Q4 2026 360 Capital REIT Earnings Call

August 18, 2026

Speaker #2: Good morning, ladies and gentlemen, and welcome to the FY26 360 Capital REIT annual results. My name is Tony Pitt. I'm the Executive Chairman of the group.

Tony Pitt: Good morning, ladies and gentlemen, and welcome to the FY26 360 Capital REIT annual results. My name is Tony Pitt. I am the Executive Chairman of the group. Today, we will go through TOT's results and then anyone that wants to ask any questions, there is a Q&A on the system at the back end. Just type your questions and then we will endeavor to answer those at the end. Just starting off on why invest in TOT. We think TOT is a great value proposition. Very attractive yield of 8.8% based on FY27 upgraded distributions. Once again, we are forecasting that those will be 100% tax deferred. Those earnings and distributions are coming from a very strong, well-tenanted portfolio that is now 100% leased with a WALE of six years with 84% leased to government and public companies.

Tony Pitt: Good morning, ladies and gentlemen, and welcome to the FY 2026 360 Capital REIT annual results. My name is Tony Pitt. I am the Executive Chairman of the group. Today, we will go through TOT's results and then anyone that wants to ask any questions, there is a Q&A on the system at the back end. Just type your questions and then we will endeavor to answer those at the end. Just starting off on why invest in TOT. We think TOT is a great value proposition. Very attractive yield of 8.8% based on FY 2027 upgraded distributions. Once again, we are forecasting that those will be 100% tax deferred. Those earnings and distributions are coming from a very strong, well-tenanted portfolio that is now 100% leased with a weighted average lease expiry of six years with 84% leased to government and public companies.

Speaker #2: Today, we'll go through Todd's results, and then anyone that wants to ask any questions—there's a Q&A on the system at the back end.

Speaker #2: Just type your questions, and then we'll endeavor to answer those at the end. Just starting off on why invest in TODD. So, we think TODD's a great value proposition.

Speaker #2: Very attractive yield of 8.8% based on FY27 upgraded distributions. And once again, we're forecasting that those will be 100% tax deferred. Those earnings and distributions are coming from a very strong, well-tenured portfolio.

Speaker #2: That is now 100% leased, with a weighted average lease expiry of 6 years. With 84% leased to government and public companies, it's strong covenants with annual rent reviews.

Tony Pitt: Strong covenants with annual rent reviews. Management, obviously, a lot of alignment there. That will continue. We are very focused on driving EPS. As mentioned, the portfolio, for the direct portfolio, average age of the building is only 5.7 years. TOT is unique in that it has a stable security. It has franking credits that we can use to supplement the deferred tax distributions when needed. During the year, we increased our assets by investing AUD 10 million of structured equity, and we will talk about that more shortly. As mentioned, our focus is really growing EPS. We are not interested in FUM for FUM's sake and growing assets for the sake of it, but really continuing to drive that earnings.

Speaker #2: Management, obviously, there's a lot of alignment there. That will continue, and we're very focused on driving earnings per security. As mentioned, the portfolio—the direct portfolio—average age of the buildings is only 5.7 years.

Speaker #2: And TODD is unique, in that it is a stapled security. It has franking credits that we can use to supplement the deferred tax distributions.

Speaker #2: When needed, during the year we increased our assets by investing $10 million in structured equity, and we'll talk about that more shortly. As mentioned, our focus is really on growing earnings per security.

Speaker #2: We're not interested in farm-for-farm's sake and growing assets for the sake of it, but really continuing to drive those earnings. Looking at FY25, we had 2.4 cent earnings.

Tony Pitt: Looking at FY25, we had AUD 0.024 earnings on a 3% distribution, so we are over-distributing as a result of leasing that occurred mainly in Canberra. During that year, we took the benefit of that this year coming through cash flow, and we forecast AUD 0.03 for FY26. We upgraded that to AUD 0.032, well and truly covering our distributions as a result of the preference equity investment, and we put out earnings of AUD 0.036. We are pleased to announce that we have upgraded FY27 earnings again, to AUD 0.038, and are looking at increasing, or forecasting increasing our distributions by 20% this year. I will go through why that is in a minute. Obviously, a busy year with the leasing.

