Q4 2026 Abacus Group Earnings Call

August 25, 2026

Speaker #1: Thanks, and good morning, everybody. On a busy morning, we welcome you to the FY26 results presentation for Abacus Group. I'm joined here today by Evan Goodridge, the group's current CFO, who's supporting both Abacus Group and StorageKing Group through the 26 results period.

Speaker #1: Also, Lawrence Wong, our incoming CFO of Abacus Group. Evan George, the General Manager Commercial and Fund Manager for the group, as well as other members of our investor relations and finance team.

Speaker #1: You'll see in the result that there are a number of impacts that result from the internalization of the entire management function of Storage King Group, which took effect on the 30th of June, as we announced back in May.

Speaker #1: You'll see in the result there's a number of impacts that result from the internalization of the entire management function of StorageKing Group, which took effect on the 30th of June.

Speaker #1: And you may notice on the header page a subtle logo addition. This year, Abacus celebrates its 25th year as a listed company. August 2026 will be something of a watershed year, with the evolution and now separation of the self-storage business, Storage King.

Speaker #1: As we announced back in May, you may notice on the header page a subtle logo addition. This year, Abacus celebrates its 25th year as a listed company.

Speaker #1: And I just want to give thanks and acknowledge the myriad of team members, executives, and board members that have contributed to the group’s long history.

Speaker #1: In August 2026, somewhat of a watershed year, with the evolution and now separation of the self-storage business, StorageKing. And I just want to give thanks and acknowledge the myriad of team members, executives, board members, that have contributed to the group's long history.

Speaker #1: Turning to our financial year 2026 metrics, there are a number of very positive operating highlights across the business. Commercial occupancy remains strong at 91.2%. Leasing activity was solid, with almost 50,000 square meters completed during the year, and the group reported FFO of $81.2 million, reflecting, we believe, the resilience of the portfolio of assets and our focus on execution.

Speaker #1: Turning to our financial year 26 metrics, there are a number of very positive operating highlights across the business. Commercial occupancy remains strong at 91.2%, leasing activity was solid with almost 50,000 square meters completed during the year, and the group reported an FFO of 81.2 million dollars, reflecting we believe the resilience of the portfolio of assets and our focus on execution.

Speaker #1: At 30 June 2026, the group's portfolio was valued at $2.5 billion Australian dollars, with a weighted average cap rate of 6.7%. You'll note the statutory loss and decline in NTA during the period—this was driven largely by non-cash accounting adjustments associated with the now-complete internalisation of the Storage King Group, where our ASK investment is re-measured using the listed share price at year-end, which resulted in a $122 million non-cash accounting loss.

Speaker #1: At 30 June 2026, the group's portfolio was valued at 2.5 billion Australian dollars, with a weighted average cap rate of 6.7%. You'll note the statutory loss and decline in NTA during the period.

Speaker #1: This was driven largely by non-cash accounting adjustments associated with the now-complete internalization of StorageKing Group, where our ASK investment is re-measured using the listed share price at year-end, which resulted in 122 million dollars non-cash accounting loss.

Speaker #1: Importantly, these accounting adjustments do not change the underlying strength of the business, which continued to deliver stable operating performance, strong occupancy, and growth in funds from operations.

Speaker #1: We were pleased during the year to declare an 8.5 cents per security distribution, in line with our guidance, and gearing of 36.2% at the end of the period remains well within our target range.

Speaker #1: We were pleased during the year to declare an 8.5 cents per security distribution in line with our guidance, and gearing of 36.2% at the end of the period remains well within our target range.

Speaker #1: Abacus Group, going forward, is positioned as a focused, pure-play commercial REIT. Our strategy is straightforward: we invest in high-quality commercial real estate sectors that can deliver sustainable long-term returns through active investment management, disciplined asset management, and a strong customer focus.

Speaker #1: Abacus Group, going forward, is positioned as a focused pure-play commercial REIT. Our strategy is straightforward: we invest in high-quality commercial real estate sectors that can deliver sustainable long-term returns through active investment management, disciplined asset management, and a strong customer focus.

Speaker #1: We believe the office sector in Australia has very sound fundamentals. The market is showing signs of stabilizing from cyclical lows, placement costs remain supportive of valuations, and new supply remains constrained.

Speaker #1: We believe the office sector in Australia has very sound fundamentals. The market is showing signs of stabilizing, from cyclical lows to replacement costs remain supportive of valuations, and new supply remains constrained.

Speaker #1: Together, these factors provide, we believe, a supportive backdrop for medium-term rental growth. We are concentrating our investment activity in Australia's major east coast markets, particularly Sydney and Brisbane, where we see the strongest opportunities to create value and grow income over time.

Speaker #1: Together, these factors provide we believe a supportive backdrop for medium-term rental growth. We're concentrating our investment activity in Australia's major East Coast markets, particularly Sydney and Brisbane, where we see the strongest opportunities to create value and grow income over time.

Speaker #1: Sydney remains our preferred market, given its scale, liquidity, and highly diversified tenant base. Brisbane continues to benefit from strong population growth, significant infrastructure investment, and favorable demand drivers.

Speaker #1: Thank you for standing by, and welcome to the Abacus Group FY26 Results Presentation. There will be a presentation followed by a question-and-answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad.

Speaker #1: Sydney remains our preferred market given its scale, liquidity, and highly diversified tenant base, while Brisbane continues to benefit from strong population growth, significant infrastructure investment, and favorable demand drivers.

Speaker #1: Within office, our focus remains on high-quality assets that are well positioned to meet the needs of their customers, particularly small- to medium-sized enterprises. We'll continue to actively manage and enhance our portfolio through targeted repositioning and refurbishment initiatives, while maintaining a disciplined approach to operational performance.

Speaker #1: If you wish to ask a question via the webcast, please type it into the Ask a Question box and click. Coming CFO of Abacus Group, Kevin George, the General Manager Commercial and Fund Manager for the group, as well as other members of our investor relations and finance team.

Speaker #1: Within office, our focus remains on high-quality assets that are well positioned to meet the needs of their customers, particularly small to medium-sized enterprises. We'll continue to actively manage and enhance our portfolio through targeted repositioning, refurbishment initiatives, while maintaining a disciplined approach to operational performance.

Speaker #1: Importantly, customer outcomes remain central to our strategy. By strengthening customer relationships and using insights from our recently completed Voice of Customer program, we aim to improve occupancy outcomes and enhance overall asset performance, which will support long-term earnings growth.

Speaker #1: We think that obviously the supply constraints in the various markets is assisting for well-located, well-capitalized and actively managed assets, and that's a big part of our customer proposition.

Speaker #1: Following the internalization, effective 30 June, our key business priorities are centered on disciplined execution supported by a clear strategic agenda to strengthen the business today while positioning us to deliver sustainable long-term value for security holders.

Speaker #1: So when we look across our portfolio, the building we're in here, 77 Carthuray, 100% leased, we've been able to shift to Owen Elizabeth Street up to the sort of mid-80s, we think there's more to go there, and obviously with our partners at Charter Hall, we're working hard on that building.

