finance to really strong liquid sponsors on good quality projects with a very strong builder behind that that are heavily either pre-committed or pre-sold, and then the structure we wrap around that loan actually provides really good protection. So they're actually really hard structures to break, because if you think about it, the way the whole capital stack works, you're investing into the debt stack here. So to have any sort of impairment in the debt stack, you need to firstly basically write off the projected profit in the development, which could be 15%-20% of total development costs. You've got to write off the entire amount of the equity contribution into that project, which could be another 15%-20%. If it's a builder issue which has led to a default on the loan, there's performance bonding under the building contracts, which is generally another 5%-10%. There's feasibilities built within the actual construction loans at another 5% +. So all those layers of protection have got to be completely wiped before you actually incur any capital loss on construction. And for that reason, there's very strong institutional capital demand for this type of loan. The sort of returns that you can actually get in that space, senior IRRs on a growth basis from 12%-15% and mezzanine from 14%-17%. We'll then move through to the other two core types of loans, and these are on completed buildings, essentially. So the first is what we describe as traditional senior investment loans. So these are against income-producing real estate across all sectors, or it could be a bit of an asset repositioning play, where it will become an income-producing property in the very near term. Once again, they're more down the very defensive end of the curve as far as private CREs, private CRE credit is concerned, but the sort of returns you can still get in this space are really attractive. So you're looking at 450-650 basis points over 90-day BBSY. So once again, providing a strong IRR relative to the amount of risk that you're actually participating in, because you are participating here in the debt part of the capital stack, not the equity part. And then the final loan type that I'll mention, residual stock loans. So residual stock loans are essentially loans against a line of recently completed but unsold apartments in order to generate some further liquidity for the borrower group. We really like this type of lending because you're essentially lending against brand-new, completed residential stock in a deeply undersupplied market, and you're providing funding against a product which is essentially at a value which is, in these days, sort of well below replacement cost. So I thought it might be also worthwhile to talk about how we at Qualitas actually interface with the private CRE market and what our exposure and strategy in this space actually looks like. So you'll see there in terms of the real estate cycle exposure and how we're positioned. So it's essentially 53% or thereabouts, in construction-type facilities, and then the other 47% is traditionally what we'd call more income credit. So that's your pre-development land loans, your residual stock loans, investment loans. Importantly, the underlying loan maturity across our book is kept quite short. So a little under 60% of the loan exposure book is within no greater than 2 years, and then the rest of it is sort of up to around about 3 years, and those loans in that 2-3-year bracket are generally our larger construction facilities, which have got a defined source of clearance from exit. The benefit of actually keeping that loan maturity profile quite short is it gives you the ability to retrade, refinance, restructure, recalibrate the loan to market at any point in time as the market tends to shift on you. So you're not locked into yesterday's deal in the same way that you might be if you were investing in a loan that ran for three, five, or seven years. Geographically, we point really heavily into New South Wales and Victoria. So roughly about three-quarters of our exposure is in those two states. And when I say New South Wales and Victoria, it's primarily Melbourne and Sydney. We really like those markets. They're the deepest, most liquid markets in real estate in this country. They get strong support from an institutional investor perspective, but we also like them because it gives us the ability, if we wish to refinance out of a loan or if we need to, to restructure or do something with the loan, playing in those particular markets gives you a lot more optionality as far as that's concerned. And then in terms of the sectors that we participate in, this is a really important point and a key differentiator for Qualitas. I know Andrew and Mark have referenced it during their presentations as well, is our very heavy weighting in residential. So you'll see there on screen, 74% in residential, in terms of private credit. Then if you include some exposure we've got in build-to-rent as well, you're up at 77% of our overall FUM is invested in that residential market. Obviously, we've got really strong conviction in residential. To Andrew's point earlier, he was saying he hasn't seen a market which is more so a sub-market, which is more favorable in 40 years. He stole some of my thunder because I was going to say the same thing, but I was only going to quote 34 years rather than 40, Andrew. But it's just so true. You're