I would now like to hand the conference over to Mr. Stephen Burns, Managing Director and CEO. Please go ahead.
Good afternoon, welcome to the GDI call. I'm joined by David Williams, our CFO, I thought I'd start on page 3 of the presentation, which is the highlights. We really do continue to drive the FFO growth, which is up 29.1% for the half, with a good co-living contribution, up some 37% and property FFO up nearly 14%. We continue to basically drive the property FFO, as you'll see from the charts, which shows this has been a 3-year effort. The NTA was stable at AUD 1.20, with Westralia Square and Murray Street car parks increasing in value despite cap rate expansion. Our Moranbah co-living acquisitions takes total rooms to over 920.
We feel we're building a good business there, which is showing through in the results. We've seen the rewards of strong leasing efforts, not only in this half, but over the past couple of years, achieving over 13,000 square meters of office leasing. You know, it's worth pointing out that this result that we achieved was underpinned by a really strong December quarter to the broader market, which saw in the order of 49% of the year's leasing activity achieved in that final quarter. Which brings us really to the momentum carrying through to the first quarter of 2026, which looks strong both at a GDI and a market level.
Turning over the page and continuing the highlights, we've completed over AUD 250 million of asset sales across the business, including the car yard sales of AUD 74 million, which was achieved at 50% over the acquisition price and settled on Friday. We continue to see good interest in selected asset sales. The office market appears to be on the verge of transacting. We're very focused on AUD 100 million non-core targets. That is ongoing. We extended the facility bit by AUD 25 million and have over AUD 52 million of undrawn liquidity. The, you know, probably the highlight has been this leasing environment, definitely strengthening into that, the end of the year and continuing on. The five-year supply gap in office buildings is resonating strongly, not only with commentators, but tenants.
Tenants now with 3-year expiries, are looking to, to bring them forward to avoid what is likely to be a big jump in rents. Tenants are still expanding. 68% of the 25-year deals were expanding tenants, and tenants also continue to move into the CBD, accounting for 27% of deals in 2025. There's still some very large unfilled inquiries, such as 20,000 square meters for Western Power. We're likely to see something new for Perth, called withdrawals, which is likely to add to the supply shortages. An example would be St. Martin's Centre at 40-50 St. George's, which is likely to result in some 27,000 square meters of net withdrawal.
It's worth mentioning that this is something that hasn't really been discussed in Perth, but those of you who remember Sydney benefiting from the Metro withdrawal of buildings, it is quite a factor, and it will go to vacancy forecasts from now on. Of course, we're going to see rents rising significantly. They will have to go anywhere near the break-even rents for rational construction. It's probably worth noting that the last time there was a supply gap of 5 years back in 2009, the net effective rents rose nearly 3 x. At the moment, we're seeing agents revising their forecast for rental growth.
CBRE is about 39% over the next 5 years, and a variety of other agents are also forecasting such growth figures. They're, in my view, likely to significantly underestimate the actual growth that occurs, so we're likely to see a, a squeeze occur at some point. I'll just quickly hand over to Dave to concentrate on the financial snapshot.
Afternoon, everyone. Stephen's already mentioned a lot of this, but if we turn to page 5 of the presentation, for those of you that have it in front of you, the NTA is AUD 1.20, as it was in June. The main assets that were revalued were the Westralia Square ones. They went up slightly, AUD 5 million in total. That was notwithstanding the cap rate going from 6.375 on both out to 6.5. The 2 car parks were also revalued. One went up AUD 4 million, one went down AUD 1 million, and that's largely resultant of the performance of them. The Murray Street one, which is CBD located, is continuing to perform very, very well. The result of that, our gearing is 35%.
The syndicated facility and how they measure it, the LVR is 41% as it was in June, the ICR is 2.3 x versus covenant of 1.5. Stephen's already talked about the strong year-on-year growth in FFO. There's a little chart down the bottom to show you how strong that has been. The distribution, we determined for the first half of the distribution, AUD 0.025, are confirming the intent to pay the cash distribution of AUD 0.05 for the year. I just wanna point out that for those that read the tax components of the distribution, it is again, out of capital that is for tax purposes.
