Good morning, everyone. Welcome to the Ingenia Communities 2017 full year results presentation, teleconference, and webcast. We will be holding a question and answer session at the end of this call for those who wish to participate. To ask a question, participants will need to dial star one on their telephone keypad. This conference is being recorded today. I would now like to hand the conference over to your first speaker today, Simon Owen. Thank you. Please go ahead.
Good morning, everyone. It's great to be here. I'm really excited to be presenting Ingenia's results today. The group's performance again demonstrates that our strategy of owning, managing, and developing a leading portfolio of lifestyle and holiday communities is working. Before we go into the details, I would like to make a few introductory comments about our business and the sector. What the next few years has ahead for us. Ingenia is now in a phase of accelerated growth as we build out our development pipeline in key capital city and coastal markets. Over the next 14 months, we intend to launch eight new or expansion projects. These are all either on balance sheet or secured via an option. We also intend to execute on the numerous organic growth initiatives that we have identified within the business. Some of which have been identified in today's presentation.
What sets Ingenia apart is that we have already locked in our growth for the next two to three years. Ingenia is now at the forefront of land lease communities within Australia. Over the past two years, it has become abundantly clear that consumers are embracing the simplicity and transparency of a model where residents buy the home and rent the land, where they pay no stamp duty or legal fees. Where there are no deferred management fees. They get to keep all the capital appreciation on their home. This is a housing solution with a genuine and meaningful cash-out from selling the family home and moving into a vibrant and engaging community. Two years ago, many of the conversations that we were having with boomers was about how the model worked and what security of tenure you had if you didn't own the land.
Today, the conversations really start about floor plans and inclusions. When is the clubhouse going to get built? What sort of activities will be happening within their community? The consumer fully understands how the model works and value its transparency and simplicity. Across land lease communities, no other group has the breadth and depth of projects that Ingenia is currently bringing to market. Finally, Ingenia has a strong balance sheet and capital position. We are absolutely determined to self-fund the build-out of our development pipeline. We will reinvest development profits into future growth projects. Are progressing a number of non-core and regional asset sales. Our near-term acquisition program has stepped back a notch. I'm now going to turn to the presentation.
Joining me on the call today is Scott Noble, our Acting CFO, who is doing a great job while Tanya is on maternity leave, and Nikki Fisher, our Chief Operating Officer. Let's start on page three, which are the key highlights. I'm going to let Scott talk to the numbers in a moment. Lifestyle and holidays, a market segment we only entered just over four years ago, is now the largest contributor to earnings. The group has a development pipeline of nearly 2,500 home sites, with a 90% weighting to key metro and coastal markets. We really have strong momentum in a business that uniquely meets the convergence of two of the key challenges facing Australia today: an aging population and housing affordability, supported by strong cash earnings from our growing holiday business and our core Ingenia Gardens business.
What are the areas that we need to work harder? I think firstly on executing and demonstrating the scalability of our management platform. Secondly, working harder to recycle capital quicker from our non-core and select regional communities, which will enable us to continue to self-fund the build-out of our development pipeline. Finally, I think there's more work we can do on standardizing our home designs and looking for further cost outs and volume efficiencies in our development business. We're working very hard on all of these. On to page four. I think this slide really captures not only the tremendous growth of the business over the past five years, but also that we have established a strong framework for future sustainable growth as we accelerate development and integrate and optimize our existing communities. On to page five, which highlights our business overview.
Today, we have over 4,600 residents who pay us rent. In our holiday business, we've now got over 790,000 room nights per annum across villas and caravan camping sites. In terms of earnings, and notwithstanding the significant and continuing growth in development, the rent collection side of our business still represents approximately three-quarters of earnings. I do think we have a very stable balance here. We're really excited about that part of the business in terms of the growth potential it offers. Our annual revenues are now tracking at over AUD 175 million per annum, and we're collecting over AUD 1.5 million in rent every week, which really underpins the business. If we can now turn to page seven, and I'll hand over to Scott to walk through the financials and capital management.
Thank you, Simon. Thank you everyone for joining the call. Running through our key financial results on slide seven. Revenue has increased AUD 42.8 million to AUD 149.9 million, a 40% increase from the prior year.