sitting there with a vacancy rate of circa 1%. A market in equilibrium is 3%, so today we're chronically undersupplied. We've got walls of population growth coming through this country. Then overseas migration in the last 12 months to March this year was over 450,000 alone. The forecasts for population growth are OECD leading over the next 10 years, forecast population growth of over 13%. So all that population growth has to be accommodated. And then when we look at the supply outlook over the next 2-3 years, our supply's delivery is actually at decade lows. So from a societal point of view, that's a disaster. But from a, in terms of a market and investment thesis, to point into that market and to get the sort of returns that we're able to get in that market, simply because of the fact that the traditional financing sandbox is narrowed to such a degree, presents a really attractive investment option. We can go to the next slide. I'll talk very briefly about loan valuation and impairment, and how we think about risk at Qualitas. It's part of... It's a core foundation of what we do. It's part of our DNA. At the time of loan underwrite, we're unapologetically intrusive in terms of the way in which we require information from our borrowers. I think about the process we go through here at Qualitas. Prior, I've been at Qualitas now for over six years, but prior to that, spent 28 years in the major banks here, in their corporate institutional property teams. The amount of due diligence we do at underwrite on these loans would be two- to three-fold what the major banks would be doing. And then from a loan management point of view, once again, we're much, much more intensive than a traditional financier. A traditional financier will have potentially an annual review on the loan. They'll set up some loan covenants that are monitored every quarter, half year, annually. We review every single one of our loans monthly. A formal updated report is done. We've got a traffic light system of green, amber, red, depending upon, you know, the position of the loan at any point in time. And if we see the risk profile deteriorating, we do our absolute utmost to get ahead of the curve and to ensure that we put risk mitigation strategies in place before it becomes a problem. So to give you an example of how that's played out over a long period of time at Qualitas, we've invested in 222 credit investments since inception, and we haven't had a single impairment in terms of from an interest collection perspective, nor from a capital perspective. We'll move through the next slide. I'd also like to comment on our Qualitas Real Estate Income Fund. I know it's been mentioned earlier in presentations that the majority of our capital comes in from, from large institutional investors, generally in long-dated, closed-end funds. This fund is a little bit unique in, in the sense that it's, it's an ASX-listed fund that IPO'd back in 2018. It's the only mREIT or mortgage REIT, listed, on the Australian Stock Exchange, which is included in the ASX 300 and ASX 300 A-REIT indices. So it's quite unique, and, and the reason we actually developed this as a fund in the first place was to give, give investors outside the large institutional, universe, the opportunity to invest and enjoy the sort of returns that you're able to get in private credit. So the key pillars of the fund are around providing a monthly distribution to investors, and to give you an idea on how that's performing, if you annualize the last month's distribution, that's running about 9.02%, with distributions paid monthly. And the other key for us is this is a defensive fund. It's its key focus on capital protection and ensuring the NAV of the fund remains at or above the level it was when it IPO'd, which was AUD 1.60, which it's remained at or above that level all the way through. And pleasingly, it's now trading at pretty much its NAV level as well on the ASX. Just a couple of other data points for you to get your mind around that as a fund. It's got a very short average weighted loan maturity profile, just under one year, and that's... We do that intentionally because to my earlier point, a short loan maturity profile enables you to re-trade on the portfolio, enables you to restructure, reprice, reconfigure, do all the things that you want to do in real time, rather than being locked into long-dated contracts. The average weighted loan-to-value ratio across the portfolio runs at about 66%. So you've always got that capital buffer protection of circa 34% ahead of you. Once again, underlining the importance of investing in the debt stack. So the key takeaways from the presentation today, and I know there's been a lot of information that's been extended to the audience, but for me, it's really around private credit is really outperforming in a risk-return sense other asset classes. It's around the size of the addressable market. We've only really from my end really only scratched the surface here in Australia in terms of the private loan market. We think it's got a tremendous runway ahead of us. I think it's very important that if you are investing into this sector, that you're investing with a manager that's got deep experience and a really strong skill set to navigate what needs to be navigated in what's a fairly dynamic market. And also, pleased to be part of QRI, and we see that as a fund, as a bit of a pioneer in a