Tony Pitt: Looking at FY 2025, we had AUD 0.024 earnings on a 3% distribution, so we are over-distributing as a result of leasing that occurred mainly in Canberra. During that year, we took the benefit of that this year coming through cash flow, and we forecast AUD 0.03 for FY 2026. We upgraded that to AUD 0.032, well and truly covering our distributions as a result of the preference equity investment, and we put out earnings of AUD 0.036. We are pleased to announce that we have upgraded FY 2027 earnings again, to AUD 0.038, and are looking at increasing, or forecasting increasing our distributions by 20% this year. I will go through why that is in a minute. Obviously, a busy year with the leasing.

Speaker #2: On a 3-cent distribution, so we're over-distributing as a result of leasing that occurred mainly in Canberra. During that year, we took the benefit of that this year, coming through cash flow.

Speaker #2: And we forecast 3 cents for FY26. We upgraded that to 3.2 cents, well and truly covering our distributions as a result of the preference equity investment.

Speaker #2: And we put out earnings of 3.6 cents. We're pleased to announce that we've upgraded FY27 earnings again, to 3.8 cents. And looking at increasing, or forecasting increasing, our distributions by 20% this year.

Speaker #2: I'll go through why that is in a minute. Obviously, it's been a busy year with the leasing—it's been great, but we continue to trade at a discount to our NTA.

Tony Pitt: It has been great, but we continue to trade at a discount to our NTA, and we feel that the only way to continue to try and close that gap is to continue to try and grow earnings per security without taking too much risk. Snapshot of the results, looking across the top line there, earnings up 33%, distribution in line with forecast, a payout ratio improvement to a payout ratio of 94%. Gearing is getting to the upper end of our gearing range. With the preference equity investments or structured equity investments that we are making, they are self-liquidating. Along with having our DRP on, we are forecasting that we will be down to mid to lower end of our range by 30 June 2027. Looking at forecasts, this financial year being FY27, earnings we are forecasting to be up another 18%. As I mentioned, distributions will be up 20%.

Tony Pitt: It has been great, but we continue to trade at a discount to our NTA, and we feel that the only way to continue to try and close that gap is to continue to try and grow earnings per security without taking too much risk. Snapshot of the results, looking across the top line there, earnings up 33%, distribution in line with forecast, a payout ratio improvement to a payout ratio of 94%. Gearing is getting to the upper end of our gearing range. With the preference equity investments or structured equity investments that we are making, they are self-liquidating. Along with having our DRP on, we are forecasting that we will be down to mid to lower end of our range by 30 June 2027. Looking at forecasts, this financial year being FY 2027, earnings we are forecasting to be up another 18%. As I mentioned, distributions will be up 20%.

Speaker #2: And we feel that the only way to continue to try and close that gap is to continue to try to grow earnings per security without taking too much risk.

Speaker #2: Snapshot of the results: Looking across the top line there, earnings are up 33%. Distribution is in line with forecast. A payout ratio improvement to 94%.

Speaker #2: Gearing is getting to the upper end of our gearing range. But with the preference equity investments, or structured equity investments that we're making, they are self-liquidating.

Speaker #2: Along with having our DRP on, we're forecasting that we'll be down to sort of the mid to lower end of our range by 30 June.

Speaker #2: Looking at the forecast for the financial year, being FY27, earnings are forecast to be up another 18%. As I mentioned, distributions will be up 20%. Our payout ratio is pretty much in line with last year.

Tony Pitt: Our payout ratio, pretty much in line with last year. What is important here in differentiating TOT is that we have very little CapEx coming through in our cash flow, so it is very clean cash flow. So our FFO is pretty much in line with our operating earnings. As mentioned, we are forecasting to remain 100% tax deferred and making quarterly distributions. Touching on the investment portfolio, given it is 100% leased now, I will not go through too much detail here. As you can see, snapshot of the portfolio. We have introduced that structured equity investment of AUD 10 million during the year. We do have a strategy of increasing that, given that when you look at direct assets yielding 6.5%, 6.4%, we are getting an increase in our revenue from bringing on some of that structured preference equity. As I said, we are very disciplined in what we look at.