EBIT has increased 32.6% to AUD 32.1 million, driven by the growth in the result from our Lifestyle and Holidays business and the increased contribution from our Lifestyle Development business. Underlying profit increased 16.3% on prior year, driven by the increase in EBIT. However, this was adversely impacted by the group's tax expense, with an effective tax rate of 7% being booked. The increase in tax expense from the prior year was largely attributable to the increased portion of profit coming from the group's development business, which is not sheltered by the group's cross-staple arrangements. Please note, even though we've started booking tax expense, the group does not have any cash tax payable due to the group's available tax losses. Statutory profit improved 8.6% on prior year. This was driven by the improved underlying profit and achieving higher valuations on our investment properties.
The statutory profit was negatively impacted by the loss on the sale of Settlers' assets and the impact of the tax expense turnaround from prior year. Pleasingly, the group's operating cash flow increased 44.3% on 2016, driven by strong recurring rentals returns through our existing portfolio, the impact of new acquisitions, and the improved sales momentum in the second half of the year. Ingenia has declared a final distribution of AUD 0.051 per security, taking the full-year distribution to AUD 0.102 per security. This represents a 9.7% increase on 2016. This distribution is consistent with the guidance provided to the market at the time of our equity raising in May. Turning to slide eight. The group delivered a strong growth in EBIT, increasing 32.6% on prior year.
Lifestyle and Holidays increased 58% to AUD 17.4 million, attributable to the improved performance of the existing villages and additional EBIT on our new acquisitions. Lifestyle development EBIT increased 98% on prior year, with 211 turnkey settlements completing in 2017, compared to 107 settling in 2016. The EBIT from Ingenia Gardens portfolio increased five and a half % on FY 2016, driven by higher occupancy and improved operating performance across the portfolio. Corporate costs were higher than prior year, reflecting the increased asset base and the impact of due diligence costs written off in the first half of FY 2017. Turning to the capital management slide on page nine. During the second half of 2017, we raised an additional AUD 74 million in equity to support the acquisition of four new villages and accelerate development spend. Two of these villages, Bonny Hills and Durack, were acquired prior to the end of FY 2017.
The timing of the equity raise versus the timing of the deployment of capital raise, has had the impact of reducing our LVR to 27.7% at 30 June. This compares to our debt covenant at 50%. During the year, the group also increased its syndicated facility by AUD 100 million and extended the tenor of our debt facility, which now has a weighted average term to maturity of 3.8 years, with the next maturity due in February 2020. We will be opening up the distribution reinvestment plan to security holders and will apply a 2% discount. Turning to slide 10. During the year, we externally revalued approximately half the group's portfolio. Over the last 12 months, we've seen the average capitalization rate of the Lifestyle and Holiday portfolio sharpening by approximately 50 basis points across the portfolio.
The sharpening of capitalization rate has been driven by a combination of strong macroeconomic conditions with low interest rates and record housing prices, making housing affordability a key issue. The impact of new market entrants such as Hometown and Voya, looking to share in the strong growth outlook for the sector. The maturing of a sector, which is well established in countries like the U.S., and the improved quality of Ingenia's villages through capital investment and the implementation of various asset management strategies. Our Ingenia Gardens capitalization rates have remained largely stable. On slide 11, this highlights the key drivers of our net asset value growth to AUD 2.50 per security. Our net asset value increased due our strong underlying profit and the impact of the revaluations on our portfolio, which was driven by both cap rate sharpening and improved operations of our villages.
These increases are offset by the loss on sale of our Settlers' assets, distributions paid to security holders, and the impact of acquisition costs such as stamp duty on newly acquired assets, which are revalued down to the original purchase price post the acquisition of the new asset.
Thank you, Scott. Moving on to slides 12 and 13, we thought it would be interesting to show you where recent lifestyle and mixed-use communities and development sites have transacted. This is proprietary Ingenia analysis collected over the last four and a half years. Slide 12 shows a very significant tightening in cap rates for lifestyle and mixed-use communities. In the last six months, we've seen two new market entrants acquire existing lifestyle communities at cap rates in the high sixes. Newport and Green Point are properties on the New South Wales coast. Durack, one of the other transactions on the right there, is a recent Ingenia acquisition located in metro Brisbane, and I know where I'd rather be.
Ingenia's first lifestyle community was acquired back in March 2013, which was The Grange on the left of the screen, at a cap rate of 9.45%, and has now valued at a cap rate of 7.8%. My closing comment on this slide is that the valuers are at least 100 basis points off the pace for lifestyle communities compared to where deals are now transacting. Page 13 clearly articulates the growing demand and increasing prices for development land, particularly that that has approvals in place. Approved development sites on the recent Newport and Green Point deals transacted at prices well over AUD 100,000 per home site. That's a lot more than what we even paid for Avina in Western Sydney. At that sort of price, it's certainly going to be putting pressure on your development margins.