sense, because it's giving access to pure private credit to the public market, which previously hasn't been available. So with that, I'll draw it to a close and we'll perhaps open up the questions. Kathleen? If anyone has a question, please put up your hand. We've probably got time for one. Yep, Howard. Howard Penny, Citibank. I just wanted to ask a question about investor appetite that you're seeing and maybe the change over the last year or two to now in the interest in this asset class. And from a capital perspective, you're saying, Howard? Yeah, from an investor perspective. Yeah. So we're seeing really strong appetite in the sector with very strong capital flows coming through. And Howard, that really goes back to my earlier point that the institutions can see the sort of risk-return equation playing out in this space, and particularly in this environment where, like, equity in real estate is hard at the moment. It's really, really tough. I mean, Mark, you made the point earlier about how you value assets, what the true valuation is, where that's going to land. There's particularly in office and certain other asset classes, pretty tough in the equity space. So where the majority of our capital flow is coming through is into that private credit space, because if you can get-... High single digits, low double digit returns, and be in the debt part of that capital stack with all the protections that provides, it's, it's kind of a good place to be. Great. Thank you. We're going to wrap it up there. Please join me in thanking Mark. Our next presenter is Sam Khalid, who's gonna talk through our first case study. Sam is our Head of Execution of Credit Investments, and has been with Qualitas for 6 years, but has over 12 years in banking and finance, and like Mark, was previously in the institutional property lending division in one of the big banks. She's responsible for structuring, due diligence, execution of transactions, including ongoing management of existing clients. Thanks, Kathleen, for the introduction. So as Kathleen mentioned, our team covers both credit execution for both the income credit, which is Mark Power's world, as well as Total Return Cred it, which is GIC's world. And I can confirm we do all the due diligence, which is as extensive as Mark said. We do the underwrite, we do the credit papers, we do the execution, and we do the ongoing asset management for all our investments. The case study I'm gonna take you through today is a residual stock loan that we funded earlier this year. Residual stock loans are secured by completed units in a project. Usually, proceeds are applied to repay any remaining construction debt, and we often also allow an equity repatriation back to the sponsor. So that effectively allows the sponsor to take the profits out of the project and reinvest them into their next project, without having to wait for all the apartments to sell and settle to get the, the profits out. Traditional financiers don't typically fund residual stock facilities because there's no income generated by these assets, but we've actually found they perform really well, and what we like about this type of facility is that leverage progressively reduces over time as units sell and settle throughout the term of the facility. We've actually recently done some analysis on our residual stock portfolio, and we've found that the majority of our loans, the sales rate, has actually been either in line with or higher than we'd forecast at the time of the original underwrite. So we're comfortable that the portfolio is performing quite strongly. So this particular investment, it was located in inner-city Melbourne. We liked the location. It was close to transport and amenity, and it was quite a large project. It was about 450 apartments. So by the time we funded, close to 250 of those units had actually already sold and settled. So that gave us a lot of comfort around the market acceptance of the product and that there was a good level of demand there. So the security pool for this project was about 200 apartments. There was also a retail component on the ground floor, so we also had security over a Coles supermarket. And we were comfortable with that, given obviously the nature of the tenant. The product proposition, it was a mid-market product, so we liked that it appealed to both investors and owner-occupiers. So the smaller units, probably the one-bedroom, were more targeted at investors, and there were some foreign investors. And the larger units were probably more owner-occupier focused. The facility was quite a large facility. It was about AUD 150 million. And what we find is that there's probably a lot more competition in the smaller ticket size for this type of facility. So there's a number of lenders that will do a AUD 10 million-AUD 20 million residual stock facility. So the ability for Qualitas to do these larger residual stock facilities is really one of our competitive advantages in terms of having that institutional capital available to fund something of this size. The pricing there is typical of what we charge for a residual stock loan, so we've got an upfront fee and a margin over BBSY. So why Qualitas? Firstly, this is a good example of the strong relationships that we've got in the market. So the originator of this facility had known the sponsor for many, many years, and the sponsor was also well known to Qualitas senior leadership. We