Q4 2026 GDI Property Group Ltd Earnings Call
Speaker #3: Thank you for standing by, and welcome to the GDI annual results teleconference. All participants are on listen-only mode. There will be a presentation followed by a question-and-answer session.
Speaker #3: If you would like to ask a question, you'll need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Stephen Burns.
Speaker #3: Managing Director and CEO, please go ahead.
Speaker #4: Good afternoon, everybody, and thanks for joining the GDI call. I'm joined by David Williams, our CFO, and I'd like to start on page 3 of the presentation for you to follow along.
Speaker #4: It's been a good year. We continue to drive the FFO growth, most notably 25% overall in terms of the total FFO to $44.5 million. There was strong growth in the property FFO of 14.8%, and co-living, the business that we seeded along with our partner, has provided strong growth this year, which was facilitated by the addition of Morumba—about a 46% increase on last year.
Speaker #4: I think, importantly, we've delivered strong results over a three-year period by really paying attention to executing on our strategy, and it's very important to us.
Speaker #4: So, what we say we're going to do, we want to deliver on. The NTA has had a marginal increase per security; not many assets were revalued in the period.
Speaker #4: We've had strong leasing results, with over 20,000 square meters of leasing achieved, which puts together three very solid years of leasing. Noting that, post-balance date, WS1 and WS2 moved to 100% leased.
Speaker #4: We closed over $150 million of asset sales at good prices. I'd note, in the funds business, that we're focused on continuing non-core asset sales.
Speaker #4: And just a reminder, that's at least $330 million since December '24 that we've been able to get away at good prices. The co-living business is contributing meaningful profits now, and still meeting our in excess of 20% return hurdle.
Speaker #4: Noting the big increase over last year, the business is now a really stable platform upon which we expect to eke out further growth at the operating level.
Speaker #4: Gearing at 33%, with a $21 million reduction in drawn debt. Post-balance date, the car yard sales are completed, and we're sitting there with about $90 million of liquidity.
Speaker #4: And today, we have announced a 5% buyback. Turning to the next page, and speaking of strategy, the important thing has been to lease up the core properties, which is where the bulk of the value sits.
Speaker #4: Both WS1 and WS2 are now 100% leased, including a recent heads of agreement for Level 10 on WS2. This reflects both an improving Perth office market and our expert leasing team, as well as our targeted spec fit-out strategy, which has been a feature of previous discussions that we've had with the market.
Speaker #4: There's no doubt that the Perth office market is improving, and GDI has outperformed the market in terms of overall leasing. The strength is going to continue, and it's going to be driven by supply shortages on the office side, expanding tenants, and demand.
Speaker #4: We'll get to that later on, but also the improving rent dynamic. I mean, all of it is underpinned by a strong WA economy as well, which gives us further benefit.
Speaker #4: WS2 was a new build without a tenant pre-commit. The FY26 FFO increased by some 42% as the property stabilized to $6.1 million. WS1 involved basically the letting of most of the building a few years back, and over the past four years, with government leasing half of the building and the balance multi-let to corporates, it has a six-year WALE.
Speaker #4: And in the FY26 year, FFO increased by 9.7% to $29.3 million. If we look at the repositioning of the core properties, which specifically relates to the three on the Millgreen site, it's been a very busy period at Millgreen.
Speaker #4: Completing over 31 leasing transactions, and again, utilizing our spec fit-out strategy. At 197 St George's Terrace, we lifted the occupancy from 87% to 92% over the year, and we only have one full floor of office remaining.
Speaker #4: Plus a few suites. The vacancy sits mainly within retail. The FFO increased for the building from 29% to $16 million. At $5 million, we dealt with just under 3,000 square meters of NLA, lifting the occupancy from 86% to 93%.
Speaker #4: And as mentioned in previous reports, we're working on a master plan DA for the entire site, which encompasses three buildings. The initial stage is to focus on 197 St George's Terrace ground level amenity.
Speaker #4: Longer term, the site will benefit from the improving dynamics for a mixed-use approach, with flexibility between uses. Turning the page to some of the other assets—the car parks—they have been steadily generating around $4.5 million of FFO for the year. Notwithstanding petrol prices, people like driving to work in Perth.
