Thank you, and good morning, everybody. Welcome to the inaugural half year result presentation for Abacus Storage King, as its own freestanding self-storage sector specialist REIT. I'm joined here today by Nikki Lawson, our Group General Manager Self-Storage, and also Evan Goodridge, our CFO, both for both the group and ASK. As well, we have Cynthia, Chris, Lucy, and Key here from our IR corporate comms and finance teams. Well, what a half year of achievement. On the 3rd of August 2023, we launched ASK with a massive positive endorsement from our shareholders voting 99.97% in favor, one of the highest positive votes for a scheme of arrangement in REIT history in Australia. But we didn't stop there. Our business has continued to achieve and record very pleasing operating results as the self-storage sector proves its resilience to broader macro factors.
Plus, we believe benefits from a number of cyclical and structural tailwinds that we will expand on later in the presentation. As part of the de-stapling, we were able to raise fresh equity to set the balance sheet strongly with ample liquidity to maintain our growth momentum. Plus, also with strong support from our lenders, we were successful in extending and enlarging our debt facility on very attractive terms. But it is particularly the operating performance, RevPAM growth in particular 4.8% on prior period, and continued above-average occupancy levels that is the most satisfying, a product we believe of superior locations, facility placement, and design along with the diligent and expert management by the Storage King team. We continue to acquire and develop new stores, and we're not done with yet.
In fact, the future looks very bright for a continuation of all these initiatives and more, as well as operating platform enhancement activities aimed at growing long-term value and capital value growth appreciation for our investors. Turning to the half year, at just over AUD 3 billion of assets, ASK has evolved in a short space of time to be a significant platform with the experienced Storage King business now stapled with a substantial portfolio of income-producing and future development storage locations, all forming the listed ASK business. As I detailed, coming out of the de-stapling process and associated equity raising, the balance sheet is strong, 29.3% gearing, and liquid, and this has resulted in activity levels accelerating at a pace with acquisition and redevelopment activity right across the country and in New Zealand.
As part of our platform enhancement initiatives, we have brought forward our ambition to be a net-zero contributor to emissions previously stated at 2050 to now be 2030, with a raft of actions and deliberate strategies that Nikki will touch on later in place and being enacted. While the corporate reorganisation of de-stapling was in progress, what is most pleasing is that the operating performance delivered from this portfolio of assets continued due in large part, as I mentioned, to the geographic bias towards suburban and inner-urban locations. We're comforted with the strong occupancy and revenue results being delivered, underpinning the valuations, and from what we believe, these operating results are market-leading for self-storage REITs in most developed markets.
Our valuation process is detailed later in the presentation, but for the asset quality delivering with this sort of income growth, we feel very comfortable with the asset backing at AUD 1.52 per share. In line with the transaction documents, our FFO and dividends are in keeping for the half year, and we will confirm our guidance at the end of the presentation. I'll now turn over to Evan to talk through the financial metrics and capital management of the business.
Thanks, Steven, and good morning. While Abacus Storage King may be a relatively new listed entity on the ASX, it has a long publicly listed heritage as a stapled entity within what was Abacus Property Group. There has been a continuity of the management team who, over the past two decades, have created the strategically curated constructed portfolio and operating platform. All segments of the operating platform and the portfolio generally continue to demonstrate solid top-line growth, with operating revenue increasing by 10.3% compared to the prior period. Breaking this down, our stable, established portfolio continues to grow faster than CPI, exhibiting revenue growth of 5.3%. Future growth has been embedded by recent acquisitions up 15.6%, and our stabilising assets have shown strong occupancy growth up 1.2 x on the prior period.