were actually originally presented the opportunity to participate in this project as an equity capital partner, and then although that didn't proceed, we were then presented with the opportunity to participate in the residual stock funding. The other reason we were successful in investing in this transaction was our ability to really structure up a solution that worked for the client. So we structured this to have a slightly higher starting leverage than we'd probably typically do for this type of facility. So that was a 75% LVR, and the main reason we were comfortable with that was that there were a number of units that were already pre-sold at the time of funding, which would then settle shortly after financial close. So that gave us comfort that there would be a level of amortization, and there was certainty around the timing of that being locked in, given there were contracted sales. I'll talk a little bit more about the leverage risk on the next slide as well. The other reason we were able to structure up a good solution was that we actually agreed to fund this before the project was finished. So the project was completed in a couple of different separable portions, and although the majority of the project was complete, there was roughly a few million AUD left in cost to complete. So I think a lot of financiers out there doing residual stock facilities would have said a CP would be that the project would have to have reached practical completion before they funded. But because of our expertise in terms of construction funding as well, we were able to offer a solution where we could fund before that last separable portion was completed. So the way we got our head around the construction risk was we got our Head of Development and Asset Services to undertake due diligence with a focus on structural integrity. So that included physically going out, inspecting the site, speaking to the builder, speaking to the quantity surveyor, making sure we had copies of all the required paperwork in terms of the structural certifications. And then we funded the remaining cost to complete. We structured it similar to how we would a typical construction facility, even though it was only a few million AUD in cost to complete. So we basically drew the funds day one, we put it in a cost to complete account, and then we funded invoices every month, subject to QS certification on a cost to complete basis. In terms of the leverage risk, as I mentioned, 45 units had already pre-sold at the time that we settled this facility, so that gave us comfort that, that those were locked in and there was amortization that would bring the facility down to a more normalized leverage. We included step downs in terms of the LVR to make sure we, we were going to achieve that step down. At six months, we required the LVR to step down from 75% down to 70%, and we had a pricing penalty if that step down was not achieved. We also then had a covenant step down, down to 65% after 12 months, and that's really the level that we see that there's a really good level of funding from other alternate financiers, and we were really confident that it would be refinanced at that 65% LVR. The other reason we were comfortable, aside from the pre-sales, was obviously the actual product itself. So we always make sure we do detailed due diligence on the product. So we actually go visit the site. We look at all the floor plans. We make sure we go to the actual apartments that we're funding, not just go to the nicest apartments that the developer wants to show us. Make sure there's no inferior aspects, and make sure that we're happy with the product that's there. Interest servicing risk is one that we're very focused on across, obviously, the whole portfolio, and we always make sure that we're looking at the sponsor and the broader sponsor group, not just the specific asset that we're lending to. So we typically ask for a sponsor group cash flow that shows the forecast inflows and outflows across the whole group for the term of our facility. What we do is we do a real deep dive into that and stress test it to try to see what would have to go wrong in order for the sponsor to run into issues. So some things we might do for that is we typically verify the opening cash balance in that cash flow, go to the level of detail to ask for bank statements to prove that that's how much cash they have in the bank at the time that we fund. We then look at the key inflows. For a developer, it would be things like settlements, and try and sensitize those to see what happens if the project completion gets delayed. What happens if some of those settlements default? What impact would that have on their cash flow? We then look at interest costs. So obviously, we've seen interest rates rise significantly over recent times. So we'd sensitize that to say: What happens if interest rates continue to rise again? Do they have the ability to continue to service? And also construction cost escalation has been spoken about as well. We'd look at that for projects where construction contracts are not fixed in at that point in time. So this particular facility, we obviously looked at the sponsor group cash flow. The initial drawdown also provided a level of equity repatriation, so we knew that there was liquidity going back to the group from the facility. And the other things we did was we also structured it to include a three-month