Over the past few years, Ingenia has deliberately focused on auctioning or acquiring development sites at raw land prices and then procuring all necessary approvals internally. Bethania and Chambers Pines in Brisbane and at Conjola on the New South Wales South Coast. These are all recent examples of Ingenia securing development sites at very attractive and below-market prices. Moving on to page 14, most of you would know about Avina, which is Ingenia's most valuable project and one of the very few potential lifestyle development sites in Western Sydney. A DA was lodged for this project nearly a year ago, and we anticipate final assessment over the next three to six months. Pleasingly, over the past 12 months, the suburb in which Avina is located, Vineyard, recorded the third highest house price growth across Australia, which certainly supports our initial investment thesis.
I'd like to briefly touch on slide 18, which calls out some of the value levers that management is presently advancing to unlock maximum value within our portfolio. I think it, again, further demonstrates that the group does not need to acquire any additional operating communities in order to continue to grow earnings. Building out our existing development pipeline will add over AUD 20 million per year in incremental rent. Adding new rental homes at Chambers, Durack, and Sheldon on current vacant and underutilized land will add a further AUD 1.6 million per annum in incremental rent. Investing in an additional 180 tourism cabins across communities such as Cairns Coconut can add another AUD 4.5 million per annum in incremental rent. Importantly, we believe all of these opportunities can be funded internally. On page 21, we examine earnings from our key lifestyle and holiday segment.
Portfolio EBIT was AUD 28.3 million, up over 70%. Our mature, i.e., those that are fully built out communities, owned for over 12 months, are now yielding over 9% on purchase price. Like for like income is up over 5% in the past 12 months. Concentrated across Durack and Chambers Pines in Brisbane and Rouse Hill and Sydney Hills in Sydney, the group now owns 574 homes, which are typically rented out at much higher rents than what we achieve for resident-owned homes. Moving on to slide 22, Ingenia Holidays. This is again, where we're really enhancing returns through active management. Like for like, i.e., same store revenue growth, is up 4% over the past 12 months, and we now have a unique database of upwards of 150,000 members who we communicate with on a regular basis. This is up nearly 50% over the last 12 months.
Our strategy here at Holidays is about owning the customer, controlling the channel, and focusing on yield optimization and length of stay rather than meeting the market. Our holidays business is a compelling and complementary opportunity with attractive earnings upside. On page 23, talking about development. 2017 was another record year for Ingenia, with 211 settlements and an above-ground development profit of AUD 97,000 per home site. Pleasingly, we finished the year with 135 homes deposited or contracted, basically giving a 50% coverage of our forecasted settlements of between 260 and 280 homes for 2018. Second half margins were impacted by mix with a larger reliance on projects such as South West Rocks, which typically has a lower development margin than some of our capital city projects. We do forecast a return to our development margin for the current year of around AUD 110,000 per home.
Resale homes and annuals is a growing and new opportunity for Ingenia. In 2019, we are gearing up for over 350 settlements with further growth beyond that. I will now touch on page 24. I want to be clear on costs. Over the next year, Ingenia will continue to invest in our sales and development team as we launch eight new or expansion projects and continue to identify and auction land sites for future growth. Across other areas of the business, such as finance and operations, our teams are largely fixed, and we have made a number of roles redundant or we restructured them. Ingenia is rapidly growing, addressing a huge market opportunity, and we need to have a right-sized team. I would also say that the average time of the executive team now is around five years.
Moving on to slide 25, this is probably my personal favorite in the whole deck. There is no other lifestyle community operator that has a development pipeline anywhere near this quality or breadth. A majority of these projects have been sourced, where we have got the DA internally, and that has added considerable value. Over the next 14 months, we are launching eight projects. We are also entering Victoria for the first time. Our success at Lara, near Avalon Airport, has given us the confidence to move into the Victorian market, and we already have somebody on the ground putting together some sites for us. In recent months, we have recently acquired adjoining land at Latitude One, and we are currently negotiating acquisition of expansion land adjoining four existing communities.