Operating expenses rose by AUD 3.8 million, primarily due to legislative changes such as award wage, superannuation, statutory, and insurance cost obligations all rising above CPI. The addition of new stores to the portfolio has also naturally added to operating expenses, but pleasingly, we have maintained a robust operating margin at 66%. Optimizing our operating margin remains a key focus, and we remain committed to improving this margin with targeted initiatives and operational enhancements, further acquisitions, improving occupancy in our stabilising assets, and developing our existing pipeline. In respect to general and administration expenses, Abacus Group's management fee of 40 basis points of gross asset value forms part of the AUD 10.9 million. The net change in fair value of investments derecognised relates to the disposal of part of ASK's investment in another listed vehicle.
The AUD 3 million impact reflects the difference between the investment share price at 30 June 2023 and the price achieved on disposing 20 million securities during the period. The other income of AUD 4.4 million mainly reflects distributions earned from this investment. In January, ASK disposed of an additional 15 million securities, which will see a further derecognized impact of circa AUD 2.25 million in the second half of this financial year. Further, as this investment reduces, there will be less distributions received in the second half, offset by reduced finance costs as proceeds have been used to pay down floating debt. The first half 2024, ASK delivered an initial funds from operations of AUD 37.6 million, equating to AUD 0.03 per security. The de-stapling process has enabled the optimization of Abacus Storage King's capital structure with a net asset backing, or NTA, of AUD 1.52 per security.
ASK's gearing comfortably sits within the middle of its target range, offering both resilience and flexibility. With no imminent debt maturities and a recent increase in our banking facility to AUD 1.25 billion, ASK possesses the capacity to fund our targeted growth initiatives. In terms of hedging, ASK holds a year-one fixed debt position of 72% with an attractive forecast cost of debt for FY 2024 at 3.6%. While based on the current curve, the cost of debt is expected to rise over the medium term, this will be more than offset by the expected income growth resulting from the anticipated addition of 125,000 sq m of area from identified developments and expansions. Our portfolio has strong growth potential. Recent acquisitions coupled with our stabilizing portfolio are expected to deliver significant future revenue uplifts.
Planned developments and expansions, albeit longer dated, are projected to increase our portfolio's net lettable area by an additional 20%, thereby augmenting ASK's revenue-generating capacity and market presence. Should these initiatives meet mature rental yield and occupancy targets, there is the potential for substantial revenue increases. While I have highlighted the growth expected from the development and stabilizing opportunities, I do not want to detract from the fact that approximately 70% of our portfolio is comprised of established assets. The established assets provide ASK with an underlying stable income base with the opportunity for organic growth as well as other optimization initiatives. Armed with our existing assets, a strong balance sheet, and substantial capacity to fund our growth initiatives, we are confident in our ability to pursue further strategic acquisitions within this highly fragmented industry.
Turning to investment property valuations, higher interest rates have appropriately been reflected in the book value of our portfolio. Over the period, the rising rate environment saw ASK's weighted average cap rate dropping by 10 basis points to 5.67%. Despite the rising rate environment, valuation decreases were partly offset by positive income growth, with investment properties decreasing in value by AUD 27 million or 1%. I'll now hand over to Nikki to delve further into the strong operating performance of Abacus Storage King.
Thank you, Evan. This may be our first set of half-year results for Abacus Storage King, but we've had many more years than that sharing the active, targeted growth narrative for this irreplaceable self-storage portfolio. Our strong conviction in the category is based on the attractive structural drivers in the sector combined with varying cyclical factors that, together with the granular nature of the customer base, provide resilience to the sector and, more importantly, continue to set the sector up for positive growth. On the cyclical drivers today, only discretionary spend is proving to be a headwind as improved housing turnover comes back.
The combination of these factors is what had our important industry body, the Self Storage Association of Australasia, State of the Industry report showing penetration in the sector having doubled over the last decade but still leaving the opportunity for it to treble going forward before reaching today's U.S. penetration levels. We know that self-storage is characterized by people from all walks of life going through personal transitions, often known as the Ds of self-storage: downsizing, divorce, debt, dislocation, disaster, and, on a more positive note, doing something different. Most self-storage requires a catalyst, and COVID provided that catalyst on a mass scale at the same time stalling developments and the introduction of new supply. The effect of this can be seen in the center of the graph, where the pandemic-driven demand drove occupancy and, therefore, RevPAM and rent in the ASK business at unprecedented levels.