interest servicing account and a three-month interest reserve account. So the reserve account is funds that sit there basically at all times. So if you get to maturity, then we've still always got three months in that account, and the servicing account is three months to cover that first few months of servicing, particularly while the final works were still underway. The other thing we do in terms of looking at potential exits is we look at the potential to rent out these units. So what's the market rent for this type of unit? If we had to go down the route of renting these out to provide some holding income before we could deal with the asset, and what level of servicing would that cover? And typically, we'll find for these types of, you know, units, that it might cover the majority of servicing costs, while you might have to deal with the asset. In terms of refinance risk, it really comes down to obviously the sponsor cash flow assessment that we spoke about and then the forecast leverage at the end of the facility, getting down to that level where we're comfortable that we could be refinanced. So how's the deal tracking today? Today, over 60 apartments have settled since we first closed this deal, so that was about 6 months ago. And the LVR has reduced down to about 69%, so that first 70% covenant step down has been met. The actual sales prices have continued to be above those in the valuation. So over the last few months, it's probably been about 5% above valuation, and as part of our asset management, we track every settlement. So we'll get notification of a settlement coming up. We'll actually go check the sale price against our valuation and make sure they're not discounting them significantly to sell them. The Coles supermarket has also been sold, so that'll settle by the end of the year, and again, that will amortize the facility and reduce the leverage. Overall, the average sales rate is above the rate that we forecast at the time of underwrite. So it's about 7.5 a month versus our original forecast of 6.5. Overall, we're really comfortable with how this loan is tracking. It's been a really good investment for us, and we're comfortable overall with the way the residual stock portfolio is performing. So I might finish up there and pass over to questions. Great. Thanks, Sam. I actually have no questions on Slido. If we have any from the floor, please put up your hand. No? I think you've... Thanks, Sam. Right. Before our next session- Thank you. For our next session, we'd like to showcase a current project. Aura by Aqualand is located in North Sydney, and we provided a funding package of approximately AUD 600 million, which we understand is one of the largest construction financings done by an alternate in Australia. Landmark projects like Aura that contribute to urban regeneration and developed with a commitment to sustainability are imperative in the major Australian gateway cities that, as you heard Andrew, Mark, and Mark mention earlier, are experiencing historically low vacancy rates, and we've got heavily constrained supply of new residential product. So let's take a look at Aura. Right. The next case study is going to be presented by Gil Norwood. Gil is our Head of Total Return Credit, with over 20 years experience in the property sector, six and a half years at Qualitas, and like Mark and Sammy, hearing a theme here, 17 years within the institutional property lending team at the Big Four banks. He's responsible for the origination and management of our construction debt investments, focused on maintaining key relationships within the sector and formulating our leading solutions for our borrowers. Over to you. Thanks, Kathleen. They've told me that they've saved the best till last, and it looks like there's quite a few people here. So, thank you for attending and staying around. I'm fortunate that I've had some pretty high caliber people up on the stage today, and they've covered off a fair bit of our thematic and our strategy. So thank you, Andrew, Mark, Mark, and Samantha. My primary role is Head of the Total Return Credit, which means overseeing most of the construction debt within our business. What does that mean? Well, basically, I'm interacting daily with fund investors to assist them with their current trends within the market, nurture long-term relationships with borrowers, and support our originators across the country as they seek out the opportunities we've spoken about today. Of course, first and foremost also is to contribute to the overall objectives set for our Qualitas investors. As a broad overall comment, since our last sitting at the investor conference in Melbourne, I'm pleased to say that construction portfolio remains in good shape, and that's despite all the challenging times for investors, borrowers, and builders as we emerge out of the COVID-19 pandemic. The case study today I'm sharing with you is a clear example of the disciplined approach to credit investments, the established steps we apply to protect against the downside, and our depth of experience to grasp the opportunities and offer effective funding solutions. What we liked about this opportunity was that the scale was both consistent with our overall strategy. It was a shovel-ready project with no planning impediments. The sub-market, which was evidenced by the success of the pre-sales, was strong, and the location had a constrained supply, given