Speaker #1: Our immediate focus is on simplifying the organization: we will continue to streamline our systems and processes building a more efficient operating platform while maintaining our focus on sectors where we have proven capability.

Speaker #1: Our priority is to preserve our agile decision-making and efficient execution capability while reducing operating costs. This work is expected to support a lower management expense ratio over time and allow us to optimize our income yield.

Speaker #1: Continuing to churn assets and the tenants, rather, at our assets such as 324 Queen Street with positive results, 99 Walker Street in North Sydney with positive results, so it is a constant work in progress, but we are seeing that turning of the market, and we think that tenants are willing to commit, they're committing to positive deals, renewals, in-place tenants are wanting to stay on.

Speaker #1: Over the near term, our attention shifts to further strengthening the balance sheet. Through disciplined capital recycling, continued portfolio refinement, reducing gearing, and resetting to a more sustainable through-the-cycle payout ratio, of 80 to 90 percent of FFO.

Speaker #1: Our only retail asset, that property continues to perform almost above our underwrite and above our expectations. It's anchored by a very strongly performing supermarket, but it does sit really at the commercial hub of Broad Beach, and it does give us a lot of confidence to continually look to optimize the tenant mix.

Speaker #1: Our aim is to create greater financial flexibility, y, while ensuring capital is directed toward the highest returning opportunities. Looking further ahead, these initiatives place us in a stronger position to capitalize on attractive investment opportunities as they emerge.

Speaker #1: With a technologically savvy, bespoke platform, a stronger balance sheet, and continued disciplined approach to capital allocation, we believe the group will be well positioned to enhance returns and deliver sustainable earnings growth through the cycle.

Speaker #1: It is spread over three levels, it does have a very big restaurant precinct, and also car park, a very profitable car park activity, so it's a terrific property in a great location, and the retail sectors running pretty hot, as you'd understand, so we are very positive and upbeat about the performance of that asset.

Speaker #1: Turning to the highlights from financial year 2026, we delivered a solid operating performance across the portfolio while successfully completing the ASK internalization. Right across the office portfolio, we achieved leasing spread growth of 5.5%, which reflected in broad-based growth across the portfolio and continued demand for well-located assets in our core markets.

Speaker #2: So does guidance include or have an expectation of an improvement in occupancy for office by the end or during '27?

Speaker #1: I think there'd be a marginal uptick. I think we're looking at a couple of percent uptick in 201. Some of the releasing, we've got some floors coming back at properties like 14 Martin Place, 99 Walker, 324 Queen, Kevin touched on 91 King William over in Adelaide, that's a we've had a floor handed back there from an existing tenant, but we're very in strong discussions with tenants, so it's not a dramatic movement in overall occupancy, but quite good releasing and with those positive spreads that we're seeing come through, so I think the asset.

Speaker #1: Our retail portfolio performed strongly, with leasing spread growth of 8.4%, continued supported by the continued momentum at Oasis, and the strength of its prime broad beach on the Gulf Coast location.

Speaker #1: Platform efficiencies was a focus of 2026, and we'll continue to be an FY27, while where we are targeting a 25% reduction in admin expenses primarily via headcount reduction.

Speaker #1: Importantly, as I touched on earlier, FY26 also marked the successful completion of the internalization. This represents the culmination of a multi-year strategy that began with the acquisition of the storage king operating platform in FY21, the destapling of the business in FY23, and now the internalization of the management in FY26.

Speaker #1: We're not going to see any material movement or income from major vacancies, Alara Street, Canberra, and Good Shed, both Alara Street needs to go through a refurbishment before that's ready to lease post-government.

Speaker #1: Good Shed, we're in active conversations with a number of tenants, but timing for those is later, which would see income beyond the current year, so but yeah, as Steven mentioned, broad-based opportunity across the rest of the core portfolio.

Speaker #1: That positions Abacus Group clearly as a focused commercial REIT moving forward. I'll now hand over to Evan to discuss the group's financial results in more detail.

Speaker #2: Thanks, David, and good morning. Financial year 2026 has been a year of significant transition for Abacus Group, as we completed the internalization of storage kings management platform, sharpening our focus as a pure-play commercial REIT.

Speaker #2: While our core portfolio continued to deliver a resilient earnings result, over half of our operating earnings again came from office, with the balance collectively from retail, investment income, and returns from our 19.7% ownership in what is now storage king group.

Speaker #2: Funds from operations for the year were 81.2 million dollars, or 9.08 cents per security, down 1.9% on FY25. Breaking this down, office earnings were 89.6 million dollars, down 3.2% on FY25's 92.6 million dollars.

Speaker #2: Excluding the impact of surrender fees, office earnings were 88.7 million dollars, up 5.3% from 84.3 million dollars, as the group has been able to lease up the majority of the surrendered space ahead of initial underwriting.

Speaker #1: Following the internalization effective 30 June, our key business priorities are centered on disciplined execution, supported by a clear strategic agenda to strengthen the business today while positioning us to deliver sustainable long-term value for security holders.

Speaker #2: Retail delivered like-for-like operating earnings growth of 4.5% to 30 million dollars. earnings prior to internalization completing was 16.1 million dollars, down 4.2% on the prior year.

Speaker #1: Our immediate focus is on simplifying the organization. We will continue to streamline our systems and processes, building a more efficient operating platform, while maintaining our focus on sectors where we have proven capability.

Speaker #2: Investment management and other income held steady at 27 million dollars, administrative expenses continued to reduce down 5% to 32 million dollars, and net finance costs reduced to 44.2 million dollars, down from 49.7 million dollars in FY25.

Speaker #2: Abacus has historically utilized carry-forward revenue losses to mitigate its tax expense payable. These losses have now been exhausted in our FFO and are more normalized run rate of 0 to 2 million dollars per annum in tax expense is expected moving forward.

Speaker #1: Over the near term, our attention shifts to further strengthening the balance sheet through disciplined capital recycling, continued portfolio refinement, reducing gearing, and resetting to a more sustainable, through-the-cycle payout ratio of 80 to 90 percent of FFO.

Speaker #2: Our distribution for the year was 8.5 cents per security, representing a payout ratio of 93.6%. Looking ahead to FY27, there are four important moving parts for the group.

Speaker #1: Our aim is to create greater financial flexibility, while ensuring capital is directed toward the highest returning opportunities. Looking further ahead, these initiatives place us in a stronger position to capitalize on attractive investment opportunities as they emerge.

Speaker #2: These moving parts will help simplify the business, strengthen the platform, and position us for growth. First, now that we are no longer the manager of storage king, our retained stake is held at fair value rather than equity accounted.

Speaker #1: With a technologically savvy, bespoke platform, a stronger balance sheet, and a continued disciplined approach to capital allocation, we believe the group will be well positioned to enhance returns and deliver sustainable earnings growth through the cycle.

Speaker #2: This means that on an ongoing basis we will only receive storage kings distribution guided at 4.5 cents per security for FY27, rather than our full equity share of earnings.