This demand is not correcting. The growth has slowed, but it's still growth. We've seen the introduction of a new wave of people to self-storage, people who have realized its value and continue to enjoy the additional space it gives them. This corroborates with the SSAA State of the Industry report, which notes that 90% of current storage users are likely to use storage again in the next two years. So, despite the headwinds, interest rates are putting on discretionary income. In that last column on the graph, you can see the RevPam growth of 5% coming through at higher levels than we were experiencing pre-COVID. The heart of this growth agenda lies our leading self-storage portfolio.
While it continues to evolve every year, this slide shows how this portfolio represents equal measures of stable returns found in the 86 assets in the established group of stores and future upside found in the combination of the 50 assets in the acquisitions, stabilising, and development groups of stores and sites. Established stores delivered impressive RevPAM growth of 4.8% on half-year 2023, a testament, as Steven mentioned, to the quality locations of the business's real estate, which is concentrated in metro locations in easy reach of consumers. It's slightly tougher times like this where our portfolio really shines. The focus of this group of established stores has been in growing respectable rental increases with existing customers while driving occupancy with new customers. Through this approach, we've consistently delivered more move-ins than move-outs over the last 12 months.
As evidence, December 2023 closed with a 1.8% higher occupancy than December 2022. In the acquisitions group of stores, we continue to focus on extracting higher rental yield in a measured way. This resulted in two stores of this group, Karratha and Joondalup, up close to 20% in rental income in the half-year. Great examples of the upside potential ASK can achieve when we acquire well-located stores and add them to the powerful Storage King brand. But it's the stabilising group of stores where we continue to see outsized growth. All four the stores developed in 2023, Epping, Prestons, Telopea, and Gregory Hills, reached break-even within six months of opening, and three of the four stores achieved over 50% occupancy at 31 December. Rental rates have also been impressive, resulting in this group of stores delivering more than twice their projected rent roll this last month.
The stabilising portfolio, together with the 21 development sites, which cumulatively represent 16% of total property assets on our balance sheet, do have a drag on our yields today, but they are the runway for upside potential and superior growth tomorrow. Turning to the market performance, all markets outside of the ACT were in positive growth in half-year 2024, with Western Australia, South Australia, and New South Wales being our standout performers. At 15.8% growth, Western Australia was more than triple our system average, and four of our top 10 performing stores in the half were from the Perth market. Trailing the group were the ACT and Queensland. Queensland has battled with consumers showing higher price sensitivity combined with the highest proportion of new supply coming online in 2023.
We expect this market will continue to experience relatively tougher conditions, with most of the new construction for calendar year 2024 also earmarked for Queensland. The ACT, on the other hand, is penalized by the acquisition of the Mitchell satellite store, which was added in the fourth quarter 2023 at a significant rental rate discount to the group. However, excluding this acquisition, the state was still down 4%, and it has been on a long correction path after aggressive rental rate increases during COVID caused occupancy declines reaching a low of 84% in July 2023. Pleasingly, the ACT was back at 90% occupancy at the end of December, and we anticipate will now return to more conservative but positive rental increases.
Acquisitions have been an important contributor to taking the business from just AUD 666 million of assets six shorter years ago to the AUD 3.1 billion asset value the business is at today. After taking a more considered approach in the last half of 2023 due to the higher cost of capital and not seeing buyer expectations respond sorry, seller expectations respond, 2024 has had a busier start with more properties coming to the market, which we believe complement the ASK portfolio. To this end, five acquisitions settled in the half-year, three of which were trading stores: Balcatta , Bentley, and Coburg North. Importantly, 92% in terms of value of these acquisitions were secured off-market. The further three assets have exchanged and are due to settle in the second half of 2024. We remain committed to growing our scale where value-accretive opportunities exist within our network span.