the lack of sites permitted and the maturity of the suburb. The leverage included good levels of embedded equity and profit, the track record and capability of the borrower, and finally, our view was that the risk-adjusted returns for a moderate structural concession compared to traditional lenders was strong. If you take into consideration the line fees and margins and fees, on the screen today, typically, we'd probably see 100-120 basis points premium to the traditional lenders, both on line fee and margin, and up to 75 basis points premium compared to the arranger fees. So you can see that it's quite a lucrative business. The opportunity in front of us today was to partner with an experienced integrated developer and builder. What I mean by that is the borrower was very well experienced in the property area, very experienced in the Melbourne market, also had integrated businesses within their in terms of coordination of sales, and most importantly, with this particular asset class being a townhouse project, where there's not so many scale of third-party builders to engage, they had their own building capability. It was a 16-stage residential, medium-density townhouse project. As I said earlier, it was zoned, and there was no planning impediments. We're seeing that that continues to be one of the barriers to entry in all markets. The funding structure was done on a peak date, peak debt basis, excuse me, which means, basically, the rollout and sequencing of the stages on this particular project were undertaken in four lots. So there was four, four stages. And what we have to do, in terms of cash flowing this particular project, in determining the senior debt limit, was to understand the nexus between the commencement of that project and the drawdown of the facility and the repayment, and in conjunction, in coordinating the next stages that are flowing on from there, that are drawing up the facility as well. So we've got to find the equilibrium nexus there, that establishes our facility limit, and create buffers on top of that to mitigate against sequencing delays or acceleration of drawdowns. This particular project had a funding of civil infrastructure and construction of the dwellings in a separate contract, which is different to some of the vertical structures you'll see, particularly in, with Aura, that you just, just noted before on the screen, where infrastructure needs to be installed first, followed by, the housing installation. What we did also like were the fundamentals of the area. Port Melbourne's an inner, southern suburb, affluent, massive barrier to entry. It's very well developed. Putting together a size of site like this is vastly difficult, and therefore, the dwelling, values are very well established. The three-bed sort of detached housing averages at just under AUD 1.8 million. The value that you can actually for the purchasers coming into this particular project at AUD 1.25 million, demonstrates a lower cost of buying to the, to the area, but also potential upside in the long term. The structure of pricing with construction is determined in a very traditional manner, with both traditional lenders and non-bank. Line fees are basically charged on the entire facility limit, so in this case, the AUD 94 million dollar limit, and the drawn funds is, is charged on the interest rate, which is a margin above BBSY. The benefit of construction is that it's generally only drawn on average, over the life cycle of the project, about 50%-60% of the total limit. So that line fee is really important when generating the IRR, as you see in the top corner. Can I have the next slide, please? So why did the borrower choose an alternative financier? Well, if I sort of step back for a moment, looking back five years, it was probably a choice between traditional lenders and non-banks. I think both markets have matured to a point where the deal kind of chooses itself, and chooses the market at which it will be probably funded out of. And in this case, it was a non-bank, a project. And the reasons behind that is that the borrower needed responsiveness. And what we're seeing more and more in the market, as Mark Fischer alluded to earlier, is that the life cycle of a project is long. So a purchaser or a developer is buying a site five years ago, they're going through their feasibilities, they're going through pre-sales, building contract prices, et cetera. It's a long time, and so time is money, and what they don't want to be doing is fussing around for 6 months, 12 months, trying to find their finance. So responsiveness, certainty is really important. In this case, seeking leverage, and as I said earlier, they invest significant amount of capital, time, and effort into their projects, and in this case, with a high amount of pre-sales, the costs were lock in, locked in, it was a shovel-ready project. Their use and efficiency of capital is really important. So being able to find a leveraged position and a provider was really important. I've mentioned the peak debt structure, and that was an important aspect in terms of their consideration. The borrower's broad understanding of the market, so they've got relationships across both the banks as well as the non-banks markets, and therefore, they're attuned to what is a non-bank style project, and also where terms and conditions sit. Probably a major input to this particular project was the related party