Speaker #2: What's important here in differentiating, Todd, is that we have very little capex coming through in our cash flow, so it's very clean cash flow.

Speaker #2: So, our FFO is pretty much in line with our operating earnings. And as mentioned, we are forecasting to remain 100% tax-deferred and making quarterly distributions.

Speaker #2: Touching on the investment portfolio, given it's 100% leased now, I won't go through too much detail here. As you can see, here's a snapshot of the portfolio.

Speaker #2: We've introduced that structured equity investment of $10 million during the year. We do have a strategy of increasing that, given that when you look at direct assets yielding 6.5% to 6.4%.

Speaker #2: We're getting an increase in our revenue from bringing on some of that structured preference equity. But as I said, we're very disciplined in what we look at.

Speaker #2: We do look at a lot of opportunities in this space. We do expect that to increase, but we are very selective in what we do on that basis.

Tony Pitt: We do look at a lot of opportunities in this space. We do expect that to increase, but are very selective in what we do on that basis. Direct portfolio. About 9.4% of the portfolio was leased this year, all coming out of 510 Church Street, down in Melbourne, where we saw a marked improvement in the office market there, as opposed to what we are seeing in the Melbourne CBD, with high vacancies. We have managed to lease all of the vacant space within the portfolio across Siemens Energy, Endeavour Group, and STACK Infrastructure, as well as some extension of existing leases and subtenants within that building there. Most of the rent reviews are fixed, coming through with some CPI, and as mentioned before, very strong covenants, which I think is going to be important.

Speaker #2: Direct portfolio. So about 9.4% of the portfolio was leased this year, all coming out of 510 Church Street in Melbourne, where we saw a marked improvement in the office market there.

Speaker #2: As opposed to what we're seeing in the Melbourne CBD with high vacancies, we've managed to lease all of the vacant space within the portfolio.

Speaker #2: Across Siemens, Energy, Endeavor Group, and Stack Infrastructure, as well as some extensions of existing leases and subtenants within that building there, most of the rent reviews are fixed.

Speaker #2: Coming through with some CPI, and as mentioned before, very strong covenants, which I think is going to be important. We see a little bit of a downturn coming.

Tony Pitt: We see a little bit of a downturn coming, and having those covenants will see us through that well. When we look at our lease expiry, we do not have any expiry now until 2029. We have just got very minimal. When we look at 2030, 9.4% of that 13.3 coming up is actually Dentsu. We have already started discussions about tenants taking over that tenancy early, and we will be expecting Dentsu as part of that lease break, to pay any incentives that are coming through, maintaining that clean cash flow. Portfolio valuation has not changed markedly during the last 12 months. Talking to valuers and looking at evidence, there is a fair bit of evidence around suggesting that portfolios are well valued, if you like. But there is that disconnect between the listed and the direct market. Touching on Cremorne, as I said, it has been a tough asset, now 100% leased.

Speaker #2: And having those covenants, we'll see us through that well. When we look at our lease expiry, we don't have any expiry now until 2029.

Speaker #2: We've got very minimal. When we look at 2030, 9.4% of that 13.3% coming up is actually Densu. We've already started discussions about tenants taking over that tenancy.

Speaker #2: Early, and we will be expecting Densu, as part of that lease break, to pay any incentives that are coming through, maintaining that clean cash flow.

Speaker #2: Portfolio valuation hasn't changed. Market led during the last 12 months. And talking to valuers and looking at evidence, there's a fair bit of evidence around suggesting that portfolios are well.

Speaker #2: Valued if you like. But there is that disconnect between the listed and the direct market. Touching on Cremorne, as I said, it's been a tough asset.

Speaker #2: Now 100% leased; good cash flow coming through there. So, we can now continue to manage it actively, looking at that Densu space—but not too much to do there.