There is a lot of depreciation benefits that we're holding from the building of WS2 and some of the spec fit-out strategies. From an operating point of view, the distribution is getting very close to being covered from operating earnings. Turn over to page 6. Again, Stephen talked about the nearly 14% growth in property FFO. All, all the major assets are improving largely on the back of higher occupancy. Westralia Square is an interesting one because it's got a public car park for 350 odd cars in it. That is, the revenue on that just keeps going up and up. That's been a great performer for us. The car park at Murray Street, like I said, was up. The Wellington one was, was down a bit, so that's consistent year-on-year.
197, it's all about just the occupancy increasing. It's now up to 91%, not all of that 91% is rent, rent paying just yet, but it's not far from it. Funds management division, FFO was down in the 6 months. That was largely because we sold IKEA, which settled in June. In this current 6 months, there will be a disposal fee for the dealerships that settled on Friday. That will flow through for this 6 months. Co-living, we'll go into a little bit more detail later. That site by site they have outperformed where they were this time, 12 years, December 24th. You're adding in also the accretive acquisition of Moranbah, and that is, that's really an interesting part of the business that's performing very well.
Net interest expense was lower. We had an expensive swap that expired in December as well. Rent went up, I mean, the, the facility went up marginally, AUD 5 million during the period. Corporate costs are pretty flat. If you just look at the debt on page 7, like I said, this is pretty much what you saw in the August presentation. The only real change has been, AUD 5 million of debt was drawn down in the period and an expensive swap has expired.
Okay, turning to the Perth, WA economy on page 8. The macro backdrop looks positive for the office market and Perth and WA in general. If we look at the private mining CapEx, it has, you know, it's nearly doubled from 2019 levels of AUD 17.1 billion to AUD 35.5 billion today, and exploration CapEx has increased strongly as well, which adds obviously directly to the office leasing inquiry. Domestic economic growth is strong, which is, you know, circa 3% for the September quarter versus 1.9% for other states. We're seeing strong wages growth, unemployment below the national average, strong population growth, and very strong retail spending.
If we turn over the page and focusing on, on GDI, the, you know, the CBD office sales front, we witnessed five sale campaigns concluding without an actual transaction. Nonetheless, they're still sitting there. We're likely to see some of those transact over the next period. What was interesting was that there was some fairly solid bids. About 59% of the, of the book was bid for those assets, was from syndicators and about 26% from high net worth. There was a little bit of foreign interest, but it mainly flowed through to other asset classes like Mapletree, buying, buying Student Accom, and a number of our assets where we sold non-office, such as IKEA for AUD 164 million. It feels like it's getting close.
2025 you know, really looks like a year of the, the standoff on the sales front. Average volumes for, for Perth market were in the order of AUD 734 million. Last year there was virtually none in the office. There'll be a catch-up period, most likely, once the buyers and sellers work themselves out. We think that we're likely to see some bids after the recent campaigns. We've seen 2 more assets come onto the market. One of those is at 81 St. George's, is more likely to be a conversion to resi, so a withdrawal. We're hopeful that we're basically on, on the, on the edge of a transaction campaign that is gonna be successful.
I think that, the best way to sum it up is that the transactions are really the missing piece to the strengthening story, given that Perth office looks to be on a structural upswing, particularly from a rental perspective, given the economic rents required and the supply gap. You can see through the, you know, the bottom chart there, it's really pointing towards, you know, the potential supply. Commentators have still got Rio in there, which is questionable in 2030+. The blue lines there really reflect, you know, the backfill from tenant movements, and it's worth noting that a little bit of withdrawal could knock that supply out very quickly.
Turning over to, you know, the supply gap and the impact on, on vacancy, you know, the, the positive net, net absorption continues. We saw over 79,000 square meters of, of leasing deals done in the over 500 square meter scale. Around 83% of that was done in A and B class space, indicating that tenants have been cost-conscious. 68% of tenants have expanded, 27% of all deals represented, tenants moving to the CBD with more to come, as mentioned. There's been a definite pickup in the government EOI campaigns, and we've also seen effectively the withdrawal of 20,000 square meters for Devwest Development in Northbridge, not taking place, which will again, have to come back in terms of demand for, fitted out or non-fitted out space at some point.