Speaker #4: So it's been robust. We like the car parks because cash equals profit, and because they represent income-paying development sites that we can build on top of—which is similar to the approach we took with WS2.
Speaker #4: The only differential would be that it's most likely to be for living use. We're very focused on optimizing the car park uses for prospective development or sale.
Speaker #4: But also for partnering with an appropriate operator. Murray Street has benefited effectively from increased designer retail in the area, together with dining and entertainment.
Speaker #4: Wellington Street is likely to benefit from the Perth hospital expansion, which we've estimated adds an additional 920 trips per day, and also the student accommodation in the precinct.
Speaker #4: If we turn the page again and just look at the co-living JV, it's been a very strong year, with FFO up 44% to $9.5 million.
Speaker #4: The Moorham Bar acquisition in Queensland for $18.3 million, with approximately 196 rooms, has been bedded down, and there's more growth to accrue from that once we get that working from an operational viewpoint.
Speaker #4: The Norseman expansion—basically, Pantora's growth—has led to an additional 140 rooms for Pantora, with more to follow. And, as mentioned before, we're generating in excess of our 20% return hurdle.
Speaker #4: We remain very focused on the targeted expansion at the existing villages and acquiring villages where we can achieve operational improvements. The purchases are to be funded within the JV or with external capital, and we'll retain that discipline in terms of how much balance sheet exposure we have.
Speaker #4: We now believe we have in place a very strong platform that can deliver additional operational gains and accommodate further selective growth. Turning to the next page, and reverting to our strategy, which calls for asset sales—this year we sold the remaining car yards.
Speaker #4: And an industrial property, generating over $150 million. We delivered very strong returns to our investors in the two funds, and our balance sheet currently has over $100 million of non-core assets.
Speaker #4: And we're focused on continuing our sales strategy. Perth is starting to see some office sales, albeit some of the campaigns that we mentioned last results haven't come to fruition, which was probably anticipated.
Speaker #4: Subsequent to that, we've seen the sale of Work Zone East for $79.4 million and King Square 3 for $83 million. They just actually give us the feeling that there is some liquidity in the market.
Speaker #4: The increased focus on this supply gap—the only market in the Australian office market where there's no supply for the next three years—is adding to that story.
Speaker #4: And we feel quite comfortable that we're moving to an environment where asset sales of good office properties will become viable over the next few years.
Speaker #4: I'd like to hand over to Dave, just to talk through the financial snapshot.
Speaker #2: Afternoon, everyone. I think Stephen's actually mentioned most of the headlines, but to reiterate, FFO for the year was $44.5 million. Looking back to FY23, it was $28.1 million.
Speaker #2: It's been over a 16.5% CAGR growth since that time, which we're very proud of. FFO per security of 8.24 cents, and we've maintained the distribution at 5 cents.
Speaker #2: And confirming FY27 intention to pay a cash distribution of 5 cents as well. All our assets, other than a small 1180 Hay, were revalued during the year.
Speaker #2: Either at December or June. The cap rate environment has been pretty stable in the lack of any transactional evidence of note other than the one Stephen mentioned, but those were a little bit more fringe—not the core, premium-grade, prime-grade stuff that we have.
Speaker #2: So, no real change in value, and there hasn't been any change in the value of our— the cap rate on our assets. In fact, actually, West Ryde Square went out slightly in December.
Speaker #2: With the sale of the dealerships, which we co-own—we've got 47% of them—we're able to reduce our debt by $21 million, and as Stephen also mentioned, that liquidity increases post-balance date with the final settlement of the five dealerships that has now happened.
Speaker #2: Gearing's reduced to 33%. Stephen will talk more about the leasing, and the portfolio occupancy is at 90%, with a 4.2-year WALE. The contributor, West Ryde Square, is up nearly 10%.
Speaker #2: The basis of full income now—and the car park performance does generate quite a bit from the car park, which is non-contracted, the public car park there.
Speaker #2: West Raya Square is obviously increasing, and will continue to increase—not at that rate—but it is now at full occupancy, 197. Really pleasing that we’ve lifted that.