Speaker #2: Second, we will also no longer collect asset or development fees associated with storage kings management. Third, we're continuing to simplify and recycle our own portfolio.

Speaker #1: Turning to the highlights from financial year 2026, we delivered a solid operating performance across the portfolio while successfully completing the ASK internalization. Right across the office portfolio, we achieved leasing spread growth of 5.5%, which was reflected in broad-based growth across the portfolio and continued demand for well-located assets in our core markets.

Speaker #2: With this in mind, we expect to deliver a number of disciplined non-core asset sales consistent with the capital recycling priority we've set out over FY27.

Speaker #2: Hopefully, we'll be able to update the market further later in the year. And fourth, our corporate structure will become simpler and more efficient. Since 30 June, we have reduced headcount by more than a third, continuing the organizational efficiencies that we're targeting as we simplify the business.

Speaker #1: Our retail portfolio performed spread growth of 8.4%, supported by the continued momentum at Oasis and the strength of its prime Broad Beach on the Gulf Coast location.

Speaker #2: The group has identified 8.4 million dollars of annualized cost savings primarily associated with transferring staff to storage king and remains focused on further reducing management expense through a leaner operating model.

Speaker #1: Platform efficiencies were a focus of '26 and will continue to be in FY27, where we are targeting a 25% reduction in admin expenses, primarily via headcount reduction.

Speaker #2: Taking the four moving parts together, for FY27 we are targeting a distribution of 6.7 cents per security, with FFO expected to deliver a payout ratio around the midpoint of our revised 80s and 90% range.

Speaker #1: Importantly, as I touched on earlier, FY26 also marked the successful completion of the internalization. This represents the culmination of a multi-year strategy that began with the acquisition of the Storage King operating platform in FY21, the destapling of the business in FY23, and now the internalization of management in FY26.

Speaker #2: This reflects a genuinely different earnings base once storage kings contribution is removed and a portfolio and corporate structure that is still mid-transition. With our FY27 distribution levels reset, we expect that two-thirds of it will be via a fully-franked dividend, and it is the group's intention to distribute our remaining 51 million dollars of franking credits to security holders over the medium term.

Speaker #1: That positions Abacus Group clearly as a focused commercial REIT moving forward. I'll now hand over to Evan to discuss the Group's financial results in more detail.

Speaker #2: This guidance is subject to no material deterioration in commercial property market and current business conditions, and Stephen will discuss the group's outlook and guidance in more detail shortly.

Speaker #2: Thanks, David, and good morning. Financial year 2026 has been a year of significant transition for Abacus Group, as we completed the internalization of Storage King's management platform, sharpening our focus as a pure-play commercial REIT.

Speaker #2: Turning to the portfolio, Modal Group assets were 2.46 billion dollars, down from 2.59 billion dollars. On 30 June, we completed the internalization of storage kings management, which required us to re-measure our retained 19.7% stake from an equity account investment to fair value.

Speaker #2: While our core portfolio continued to deliver a resilient earnings result, over half of our operating earnings again came from Office, with the balance collectively from Retail, Investment Income, and returns from our 19.7% ownership in what is now Storage King Group.

Speaker #2: As we flagged to the market following storage kings own FY26 results release, that single non-cash accounting entry reduced total assets by 122 million dollars and is the primary driver of our reduction in assets for the year.

Speaker #2: Funds from operations for the year were $81.2 million, or 9.08 cents per security, down 1.9% on FY25. Breaking this down, office earnings were $89.6 million, down 3.2% on FY25’s $92.6 million.

Speaker #2: Our exposure to core commercial sectors, office and retail, increased to 77% of total assets, up from 72%. That trend is expected to continue in FY27.

Speaker #2: The group continues to adopt a disciplined approach to capital management. Gearing closed the year at 36.2%, up from 34.5% at FY25, and on a covenant basis, 41.2% against the covenant of 50%.

Speaker #2: Excluding the impact of surrender fees, office earnings were $88.7 million, up 5.3% from $84.3 million, as the group has been able to lease up the majority of the surrendered space ahead of initial underwriting.

Speaker #2: For FY27, we expect gearing to reduce as non-core sale proceeds are applied to debt reduction. Our interest cover ratio was 2.7 times against the covenant of 2 times, and the group's average cost of debt for FY26 was 4.5%, down from 5.1% in FY25.

Speaker #2: Retail delivered like-for-like operating earnings growth of 4.5% to $30 million. Our equity share of Storage King's earnings prior to internalization completing was $16.1 million, down 4.2% on the prior year.

Speaker #2: Our hedge cover currently sits at 81%. For FY27, we are targeting a weighted average cost of debt of approximately 5.25%, as those lower costs historical hedges progressively roll off.

Speaker #2: Importantly, we have no bank debt maturing in FY27. During the year, we extended our syndicated facility on improved tenure and pricing. We retained funding capacity of more than 150 million dollars, or approximately 450 million dollars, when we include our liquid investment in storage king.

Speaker #2: Abacus has historically utilized carry-forward revenue losses to mitigate its tax expense payable. These losses have now been exhausted in our FFO, and a more normalized run rate of $0 to $2 million per annum in tax expense is expected moving forward.

Speaker #2: Net tangible assets closed the year at $1.59 per security, down from $1.72. In respect to valuations, our investment property portfolio closed the year at $1.826 billion dollars, up from $1.8 billion dollars.

Speaker #2: Our distribution for the year was 8.5 cents per security, representing a payout ratio of 93.6%. Looking ahead to FY27, there are four important moving parts for the Group.

Speaker #2: That reflects an increase of 36 million dollars of capital expenditure less fair value losses of 17 million dollars. Our weighted average cap rate, firm slightly to 6.7% from 6.77% a year ago.

Speaker #2: These moving parts will help simplify the business, strengthen the platform, and position us for growth. First, now that we are no longer the manager of Storage King, our retained stake is held at fair value rather than equity accounted.

Speaker #2: I note that this is my last results presentation as CFO of Abacus Group. It has been my privilege to be able to share the group's results with you over my 15 years at Abacus, and I wish my replacement, Lawrence Wong, all the very best in the future.

Speaker #2: This means that, on an ongoing basis, we will only receive Storage King's distribution, guided at 4.5 cents per security for FY27, rather than our full equity share of earnings.

Speaker #2: With that, I'll hand over to Kevin to discuss the group's operating performance.

Speaker #2: Second, we will also no longer collect asset or development fees associated with Storage King’s management. Third, we're continuing to simplify and recycle our own portfolio.

Speaker #3: Thanks, Stephen, and thanks for your contribution to the group over many years. Our office portfolio comprises predominantly A-grade assets across Australia's eastern seaboard, with a strong weighting to Sydney and Brisbane.

Speaker #2: With this in mind, we expect to deliver a number of disciplined, non-core asset sales, consistent with the capital recycling priorities we've set out over FY27.

Speaker #3: Continue to favor these markets given their attractive long-term fundamentals. Putting on Stephen's earlier comments, Sydney remains Australia's largest and most diverse office market, while Brisbane continues to benefit from strong population growth, significant infrastructure investment, and solid business activity.