Beyond established store growth and acquisitions, our development pipeline also powers our growth. The pipeline continues to deliver fit-for-purpose, bold brand icons that create exceptional customer experiences. The slide details the developments that we have forecast to be delivered in the short to medium term. Changes in NLA since we last shared our plans are Brendale being delivered up the pipeline in December 2023 and the pipeline being replenished with two sites settling in the first half of 2024 and two sites that are due to settle in the second half. Additionally, our expansion pipeline delivered an expansion at Burwood and will continue to bolster the NLA in our established portfolio with 15,500 sq m identified and forecast to be delivered in the short to medium term.
On the cost side, construction costs seem to settle later in 2023, but we are seeing slightly elevated building inflation return, particularly in Queensland with the major events in the coming years requiring large-scale development. Adding to this, we are seeing more stringent applications of council planning controls, which has had a small effect on our NLA forecasts. In these circumstances, quality locations in territories that command superior rental income are critical, and we will continue to update and evaluate our pipeline feasibility based on these moving parts. This does highlight the irreplaceable nature of our existing estate and the high barriers in the sector for new entrants. Growing our portfolio is our leading platform. The ASK business is in the enviable position of having been started by two entrepreneurs who singularly focused on building the undisputed leader in the industry.
The over 25 years of investment in the distinctive Storage King brand and operating platform continues today and is what has awarded the brand Canstar's most satisfied customers across the consumer and small business segments, as well as the most recognized brand in the industry across Australia and New Zealand. When measuring what really matters in self-storage, we believe nothing is more important than inquiries, branded search, and customer NPS. There are many reports being published on the popularity of self-storage brand using varied metrics like website hits, which we find peripheral. Total inquiries, because that's what fills our stores up, are up a healthy 4% on prior year for stores that have been in operation more than two years. We're up twice that when including new stores. The second most important metric is branded search because that affects our cost of generating these inquiries.
These are consistent with our brand recognition scores and show Storage King leading the sector. The third is customer NPS because that affects our reputation, how likely our move-out customers are to return, and how long our existing customers stay with us. The graph on the bottom right showing the percentage of customers who stay with us longer term. This trend has seen slight increases over the long term but remains largely stable. While we're delighted with the strength of the platform today, we're not satisfied. We still see tremendous upside in economies of scale. There's upside from acquiring independent operators, which, as the graph shows, still represents 50% of the industry, to plug into our network and improve the store's performance while leveraging the fixed costs in the business. We also believe there's future upside in the application of data and technology systems throughout the business.
This will improve the quality of timely information and insights in the business available to our people in order to further step-change our ability to prioritize what's important and deliver pricing and customer conversion more consistently every store, every unit, every day. Sustainability at ASK is driven by the belief that it is pivotal to creating immediate and long-term financial and social value. The business has a long history in ESG and supports a broad range of initiatives across the areas of environment, employee, community, customer, and governance. Our recent focus has been on data collection and accurate, timely, and automated reporting of key measures across the business. A key data set we've been getting our arms around is our greenhouse gas emissions data.
We are a relatively small transgressor in this area, but we're determined to play our part, which led to the Board agreeing a commitment of net-zero Scope 1 and 2 greenhouse gas emissions by 2030, as Steven mentioned earlier. It's a commitment with a clear plan and steps behind it that will require our focus as well as our financial and creative resources, but one that the team is energized to execute against. We look forward to sharing a broader plan with you when we deliver our first ASK standalone sustainability report later this year, a plan that will drive the long-term resilience of the business when faced with external pressures and changes such as a changing climate, changing consumer, employee, and investor expectations, and changing legislative environments.
Thanks, Nikki and Evan. Hopefully, that gives everybody a detailed look at the current and expected performance of the business and is enlightening. As we navigate the current micro and macroeconomic conditions, we're confident in the business resilience, structures, and processes to continue to deliver sustainable and attractive income results that will underpin distributions to investors. We see no reason to change course, and indeed, we're encouraged to proceed with bigger and strengthened conviction. ASK is a substantial player in the sector today and will continue to participate and drive, and we will continue to participate and drive to expand our portfolio of stores in the most commercially attractive locations, shaping and with the most attractive location shape and size, providing investors with a steady and growing income that will support these distributions.
