Good morning. Welcome to the Annual General Meeting of the Mirvac Limited and the General Meeting of Mirvac Property Trust, which are referred to today as the meetings. My name is John Mulcahy, and I'm Chair of the Board of Directors of Mirvac. I have been informed that there is a quorum, and I declare the meetings open. I'd like to begin by acknowledging the traditional custodians of the land from which we are presenting to you today, which are the Gadigal people of the Eora Nation. I'd like to pay my respects to elders past and present, and to all Aboriginal and Torres Strait Islander peoples, the traditional custodians of the lands and waters of Australia. I'd also like to welcome all those here in Sydney who have joined us in the room today, and also those who have joined us online.
Joining me here in Sydney this morning is, to my right, Mirvac's Group Company Secretary, Michelle Favelle, and Non-Executive Directors, James Millar, Christine Bartlett, Samantha Mostyn. To my left, we have Mirvac's Chief Executive Officer, Managing Director, Susan Lloyd-Hurwitz, and Non-Exec Directors, Rob Sindel, Jane Hewitt, and Peter Nash. Damien Frawley, one of our Non-Executive Directors, is unfortunately unable to be with us in Sydney today and is attending the meetings online. All members from our Executive Leadership Team are present here today, and they'll be available after the meeting if you would like to speak to them in person. Voula Papageorgiou, our Lead Audit Partner from our external auditors, PricewaterhouseCoopers, is also here today and is available to answer any specific questions on the audit. Now, safety is always our first priority at Mirvac, so I'd like to start the meetings with a quick safety briefing.
In the unlikely event of an emergency in this building, an alarm will sound. This is when you should follow the directions of Mirvac employees. May I also ask that everyone in the room please switch their mobile phones to silent mode. Thank you. Turning now to my formal address. This year is a very special year for Mirvac. It marks 50 years since Bob Hamilton and Henry Pollack joined forces, bringing together their property expertise and a shared vision to build quality homes in Australia. In 1972, they launched Mirvac with a block of 12 apartments called Montrose in Sydney's eastern suburbs. The group's trajectory of growth since then has been nothing short of remarkable.
In 50 years, Mirvac has evolved into a top 50 ASX-listed property group with approximately AUD 34 billion of assets under management and AUD 30 billion forward-looking development pipeline, the largest in our history. From its inception as a small joint venture, Mirvac now employs more than 1,500 people in Sydney, Melbourne, Brisbane, Perth, and Canberra. I would like to acknowledge and thank all of the many people who have contributed to Mirvac's ongoing success. Along the way, we've become leaders in sustainability and innovation, and there are a number of milestone projects spanning five decades that demonstrate our focus in these areas. Importantly, for over 50 years, we have maintained an enviable reputation for quality and care in all that we do. We are one of a few property groups in Australia to have had the privilege of serving our communities for as long as we have.
I believe it is because, in 50 years, we have not deviated from the high standard of excellence set by our founders. Our high standard of excellence and an ongoing commitment to quality has been key to our success, underpinned by our focused urban strategy. This is reflected in the solid performance we delivered in financial year 2022, which included a statutory profit of AUD 906 million, up AUD 5 million on financial year 2021, along with an operating profit of AUD 596 million, up 8% on FY 2021. Notably, this result was achieved in the face of a number of challenges, including supply chain issues, labor shortages, extreme weather, rising inflation, and interest rates. As a result of our solid performance, the annual distribution to security holders increased to AUD 0.102 per stapled security, which was in line with our guidance.
In addition to a strong earnings outcome, our operating cash flow of AUD 896 million was 41% higher than financial year 2021, helping to fund our distributions. Net tangible assets were up 4% to AUD 2.79, delivering a 6.9% return on invested capital overall. Our prudent approach to capital management also ensured our capital position and balance sheet remained strong in FY 2022, which enabled us to be agile in the face of changing market conditions. Our debt maturity profile was conservatively managed, and as at the 30th of June, 2022, our weighted average debt maturity was 5.6 years, with only AUD 220 million of debt maturing in FY 2023 and AUD 250 million in FY 2024.
Liquidity increased to AUD 1.4 billion, and gearing at 21.3% was at the lower end of our target range of 20%-30%. This provides Mirvac with the financial flexibility to take advantage of opportunities as they arise for the benefit of our security holders. Our A3 Moody's and A- Fitch ratings were maintained with stable outlook, while our cost of funds increased by 50 basis points to 3.9% as at the 30th of June this year. 55% of our debt is currently hedged in line with our long-term targets. This level of group hedging reflects a substantially higher level of hedging of debt associated with our investment trust assets and lower level of hedging across our active development operations.