Speaker #2: Hopefully, we'll be able to update the market further later in the year. And fourth, our corporate structure will become simpler and more efficient. Since June 30, we have reduced headcount by more than a third, continuing the organizational efficiencies that we're targeting as we simplify the business.

Speaker #3: Our portfolio is well aligned to the SME sector, which represents around 60% of our customer base. SME demand has historically led the early stages of office market recovery, positioning us well as operating conditions continue to improve.

Speaker #2: The group has identified $8.4 million of annualized cost savings, primarily associated with transferring staff to Storage King, and remains focused on further reducing management expense through a leaner operating model.

Speaker #2: Taking the four moving parts together for FY27, we are targeting a distribution of 6.7 cents per security, with FFO expected to deliver a payout ratio around the midpoint of our revised 80% to 90% range.

Speaker #3: Beyond the quality of our assets, a key differentiator is our focus on customer experience and engagement. During FY26, we achieved a net promoter score of plus 35 across our managed office portfolio, up from plus 28 in FY25, reflecting the strength of our customer relationships and service proposition.

Speaker #2: This reflects a genuinely different earnings base once Storage King's contribution is removed, and a portfolio and corporate structure that is still mid-transition. With our FY27 distribution levels reset, we expect that two-thirds of it will be via a fully franked dividend, and it is the Group's intention to distribute our remaining $51 million of franking credits to security holders over the medium term.

Speaker #3: Through our voice of customer program, asset activation initiatives, and active engagement with customers, we continue to support retention, drive leasing outcomes, and enhance the performance of the portfolio.

Speaker #2: This guidance is subject to no material deterioration in the commercial property market and current business conditions, and Steven will discuss the Group's outlook and guidance in more detail shortly.

Speaker #3: Turning to our key office portfolio metrics, demand continues to be supported by the SME flight to value trend. This workspace offerings and active customer engagement.

Speaker #2: Turning to the portfolio, total group assets were $2.46 billion, down from $2.59 billion. On 30 June, we completed the internalization of Storage King's management, which required us to re-measure our retained 19.7% stake from an equity-accounted investment to fair value.

Speaker #3: Portfolio delivered 2% like-for-like rent growth in FY26, supported by leasing spreads of 5.5% and average rent reviews of 3.2%. This was modestly below FY25 growth, reflecting slightly lower occupancy during the year.

Speaker #2: As we flagged to the market following Storage King's own FY26 results release, that single non-cash accounting entry reduced total assets by $122 million and is the primary driver of our reduction in assets for the year.

Speaker #3: Occupancy of 30 June was 89.2%, down from 91.1% in FY25, primarily reflecting residual vacancy from customer surrenders recognized in the prior period. Interestingly, leasing progress on the surrendered space has been strong, with 80% of the area at 3 to 4 Queen Street already committed, and at 99 Walker Street, approximately 60% of the surrendered floors over a period of time have been released.

Speaker #2: Our exposure to core commercial sectors—office and retail—increased to 77% of total assets, up from 72%. That trend is expected to continue in FY27.

Speaker #3: Moving to our office leasing metrics, leasing spreads remain positive at 5.5%, underpinned by strong outcomes of 14 Martin Place and 3 to 4 Queen Street, which achieved spreads of 9.9% and 8.7% respectively.

Speaker #3: During FY26, we completed 71 leasing transactions across almost 50,000 square meters, up 5% on FY25. The increase in activity was driven by strong leasing outcomes across the portfolio, including at 91 King William Street, which recorded 7,600 square meters of transactions, compared with 2,800 square meters in FY25.

Speaker #2: Our hedge cover currently sits at 81%. For FY27, we are targeting a weighted average cost of debt of approximately 5.25%, as those lower-cost historical hedges progressively roll off.

Speaker #2: Importantly, we have no bank debt maturing in FY27. During the year, we extended our syndicated facility on improved tenure and pricing. We retained funding capacity of more than $150 million, or approximately $450 million when we include our liquid investment in Storage King.

Speaker #3: Primarily supported by a Department of Veteran Affairs renewal and expansion. Leasing activity was well balanced, with new deals representing 53% of transactions and tenants renewing 47%.

Speaker #3: Average incentives were 33% for the year, broadly in line with FY25. Slightly lower in fact than half year 26. While incentives on large and new transactions remained elevated, we are encouraged by the reemergence of a spread between new customer transactions and existing customers extending their tenure.

Speaker #2: That reflects an increase of $36 million of capital expenditure, less fair value losses of $70 million. Our weighted average cap rate firmed slightly to 6.7%, from 6.77% a year ago.

Speaker #2: I note that this is my last results presentation as CFO of Abacus Group. It has been my privilege to be able to share the Group's results with you over my 15 years at Abacus, and I wish my replacement, Lawrence Wong, all the very best in the future.

Speaker #3: Renewal incentives average 25%, compared with 35% on new deals, a good early indicator of an improving market. There are also seeing stronger outcomes in premium locations, at 14 Martin Place, 6 of the 7 leasing transactions completed during the year, were agreed at incentives below 30%, highlighting improving conditions for high-quality well-located assets.

Speaker #2: With that, I'll hand over to Kevin to discuss the Group's operating performance.

Speaker #3: Thanks, Steven, and thank you for your contribution to the group over many years. Our office portfolio comprises predominantly A-grade assets across Australia’s eastern seaboard, with a strong weighting to Sydney and Brisbane.

Speaker #3: Another sign of market improvement, we reduced average downtime on new leasing transactions to 9.5 months, down from 11 months in FY25, reflecting improving leasing efficiency across the portfolio.

Speaker #3: We continue to favor these markets given their attractive long-term fundamentals. Building on Steven’s earlier comments, Sydney remains Australia’s largest and most diverse office market, while Brisbane continues to benefit from strong population growth, significant infrastructure investment, and solid business activity.

Speaker #3: Looking ahead, we expect incentives to continue moderating, particularly in Sydney and Brisbane, where vacancy is tightening and new supply remains limited. Turning now to our lease expiry profile.

Speaker #3: We remain comfortable with our vacancy position and near-term expiries. Importantly, 65% of our vacant space is fitted and customer-ready, allowing us to capture demand quickly as it emerges.

Speaker #3: Beyond the quality of our assets, a key differentiator is our focus on customer experience and engagement. During FY26, we achieved a net promoter score of +35 across our managed office portfolio, up from +28 in FY25, reflecting the strength of our customer relationships and service proposition.

Speaker #3: The largest vacancy remains at 710 Collins Street, which is being actively marketed following government tenant departures during FY26. Discussions with respected tenants are ongoing.

Speaker #3: Amazingly, we have started FY27 well, with a meaningful proportion of vacant space already under heads of agreement or in advanced negotiations. Finally, looking at our retail portfolio, performance remained strong throughout FY26, with occupancy increasing to 97.4%, and the weighted average lease expiry extending to 4.8 years.

Speaker #3: Through our Voice of Customer program, asset activation initiatives, and active engagement with customers, we continue to support retention, drive leasing outcomes, and enhance the performance of the portfolio.