The guidance for FY2024 remains consistent with the transaction booklet we released last year at distributions of at least AUD 0.06 per share, and that will represent a full-year payout ratio of between 90% and 100% of FFO. That concludes the formal presentation. We'd now like to turn it to the lines, both online and telephone, to ask questions. Happy to take any questions. Thank you.
Thank you. If you wish to ask a question via the phones, you'll need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask A Question box. Your first question comes from Stephen Tierney from Barrenjoey. Please go ahead.
Morning, Steven, Evan, and Nikki. Thanks for your time today. A couple of questions for me. Just firstly, on the balance sheet and post the January selldown, if you look at, have there been any additional selldowns?
Just the one that Evan referenced in January.
Got it. And just secondly, how should we be thinking about operating expense growth into the second half? Just kind of like an annualized figure on the first half or CPI increases from here or still outsize growth?
Sorry. I think an operating margin of 66% in that range is sort of what we're focused about in that second half as well.
Yeah. So CPI increases would be a good proxy, I think, for that increase line.
Great. All right. Thanks for your time.
Thanks, Steven.
Thank you. Your next question comes from Solomon Zhang from JP Morgan. Please go ahead.
Morning, Steven. Thanks for your time. First question from me was just on, I guess, the demand outlook. It just feels like the self-storage sector has gone through a bit of a demand normalization over the past 12 months. Do you think this COVID-related ex-demand has been sort of fully worked through? And what do you sort of expect over the next 6-12 months? Do you think the business will be back to more regular pace of growth?
I think what we tried to explain and the numbers bear out, Solomon, is that while the activity levels through COVID, June 2020 to June 2022, were exceptionally high, the growth has come off but is still better than it was pre-COVID. And I think that's because of the maturity and the enhancement of the actual product that's in the market, and it's borne out by those stats that Nikki explained as to the lease-up and how quickly brand new stores in the locations where they're being built that are being leased up. So where historically, we would have expected straight-line 3-4-year growth up to 90%-odd, we've had stores hit 50% within 12 months.
And that's a lease-up activity rate that's never been seen in storage. So we're comforted by the fact that we think that the customer is voting with their feet. And particularly where we've got new stores in infill suburban locations above average demographics, that's proving that level of momentum. So I think you're right. The growth is coming off from COVID activity levels, but it's certainly higher than where we expected it would normalise.
All right. That sounds reasonably healthy. Second question from me was just around your approach to existing customer rate increases. I think you caught out in the FY2023 result that there's a bit of caution around pushing rate increases. Has things changed in the past six months? And what did those rate increases sort of average in first half 2024? Was it matching CPI or around that level?
Yeah. The last six months, we haven't seen a big change to existing customer rate increases. They're all slightly above CPI, which is similar to how we've tracked in the past. We have extended the length or the frequency with which some of those increases have gone through. But most of the trading's been on the move-in, move-outs. The existing customer rate increases continue to give us a stable level of slightly above CPI increase. Right.
Maybe just final quick one just on follow-up to Steve's question on the selldown of the NSR stake. How should we sort of interpret this? Is this a read that you sort of see more value in deploying capital in acquisitions and developments rather than holding onto that stake?
I think we have made a point for some periods now that we see this as a source of value for the stock. It's a highly easily monetized investment. And our core business is buying, building, managing our own storage facilities. So you can take from that. And I think our behavior as we have in the last couple of years is that as we see fit, we will direct investment from that stake to our own balance sheet in order to continue the pipeline of activities that we've got underway.
Great. Thanks for that.
Thank you. Your next question comes from Larry Gandler from Shaw and Partners. Please go ahead.