GDI has experienced good leasing interest in our East Perth office assets, which is really interesting. It's probably the highest level we've witnessed, and there's multiple inquiry across those buildings. If we look at the chart, it really shows absorption, absorption scenarios for different levels. Again, it hasn't netted off for the withdrawals that I mentioned before, and the likely candidates there are gonna be St. Martin's Centre and also the 81 St. George's asset, to mention a few. Basically, you can see that there's a distinct lack of supply on the horizon. The vacancy rate can tighten quite considerably based on those various scenarios. Average take-up or net absorption's been around 20,000 in the past. We expect it could be quite a bit higher.
A lot of the, a lot of the vacancy in the prime end resides in, in 1 building. If we look to, if we look to the next page, just a little bit on rents. Clearly, market rents need to, to rise substantially. The market seems to have a range of between $1,180-$1,300 net face for the premium end, and, you know, if we use a rent of $1,260, they'll need to grow from around $880 today, which is about 64%. As mentioned, CBRE is forecasting 69%, which may prove conservative. Most of the premium vacancy resides in QV 1. Out of, out of 55,000 odd square meters, there's about 23,000 sitting in QV 1, which can be moved pretty quickly because there's some shuffling going on.
It only takes 1 or 2 tenants to move out of A grade into premium, or one of the tenants coming in from the city, such as Western Power, and it'll fill it very quickly. Incentives are still sticky, tends to be the case, but it varies according to the, the condition of the space, whether it's refurbished, whether it's a spec fit-out, or whether it's an existing fit-out. That's, that's healthy at the moment. They're likely to come down, keeping in mind that, you know, the Brisbane market has, has done well, and it's still got very high levels of incentives. Turning over the page, in terms of the property portfolio, noting there that the, the non-office property component is shown around 18%. After the successful settlement of the, of the car yards, that'll drop to around 12.
You know, valuation policy resulted in independent valuations for WS 1 and WS 2. As Dave mentioned, they held their value and increased ever so slightly, despite cap rate. The expansion showing the growth in income, particularly for WS 2. We saw Murray Street Carpark lift, by AUD 4 million, despite having a, a, a fatter cap rate, and Wellington was a bit softer and Townsville was a bit softer. Turning onto, page 18, to save turning through every page of the preso, we're gonna talk a little bit about, co-living.
Thanks, Stephen. I think we'll just give a little bit more detail than in this presentation than what we've done in the past. You might want to, sort of, have a finger on page 23 as well, as, as we do this. When we, when we made the investment, we had an objective of a 20% return on the initial invested capital, which was AUD 33 million, which is about AUD 6.6 million for the year of FFO contribution. It only had the Norseman asset and South Hedland. South, South Hedland, the team in The Cove, the head office is six people now, plus some outsourced accounting staff. There's over, over 100 all up, including all the site workers. Very stable at site manager level.
The beauty of having the four, four facilities now, we're able to move site managers between the, between the villages, we're able to grow assistant site managers into site managers. There's pathways, staff retention at a more senior level is easier with more of them. It's sort of showing through in the results. The team's done a really good job at Hedland. It's gone from, I won't say last resort, but the CapEx investment and BDM investment has meant that we are preferred supplier status for a number of users in the South Hedland market now. Did over AUD 5 million. There's a chart on page 23, which compared the December 2024 to December 2025 across each of them.
We're really pleased with how South Hedland's going, and the preferred, the preferred status gives us a lot of comfort around what that ongoing occupancy will look like, at least for the next sort of 12 to 18 months. The Norseman, we face Pantoro Gold. That's since we invested in 2023, Pantoro's been on a pretty incredible journey. We've put 76 rooms on the mine site. They have a very, very quick payback, and we're in the process of delivering another 64 rooms. They will be delivered shortly. Norseman is going very well. Pantoro going very well, and the price of gold is very high. Our challenge is to keep up with the room demand of Pantoro. Newman's a really interesting one. We settled in May 2024.