Speaker #3: Turning to our key office portfolio metrics, demand continues to be supported by the SME flight-to-value trend, our workspace offerings, and active customer engagement.

Speaker #3: Leasing conditions at Oasis remained favorable, with net base leasing spreads of 8.4% and incentives holding at a low 15% across both new and renewal deals.

Speaker #3: Our portfolio delivered 2% like-for-like rent growth in FY26, supported by leasing spreads of 3.2%. This was modestly below FY25 growth, reflecting slightly lower occupancy during the year.

Speaker #3: These metrics reflect the quality of the Oasis asset, in particular its dominant Broad Beach Gold Coast location, resilient retailer demand, and the strength of customer engagement across the center.

Speaker #3: We also delivered strong retention outcomes during the year, supporting occupancy reducing vacancy risk and underpinning the stability of future earnings. On that hand, you're back to Stephen for the outlook and guidance.

Speaker #3: Occupancy as of 30 June was 89.2%, down from 91.1% in FY25, primarily reflecting residual vacancy from customer surrenders recognized in the prior period. Interestingly, leasing progress on the surrendered space has been strong, with 80% of the area at 324 Queen Street already committed, and at 99 Walker Street, approximately 60% of the surrendered floors have been released over a period of time.

Speaker #2: Thanks, Kevin. And Evan, our commercial portfolio continues to perform. In the group, as I said before, is now focused as a specialized commercial REIT.

Speaker #2: We're pleased to provide distribution guidance for FY27 of 6.7 cents per security, reflecting a payout ratio in the range of 80 to 90 percent of FFO, assuming no material decline in current business conditions.

Speaker #3: Moving to our office leasing metrics, leasing spreads remain positive at 5.5%, underpinned by strong outcomes at 14 Martin Place and 324 Queen Street, which achieved spreads of 9.9% and 8.7%, respectively.

Speaker #2: As Evan mentioned, we've also increased the franking component in FY27 and expect 67% of the distribution to be fully franked up from 50% in FY26.

Speaker #2: I just wanted to take a moment to mention and acknowledge some people that have contributed to Abacus over many years, and have or are about to leave the group.

Speaker #2: Firstly, Evan Goodridge, who, as I said earlier, will leave at the end of the month. Evan took on the CFO role during the pandemic, after working many years in finance across many different functions.

Speaker #3: Primarily supported by a Department of Veteran Affairs renewal and expansion. Leasing activity was well balanced, with new deals representing 53%, and transactions and tenants renewing, 47%.

Speaker #2: We do wish Evan every success at Storage King Group. Secondly, many of you will have interacted over the years with Neil Summerfield, Neil has been with Abacus over 17 years, and leaves at the end of the month.

Speaker #2: Neil was previously head of investor relations, accompanying my predecessor, and has been a loyal and positive contributor to the group in its various activities and transactions.

Speaker #3: Average incentives were 33% for the year, broadly in line with FY25—slightly lower, in fact, than half-year 26. While incentives on large and new transactions remained elevated, we are encouraged by the reemergence of a spread between new customer transactions and existing customers extending their tenure.

Speaker #2: We sincerely wish Neil every success, also in his exciting new chapter. And finally, Mara Salkinda, retired as our chair in June. After more than 15 years on the board, and as chair for about 8 years, Mara devoted an enormous amount of energy and attention to the group.

Speaker #3: Renewal incentives average 25%, compared with 35% on new deals— a good early indicator of an improving market. We're also seeing stronger outcomes in premium locations. At 14 Martin Place, 6 of the 7 leasing transactions completed during the year were agreed at incentives below 30%, highlighting improving conditions for high-quality, well-located assets.

Speaker #2: And will be missed for her wise counsel and people-first mentality. We wish Mara every happiness and success in her retirement, as she takes on more and more of her life interests, including her growing family and wonderful grandchildren.

Speaker #2: That ends the formal remarks for the presentation; I now look forward to any questions or alternatively meeting with you in person in the days and weeks to come.

Speaker #3: Another sign of market improvement: we reduced average downtime on new leasing transactions to 9.5 months, down from 11 months in FY25, reflecting improving leasing efficiency across the portfolio.

Speaker #1: Thank you. If you wish to ask a question via the phones, you will need to press the star key, followed by the number 1 on your telephone keypad.

Speaker #1: To ask a question via the webcast, please type your question into the Ask a Question box and click Submit. The first phone question today comes from Larry Gandler from Shorin Partners.

Speaker #1: Please go ahead.

Speaker #4: Thanks, Stephen, for taking the question and welcome, Lawrence. And good luck, Evan, over at ASK. Just quickly, Stephen, can you maybe give us your thoughts on what your thinking about the ASK stake just maybe some comments around that?

Speaker #3: The largest vacancy remains at 710 Collins Street, which is being actively marketed following government tenant departures during FY26. Discussions with respective tenants are ongoing.

Speaker #3: Amazingly, we have started FY27 well, with a meaningful proportion of vacant space already under heads of agreement or in advanced negotiations. Finally, looking at our retail portfolio, performance remained strong throughout FY26, with occupancy increasing to 97.4% and the weighted average lease expiry extending to 4.8 years.

Speaker #2: I think Larry, as you'd appreciate, given we no longer are the manager of that group and have any involvement with the group, it's no longer considered a strategic investment.

Speaker #2: It is held as a current asset, and like every investment we have on the balance sheet, is constantly reviewed for its long-term returns to the group.

Speaker #2: So that's about as much as we can say at the moment.

Speaker #3: Leasing conditions at Oasis remained favorable, with net base leasing spreads of 8.4%, and incentives holding at a low 15% across both new and renewal deals.

Speaker #4: Is it meeting any sort of financial metrics that would warrant it being retained?

Speaker #2: Well, given the group is a commercially focused REIT, I would say there's a fair chance that it's not strategic to hold an investment in a storage self-storage listed entity.

Speaker #3: We also delivered strong retention outcomes during the year, supporting occupancy, reducing vacancy risk, and underpinning the stability of future earnings. On that note, I'll hand you back to Steven for the outlook and guidance.

Speaker #2: So I think that's about as much as we can say, Larry.

Speaker #4: Okay. Got it. Thanks, Stephen. Just wanted to clarify.

Speaker #1: Thank you. The next question comes from Callum Brammer from Macquarie. Please go ahead.

Speaker #1: Thanks, Kevin. And Evan, our commercial portfolio continues to perform. The group, as I said before, is now focused as a specialized commercial REIT.

Speaker #5: Good morning. Thanks for taking the question. Just wondered if you can give a little bit more color around the expectations for '27 in the guidance, particularly around retail and office.

Speaker #1: We're pleased to provide distribution guidance for FY27 of 6.7 cents per security, reflecting a payout ratio in the range of 80 to 90 percent of FFO, assuming no material decline in current business conditions.

Speaker #5: I know there was quite a few comments around the expiry profile, but just wondered if you can particularly reference any known outcomes in that short term or '27 expiry's bucket that we need to think about, and just your expectations on growth coming out of the retail component, as well.