Speaker #2: There are very few suites left in that. There's one full floor, and that's not much else. Car parks were stable. And there's the opportunity to continue to grow through incrementals at $197 if the market improves.
Speaker #2: 5 Mill Street's still got a little bit of vacancy, and obviously, tackling something like 180 Hay. The funds management division in FY25 had IKEA for the full year, then a big disposal fee.
Speaker #2: That generated, in total, over $4.3 million of fees that weren't in this year. So, there was a reduction in the Funds Management division FFO.
Speaker #2: FY27 will benefit from the performance fees that will be paid on the dealerships that we just settled. And Stephen's already spoken about the co-living JV.
Speaker #2: One of the things I would like to highlight if you go back a couple of pages, which we're particularly proud about, the at South Headland, we've got very strong earnings, but importantly, we've been able to put in place some take or pays, which we haven't been there, so it's there's a little bit more consistency and forward-looking income in that for a chunk of those for a chunk of those rooms, which is pleasing.
Speaker #2: Turning to debt, this time last year we had just announced an extension and increase to the facility in June. We extended Tranche A from a February '27 expiry to a February '29 expiry.
Speaker #2: And as previously said, we've reduced the undrawn we've increased the undrawn limit by 21 million dollars by reducing the drawn debt. Swaps and interest rates, we've got a cap and collar at 3.75, 2.65 that expires in December for 100 mill.
Speaker #2: That's been replaced, forward-looking for 12 months, with a cap at 4.5%. And then we've got callable swaps on $175 million.
Speaker #4: If we look at the macro backdrop to office within the Perth WA region, we're feeling pretty good about it. There's obviously strong investment, export growth, robust employment and population growth, and strong spending.
Speaker #4: It seems to be a bit of a characteristic of the WA statistics, but it shouldn't be underestimated. And I think WA is well placed to benefit from structural forces driving demand for commodities.
Speaker #4: Particularly the latest themes of AI, AI capital and expenditure boom, and the global electrification impacting, obviously, copper, aluminium, uranium, nickel, and rare earths. So we don't think WA is going into a hole—quite the contrary.
Speaker #4: All our indicators are from the growing tenants, which we're about to get to in a minute. You'll see that we're quite strong on that theme.
Speaker #4: We're feeling it very much in the micro dynamic when we're negotiating with tenants, and we feel that the macro backdrop is very strong.
Speaker #4: Turning onto the next page and looking at some of those key office trends, I think it's really important to stress that the market is continuing to strengthen.
Speaker #4: This is not going to be short-lived. The supply gap is on the minds of tenants. They're trying to pull negotiations forward. It's quite common now to look at briefs in the market and for us to say we simply don't have the space.
Speaker #4: The other thing is, if they want more than one floor together, particularly if they're starting to look in premium, they're going to have a problem.
Speaker #4: There's definitely a sharp reduction in contiguous space in the premium category. The leasing activity is very strong in A-grade, which accounted for nearly 49% of the activity.
Speaker #4: And overall, leasing deals are up some 96% for the half and represented just under 67,000 square meters. And that tells you that there's been a bit of a key point reached, where the demand for leasing deals has gone up so quickly over that period. It's fairly important in terms of defining where we are.
Speaker #4: Quite often, the tenant reps are not getting their fees anymore. There's quite a bit of tension around incentives. They're still there, like in the Brisbane market, but it doesn't impact Brisbane from being able to sell office buildings.
Speaker #4: The tenants are continuing to grow, with over 63% of the relocating tenants expanding. And from a GDI perspective, we've been very tactical around renewals to ensure, one, we optimize the rental growth in the forecast—in the strong years, which will sort of be between ‘27 and ‘30—and reducing incentives and targeting higher rents.
Speaker #4: If we turn to the next page, you will see the supply gap chart that we've shown, and I want to re-emphasize there is no supply in the next two or three years.
Speaker #4: Rio has popped up again as a potential heads of agreement—may have been signed for 15 The Esplanade in the 2030 year. And then, on the chart, you'll see two bars basically reflecting the backfill space from Rio, should they decide to move.
Speaker #4: And what will be interesting there is seeing what sort of rent Rio was able to justify for a move, if in fact it does.