Against the backdrop of challenges we faced and continue to face, the benefit of our diversified and integrated business model has been clear. Susan will provide a more detailed update in her address, but it's safe to say the diversified nature of our business means we are well-placed in the current environment. In a challenging environment, it's also more important than ever to have the right people in place. Over the past several years, you'll have seen the addition of new directors to our board as part of our disciplined approach to succession, our planning around succession and ongoing board renewal. This approach ensures we continue to have the right mix of skills, experience, and capabilities to meet the current and future challenges and opportunities.
Consistent with our succession planning at last year's AGM, I flagged that I would not be serving out my full term. Last month, I announced my retirement from Mirvac, having served on the board since 2009 and as Chair since 2013. I will leave the group at the end of the year. Rob Sindel, who joined the Mirvac board in September 2020, will assume the role of Chair from the first of January 2023. Rob is highly regarded in the property industry, having led CSR Limited for eight years and serving as a director on the board of Boral and Orora. Rob is the current Chair of our Health, Safety, Environment & Sustainability Committee. Mirvac will no doubt continue to benefit from his deep knowledge and extensive expertise.
Susan Lloyd-Hurwitz, who has served as Mirvac's Chief Executive Officer and Managing Director for the past 10 years, has also announced her plan to retire from the Group at the end of the current financial year. Susan has been instrumental to the growth and evolution of Mirvac over the past decade, overseeing the successful execution of the Group's urban strategy and upholding its legacy of quality and care. Campbell Hanan, who has been on the Executive Leadership Team since he joined the Group in 2016, has been appointed as the next Chief Executive Officer and Managing Director of Mirvac. Campbell is the current Head of our integrated investment portfolio, and during his time at Mirvac, has made a significant contribution to its urban strategy.
In addition to his six years at Mirvac, Campbell has 29 years of experience in the property and funds management industry, 12 of which were with Investa Office, where he served in a number of senior positions, including as Chief Executive Officer. The board has every confidence that Campbell will continue to build on Mirvac's legacy and drive its success into the future. In September this year, Brett Draffen announced his resignation as Chief Investment Officer of Mirvac. Brett has been an invaluable member of the Mirvac team for over 20 years, and I would like to thank him for his significant contribution to the group during that time.
With Mirvac securing the rights to manage the AMP Capital Wholesale Office Fund in July this year, now known as the Mirvac Wholesale Office Fund, we created a new Head of Funds Management to sit on the executive leadership team and report to the Chief Executive Officer and Managing Director. I'm pleased to announce that Scott Mosely has been appointed to this role, which is to commence at the end of this month. Scott will lead all our wholesale pooled funds and capital partnerships, which, as well as MWOF, includes the Australian Retirement Trust, CIC, and the Mirvac Industrial Logistics Partnership. Scott's extensive experience and his well-established relationships in the real estate capital and transactional markets makes him well qualified for this role.
Now, while this presents a number of changes to our board and executive leadership team, I'm confident that we continue to have a strong leadership team and the right people with the right skills and experience to steer Mirvac through the current economic uncertainty. Maintaining a diverse and inclusive culture at Mirvac remains an important priority. We aim to create an environment that leverages the individual differences of our employees, one in which our people feel that it is safe to speak up and voice different opinions. In FY 2022, we refreshed our diversity and inclusion strategy, building on the excellent work we have been doing over the past several years. Within the strategy, we have broadened our focus around Indigenous participation in the workforce, women in construction, and employees with caring responsibilities beyond young families, such as caring for elderly parents.
To actively embed our awareness of inclusion, we developed a new inclusive leadership program for our leaders, which dives deeper into the core characteristics of highly inclusive cultures. As well as our commitment to diversity inclusion, we work hard to embed a culture that prioritizes health, safety, and sustainability. Our Health, Safety, and Environmental and Sustainability Board Committee helps to ensure that we have a strong safety governance and good oversight of the resources and systems in place to manage HSES matters. This year, we increased our focus on major hazards and psychological health and safety while remaining committed to delivering a strong safety performance. In FY 2022, this was demonstrated by a lower lost time injury frequency rate of 1.18 compared to 3.24 in FY 2021.
As we continue to take on larger and more complex projects, we will continue to strengthen our approach to managing both our known and unknown major hazards. Let me now turn to remuneration. At the heart of our remuneration framework is a commitment to deliver competitive remuneration for excellent performance that enables us to attract top talent and motivate and retain talented individuals who align to the interests of executives and security holders. In FY 2022, the strategic objectives set by the group were either met or exceeded, resulting in a group STI score of 113%. For the executive key management personnel, the FY 2020 LTP vested at 40%, reflecting the mixed results across the performance metrics. Mirvac's absolute TSR performance was below the median of the comparator group, and as a result, this portion of the award did not vest.