Our experience is that when you are acquiring the land next to an existing community, that it typically provides for very low risk and highly profitable development. These projects detailed on this page continue to demonstrate our focusing on large-scale, long life, and high-margin projects. I will now touch briefly on Ingenia Gardens, which is on page 27. In our Ingenia Gardens business, we achieved an all-time record occupancy of 92.8% at 30 June, which is really exciting. Ingenia Gardens remains a core part of our platform, and we collect nearly half a million dollars in rent every week, most of which is government funded or supported. Over the last six months, we have been trialing a new Ingenia Care Plus, which provides an extended care offering. We are trialing that at the moment in two villages, Devonport down in Tasmania and Taree on the New South Wales Mid-North Coast.
By the end of this year, we will be assessing whether we are going to roll that out across the portfolio. Touching briefly on to page 28, our non-core assets. We are actively divesting the remaining three DMF assets that we have, which are collectively worth around AUD 10 million, in addition to select regional lifestyle communities. At this point in time, we have conditional offers in place across six communities totaling AUD 48 million. The capital release from this program will be recycled into accelerating the build-out of our development pipeline. I will now touch on to page 29, which is the market landscape. What we are seeing out there is that housing affordability is a front-page issue across Australia. Combined with an aging population, there is very strong and growing demand from prospective residents. There is limited new supply, and there is very strong tailwinds behind our business.
I would certainly say that the competition is stepping up. There are new competitors coming into the market, but we have been busy executing our strategy and constructing our portfolio over the past four and a half years. The key risk to our business would be a downturn in the housing market, but this would likely require rising unemployment and rising interest rates, and we don't see any near-term risks of either of those. We are alert, but certainly not alarmed. We're spending a lot of time on customer research, and we're continuing to evolve and improve our product and service offering as we need to. The customer and their families are very informed and prepared when we're talking to them about moving into one of our communities. Lastly, on page 25, which is our outlook.
Our absolute number 1 priority in the business remains on improving the performance of our existing assets. Recycling capital from non-core and select regional communities is a key focus over the next 12 months. Acquisitions will likely be far more muted than previous periods, and self-funding is a very high priority. In terms of guidance, we remain confident in our ability to hit 260-280 settlements this year and over 350 in FY 2019, and we would see continuing growth beyond then, subject to where the market's currently trading. Our earnings guidance remains unchanged with an EBIT of between AUD 42 million and AUD 46 million, again, subject to no material changes in market conditions. On closing, I think this is another very strong result for Ingenia that demonstrates we're delivering on strategy and investing in our platform to become the clear market leader in our segment.
I'll now hand over for Q&A.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Our first question comes from the line of Jo Lisa from Morgan. Please ask your question.
Good morning, Simon. Congratulations on a result ahead of guidance. Firstly, on the six communities worth AUD 46 million, can you just confirm what you think the equity release is there and also the EBIT contribution from those six assets or those six communities in FY 2017?
Sure, Jo. All of the assets in the group basically sit within one security pool. If we were to sell those assets for AUD 46 million, we could invest that into AUD 46 million of equivalent assets, and gearing would remain unchanged. The near-term impact of divesting those is that we would probably pay down our gearing a little bit, and we would forego some earnings until that capital is reinvested. In the EBIT guidance we've given of AUD 42 million to AUD 46 million, we have made an allowance for the divestment of, you could say, an equivalent value of assets in the current financial year.
Okay
If we sold less than that, EBIT may be slightly higher, and if we sold more than that, EBIT may be slightly lower until we reinvest that capital.
Okay. Understood. Just on the corporate cost, just trying to get what you're pointing out there. That should continue to grow at well less than EBIT growth, I imagine, next year, but you're also flagging you're growing strongly and there is further investment. It did fall in the second half. How should we think about that next year?
I think, you could say that corporate costs we would expect to remain flat from here.
Okay. Great. You just didn't provide a settlement update year to date like you normally do. Is there a timing thing there or how do we interpret that?
I've got the numbers right here. As of yesterday, we have settled 24 homes, and we have 122 deposits and contracts in place. Consistent with a normal residential housing market, the housing market tends to slow down over the winter period. If you are looking to buy a home at the moment, there's not a lot of product out there. As we move into autumn next week, that will begin to step up and our two key selling periods, which is consistent across the last four or five years, is moving into autumn and then coming out of February, March, April. If you look over the last 12 months for FY 2017, our two strongest months of the year were May and June, and our softest month last year was July, and that's consistent with where we are at the moment.