Speaker #4: Our view is still that construction rents are some way off. If we use a break-even construction rent of around $1,260, we need growth of around 43% from where they currently sit.
Speaker #4: But it's worth keeping in mind that in 2004 to 2009, the last five years, with the supply gap, the rents grew by about 290%. So there is a tendency to undershoot, and it's worth noting too that Perth rents have pushed through the $1,000 per square meter mark.
Speaker #4: Not that we're calling for a 290% increase, but it does give you some context. And most will remember the tailwinds that Sydney office got from withdrawals caused by the Metro.
Speaker #4: Perth really is the only national market with zero new supply on the horizon in years '27, '28, and '29. And they're starting to use that word "withdrawal" in Perth as well.
Speaker #4: These are interesting times, and we believe they are very positive times. If we turn to the next page, there's good leasing activity, which is obviously a precursor to demand.
Speaker #4: The tenants are expanding. We're seeing the likes of the defense sector with mooted inquiries, circa 15,000 square meters in the market. We're also seeing inbound suburban tenants.
Speaker #4: One is mooted to be taking 4,000 square meters in QV1. QV1 was the building that basically had half the premium vacancy, which is now being reduced to only a few thousand.
Speaker #4: So, that has come right in. The lithium players are coming back, particularly in West Perth, and there are large active briefs in the market ranging between 4,000 to 6,000.
Speaker #4: There are at least half a dozen of those at the moment, so it's getting harder to find contiguous space, particularly in the premium and A-plus space.
Speaker #4: And still we're seeing that the demand for fitted space is important, involving around 74% of deals, which plays right into our hands. And incentives are tightening, albeit that's a varied discussion because it depends on whether the space is refurbed, whether it's a spec fit-out, or whether it's an existing or a new generation fit-out.
Speaker #4: But basically, the trend is the same—it's in the right direction for our economics. If we turn to the next page and look at the market, there are several large deals.
Speaker #4: That occurred in the first half of '26 that are tightening the market. We basically saw Western Power, which was 20,000 square meters, and Allen's for 3,200.
Speaker #4: NAB for 4 and a half. And Levan, which is a legal firm for just under 5,000. All representing a flight to quality. And then of course, if the pre-commitment by Rio for 57,000 square meters comes through, which was currently believed to be heads of arrangement for heads of agreement for lot five, then that represents a consolidation one of the things we look at, and it's referred to on this page, we look at a CBRE vacancy tracker, which points to a load of vacancies and the PCA numbers, the second quarter of 2026 showed a sharp reduction circa 21% for the total market over the first quarter.
Speaker #4: So that's quite marked, and most of the movement or reduction is in the premium and A-grade space, as you'll see in the table there.
Speaker #4: If we turn to the next page, it's really just looking at the impact of the absorption scenarios. Not shown on this chart, but we do want to remind you that commodity prices look robust across most of the areas that impact WA.
Speaker #4: If we turn onto the property page, which is page 19, there's one noticeable difference between this and prior results, and that is that we've got 7.6% exposure to car parks, apart from office, having sold the car yard.
Speaker #4: So, there's no more car yards in the portfolio. The valuations that we had for the half, related to 197 St George's Terrace, came in at $234 million, 7%.
Speaker #4: It's up $8 million, same cap rate. Reflects the increased growth and leasing. Now leased, as you've seen, over 92%. And the WALE's moved out to 3.3 years, which sits very well with our thesis on the market, because we'd love those tenants, when they expire in three years, to be paying the higher rents.
Speaker #4: So that's good from our perspective. Five million came in at fifty-four million. The cap rate is basically the same at seven and a quarter, and the value is up one and a half million.
Speaker #4: The vacancy there is around 93%, and the Wale's 2.3, again giving us access to the market growth when it hits its most desperate phase.
Speaker #4: The reality is that we're probably more focused on divesting than acquiring, particularly in terms of our balance sheet positioning and our non-core assets, as we've emphasized.
Speaker #4: Or joint ventures in good assets with the right parties. Of course, we're always looking for assets, particularly for the funds management business, and that's not necessarily in the unlisted syndicate side.