Tony Pitt: Good cash flow coming through there. We can now continue to manage it actively, looking at that Dentsu space, but not too much to do there. The fund will obviously benefit from that leasing, some of it happened late in FY26. The benefit will come through in FY27, as you have seen with our Sydney Avenue asset in Canberra. Tightest office market in Australia, where 12 months ago, we leased the vacant floor there, and FY26 all the earnings coming through from that vacancy. Good asset, well-leased, WALE of 8 years. Well-located office asset. Lastly, Cannon Hill leased to Michael Hill, specifically built for them. Very happy tenant there. There is not a lot to report on that. Looking at the structured equity. In December, the fund made an AUD 10 million investment into 36 brand-new apartments in Willoughby, in Sydney here, as part of a preference equity.

Speaker #2: The fund will obviously benefit from that leasing, though some of it happened late in FY26. The benefit will come through in FY27, as you've seen with our Sydney Avenue asset in Canberra.

Speaker #2: Tightest office market in Australia. Where, 12 months ago, we leased the vacant floor there. And FY26 for the earnings coming through from that vacancy.

Speaker #2: Good asset. Well leased. Whale of eight years. Well-located office asset. Lastly, Cannon Hill. Leased to Michael Hill, specifically built for them. Very happy tenant there.

Speaker #2: There's not a lot to report on that. Looking at the structured equity, in December the fund made a $10 million investment into 36 brand new apartments.

Speaker #2: In Willoughby, in Sydney here. As part of a preference equity, it is in with private capital, in a 360 managed fund. The strategy of this fund is to sell down apartments.

Tony Pitt: It is in with private capital in a 360 Capital managed fund. The strategy of this fund is to sell down apartments, repay this preference equity as we go along. As at 30 June, that had capitalized up to AUD 10.9 million. Post 30 June, we have had 6 settlements of the 36 apartments, which has taken that down AUD 1.3 million, and that will continue to amortize down over predominantly FY27, potentially into FY28, as we are seeing a bit of a slowing in the residential market. We bought these apartments at 27% discount to valuation. We are selling them at about 5% discount to the valuation at the moment, so well and truly covering TOP's preference position with a significant buffer behind that. These are the types of deals that you will see us looking at going forward, whether it is apartment buildings, gap capital into shopping centers, industrial properties, that sort of thing.

Speaker #2: Repay this preference equity as we go along. As at 30 June, that had capitalized up to $10.9 million. Post 30 June, we've had six settlements of the 36 apartments.

Speaker #2: Which has taken that down to $1.3 million, and that will continue to amortize down over predominantly FY27, potentially into FY28, as we're seeing a bit of a slowdown in the residential market.

Speaker #2: We bought these apartments at a 27% discount to valuation. We're selling them at about a 5% discount to the valuation at the moment, so we're well and truly covering Todd's preference position.

Speaker #2: With a significant buffer behind that. These are the types of deals that you will see us looking at going forward, whether it's apartment buildings.

Speaker #2: Gap capital into shopping centers, industrial properties, that sort of thing—taking a really preferred position down the capital stack, with a lot of equity buffer behind.

Tony Pitt: Taking a really preferred position down the capital stack where there is a lot of equity buffer behind. We think it is a good risk-return profile for TOP to be doing a little bit of this. Although we have an allocation of 25% of our balance sheet, I think it is about 5% at the moment. We are going to be very cautious in doing this, not doing this for getting risk for sake of just driving earnings, looking at the risk and return in this very volatile market that we are now in. Touching on the financials. You can see there, the TOP property line, the gross income for the year was up 8%. We are forecasting it will be up another 13.6% for FY27. That is as a result of the recent leasing, getting the full benefit of that coming through. Likewise, the structured equity income coming through.

Speaker #2: We think it's a good risk-return profile for Todd to be doing a little bit of this, although we have an allocation of 25% of our balance sheet.

Speaker #2: I think it's about 5% at the moment. We're going to be very cautious in doing this—not doing this for getting risk, for the sake of just driving earnings.

Speaker #2: Looking at the risk and return in this very volatile market that we're now in, and touching on the financials, you see their top property line.

Speaker #2: The gross income for the year was up 8%. We're forecasting it'll be up another 13.6% for FY27. That's as a result of the recent leasing getting the full benefit of that coming through.