The first 6 months to DEC 2024, it did about AUD 900,000. Again, putting the team's magic on it, Chris and his team. Changing the branding, focusing on the delivery of the service, focusing on BDM, it did double that to DEC 2025. In October, we settled the Moranbah acquisition. It's 245 rooms. The first thing they've done is rebrand it. So there's changed it from 3 different brand names to 2. 144 rooms have the benefit of a take-or-pay contract with Stanmore, Stanmore Coal. The other 2 are, they're, they're more of the traditional style, minor accommodation.
The other two are brick motels, and there's work to do to bring them up to the occupancy and performance that we want. I look at the what we did at Newman and have some comfort that we'll be able to achieve those similar results on those two rooms, which is about 100 all up of the 245, and have solid growth as we look forward to the next couple of years. On the...
Turning onto page 19 and reinforcing, strategy, we're very focused on doing what we say we will do, and to that note, we believe we're, we are executing in line with strategy. We're relentlessly focused on leasing and, with a strong result for the period. We're very focused on the remaining lease-up, utilizing the spec fit-out strategy, of course, which has proved very fruitful to filling space. Financially, we're driving the FFO growth whilst balancing out those liquidity requirements to deliver a full year AUD 0.05 distribution. We continue to recycle at good prices, with over AUD 250 million realized and more to come.
We're very focused on bringing performance fee outcomes to account, and we're carefully managing the strategic growth plans at both a property and a business level. Noting the improved contribution that Dave has just talked to on the JV business. We're always focused on asset improvements, that's our job, and returning the benefits to investors, including Mill Green and assets within the funds management business, such as Broadmeadow. With that, I just turn the page onto page 20, which shows, you know, at Mill Green, we've, we're working on a stage concept, with the initial focus very much on an extension of our spec fit-out strategy, which is really to fix up the ground floor vacancies for 197 St.
George's and 5 Mill, which run together, and boost the income from retail repositioning and tenant amenity. Then, if you turn the page, longer time, longer term, you know, the total site lends itself to a stage repositioning. There's nothing to worry about there. We're not rushing out to spend money, but you've gotta, you've got to best position your assets to extract the best prices. With that, if we turn on to the next page, Broadmeadow sits in one of our funds, and it's interesting to note that, it received a big boost in valuation, up from AUD 44 million to AUD 78 million. It's basically a rezoning from industrial to mixed use, which could include up to 1,700 residential units.
You know, the, the, the key here is that this can deliver a very high performance fee to GDI, which on our numbers at the moment, is in excess of AUD 17 million. With that in mind, it's important to realize that you've got to position your assets to get the best prices, to take advantage of the growth, and to optimize values for investors. In summary, GDI is well-placed for FY 2026, particularly given the Perth office market tightening. I'd just like to thank you for listening, and I'll hand over for Q&A.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andy Macfarlane with Bell Potter. Please go ahead.
Oh, hi, Steve, Dave. Hope you're both well. Thank you for your time. First one, if I may, just in terms of fundamentals, just interested in terms of what you're seeing in terms of incentives and, and leasing spreads and some of those metrics in the rental market in Perth?
Yeah, sure, Andy. I think the rider on incentives is, you've got to break it up by the type of space. If you, you know, if you looked at refurb space, varying, varying quality and location, you could be anywhere between 38%-50%. That's what most agents will quote you. You're probably looking at 5-10 year terms, and that's, that could be in premium to A-grade. That space, I mean, you've got the spec fit-out category, which is where we concentrate because the incentive is a lot lower. It could be between 5 and 25, noting that we have done some without an incentive.
Not all landlords are willing to do, spec fit-outs, as you know, and the lease terms there tend to be on a 3-7 year, and it's mainly in that A-grade space where you can capitalize on your, on your spec fit-out strategy. I think existing fit-outs or next generation fit-outs, you know, they, they're gonna vary between 20 to 45, depending on how strong your marketing is. You, you know, there's gonna be a lot of variability in quality, style, and location, but they tend to be for your 2-7 year, you know, ranges as well, in terms of the lease term. It's, it's, it's fair to say, Andy, that the incentives are still there in the, in the Perth market.