Speaker #4: There are other forms of investment, particularly with institutions and not just in office. We're very cognizant of the fact that we need to invest in our existing assets very carefully.
Speaker #4: Turning to our strategy page, which is basically page 25. I really want to emphasize that we're focused on doing what we say we will do.
Speaker #4: And executing in line with strategy is very important to us, and I think we've demonstrated that over three years. I think, as Dave mentioned earlier, we've increased the FFO over the past three years from $44.5 million.
Speaker #4: From 28.1, up some 58%. We're very focused on the lease-up and positioning for rent increases. With the strengthening market, we do believe we have the best leasing team in the Perth market.
Speaker #4: Balance our liquidity needs with between growth and investment in the portfolio. And improving returns for shareholders. Targeted asset sales and partnering. Noting that 330 mil has been achieved since December 24.
Speaker #4: And we have in excess of $100 million of non-core assets to deal with. Our businesses are in good shape, have solid liquidity, and the outlook is very strong in our minds.
Speaker #4: If we turn to the next page, which relates to our additional focus, it's very much around the property division's long-term returns and evolving the funds management product.
Speaker #4: Moving away from the unlisted syndicate style, which doesn't serve office funding requirements. We're targeting operationally led growth improvements in the co-living business and meeting our 20% return hurdle.
Speaker #4: Maintaining the 5% distribution per security is really important. And as mentioned today, executing a 5% buyback that we've announced. Basically, that's it from me.
Speaker #4: Operator, if you'd like, I'll hand it back for Q&A, if that's all right.
Speaker #1: Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced.
Speaker #1: If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question.
Speaker #1: Your first question today comes from Andy McFarlane from Bell Potter. Please go ahead.
Speaker #2: Good afternoon, Steve, David. Please see time. First question from me, just on the HLA you've signed at WS2. Just interested in a little bit of color on rents achieved when it comes online there.
Speaker #3: Yeah, WS2. It's ahead, so we've got to be a bit careful there, Andy. But I would say high eights, five years, and an incentive—about a low incentive.
Speaker #2: Okay. And potentially comes online in this year, you say?
Speaker #3: Well, when we've completed the fit-out, which is probably in January.
Speaker #2: Cool. Thanks, Steve. Just in terms of the JV you mentioned in your remarks, just in terms of eking out some more gain, I guess, at the operating level.
Speaker #2: Just—yeah, just interested in some color on what you're thinking there.
Speaker #3: Really, just business as usual on that front. We pick up assets like Newman Village or Norseman and look to increase the occupancy, which is what we've done.
Speaker #3: Increase the occupancy, reduce the cost, improve the profitability. It's really that sort of a focus—not just a pickup and switch it out.
Speaker #3: We're really looking to gain additional income out of the assets by improving them and bringing in the operational methodology, which is based around branding, ensuring that we can look after the staff of the resource companies in remote places.
Speaker #3: And get the right satisfaction. It's not easy to do. You need remote staff, and you need proper teamwork. But that's the model, and in all cases, it's improved the earnings of the villages that we've acquired.
Speaker #3: So that's really the model. If we find a down-and-outer that's not too big, we'll have a stab at doing that. But before we did, we'd make sure we've got a very good plan.
Speaker #3: I mean, with the benefit of our partners, we get to see all the assets that come up. We look at so many—it's ridiculous—but we only land on a few that we believe are worth our strategy.
Speaker #2: Thank you. Just a final one. Yeah, you talked about construction costs, I guess, in terms of there not being much coming through the pipeline.
Speaker #2: Broadly, for the office market, I guess just looking at a little more granularity—a little bit different—but just wondering if there's been any timing you're kind of thinking around submitting plans, and what you're kind of thinking there at the moment.
Speaker #3: Yeah, we've mastered DA. We're looking to put one in fairly soon, and noting there's already been two on the site, right? So it's nothing new to put a DA in.
Speaker #3: But what we're particularly looking at is something where we have the flexibility to do things in stages, right? And we've mentioned before, the first stage would be an extension of our spec fit-out strategy with regard to 197.
Speaker #3: We've also mentioned that we would look to do an improvement on the retail component and target the available market there. That particularly impacts $5 million.