builder involvement. We saw it as actually a positive. As I said earlier, three-story, walk-up, detached or semi-detached townhouse projects really falls in between a gap in the market in terms of construction, builder, and delivery. It doesn't fall in a detached housing volume builder market, and it doesn't sit within a vertical builder commercial market, and so there's very limited alternative builders in the market, some of which that do participate are strong, but in this case, having the internal capability was critical to delivery of quality, their vision, their design, and their ability to move with variations, et cetera, to purchasers' likes and wants. And our ability to understand the high profitability versus low cash equity. So we talked earlier about the buffers within senior lending, and in this case, the absolute level was the same, and the buffer is exactly the same, but the makeup of that particular buffer was probably more skewed towards profitability as opposed to cash equity. That was due mainly because, the developer bought very well into the site and added significant value through the planning and pre-sale process. Why did the borrower choose Qualitas? Well, we did go through an extensive tender process probably 9 months before being involved in this project, and at that particular point, an alternative second tier senior lender actually won the tender. Part of our discipline and our approach, and knowing the market, and appropriately structuring these facilities was our ability to actually walk away. We said, "We're not prepared to fund at those returns or at that structure." The other alternative lender was predominantly backed by retail investor funds. It had a very narrow and tight facility, but it was cheaper. As it happened, that lender was unable to deliver on that alternative, and the borrower reapproached Qualitas on the basis of our previous structure. Happily to say, we did secure a little bit more of a additional margin, and change to the terms and conditions. But what drove them to come back to Qualitas was probably a bad experience in terms of the investor profile, our certainty of discretionary capital, and I emphasize discretionary, and I emphasize institutional capital, and that gave them a lot of comfort that the money's gonna be there every month. Every month, there's drawdowns in construction and certification of costs, and that was a really important point. We had a strong relationship with the borrower, both pre-Qualitas and during Qualitas, and our ability to have delivered on time-critical solutions was a further enhancement. But more importantly, and probably whilst it's the last point, it's probably one of the most important, in going through some of these difficult times, it's knowing their business and understanding their strategy. And so we do a deep dive into those, those areas, and by understanding that, I believe we're able to move quickly and understand the opportunity. Samantha stepped through some of the key construction or risk items and risk mitigation strategies with the residual stock. Not too indifferent with a construction facility. We identified three critical aspects to this particular project, one being the construction and delivery risk, probably one of the most important critical risks within our business. What we generally look for is sponsor guarantees and support, not only for the project, but in this case, where the builder was co-owned by the same entity as the sponsor and the borrower, by supporting the building entity as well, and that's a critical aspect in the sense of the next point around liquidity, payment of subcontractors, and their capacity to deliver on what they promise. We go through an extensive builder replacement scenario and builder default insolvency. As I said, because of the narrowness of alternative builders in the third-party market, it was a really critical step for us to get comfortable. We engage our asset management service team to assist us in that due diligence in conjunction with Samantha's team as well. In this particular instance, we generally have a contingency for the project, which is kind of 5%, typically by market, of the construction contract price. Given we had exposure to the builder and ultimately their ability to deliver and the cost and the exposure to subcontractors, we took the view, not necessarily on advice of external consultants, but our own evaluation of the situation, to include a further trade escalation allowance. We felt that was critical, just given the tightness of the market around labor and materials, that as they go through the trade letting, which is fixing the price below the line, so where the builder is building, to offset that risk. In terms of sponsor risk, similar to what Samantha mentioned earlier, we're monitoring closely liquidity and contagion risk. So what does that mean? What cash do they have at bank? What inflows are predicted? How comfortable are we that they're gonna happen? What if they don't? And more importantly, any contingent liability, so options or future obligations that they have committed to in their cash flow. So we need to know and have that level of transparency. Fortunately, we had a very well-capitalized, strong asset position with with sponsors in a business that had operated for in excess of 10 years and retained significant capital in the balance sheet. And finally, the exit