What is interesting, is that we've noticed a few cases where, you know, tenant reps have missed out on deals because they've been holding out. We are at an inflection point on basically, you know, a bit of a handover of power to the landlord because it is tightening up, particularly if you've got, you know, if you've got river views, et cetera, in good space, it's noticeable. The other trend there, Andy, which will come together with incentives, is that a lot of the renewals, a lot of tenants, particularly big ones, are looking at their space expiring in, in, say, 4 years' time, and they're going, "We don't want to get hit with that rental growth." They're trying to bring it forward now and negotiate a deal.
Thanks, Steve, and any comment just on lease spreads, if so?
Well, you know, because you've got such a variability in incentives, we, we tend to get a, you know, a pickup in situations where we do a quick shift. In 5 Mill or 197 , we can actually make a positive spread, but quite often, you're, you're basically converting capital to income. It depends. I wouldn't give an average figure. I know rental growth for the market was up around 4.1%, but a lot of the instances that we see, and building by building, because we've got lower outgoings with a lot of tenants, we can be quite competitive, so we can push the rents. Dave, did you have a comment there?
Andy, just in terms of, you know, our portfolio in particular, both 197-- 5 Mill Street's got pretty short leases, so it's always at market leases, you know, that rolling profile. 197 has... A lot of the hard work's been done, so they're not long leases, so we are conscious of that sort of 28, 29, and I'm very happy to have expiries dropping into that period. Again, WS, Westralia Square Complex and WS2, a lot of the leasing's been done in the last 2 years, so we feel as though our portfolio is pretty much at market at the moment. If, but soon to be below.
Thanks, guys. From the UGP portfolio, it looks like you've made some good inroads there. Kind of disposal-wise, got 1, 1 asset left, Broadmeadow, and nice little markup. Talked about this a little bit in the past, but just any sense on, you know, disposal for that, that unit, trust, or fund, and therefore, when a performance fee might manifest, if so?
That was originally a seven-asset fund. It is a, a great story for investors in it. Six of the assets have been sold, one still to settle. When that settles, the investors would have received over AUD 1 back for the money they put in, and their, their, the units are still valued at AUD 1.21 after all fees and costs. The City of Newcastle last year delivered their Broadmeadow Place strategy, which identified this site for mixed use, as Stephen's already talked through.
We are going through a DA to get it rezoned in accordance with what Newcastle Council want for it. We're not really pushing the envelope on what they want. I mean, we, to be fair, since we've bought it, we've been working with the council about its, its alternate use. You know, once, once that DA is formally received, we would look to wind up the current fund, but it's certainly we wouldn't be looking to move on the site.
Yep.
If you tell me how long it'll take, we, we, and we, we hope to have the DA for rezoning in this calendar year, and then, you know, the council process that may take it a year. That's why we talk around what the fee would look like if it was done at 31 December 2027. It may be sooner, it may be longer.
It, I, I think also, Andy, just in terms of the scale of it, it's sitting in the fund that's in now. At some point, they'll need realization, but as far as GDI staying involved, there's, you know, there's 10+ years of profits in this type of deal. It's a matter of how you look to position for that and bring the requisite expertise and all that to pass. It would go through a different form of funding at the right time.
Yep, yep.
Just on, Dave, just on noise, and you talked a little bit about that. It sounds like things are progressing pretty well there. Just wondering what you're kind of seeing in terms of room rate growth, and I guess what that might mean on an annualized EBITDA basis?
The ones that are con-contracted, so Norseman and Norseman and a, a good chunk of Moranbah, you're basically getting CPI increases. It's very formulaic in the relationship with the, the main user on the take-or-pay. It's been volume, volume increases at Norseman that's added to the earnings. Very, very good payback on the temporary ones on the mine site. The Hedland and Hedland and Newman, we would, we would-- You trade room rate for occupan-occupancy certainty to some extent. The-- We actually had a very good occupancy in FY 2025, but the revenue was down because there was more certainty to it from what it was in FY 2024 when we first, first bought it. The answer is, you're not really...
It's, it's not as simple as just saying you're getting CPI, right? It's about occupancy, it's about certainty, and you trade those two.