Speaker #1: As Evan mentioned, we've also increased the franking component in FY27 and expect 67% of the distribution to be fully franked, up from 50% in FY26.

Speaker #2: I think the overarching message, Callum, is that we're seeing some really strong green shoots coming through, particularly in Sydney and Brisbane in office leasing.

Speaker #1: I just wanted to take a moment to mention and acknowledge some people that have contributed to Abacus over many years, and who have or are about to leave the group.

Speaker #2: As Kevin mentioned, incentives starting to moderate and particularly with our retention and renewal transactions, I think that's probably the most pleasing outcome. And certainly, as Kevin mentioned, is one of those sort of leading indicators of a recovering market.

Speaker #1: Firstly, Evan Goodridge, who—as I said earlier—will leave at the end of the month. Evan took on the CFO role during the pandemic, after working many years in finance across many different functions.

Speaker #1: We do wish Evan every success at Storage King Group. Secondly, many of you will have interacted over the years with Neil Summerfield. Neil has been with Abacus for over 17 years and leaves at the end of the month.

Speaker #2: We think that obviously. Supply constraints in the various markets is assisting for well-located, well-capitalized and actively managed assets. And that's a big part of our customer proposition.

Speaker #1: Neil was previously Head of Investor Relations, accompanying my predecessor, and has been a loyal and positive contributor to the group in its various activities and major transactions.

Speaker #2: So when we look across our portfolio, the building we're in here, 77 Carter Way, 100% leased, we've been able to shift 201 Elizabeth Street up to the sort of mid-'80s.

Speaker #1: We sincerely wish Neil every success, including in his exciting new chapter. And finally, Myra Salkinda retired as our chair in June. After more than 15 years on the board, and as chair for about 8 years, Myra devoted an enormous amount of energy and attention to the group, and will be missed for her wise counsel and people-first mentality.

Speaker #2: We think there's more to go there. And obviously, with our partners at Charter Hall, we're working hard on that building. Continuing to churn assets and other tenants, rather, at our assets, such as 324 Queen Street with positive results, 99 Walker Street in North Sydney with positive results.

Speaker #2: So it is a constant work in progress, but we are seeing that turning of the market. And we think that tenants are willing to commit.

Speaker #1: We wish Myra every happiness and success in her retirement as she takes on more and more of life's interests, including her growing family and wonderful grandchildren.

Speaker #2: They're committing to positive deals, renewals, in-place tenants are wanting to stay on. There are only retail asset that property continues to perform almost above our underwrite and above our expectations.

Speaker #1: That concludes the formal remarks for the presentation. I now look forward to any questions, or alternatively, meeting with you in person in the days and weeks to come.

Speaker #2: It's anchored by a very strongly performing supermarket, but it does sit really at the commercial hub of Broad Beach. And it does give us a lot of confidence to continually look to optimize the tenant mix.

Speaker #2: Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad.

Speaker #2: To ask a question via the webcast, please type your question into the "Ask a Question" box and click Submit. The first phone question today comes from Larry Gandler from Shorin Partners.

Speaker #2: It is spread over three levels. It does have a very big restaurant precinct and also car park, a very profitable car park activity. So it's a terrific property in a great location, and the retail sector's running pretty hot, as you'd understand.

Speaker #2: Please go ahead.

Speaker #4: Thanks, Steven, for taking the question, and welcome, Lawrence, and good luck, Evan, over at ASK. Just quickly, Steven, can you maybe give us your thoughts on what you're thinking about the ASK stake—just maybe some comments around that?

Speaker #2: So we are very positive and upbeat about the performance of that asset.

Speaker #5: So does guidance include or have an expectation of an improvement in occupancy for office by the end or during '27?

Speaker #1: I think, Larry, as you'd appreciate, given we no longer are the manager of that group or have any involvement with the group, it's no longer considered a strategic investment.

Speaker #2: I think there'd be a marginal uptick. I think we're looking at a couple of percent uptick in 201. Some of the releasing we've got some floors coming back at properties like 14 Martin Place, 99 Walker, 324 Queen, Kevin touched on 91 King William over in Adelaide.

Speaker #1: It is held as a current asset, and, like every investment we have on the balance sheet, is constantly reviewed for its long-term returns to the group.

Speaker #2: That's a we've had a floor handed back there from an existing tenant, but we're very in strong discussions with tenants. So it's not a dramatic movement in overall occupancy, but quite good releasing and with those positive spreads that we're seeing come through.

Speaker #1: So, that's about as much as we can say at the moment.

Speaker #4: Is it meeting any sort of financial metrics that would warrant it being retained?

Speaker #2: So Callum, I think

Speaker #3: the assets where we're not going to see any material movement or income from major vacancies are Larry Street, Canberra, and Good Shed. Both Larry Street needs to go through a refurbishment before that's ready to lease post-government.

Speaker #1: Well, given the group is a commercially focused REIT, I. Right. And particularly with our retention and renewal transactions, I think that's probably the most pleasing outcome, and certainly as Kevin mentioned, is one of those sort of leading indicators of a recovering market.

Speaker #3: Good Shed, we're in active conversations with a number of tenants, but timing for those is later, which would see income beyond the current year.

Speaker #3: So but yeah, as Stephen mentioned, Broad-based opportunity across the rest of the core portfolio.

Speaker #5: Maybe if I can ask another one just around costs. So the 25% reduction in admin expense in '27, do you think that there's further costs that come out again in '28, or does that get you to your kind of target MER?

Speaker #5: And as you think about the MER, Stephen, I just wondered you exclude, I guess, the ASK stake in that kind of calculation, or how should we think about that?

Speaker #2: Yeah. I think, Callum, it's a constant work in progress as to technology applications across the business. What is the portfolio that we own? What are we focused on?

Speaker #2: We've just gone through a transition with property managers, so there's quite a big roles and responsibilities alignment going on across the commercial team. And Lawrence joining in the finance team, looking with a fresh set of eyes at our corporate structure, what we've got in place, and the team.

Speaker #2: So I wouldn't say that '27 is the end game. I think it's a constant work in progress. And I think from an MER perspective, you're right.

Speaker #1: and the team. So I wouldn't say So I wouldn't say that Q7 is that it was the end game. I the end game. I think we're constant work in think it's a constant work in progress.

Speaker #2: The ASK stake obviously doesn't get counted, but we're also very keen to grow as we've said in the strategic priorities and setting the business with a very low level of gearing looking at opportunities as they emerge.

Speaker #1: doesn't get counted, but we're also But we're also very keen to grow, very keen to grow as we've said as we've said in the in the strategic strategic priorities.

Speaker #2: We'd be looking to deploy. Of that balance sheet strength in the latter part of FY '27 and into '28. So it does sort of move the numbers around quite a bit.

Speaker #1: So it does sort of it does sort of move the numbers around quite move the numbers around quite a a bit. As you'd bit.

Speaker #2: As you'd appreciate.

Speaker #5: Yeah. Thanks very much. Thanks for taking the questions. Congrats, Evan and Neil, and Myron on a great innings and contribution to the group. Thanks so much.