Two-thirds of the ROIC component vested, taking account the ROIC performance exceeded WACC and the outcomes delivered by the management over the three-year performance period. Mirvac's full remuneration report for FY 2022 can be found in our annual report, which is available on our website. There is no doubt there is much uncertainty in the macroeconomic and geopolitical environments. However, we have a long track record of managing through the cycles over our 50-year history. I believe the quality of our integrated investment portfolio, our reputation as a market-leading residential developer, our growing funds management platform, and the value of our commercial and mixed-use development pipeline will stand us in good stead as we navigate the cycle.
Our key priorities over the next financial year are to secure strategically aligned capital partners for our assets, including our build-to-rent portfolio, increase our funds under management further, and deliver our residential project launches and settlements. We will also continue to progress our active development pipeline, retaining flexibility around project commencements to manage our development risk. We will continue to have a disciplined approach to capital management and focus on maintaining a healthy balance sheet so that we can capitalize on opportunities as they emerge. Our significant AUD 1.3 billion program of non-core asset sales will further support our activities as we look to create the next generation of assets that deliver development profit, generate new recurring income, and further improve the quality of our portfolio.
Subject to no material change in the operating environment, the Group is targeting operating earnings in FY 2023 of at least AUD 0.155 per stapled security and distributions of at least AUD 0.105 per stapled security. In my last address to you as Chair of the Mirvac Board, I would like to say how proud I am of the Group as it stands today. In the past 10 years, we have seen considerable growth in both our development capability and our funds under management. We have markedly improved employee engagement, and we have cemented our place as leaders in sustainability and innovation.
All of this is a credit to Susan and the rest of the executive leadership team. To Susan, I would like to say it's been a pleasure working with you for the past 10 years, and I would like to thank you for your leadership, your integrity, and your passion for reimagining urban life. To our valued security holders, I'd like to thank you for your ongoing support. I'd now like to hand over to Susan to address the meetings.
Thank you so much, John, and welcome to all of you who've joined us either here in person at 200 George Street or online. I'd also like to acknowledge the traditional custodians of the land that we meet on, the Gadigal people of the Eora Nation. Pay my respects to elders past and present. Mirvac is an asset creator and curator, and because of that, we are intrinsically linked to this country. Our second Reconciliation Action Plan outlines our vision and guides our action towards a fair and truthful relationship between Aboriginal and Torres Strait Islander peoples and the wider Australian community. Their sacred link and attachment to country is a gift to all Australians. As John touched on in his address, the property industry is facing a confluence of headwinds, and Mirvac certainly has not been immune from these challenges.
However, the group remains well-positioned in this context, and there are three key reasons why this is so. Firstly, having a diversified business model provides substantial resilience. It allows us to maintain an appropriate balance of passive and active capital invested through cycles. Our long-term target is to have 80% of our capital allocated to the investment portfolio, which delivers that stable recurring income, and 20% of our capital allocated to our development activities, which deliver development profit and NTA uplift. The assets we create then provide recurring income and capital partner fee income once they form part of our high-quality integrated investment portfolio and funds management platform.
As well as being diversified in terms of capital, we're also diversified in terms of sectors, and this means we can bring a wide range of skill sets to development and acquisition opportunities to unlock complex urban renewal projects. Secondly, we're an integrated business. We retain all of the key skill sets required in the life cycle of a project in-house, providing us with the ability to respond to opportunities and market conditions more seamlessly than most. Having an in-house asset creation and curation capability means we're able to exercise full control over a project's life cycle, ensuring our high standard of quality is maintained, reducing supply chain and construction risk, and providing greater cost efficiencies both within and across sectors. It also means we can incorporate customer feedback into front-end design while driving sustainable outcomes from the very beginning of a project's life cycle.
Lastly, we have an enviable culture upheld by our core values of being genuine and doing the right thing, of putting people first, of collaborating, of being curious and bold. In FY 2022 we continued to be recognized for our culture, which included being named the number one AFR Best Place to Work in the property, construction, and transport category, as well as being named number one in the world in Equileap's global report on gender equality. Having a strong, inclusive, and diverse culture where people feel that they belong and they're inspired to go above and beyond their roles, that means we are better placed in a challenging operating environment. The resilience of our business and the benefits of our diversified and integrated business model is evidenced in our first quarter operational update, which we released to the market just a few weeks ago.