Hi, team. Congratulations on the meeting ASK result. A couple of questions from me. Thanks, Larry. First, on the development pipeline, if you could talk to that slide, give us some more color on the activity that occurred in the half around development, the 14,000 sq m, was that already delivered in the first half or is that still yet to come?
Larry, that's the 14,000 still to come. So similar to our previous results where we expect a full year of around 22,000 NLA for the year, we delivered Brendale. So that came off the numbers, but we've still got the 14,000 that we have a high degree of confidence will be delivered in the next six months.
Oh, great. Okay. Nikki, I'm just noticing the AUD 211 million spent to date or sorry, AUD 264 million cost to complete and AUD 211 million spent to date. When I looked at the FY2023 presentation, I think those numbers are the exact same. Did you guys actually run some CapEx in?
No. It was a bit when the numbers came out, we had the same reaction. It was like, "Should we change it to 210.5 or add a few more decimal places?" So we've had ins and outs in there because Brendale obviously completed and came out the numbers. We've had new acquisitions that have gone into there. It just happens to play out at a similar level.
Oh, okay. Okay. Very coincidental. All right. Thanks for that. And I guess, Evan, one question from you. In the cash flow statement, it looks like cash from operations was about half of what it was in the prior year. Was there anything there that's anomalous that you want to call out?
Yeah. I think the way to think of the stats, unfortunately, is last year is just showing one of the two stapled entities being Abacus Storage Operations Limited. And then this year, it takes into account the stapled entity being Abacus Storage Operations Limited and ASPT combined for ASK. I'd be looking at this year as sort of the more better run rate because the company side had none of the interest expense associated with the underlying assets in the prior period.
Okay. Great. Understood. All right. Thank you for that, Evan.
Thanks, Larry.
Thank you. Your next question comes from Ben Brayshaw from Barrenjoey. Please go ahead.
Good morning, Steven. I was wondering if you could talk about the three acquisitions, just pricing and how you think about the return outlook, and also what strategically do they add to the group by way of market share or what do they position the platform to do better as a result of the increased scale going forward?
So the acquisitions, Ben, were a blend from existing Storage King sites and from outside. Funds from outside. So I think we obviously, through our management agreement, have a first right in most cases for acquisition of stores that we don't manage. The Coburg North store was one that we were able to negotiate with the owners. That's a fantastic store in a very strong inner urban location in Melbourne. The other two stores, one from outside Storage King and one from within the portfolio already, are in Western Australia.
We've seen exceptional growth in the period since 2018-2019 when we first invested in Western Australia. We think that that's helping us rather than build stores in Western Australia where obviously the tyranny of distance is more difficult, we see the opportunity there to buy existing trading stores, either Storage King managed or outside, as a fantastic immediate lift to the business. What we've also seen, and I think we've touched on a few times, is where we bring a store in from outside Storage King, so a privately run store, we see an immediate appreciation by virtue of some of the things that Nikki touched on, particularly the inquiry-level conversions and the strength of the brand. We see up to 20%-30% premium in or lift in revenue from a conversion of a private operator to what we would call institutional Storage King banner.
So we're continuing to do it. We think it's absolutely the best thing to do for the long term. And it supports a bigger, better platform that we will continue to drive. A lot of the focus is on that margin that Evan has touched on, 66% existing. Relative to some other markets in the world, that is lower than average. So we see the opportunity with technology and other process enhancements to drive that operating margin. And that will fall to the bottom line as better income for investors.
And just on the pricing, Steven and the occupancy, could you just comment on either the cap rate and whether that's stabilized as well, please?
Yeah. I think the cap rate has stabilized where you've got the potential for strong income growth. Obviously, the metrics and the factors that feed into valuations, interest rates obviously have a big bearing. Current and future projected income growth has a big bearing. I think that's where we take great comfort from the current average cap rate of the portfolio because we see the potential and delivery of this strong income growth.