Speaker #2: Likewise, the structured equity income coming through—what was done there was about a half year of earnings for that. What happens in the second half?

Tony Pitt: That was about a half year of earnings for that. What happens in the second half, it will go up about another 35%, but is starting to amortize off as those apartment sales are coming through. So we are forecasting about AUD 8.7 million net operating profit for FY27, which is up about 26% on the 33% that we had last year, driven from those things, and that is driving our earnings per security. Pretty simple balance sheet. Keeping costs under control, and driving those after-tax returns to TOP's security holders. Likewise, when you look at the balance sheet, AUD 10.9 million of pref equity there. As I said, it has already come down AUD 1.3 million post-period. We have used those proceeds to reduce our gearing down, and that will be a continuing theme over FY27. Already gearing is down at 38.5% and will continue to come down.

Speaker #2: It will go up about another 35%, but is starting to amortize off as those apartment sales are coming through. So we're forecasting about $8.7 million net operating profit for FY27.

Speaker #2: Which is up about 26% on the 33% that we had last year, driven from those things. And that's driving our earnings per security. Pretty simple balance sheet.

Speaker #2: Keeping costs under control and driving those after-tax returns to TOTT's security holders. Likewise, when you look at the balance sheet, $10.9 million of preferred equity there, as I said.

Speaker #2: It's already come down 1.3 post-period. We've used those proceeds to reduce our gearing. That will be a continuing theme over FY27.

Speaker #2: We are already gearing down at around 38.5%, and this will continue to come down. NTA is stable at $0.58, given that valuations are remaining stable on the capital front.

Tony Pitt: NTA is stable at AUD 0.58, given that the valuations are remaining stable there. On the capital front, we did extend our debt facility for 5 years, now expiring on 31 August. A couple of reasons why we did that. We had a reduction in our margin given the improvement in the portfolio, and also just securing our long-term cash flows in our debt. We also increased the facility up to AUD 100 million from AUD 90 million, just giving us that headroom. While AUD 16 million headroom, that is obviously increasing well within our LVR and ICR covenants. As you can see, we are 100% remaining floating at this stage. We are monitoring the interest rate environment. We see over the medium-term, interest rates coming down, and we want TOP to benefit from that lowering of interest rate expense there. in March, we turned on our DRP there.

Speaker #2: We did extend our debt facility for five years, now expiring on August 31. A couple of reasons why we did that.

Speaker #2: We had a reduction in our margin given the improvement in the portfolio, and also just securing our long-term cash flows in our debt. We also increased the facility up to $100 million from $90 million.

Speaker #2: Just giving us that headroom. Was $16 million headroom; that's obviously increasing. Well within our LVR and ICR covenants, as you can see. We are 100% remaining floating at this stage.

Speaker #2: We are monitoring the interest rate environment. We see, over the medium term, interest rates coming down, and we want Todd to benefit from that lowering of interest rate expense there.

Speaker #2: In March, we turned on our DRP. There, we are forecasting that we'll continue to have that on for FY27, and we're forecasting about a 60% participation arrangement.

Tony Pitt: We are forecasting that we will continue to have that on for FY27, and we are forecasting about a 60% participation level. TT Investments, the largest shareholder in TOP, has undertaken its current intentions to continue to take up its DRP, so therefore, we can forecast quite accurately in terms of our LVR coming down. That gives us capacity if there are opportunities that suit TOP coming along. It also keeps us in a very conservative approach there. All of these have been adopted in our forecast when we look at our AUD 0.038, so it takes all of this into account. Looking at the key focuses for FY27, as mentioned, guidance. We have increased our distribution to AUD 0.036, up 20% with a 95% payout ratio.

Speaker #2: Participation level. And TT Investments, the largest shareholder in TOT, has undertaken that its current intention is to continue to take up its DRP. So therefore, we can forecast quite accurately in terms of our LVR coming down.

Speaker #2: That gives us capacity if there are opportunities that suit Todd coming along, but also keeps us in a very conservative approach there. All of these have been adopted in our forecast.

Speaker #2: When we look at our 3.8 cents, it takes all of this into account. Looking at the key focuses for FY27, as mentioned: guidance.