risk. High proportion of these sales were secured during 2019/20. I think, for those who are from Melbourne, we were pretty much locked down during that period. They were. I think it reflects the, the dynamic, as I said earlier, of the supply and demand in that area, that they were sold, you know, effectively, 106 were sold off the plan. The balance were to be kept by the, the sponsor, and, so that was a pretty successful outcome. But by virtue of the COVID impact, there was a delay in the site commencement and, and obviously, the issues with, with financier, early days. So that required the purchasers to be reapproached to confirm their commitment under the, under the, under the contract, which was our, our, requirement. Fortunately, what we took from that was a high level of that conversion, being 95% +, gave us the comfort that those purchasers were very much looking forward to settling. So how's the deal tracking? Well, at the moment, we've got pre-sale debt covering well in excess of our facility limit. As I said earlier, they are retaining 12 townhouses, which I think is an endorsement of the developer long term in terms of the value accretion. And as we said, I think Mark touched on, in terms of the pre-sale strategy, in the live current market, those 6 are gonna be retained and sold to purchasers who can touch and feel and walk the actual assets at the end. I'm delighted to say it's on time, and we expect the completion to be in April 2025. Thank you very much for your time. Thanks. Thanks, Gil. Do we have any questions from the floor? Otherwise, there are a couple of you can't go yet. A couple of questions that have come in online. No? Okay, so there's, there's an interesting one here that's come through around: Is there a link between construction facilities and residual stock loans that we just heard from Sam? So if there's a market for residual stock loans, does that change your on, your thinking around underwriting on the pre-sales during your construction? I think it's certainly a consideration. I think it comes back to the earlier point that the thematic and the strategy and the inputs prior to our sort of project commitment, that is around the demand, supply of product and sites, as well as vacancy rates. So it all points towards projects being pre-sold or sold through construction or shortly thereafter. As it relates to residual stock loans, yes, we do take a lot more comfort these days. The market has matured significantly in the non-bank market. The terms, conditions related to that are quite favorable in terms of our exits, and we have seen on a couple of occasions incoming borrowers, or, sorry, lenders, taking out residual stock loans to repay our facilities. But in the main, we tend to want to secure those. Great. I've also got another one quite topical around delay. How do you think about delay risk, given supply chains and DA risk on your underwriting and on your existing portfolio? It was probably a genuine problem sort of three years ago. I think what we're seeing now with builders engaging with developers, that they're embedding significantly more surplus sort of time in their programs, and so we're not seeing probably the new projects having significant delay. Part of that is, building's obviously a sequence, and you can't sort of go beyond the certain steps significantly, and you've got to maintain that sequence. So builders are mitigating that by procuring their joinery or facades particularly, are the two major components earlier in the sequence and program, and storing them off site and that way it gives them certainty. So program slippage probably less of a problem because you can predict some of the delays a little bit easily now. Great. And the last one is, we hear about, ticket size and how important that is for Qualitas. Is there a maximum limit that the banks will go to on construction financing? Look, we as a rule of thumb, I generally would say banks tend to thin out at about AUD 100 million hold on a single asset and probably a relationship level as well. So there's two dynamics there, the specific deal we're looking at, but also their aggregated relationship across the bank. And generally speaking, the way they try to get around that is syndicating with other banks, and there's a material execution risk that we see for borrowers with that, and I think that's part of the value proposition and why we can probably charge more than a typical bank. Great. Well, on that note, I think thanks, Gil, and please join me in thanking him for a great case study. Okay, well, that brings us to the end of our session. We hope that you've come away with a better understanding of what we do and how we're going to capitalize on the opportunity ahead of us. On behalf of the executive team and we're all here today, I'd like to thank everyone once again for joining us during a really extremely busy time, not only in markets, but also what's happening offshore, and really appreciate you coming to hear our story. I'd also like to thank the entire Qualitas team for their hard work in making today possible. If you have a bit more time, and we're only five minutes over, which is actually on the upside, I'd like to invite you to join us in the foyer for some drinks, and we're happy to answer any further questions you may have. Otherwise, we wish you a safe journey home, and we look forward to seeing you again next time. Good afternoon.