Tends to be around occupancy if you're existing and where required. For example, if, you know, Pantoro, to, to meet their needs, it's about expansion and how you deliver additional rooms, right? We think we've got a good spread across the different types, but it's not just as formulaic as adding a room rate and increasing it. It's, it's a bit more nuanced than that. As Dave mentioned, obviously, we, you know, at the start of the JV, we started off with 6 years of nights sold forward to, to Pantoro. All they've done since the gold price has gone crazy and they've started pulling more gold out of the ground, is that they've had to expand. We're flat out keeping up with their, their expansion.
You know, in terms of other asset opportunities, we're very mindful of not, you know, adding too much to the GDI balance sheet, so we look at other ways to, to recycle and to fund that, as we've explained before. You can see from our sort of investment philosophy, we're very focused on that target return of over 20% on our initial capital, because it really does, you know, deliver a good level of cash flow and profitability to GDI.
Just final one, if I may. Just interested in some color around if you ever talk on your comfort of the AUD 0.05 distribution kind of going onwards, and just, I guess, you know, in relation to, you know, income and, you know, kind of what's coming through. You talk, Dave, you talked a little, little about, you know, an element of return capital, but just wondering if there's comfort levels there around what's coming through from income going forwards.
I think I'm, what I did mention, if you go to the cash flow in our accounts, you can see cash flow from operations is getting very close to covering the distribution, which it hasn't done for a while, given we're in leasing upstage of WS2 and building it and then leasing it up. We feel very, if you look at the FFO numbers compared to the distribution numbers, we're very comfortable to talk around AUD 0.05.
Perfect. Thank you, guys.
Thanks, Andy.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Lionel McFadyen with Bell Potter. Please go ahead.
Hey, guys. Hey, Burnsie. Thanks for the run-through. Just a quick one. It's on the incentive amortization and the sort of cash flow. It looks like your leasing costs and incentives, and Andy touched on this, has jumped to 10.1 from 8.1 PCP. It's sort of like 20% of your, if my math is right, 26% of your gross rent and recoverable outgoings? I'm just more interested, what do you expect the peak level incentive amortization as a proportion of gross rents will be going forward, given you've got sort of 197 SGT and 5 Mill Street?
Lionel, that, that is quite-- Are you trying to bowl us out, mate?
No, no, it's just to sort of, yeah.
No, they're just reconciling the numbers here. What do you got? The AUD 9 mil, we've got AUD 9 mil versus-
You, you're at, you're at, 26%, right? Because you've gone from 10.1 to 8.1. I'm thinking, okay, you guys have got a bit of spend ahead of you, and I'm just trying to reconcile.
We're.
When the drag to the, well, you know, could start reversing or the, you know, then we could, might be able to see a lower incentive, requirements.
Here it is. Yeah, we're just looking at where you got your numbers from. Hang on. Have you got that?
A business like GDI that runs towards leasing risk on markets that we like, will always have a high, high incentive number. We truly believe that when you buy an asset like the Westralia Square Complex, where you're staring, staring at 100% vacancy when we bought it, and building a building, building a new building like WS2, we put incentives as a capital item, and our cash flows reflect that. If you go to the cash flow statement, it shows that the incentives are a capital item. I think if you hold, hold on assets through multiple leasing cycles, they start to sort of really start to be viewed more as an OpEx number rather than a CapEx number.
As our buildings get full, we would like to think that at that building level, you know, we often bring in a partner or realize the asset or move it on. That is difficult in Perth at the moment, but generally, we'd like to say that, you know, once the building is fully leased and we've got it to maturity, we'll look at what we can do with that building. You know, at, at the current portfolio, you're getting. It is pretty full, so you're getting close to peak number.
For it, Lionel, if we...
Right
At over 88% and improving on that, the incentive levels, you know, should drop. In this case, they, they should, 'cause a lot of the vacancy sits in good space. You've got 2 floors in WS2, for example, where we're holding out for better rents, given the squeeze, and it's premium space. If you were just full of not good space, then you might have to pay more on it. You, you can actually get there different ways, Lionel. You don't have to necessarily push an incentive through there. It's only, it's only if you really need to spend and to get them, and we're getting, you know, we're getting above market occupancy levels now, so we can start to pick and choose.
I think the more important way of thinking about it is, we wanna capture the growth of this cycle that we see coming. We're happy to sit there with a bit of vacancy, so we're not gonna just go and spend on incentive to cap our rents, right?