Speaker #1: As you'd appreciate. appreciate.

Speaker #2: Yep. Thanks Yeah. Thanks very much. very much. Thanks. Great. Congrats, Kevin, and you on Evan and you and Myra, great our great evenings, and evenings and thanks so thanks so much.

Speaker #4: Thanks, Callum.

Speaker #1: Thank you. The next question comes from Ben Brayshaw from Barren Joy. Please go ahead.

Speaker #2: much.

Speaker #3: Kevin. Thank you.

Speaker #6: Hi, Stephen. Thanks for the presentation. I was just wondering given that ABG is trading 45% below its MTA, if you could just talk about what opportunities you see as means to narrow that gap to your asset backing and how the board are also thinking about whether ABG could be a beneficiary of strategic transactions or M&A within the sector.

Speaker #4: ahead.

Speaker #5: M&A?

Speaker #2: Our focus, as we've said, Ben, is non-core sales, production and gearing, and really driving down the operating costs of the business. That we see as our best opportunity to present the most optimum income yield.

Speaker #1: our Our focus has focus has been been in in on-call non-quartile production and sales production and gearing, gearing, and and really really diving down the operating diving down the operating costs of costs of the business.

Speaker #1: the business. That we That we see as our best see as an opportunity to opportunity to prevent the most present the most optimum income optimum income here.

Speaker #2: Our portfolio and investors can obviously then make their mind up as to how that tracks relative to the valuation of the business. So we don't control that discount that we trade on on a daily basis.

Speaker #1: valuation of the business. So we don't So we don't control that control our discount that we trade discount that we trade on on a daily basis, on on a daily basis, and but we are and but we are very very focused on focused on delivering the delivering the best income best income yield yield for the for the portfolio of portfolio of investments that we investments we have.

Speaker #2: And but we are very focused on delivering the best income yield for the portfolio of investments that we have. We constantly look at every asset.

Speaker #2: We look at its three-year projections and contribution to the profitability of the group. And that covers across not only the storage stake, but also the retail assets and the commercial assets.

Speaker #1: We have. We constantly look at every constantly look at every asset. We look asset, we look at a three-year at a 3-year projection and projection, and contributions to the contribution to the profitability profitability of the of the group.

Speaker #2: And as Kevin mentioned, we have some non-core sales that are continuing. The likes of a Larry Street and Canberra, single asset, small building that we have in Alexandria, Bowden Street.

Speaker #1: More building that we have in Canberra, Mountain in Madden Street, and that's Street, and that's a constant work in a constant work in progress, looking progress looking at what is considered at, you know, what is considered core and core and what will be what will be compromised.

Speaker #2: And that's a constant work in progress looking at what is considered non-core and what will be crystallized. We're comforted and pleased to have contracted situation with the Camellia asset that's scheduled to complete by the end of September.

Speaker #2: So we'll constantly look at having the gearing level running at the lower end of the 25 to 40 percent range. And driving the income yield on our investments.

Speaker #1: September. So, you So we're constantly know, we're constantly looking looking at having the gearing at having the gearing level at the lower end level at the lower end of the of the 25 to 40 percent 25 to 40 percent range, and driving range, and driving the the income yield.

Speaker #2: So that's what we see, really, as our best opportunity.

Speaker #1: income yield. So that's what we see really as So that's what we see really as our our best opportunity. opportunity.

Speaker #6: Okay. Thanks, Stephen.

Speaker #5: Okay. Thanks, Okay. Thanks, Steven.

Speaker #1: Thank you once again to ask a question via the phones. Please press star one. To ask a question via the webcast, please type your question into the ask a question box.

Speaker #4: Thank

Speaker #4: you once again to all of your questions Steven. Thank you once again to Oskar, Kristin, via the phones. Please via the phone. Please don't press the star button to ask a stall on to ask a question via question via the webcast.

Speaker #4: the webcast. Please type your question Please type your question into the Ask a Question into the Ask a Question box. The next phone box.

Speaker #2: Maybe if I can ask another one, just around costs, so the 25% reduction in admin expense in '27, do you think that there's further costs that come out again in '28, or does that get you to your kind of target MER?

Speaker #1: The next phone question comes from Connor Eldridge from JPMorgan. Please go ahead.

Speaker #4: The next phone question is question is from Eldridge from JP from Eldridge from Morgan. Please go Jacksonville. Please go ahead.

Speaker #5: Hi, guys. Just a follow-on

Speaker #4: ahead.

Speaker #3: on the storage king stake. Can you just share what you're assuming in distribution income from that stake in FY '27 guidance?

Speaker #2: Hi guys. Just to follow

Speaker #2: on on the stake, can

Speaker #2: you just share what you're assuming

Speaker #2: And as you think about the MER, Steven, I just wondered, do you exclude, I guess, the ASK stake in that kind of calculation, or how should we think about that?

Speaker #2: contribution income from

Speaker #2: that stake in FY27?

Speaker #6: The storage king announced their results last week, and they announced that their distribution would be 4.5% for FY '27.

Speaker #1: Yeah, I think, Callum, it's a constant work in progress as to technology applications across the business. What is the portfolio that we own? What are we focused on?

Speaker #3: Okay. And you're assuming a full year of that in your guidance?

Speaker #3: FY27.

Speaker #2: Okay. And you're

Speaker #2: assuming that in your

Speaker #6: I think Stephen gave the best answer to Larry Gambler's question earlier on, which is that we assess all our assets that one obviously is no longer a strategic stake as we no longer have the management associated with it, and it'll be assessed at the right and appropriate time for the organisation.

Speaker #2: guidance?

Speaker #1: We've just gone through a transition with property managers, so there's quite a big. Roles and And roles and responsibilities alignment going responsibilities alignment going on on across the commercial across the commercial side.

Speaker #3: I think Steven think Steven gave the best answer to gave an answer from there again, Larry Gamers earlier on, was earlier on, which which is that we assess all was we assess all our our assets from that one of assets that we're going to use the systems for a strategic stake for a strategic stake in capital management associated with it, management associated with an and obviousness around the obvious list of appropriate time appropriate time to do to do a it.

Speaker #1: And in tech. and including finance finance, we're looking at a tech, you know, looking at a fresh set of fresh set of eyes. Our corporate eyes in our corporate structure, what we've got in structure, what we've got in place, place, and the team.

Speaker #3: Great. Thanks. And just on AFFO, can you just share what your assumption is in FY '27 in terms of maintenance capex? And I guess do you expect the dividend to be fully covered after accounting for that?

Speaker #1: And progress. And I I think from an MER think from an MER perspective, perspective, you're right, that's based you're right, the early stage stakes obviously on the business encounters.

Speaker #6: Yeah. So in the back of the appendices, I think it's slide 21 from memory, we break down the maintenance capex, tenant incentives, for FY '26.

Speaker #6: You can safely assume that that number has been relatively consistent for a period of time.

Speaker #1: And priorities. And setting the setting business is a very low level business at a very low level of of gearing, looking gearing, looking at at opportunities as they opportunities as they occur.