We're very comfortable in reiterating our target of 260 settlements-280 settlements. We're very pleased with where we are with Latitude One at the moment. Latitude One is our first greenfields project just north of Newcastle on the New South Wales coast. We have a database at the moment of over 700 people, and we had our first marketing event about a week and a half ago, and we're very encouraged by the level of deposits that we've already secured for that project. We're very comfortable at 260 settlements-280 settlements given everything that's in front of us at the moment.
Great. Just lastly from me, the Queensland Government recently touted proposed amendments to the MHE Act, whereby rent increases will be limited. Any thoughts on their initial proposal there and how that fits in with your practices?
Yeah. What the Queensland Government, Mick de Brenni, who is the housing minister up there, what he's proposing is very similar to the legislation we already have in New South Wales. Those proposals are currently out for industry feedback. Look, if it all came through, there's a couple of things there that at the margin may have a marginal impact on our business. We're pretty comfortable with what's being proposed there. Most of the thrust of the changes in the legislation that he's proposing really impact more the traditional retirement village or DMF operators. Regulatory risk is something that we're always vigilant about and through the Residential Land Lease Alliance, which is the peak industry lobbying group headed up by James Kelly from Lifestyle Communities, we have a well-funded advocacy platform.
Thanks so much.
Your next question comes from the line of Stefan Lam from CLSA. Please ask your question.
Hi, Simon and team. Just a few questions. Just following up on the non-core asset sales. You mentioned that in the guidance you've assumed the sale of those AUD 46 million assets. What sort of timing have you assumed for that? Are you assuming mid-year or early in the year?
Probably given our experience with divesting the DMF portfolio, I'm probably reluctant to give too much timing. Yeah, I think if you assume most of those sales happen in the second half of FY 2018, that would probably be appropriate for modeling.
Yep. Great. Thank you. Then, do you have a guidance on the CapEx? I understand that it's not always easy for us to forecast the CapEx and development costs based on the number of sites in terms of your forecast settlement pipeline. What's a rough rule of thumb that we could use or perhaps.
That's a pretty tough question, I might hand that over to Scott.
Thank you, Simon. From a development spend point of view, we're certainly expecting an increase in FY 2018, particularly with both Latitude One and Glenwood developments being forecast. My rule of thumb at the moment would be probably to double what we spent in FY 2017 at this stage. We obviously have a number of levers we can pull to either accelerate or reduce that depending on timing of asset sales and progress. We've certainly got funding in place for that in our facility, and we have the existing pipeline already in place. In terms of CapEx on our existing assets, likewise, just at this stage, I again recommend probably a doubling of where we landed in FY 2017. We do have a plan to roll out additional cabins across our sites that will add to revenue into next year. That's where the majority of our spend will be targeted.
When you say doubling, do you expect that rate to be sustained going forward or would it reduce?
Look, I think we're in the probably early stages of sort of ramping up our development. For future years, yeah, look, it really depends, again, on timing of asset sales and a number of other factors, but I think that would be more of a capped-out rate.
I think, Stefan, over the last two years, the CapEx we've spent has largely been reinstatement or maintenance CapEx. Every spare AUD of capital we've either put into developing or expanding communities or buying additional assets. On page 18 of the presentation, we set out there some value levers. In addition to the development sites, which we're front and center at the moment, we put in there some ideas or some opportunities around putting in, as an example, 180 new tourism cabins. Most of those have all approvals in place. We're not going to put them all in in one or two years, but over the next probably three to four years, that's an investment we would like to make. And depending on where the cabin is and the size of it, that could range from AUD 60,000 up to AUD 200,000 for a three-bedroom waterfront villa at Cairns Coconut.
In terms of the 125-plus new rental sites, again, you're looking at around AUD 60,000 per rental cabin, generating a sort of 12%-15% yield on investment. A lot of the staging of that CapEx will depend on the timing of asset sales and also the timing around when we procure approvals on our DA. If you went to slide 25, what you've got there is that in FY 2018, we're building out projects that we have all approvals in place, but depending on the timing of getting an approval for Avina, which is in Western Sydney, which we think would be a highly successful project, that we probably want to bring that to market as quickly as we got approval. At Hervey Bay, on the Queensland Fraser Coast, we actually expect to get that DA in the next three to four months.
The timing of some of our investment into growth will also depend on when we secure those approvals.