Speaker #3: And then the dream, or the option value, really relates to $1 million, which is, in fact, putting a mixed-use structure up on top of that, which, if you were able to get it right for hotel, is very attractive.
Speaker #3: For office, it's becoming increasingly attractive. It wouldn't work at the moment, so it has to be a future forecasting component. But being able to flex between what is the best economic use is really key to it.
Speaker #3: So if you're thinking in terms of timing, we'd like to be available to deliver something into that strong market, say '31. It's most likely the target date we'd use for something on $1 million, but that's way off yet.
Speaker #3: And keep in mind that for something like that, it has to rely on improved building technology and break-even rents that give us some sort of a cost advantage.
Speaker #3: And as we demonstrated with WS2, it's not something we'll rush into. But through a planning process, we can forecast and look out. And if you have the right flexibility, you don't even have to build office.
Speaker #3: If it turns out not to be right, that's the approach we're taking.
Speaker #2: Thanks, Steve.
Speaker #1: Thank you. Once again, if you would like to ask a question, please press star one on your telephone and wait for your name to be announced.
Speaker #1: Your next question comes from Murray Colin of Moelis Australia. Please go ahead.
Speaker #4: Afternoon, Steve. David. Just looking at your guidance, you've obviously kept the 5-cent distribution unchanged. It seems like you've done a fair amount of leasing in the last six months.
Speaker #4: Again, there seems to be a reasonable chance that we get FFO growth again next year. The first time you paid that 5% divvy was in FY23, and that was, I think, about a 95% FFO payout ratio.
Speaker #4: We've had decent EPS growth since then, and that FFO payout ratio has now dropped to 60% this year. I was just wondering how low you would like to see that number go.
Speaker #4: Before you look to start growing the divvy again—and I suppose, is there a mind towards marrying it up with AFFO on a smoothed-out basis?
Speaker #3: The simple answer is no. We're not really an AFFO player because we tend to pick up empty buildings and fill them. So that wreaks havoc with that methodology.
Speaker #3: But I think the important thing, Murray, that you're asking for is, will we increase the distribution? I mean, if we were to—we won't forecast it, because we take a lot of mind share out of being able to say that we're going to have a through-cycle distribution.
Speaker #3: And given the nature of a total return business, the profitability can move around a lot. If we were to get to a situation where we're very stabilized, like a normal, stabilized route, yeah, we'd be happy to do that.
Speaker #3: But we're not. And at the moment, it's very much in accordance with our strategy to maintain that five. I mean, the price isn't too demanding.
Speaker #3: It doesn't really seem to reflect that we should pay a higher yield at the moment. So, we would definitely wait for some price improvement before we paid any more dividend away.
Speaker #3: Those are our true thoughts on the matter. Dave, did you have a comment on that?
Speaker #5: Well, Dan, the other thing is looking at our uses of capital and what we’ve done today about the buyback. Yes, sir. I’ll turn it to security-holder-friendly action.
Speaker #4: Got it. Thanks for the color. And then maybe just following up and looking at the balance sheet. You've obviously mentioned the buyback, but I imagine that given the fact that you've probably done a big chunk of the leasing that you had in front of you for a little while, there's not much left to do in the near term.
Speaker #4: So I imagine sort of FFO-less leasing costs and incentives is probably enough to sort of keep the balance sheet stable from here, or at least cover the dividend.
Speaker #4: So, when you speak to being a net seller of assets, I was just wondering—is it just the redevelopment of the Mill Green complex that you're looking to free up capital for, or is there something else that we should be thinking about?
Speaker #3: There are growth initiatives as well—clearly—where we want to grow the earnings base, and they'll vary between a property-level investment to a situation that might involve one of our existing assets.
Speaker #3: But in all cases, we're looking to put money towards things that are enhancing. But in that balanced use of our liquidity, Murray, it's really important to realize that distributions are first order.
Speaker #3: We take that as very important. Reinvesting back into your existing property portfolio is something that's not recognized enough as something that enables you to have liquidity in that asset.
Speaker #3: If you don't invest in them, you probably won't have liquidity in that asset when the time comes to be able to sell it. And also, the future earnings that you're going to get from that building—and 197 is a classic case in hand, or West Australia Square—where you take the occupancy from virtually nothing to 100% full.