Speaker #2: We've increased our distribution to 3.6 cents, up 20%, with a 95% payout ratio. Like a lot of REITs, we still continue to trade at a discount.

Tony Pitt: Like a lot of REITs, we still continue to trade at a discount, and as I said, the only thing that we can look at in the current environment is continuing to drive our earnings, getting the message out there, and getting the support for people to buy our market and keep the unitholder base tight there. We are very focused on after-tax returns for our security holders, and hence, we can still maintain that 100% tax deferred with those franking credits balance if we need to top up in the latter years. Looking at the peer comparison. TOP is the smallest REIT in the sector. The sector is a bit of a sad place at the moment, but there is value to be had in terms of some of the investments here.

Speaker #2: And as I said, we're just looking at—really, the only thing that we can look at in the current environment is continuing to drive our earnings.

Speaker #2: Getting the message out there, and getting the support for Todd—for people to buy our market and keep the unit holder base tight there.

Speaker #2: We are very focused on after-tax returns for our security holders, and hence we can still maintain that 100% tax deferred, with those franking credit balances if we need to top up in the later years.

Speaker #2: Looking at the peer comparison, Todd is the smallest REIT in the sector. The sector is a bit of a sad place at the moment.

Speaker #2: But there is value to be had in terms of some of the investments here. We think TOD is one of those attractive propositions, given the stability of the portfolio.

Tony Pitt: We think TOP is one of those attractive propositions given the stability of the portfolio, the after-tax returns, and I think unitholders are well-rewarded in terms of when you look at the metrics to some of these other predominantly office REITs, which are trading at a steeper discount. There is a reason for that. When you look at their individual cash flows, they have a lot of incentives running through their cash flow, where you look at the TOP, there is very clean cash flow going forward, coming through. Key focuses. Talking about leasing, as I said, we are 100% leased now. We are in discussions with Dentsu, who handed back level 6 during FY26, which was subsequently leased. Given the improvement in the Cremorne market, we are in discussions now with potential tenants to take that 7 and 8 early.

Speaker #2: The after-tax returns, as well—I think unit holders are well rewarded in terms of, when you look at the metrics compared to some of these other, predominantly office REITs.

Speaker #2: Which are trading at a steeper discount. There's a reason for that. When you look at their individual cash flows, they have a lot of incentives running through their cash flow.

Speaker #2: Where you look at, Todd, is very clean cash flow going forward, coming through. Key focuses—talking about leasing. As I said, we're 100% tax, 100% leased now.

Speaker #2: We are in discussions with Densu, who handed back Level 6 during FY26, which we've subsequently leased. Given the improvement in the Cremorne market, we are in discussions now with potential tenants to take Levels 7 and 8.

Speaker #2: Early. And Dentsu, being a global company, are paring back their office requirements around the globe. It's not something to do with the building—capital management.

Tony Pitt: Dentsu, being a global company, are paring back their office requirements around the globe. It is not something to do with the building. Capital management. We do want to take this gearing down a little bit. We are remaining 100% floating, trying to get an advantage of the drop in interest rates. Let us just see how we go there. We do want to keep gearing well within our gearing range there. EPS, we think that growing our preference equity investments will grow our earnings for security, and we will get rewarded for that over the medium term from our share price. Really looking at the risk-reward side of it, we are seeing some fairly distressed situations in the market now. We will look at capitalizing on that, but we are very selective, as mentioned. Trading performance. We are now doing quarterly updates.

Speaker #2: We do want to take this gearing down a little bit. We are remaining 100% floating, trying to take advantage of the drop in interest rates.

Speaker #2: Let's just see how we go there. And we do want to keep gearing well within our gearing range there. EPS—we think that growing our preference equity investments will grow our earnings per security.

Speaker #2: And we will get rewarded for that over the medium term from our share price. Really looking at the risk-reward side of it, we are seeing some fairly distressed situations in the market now.

Speaker #2: We will look at capitalizing on that, but we're very selective, as mentioned. Trading performance—we're now doing quarterly updates. We're out there talking to investors a lot more about Todd, and will continue to do that.