Speaker #3: Great. Thanks.

Speaker #1: We'd be looking to emerge, we'd be looking to deploy some of deploy some of that business that downstream strength in the, experience in the latter part of you know, latter part of the Q27 and into '27 and into '28, so Q28.

Speaker #1: Thank you. At this time, we're showing no further questions via the phones. I'll hand the conference back to management.

Speaker #2: Thanks. We do have a couple of web questions that have come in. One is in relation to the Maya building, the 50% interest in the Maya building we have in Melbourne.

Speaker #2: We are very pleased with the performance of that asset. We're obviously conscious that Maya is in a department store category, which at various times has its challenges.

Speaker #3: Thanks, Thanks, Callum.

Speaker #4: The next Thank you. The next question question. From Ben from Ben Brayshaw. Please go Brayshaw. Please go ahead.

Speaker #5: Hi, Steven. Thank you Hi, Steven. Thanks for your for the presentation. I was just presentation. I was wondering, given wondering given that the strategies, strategy is trained 45 to 60 years into 45% MTA, if you could MTA, if you could just talk just talk about about opportunity opportunities you see as views to narrow things to narrow that to your that to your asset that, and asset and how the how the board broader ABG fishery ABG fishery of BG of BG Transaction or transactions for M&A?

Speaker #2: But given the fundamentals of that real estate, a 4,000-metre block of land in the CBD, I think it's the single biggest land holding in the middle of Melbourne.

Speaker #2: And the improvements that were spent on that building, over the course of the last 10 or 12 years, we're very happy with that investment.

Speaker #2: The other question is just in relation to the change in distribution and the reduction to 6.7 cents. I'd just draw everybody's attention to what we've said about the payout ratio.

Speaker #2: And we've guided to an 80 to 90 percent payout ratio FFO, which is a very material step down from the payout ratio that has existed in the last two or three years.

Speaker #2: We think it's very prudent at this point in the cycle. We think it is a material change for the better. It does provide that sort of step-off mark for growth and sustainable distributions going forward.

Speaker #1: here portfolio. And investors Portfolio. And the investors can can obviously then make their mind up as obviously then make their mind up as to how to how that tracks relative to the that tracks relative to the valuation of the business.

Speaker #2: And in keeping with our peers. So I think that's a prudent decision that we've taken today. That's about the end of the questions that we've received.

Speaker #2: So on that note, I will thank you for your attendance and look forward to speaking over the course of the next few days. Thank you.

Speaker #1: group, and that And that covers covers across not only the across not only the storage storage space, the retail assets, but space, the retail assets, commercial the commercial assets, and as assets, as Kevin Kevin mentioned, we have some mentioned, capital on-call non-core sales that are sales, and continuing the likes of continuing, like Alara Street in Canberra, all the Lara Street and Candle for the assets small building that we have assets.

Speaker #1: We're concerned and utilized. We're implement and pleased to pleased to have contracted have contracted situations with familiar situations with familiar assets, that's scheduled to complete by the assets, that's scheduled to complete by the end of end of September.

Speaker #5: Hi, guys. Just to

Speaker #5: follow on on storage being

Speaker #5: staked, can you just share what you're

Speaker #5: assuming in distribution income

Speaker #5: from that staking in FY27

Speaker #5: guidance?

Speaker #3: The storage gearing The storage gearing and announcement last week, they assets, last week. They announced that announced that the distribution would be the distribution would be 4.5% for 4.5% for FY27.

Speaker #5: Okay, and you're

Speaker #5: assuming that in your

Speaker #5: guidance?

Speaker #3: I

Speaker #3: promotion.

Speaker #2: Great. Thanks. Just

Speaker #2: one, David, the assumption is in

Speaker #2: FY27 maintenance

Speaker #2: can be the

Speaker #2: dividend of it after.

Speaker #3: Yeah. So in that Yeah, so in the back of the tendencies, I think it's the case, I think it's slide 21 from every surprisingly winning memories that we break down breakdown of maintenance cap and the matrix and incentives for incentives for FY26.

Speaker #3: You can FY26. You can safely assume that sometimes we safely assume we don't have very many may look at each other for a period of eligible assets for a period of time.

Speaker #3: time.

Speaker #2: Great.

Speaker #2: Thanks.

Speaker #4: Thank you. At this time, we'll time, we'll show you the questions via the show you all the questions via the phones. I'll end the conference phones.

Speaker #4: I'll hand the conference back call.

Speaker #4: to.

Speaker #1: Thanks. we do have a couple of next of questions that have come questions that have come in. one in. One is in relation to our is in relation to our building, the 50% interest in the Maya building, the 50% interest in the Maya building we have in building.

Speaker #1: Has its challenges, challenges, but, but given the fundamentals of given the fundamentals of that that real estate, the 4,000-meter real estate, the 4,000-meter block block of land in the Seabrook area, I think land in the Stevensville, I think it's the it's the biggest land holding biggest land holding in in Melbourne, and the Melbourne.

Speaker #1: And the improvements that we've seen on that building over improvements that were spent on that building over the the course of the last 10 or 12 course of the last 10 or 12 years, we're very happy with years, we're very happy with that that investment.

Speaker #1: and that reluctance of to 6.7%. I'm 6.7%. Just draw everybody's just sure everybody's interested in what attention to what we've said about the Maya we've said about the Maya ratio.

Speaker #1: Which Maya. Which is a very is a very material material step down from the Maya step down from the payout ratio ratio that we listed in the last that we've listed in the last 2 or two or three years.

Speaker #1: forward. and in keeping And in keeping with our pitch, with our peers. so I think So I think that's a prudent decision that that's a prudent decision that we've taken we've taken today.

Speaker #5: Great, thanks. Just

Speaker #5: on

Speaker #5: maintenance cap,

Speaker #5: the dividend

Speaker #5: after.

Speaker #5: Great, thanks.

Speaker #4: Thank you. At this

Speaker #1: Thanks. We do have a couple

Speaker #1: We are very Melbourne. we, are very pleased with the performance of that pleased with the performance of that asset. asset. we're We're obviously conscious obviously trying to support, you know, that Maya is in a department Maya is in a departmental store category, which category with, a at various times has its very fine status.

Speaker #1: The index. the other question is in relation other question is just in relation to to the change in the change in distribution and that reduction distribution.

Speaker #1: We've guided ratio. And we've guided to our to a 10 to 90 percent consent to 90% Maya Maya ratio with the ratio with the buyer.

Speaker #1: We think it's 3 years. We think it's very very prudent going in the prudent going in the cycle. We think it is cycle. We think it is a material a material change for the change for the better.

Speaker #1: It does better. It does provide, you provide that sort of know, that sort of step-off mark for step-off mark for growth and growth and sustainable distribution going sustainable distribution going forward.

Speaker #1: That's about the today. That's about the end end of the questions that we've of the questions that we've received. So received. So on that note, I will on that note, I will thank thank you for all your you for all your attendance, attendance, and look forward to speaking on and look forward to meeting on the call for the call for the next few days.