Okay.
You know, it gives us a bit of flexibility to bring some good tenants in and really gap the market.
It's all about filling the space, so you know, Stephen talked about interest in our East Perth, Perth property, one of which is on the balance sheet, 180 Hay. You know, that would, 5,000 meters.
Yeah
would come with an incentive, which would come to that, that line and then be, be amortized, right? Have it for.
Okay, now, thanks, guys. Yeah, and one final one, Townsville. Can I ask.
Yeah, I mean, Townsville-
Yeah, because what I can't work out there, guys. Well, when I say can't work out, you own what? 43.7%. You've written it down by 4.4 to 40.
Mm-hmm.
You've got a, what's that? 8.75 cap rate. What I'm just trying to work out, what's a realistic assessment of a re-leasing risk, and, you know, an outright sale, has that been considered?
Yeah, we tried to sell it, a year or 2 ago. Ran a full campaign.
Right.
Beautiful, beautiful document. didn't get anywhere.
Right, okay.
It's, it's, it's got a shorter WALE on it. There's a bit of movement in the tenants. We've just, you know, we've signed a heads of agreement with one of them for, for an extension, which is, which is good. That was over 4,000 square meters of space. That's, that's a very good deal. We, we believe we'll get a renewal on, on another large space user there because they spent so much on their fit out, they're likely to stay. If you look at the Townsville market, there's only four properties suitable for government occupation, and three of them are 100% full. We feel that we're, that we're in a good position to be able to extract some value from that, notwithstanding the, the shorter WALE and a bit of movement in the, in the vacancy.
Yes, we'd be delighted to sell that for the right price, but like all our assets, we, we won't-- We'll try not to sell them at the wrong price, Lionel.
Conversely.
Guys, no, thank you.
Conversely, there was a, there's been more activity in the North Queensland office market in terms of capital transactions, there has been in Perth.
Mm.
There was a similar size asset traded in Cairns in June last year, around there.
Right. Okay. Now, guys, thank you. Appreciate it.
Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Matt Ward, private investor. Please go ahead.
Hi. Thanks for the presentation. Looks like you're doing quite a good job there in a lot of ways, but your share price is AUD 0.60 odd, AUD 0.62, and your NTA is AUD 1.20. If you bought back shares, presumably there's a potential 100% upside almost. Can you tell us what sort of strategies you're using? I mean, it seems to me like you need to get bigger. The market cap of AUD 300 million odd just seems too small. I'd have thought a scrip deal with somebody done based on NTAs might be a way to go with some, as long as they're decent properties, decent people. What are your thoughts on that?
Agree, agree with you there. If you can get us a an equivalent scrip where we get the benefit, we're, we're all for it. You know, if you look at some of the other people that have gone through this exercise of, you know, swapping scrip out or realizing their portfolio, 1, I would argue they did it at the wrong time and didn't optimize it, 2, they weren't suitable candidates for us. If looking in the rear vision mirror, there wasn't many stocks where we felt we had to have their assets. If someone wants us, then that's up to them to, to tell us all about their scrip. We're basically running the business and trying to drive the FFO up like we have, and the other businesses and the cash flow and maintain the distribution.
Totally, totally get the point, and theoretically, a buyback at current prices would result in a lot of money if it was for the whole company. To be able to fund a buyback of that size, you've got to be able to sell your best assets at the right price. Now, the, you know, there was a sales campaign of five assets in Perth run last year, and none of them sold, so it's not transacting yet. You can't actually get the leg of the trade that you need to get the money to do the buyback. That's in simple terms, what, what you can't do. Totally, if, if, if there's better scrip out there and it increases our size and gets us liquidity, that's great, but at the moment, we'll do what's in our control and try and optimize the returns.
At some point, you know, the transactional market will return, and as we've stated, part of our strategy is obviously to sell a whole lot of non-core, and then at some point we would JV on, on our good assets, but only at the right price, 'cause otherwise it's like doing a steeply discounted rights issue, and we're not in that business.
Okay, thanks.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Burns for closing remarks.
Thank you very much all for joining us on the call, and look forward to catching up with those who want to see us on the marketing afterwards. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.