I think if we were looking at flat to negative income growth, we'd probably have a different reaction. We see the opportunity to buy attractive development sites, build brand new stores that will always be at the tightest valuation metrics because of that income growth. 50% within 12 months of completion of a development site, that's never been seen. I'm a six-year veteran of the self-storage industry, but those have been around the game a lot longer than me. That has never been seen that you can build a brand new store and within 1 year have it 50% let.
So that gives us the comfort to keep going. And we will keep going.
Great. Thanks for your time, Steven.
Thanks, Ben.
Thank you. Once again, if you wish to ask a question via the phones, please press star one on your telephone. If you wish to ask a question via the webcast, please type your question into the ask-a-question box and click submit. Your next question comes from Edward Day from Moelis Australia. Please go ahead.
Good morning, Steven and team. Nikki, probably one for you. I'm just interested to hear some commentary around the difference between move-in rates and your move-out rates.
Move-in rates and move-out rates, yeah, they have been all over the place a little bit depending on which state you're in. So as I said, the overall trend is that we are increasing occupancy. So we are playing on the upside of occupancy where we didn't have last year. What we are seeing in terms of the actual rate is that we've had a couple of states that actually have had move-ins at higher rates than move-outs. But we've also had states, particularly the ACT, where we've done up to 20% discounting at one point in time on move-ins to drive that occupancy number again.
We are seeing probably on average, outside of the two states that are actually growing rates, we're probably seeing low single-digit decreases. So move-ins are coming in at low single digits lower than what the move-outs are. But it's not significant.
I think that is important to just distinguish between the various regions. And what I would point to is the difference that we're seeing, particularly in our strongest represented regions such as New South Wales and Victoria. We're seeing now nearly double-digit growth in rent roll in New South Wales, which is by far our biggest contributor. New South Wales, Victoria, and New Zealand are our biggest contributors by proportion of the portfolio. And we're seeing very strong rent roll growth in those markets, which two or three years ago was looking a bit anemic, particularly New South Wales and Victoria.
But I think post-COVID, particularly with the development spend and the focus we've got in these markets, that's what's driving, we believe, those growth numbers.
Okay. Thank you. And then just on your development pipeline, you've got about 264 in the cost to complete and 39 in the expansion side of that program. Can you just talk, is it a fairly smooth delivery profile in terms of CapEx out the door? And are you seeing any shift in the return profiles for your development?
It is best to put it as a straight line. I think it can be lumpy at various times. But you'd appreciate that one project can drop costs in various financial year or half-year periods. So I think the sort of run rate that we've got on spend at the moment will be sustained for some period. We think delivering 4-5 new stores, given that some of our new stores, two in particular coming in New South Wales, are more than twice the average size of our portfolio today. So these are very big stores. And I think what we've got planned for the next 4 or 5 years, and then as we roll out and deliver these stores, we are backfilling the pipeline with new sites. And that's what we've been able and successful to do during this period.
As far as the returns, I think pleasingly, we've always been quite conservative on underwriting assumptions with our developments. And pleasingly, our operating metrics delivering at above average has more or less blown the lid off a lot of our development feasibilities. So whilst we have had some cost pressures and continue to, and I think Nikki touched on the fact that Queensland is experiencing some cost pressures because of other factors, we're seeing these above-average operating metrics, which more than makes up for those development returns. So we're happy to stick with the current assumptions.
Okay. Thank you.
Thank you. There are no further phone questions at this time.
We have had one question come in on the website just in respect to the distribution rate. Do you have enough capital left over to expand and build new facilities? I think, as Evan pointed out, the current capacity, excluding the sell-down of our listed stake in our listed peer, is in excess of AUD 250 million. So we're more than comfortable with the ability to fund our development pipeline.
We're constantly evaluating that as well as where we will spend money and the benefit that we would get from spending that money. So with that additional stake, selling entirely the additional stake would have weighed in excess of AUD 400 million -odd of capacity, which I think more than sets us up for the next potentially year or two. That's all the questions that we have. Thank you, everybody. I think that will bring the presentation to an end. Enjoy your Friday. Look forward to speaking with you one-on-one in days and weeks to come.