Great. Thank you. Just on the corporate cost guidance, just going back to previous questions. First half was AUD 4.4 million, our second half was AUD 4.1 million. What's the actual run rate? Because I think I remember first half you mentioned there was some write-off of DD costs.
Yeah. The numbers we've disclosed in the presentation were AUD 9 million for the year. Of that, it was AUD 4.7 million in the first half, AUD 4.3 million in the second half. In the first half, we had approximately an additional AUD 400,000 to AUD 500,000 of due diligence costs, which we had written off on acquisitions we walked away from.
Just finally, last one, of your 135 homes deposited or contracted, how many of those are non-refundable?
Yep. The split would be around one third would be contracted and non-refundable, and two thirds would be refundable.
Great. Thank you very much. I think that's it for me.
Once again, if you wish to ask questions, please press star one on your telephone keypad and wait for your name to be announced. Our next question comes from the line of Michael Pitt from Goldman Sachs. Please ask your question.
Hi, Simon and Scott. Sorry I was a bit late to the call. Sorry if this goes over something you might have already mentioned, just wondering about seasonality of settlements first half, second half. Is there going to be much difference between the two halves, or how do you see it playing out?
Yeah, look, we would expect normally a second half skew of probably 60%, compared to 40% in the first half. That would assume no launch of new projects, we are launching 8 new or expansion projects over the next 14 months. If you assumed a similar skew that we had in 2017, which I think off the top of my head was around that 40/60, that would be pretty right. We find the number 1 peak selling period is after Christmas, when families often sit down with extended family, and that can be a catalyst for the parents to start thinking about moving into a community. The other peak selling period, which we're about to go into now, is coming out of winter, moving into spring.
Latitude One, where are you with getting that out of the ground, and how's that looking for getting some sales or settlements into the back end of this year?
Latitude One is progressing exceptionally well. The contractor on site is ahead of schedule. We've secured all necessary approvals for that project. We, at this stage, remain on track for securing probably 20-30 settlements in the last quarter of this financial year.
Great. Just on Victoria, what sort of timing are you looking at there? Just to confirm, is that greenfields in the Greater Melbourne area, or?
In terms of Victoria, our strategy will be the same as what we've embarked upon over the last two, three years. That will be, over the last 12 months, we've mapped out all the key urban growth corridors out of Melbourne. Everywhere from the Bellarine out to the Mornington Peninsula, and the three growth corridors out of Melbourne. We've got someone on the ground now looking at optioning up land. We'll take it through the development approval process. It's unlikely that we would be in a position to launch a new project in the Victorian market, probably for the next 18 months. We're busily pulling together a land bank at the moment. If you have a look at, again, on page 25, we've already got eight projects that we're launching or expanding on in the next 14 months.
I don't think we've got the bandwidth or the capital to launch another project. What we want to do is find land that we can secure for maybe AUD 30,000 a site, take it through the approval process, settle the land once all approvals are in place. That would be our strategy in Victoria, which is exactly what we're doing in New South Wales and Southeast Queensland as well at the moment.
I guess to give you some context, in New South Wales and Southeast Queensland, in addition to those bubbles on the chart there, where we've got offers in on other land, where we're negotiating with vendors at the moment to get the right terms in place so that, in six months' time, there'll be further bubbles to the right of those existing projects so that in 2019, we're planning to hit 350 settlements, depending on market conditions. We would see further growth beyond that. We're just continuing to invest in our development pipeline. I think that segues well into, in terms of costs. We see there's massive value that Hervey Bay, for instance, we've secured that land at less than AUD 10,000 per DA-approved site. Now, once we get an approval for it'll be worth three times that.
The land adjacent to Bethania, we paid around AUD 24,000 for that land. We've seen people come and pay over AUD 100,000 for a development site on the New South Wales coast. Whilst we're incurring those costs up front, it is creating significant medium-term value for the business.
Great. Just how many projects will you be selling in this year in total?
We've got 12 projects in market at the moment, I would expect that a couple of those will finish. By the end of this year, we'll probably have another six projects in market, Michael Pitt.
Okay. Excellent. Thank you.
Once again, if you wish to ask questions, please press star one on your telephone and wait for your name to be announced.
If there's no more questions, thank you very much for listening to Scott and I for the last three quarters of an hour. We look forward to catching up with everyone over the next few weeks. Donna and I are always happy to take a call or answer an email today if there's any specific questions that you have. Once again, thanks for dialing in and look forward to catching up over the next few weeks.
Thank you.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.