Tony Pitt: We are out there sort of talking to investors a lot more about TOP, and we will continue to do that. As mentioned, we have upgraded our EPS to AUD 0.038 and our distribution increased by 20%. We see that level of distribution being sustainable going forward. That is it for the presentation. Open up the floor if there is any questions now. We will just look at the Q&A. There is a couple of questions here. The first one is: Is it wise to buy blocks of apartments for resale in a falling residential market there at a non-premium areas? When we look at this asset that we have brought, and we have brought about four blocks of apartments within the group over the years and done very well from buying wholesale and selling out to retail. Yes, with this particular one, there has been a downturn in the market.

Speaker #2: As mentioned, we've upgraded our EPS to 3.8 cents, and we've increased our distribution by 20%. We see that level of distribution as being sustainable going forward.

Speaker #2: That's it for the presentation. I'll open up the floor if there are any questions now. So, we'll just look at the Q&A. There are a couple of questions here.

Speaker #2: So the first one is: why buy blocks of apartments for resale in a falling residential market? They're in non-premium areas.

Speaker #2: When we look at this asset that we have brought—and we've brought about four blocks of apartments within the group over the years—and done very well from buying wholesale and selling out to retail.

Speaker #2: Yes, with this particular one, there has been a downturn in the market. But if we think looking forward, we think Rezzy's probably got a little bit of a way to come off yet with what's happened with the tax changes.

Tony Pitt: If we think looking forward, we think resi has probably got a little bit a way to come off yet with what has happened with the tax changes. But when you are buying at a 27% discount on brand-new apartments well below book value in a very tight market and selling them out at between val and a 5% discount, we think that is good business. Likewise, providing some pref equity in a structure into, say, a stable shopping center that was going through a re-leasing or what have you. We are property people. We look at the risks, we look at the returns, and we think there is a compensation for the risk that we are taking here, targeting that sort of 15% to 25%. Being in that strong capital position that we are, we can take advantage of that.

Speaker #2: But when you're buying at a 27% discount on brand new apartments, well below book value, in a very tight market, and selling them out at between value and a 5% discount.

Speaker #2: We think that that is good business. Likewise, providing some pref equity in a structure, into say a stable shopping center that was going through a releasing or what have you.

Speaker #2: So, we are property people. We look at the risks, we look at the returns, and we think there's a compensation for the risk that we're taking here.

Speaker #2: Targeting that sort of 15% to 25%, and being in that strong capital position that we are, we can take advantage of that. The second question here.

Tony Pitt: The second question here we have got here is: Given the recent changes to CGT and the budget, can we return to paying fully franked divvies in FY27, FY28, rather than capital return, I think it means tax-deferred distributions. That is something that we constantly look at in terms of the tax environment has changed with the budget coming through. We are looking at how we can get those franking credits back in the hands of security holders as soon as possible. That is something that we are mindful of and is a very good question because it is a changing environment there. Thank you for both those questions. It looks like there is no other questions. If you want to ask any questions, by all means, contact 360 Capital and Investor Relations.

Speaker #2: What we've got here is, given the recent changes to CGT and the budget, can we return to paying fully franked divvies in FY27 or FY28? Rather than a capital return, I think it means tax-deferred distributions.

Speaker #2: There's something—look, what you constantly look at in terms of the tax environment has changed with the budget coming through. We are looking at how we can get those franking credits back in the hands of security holders as soon as possible.

Speaker #2: So that's something that we are mindful of, and it is a very good question because it is a changing environment there. So, thank you for both those questions.

Speaker #2: Looks like there's no other questions. If you want to ask any questions, by all means contact 360 Capital and Investor Relations. We're happy to talk about any part of Todd.

Tony Pitt: We're happy to talk about any part of TOP as part of that getting the message out there and continuing to drive what we're doing in TOP. Once again, thank you for your support during the year. Look forward to another busy year. Thank you for listening to our presentation today. Thank you.

Speaker #2: As part of that, getting the message out there and continuing to drive what we're doing in Todd. Once again, thank you for your support during the year.

Speaker #2: Look forward to another busy year. And thank you for listening to our presentation today. Thank you.

Operator: Goodbye