Speaker #3: Those things take years. Property, it's a slow game. So I think in terms of the actual line-by-line attribution of what we'll do with our liquidity, Murray, it's a bit of a mixed bag.
Speaker #3: But in terms of how we think about it, it's a combination of all the factors of looking after what's best for our shareholders—and hence the buyback today.
Speaker #3: Because we just cannot stand this discount anymore. Notwithstanding delivering 16% growth in FFO over three years, it means nothing to the market. So we're bringing in our own measures.
Speaker #3: In terms of selling assets, we'll only sell them at good prices. We're not going to discount them. It's the only liquidity we have available.
Speaker #3: If we were trading at a premium to NTA, we could have a different view on life because we might have equity available to us. But at the moment, we don't.
Speaker #3: It's dead to us. So we've got to rely on the funding that we can manufacture. Until we get through that phase, we're going to be very careful about how we manage our debt, how we manage our stakeholders, how we manage our growth, and how we make sure that we're doing something and listening to our shareholders.
Speaker #4: spreads you've been seeing? And I suppose if you could, would it be possible for you to have a stab at where your passing rents are across those buildings versus Marcus?
Speaker #3: Well, the answer is probably yes. Yes, I could. It's a little tricky, because the specifics are difficult to do over a call like this, Murray. But we could definitely do it with you separately.
Speaker #3: But if I gave you an asset—for example, if I gave you a WS2—we're punching above our weight there because we're doing deals that, basically, we know in the market are higher than the competitors.
Speaker #3: And we're getting high eights there. Some of the bumps on existing rents will be ticking into the 900s. We're getting lower-than-market incentives.
Speaker #3: And obviously, we've moved to 100% occupancy, so I would say that's a clear example of outperformance. The asset sits in the A-class, AA-plus.
Speaker #3: Sort of area, but it has a premium offer. It doesn't meet premium because of the size of the floor plate. If you were to move to West Australia Square, West Australia Square gets above-market rents.
Speaker #3: And longevity. If you consider that half the building is leased to the government and we're getting over a seven-year WALE on that component, it's almost like a government bond.
Speaker #3: So I would say that the rents there, and what we've achieved there, is above market and on lower incentives. I think if you look at the multi-let tenant base of the balance of WS2, there's none coming up in the next year or so.
Speaker #3: So we feel very good about that. But they will land—some of those tenants will come on when the market is really hot. And we believe that we will be able to capture some of that on the renewal.
Speaker #3: So, we think in those two buildings we've got an absolute cracker, and the thing that people cannot beat is the location of those two assets.
Speaker #3: With regard to 197, you've got to think of 197 as being part of a three-building site. And that unlocks what is the future value of that site if the demand for offers was to increase.
Speaker #3: So it's got a bit more room for improvement there, if you think about it over time. But the rents there, they're probably classic market, Murray.
Speaker #3: Because we've really done so much of it, it'll be hard to basically state that it was above market, so we're sitting at market. Albeit, in some instances—like the top floor, recent deal we did there—it would be better than market, in terms of incentive.
Speaker #3: And setting market in terms of some of the rent on some of the suites that we have. So overall, it's probably slightly ahead of market in terms of 197.
Speaker #3: Five Mill sits beautifully in its own little market, and it's probably one of the best buildings in Perth for its own market because whenever we get a vacancy there, we can churn it.
Speaker #3: And getting reuse out of the fit-outs there has been an art form. So I'd say that's been a very good cash flow building that we feel outperforms like-for-like competitors.
Speaker #3: So we feel pretty good about those five buildings, if you like.
Speaker #4: Got it. Thank you, Steve. Thank you. Your next question comes from Sam Roy from Nexa. Please go ahead. Pardon me, Sam—your line is now live.
Speaker #4: Apologies for the difficulties there. There are no further questions at this time. I'll now hand back to Mr. Burns for any closing remarks.
Speaker #3: I can answer that last question, if that was it. Look, thanks for listening today. I look forward to getting around and seeing anybody who wants to catch up.
Speaker #3: And thanks for your support.