Overall, we remain on track to achieve our targets and have maintained guidance of at least AUD 0.155 per staple security. Our active start in FY 2023 included taking over the management of the AMP Capital Wholesale Office Fund, and that transition was successfully completed in September this year. The unit holders' vote to transfer the management rights to Mirvac was based on our strong governance, our investment performance, and the stability we can bring to unit holders. MWOF lifts our total external assets under management now to over AUD 18 billion, up from just over AUD 10 billion in FY 2021. We will derive funds management fees and other fees that are earnings accretive from this financial year onwards. The addition of MWOF accelerates our strategy to grow our third-party funds under management with aligned capital partners.
It was pleasing to see the fund's market-leading investment performance recently reaffirmed, being the top performing wholesale office fund in Australia over one, two, three, and five years. We've made good progress in executing our AUD 1.3 billion asset sales program with the sale of Allendale Square in Perth and 189 Grey Street in Brisbane, both at around book value. The sale of these assets further improves the quality of our office portfolio, which, following the completion of 80 Ann Street in Brisbane, now has a very young average portfolio age of 10.1 years, a 5.3 star NABERS energy rating, and it's 96% occupied. We do expect that the quality of our portfolio will continue to be an important differentiator for Mirvac as capital and tenant demand for modern, sustainable, and technology-rich buildings strengthens.
Within our Sydney-focused industrial portfolio, we maintain 100% occupancy and achieve further leasing success at Switchyard Auburn, which is now 60% pre-leased and expected to complete next year. Construction's also commenced at Aspect Industrial Estate Kemps Creek, which is set to be our first net positive embodied carbon development. The delivery of these assets, along with our future development pipeline, is in line with our focus to grow our exposure to this sector. Our retail business is showing signs of improvement, with sales rebounding to pre-COVID levels across most of our centers. In September, sales grew by almost 3% on the previous year, led by convenience assets and some improvements across our CBD assets. We expect the performance in this sector will continue to improve, supported by the return of international students and tourists, as well as our focus on growing retail partnerships.
The outlook for build-to-rent is also positive, with residential vacancy rates at their lowest level in 16 years. We expect that the resumption of international migration and the low supply of new apartments will further support customer demand. Our first build-to-rent asset, LIV Indigo, is now 97% leased and fully stabilized, and we were delighted to welcome our first residents to their new home at LIV Munro, Melbourne, just earlier this week. When our current build-to-rent pipeline completes, we expect to have approximately 2,200 build-to-rent apartments on our platform. Our capital partnering program for build-to-rent also formally commenced during the quarter, and we've received very strong engagement from both domestic and offshore investors to date. Within our residential business, we have seen sales activity moderate from its peak 12 months ago.
However, the fundamentals on a medium-term basis remain sound, and our active residential development pipeline is well-placed to benefit from that tight vacancy, restricted future supply, and a pickup in overseas migration. Additionally, our reputation for quality and for delivery reliability, our balance sheet strength, and the provision of upfront amenity are all proving to be very important differentiators in the current climate. During the quarter, we successfully launched Isle at Waterfront Newstead in Brisbane, the first of six apartment projects planned for release this year, with around 40% of presales achieved. This contributed to our AUD 1.7 billion of total presales on-hand, ensuring that we have excellent visibility of future earnings. Continued extreme wet weather along the East Coast, labor shortages, and supply chain challenges have impacted construction and delivery programs.
While we've retained guidance of more than 2,500 lot settlements this year, we are monitoring those impacts closely. Wet weather also impacted our retail center, Toombul, in Brisbane, which sustained catastrophic damage this year, with floodwaters inundating the center. Given the extent of the damage and the increased risk of a further flood event, we made the very difficult decision not to reinstate the center as is. We offered financial and other support to our retailers to assist them through what was an incredibly difficult time, and we are now currently working with the local community as we explore options for this iconic site. Creating value across our business is absolutely key to what we do, helping ensure our success both now and in the future.
In FY 2022, we defined five key pillars that enable us to execute our urban strategy, deliver value for our stakeholders, and to maintain a healthy and resilient business. These pillars are Performance, that being the financial results that we deliver to our security holders. Place, which speaks to our asset creation and curation capability. People, which encompasses our culture, our employees, and our relentless commitment to their health and safety. Partners, and the relationships we build with our key stakeholder groups, peers, and industry bodies. Planet, which underscores our ambition to have a positive environmental and social impact. Into the future, you're going to see us increasingly report under those five pillars of value. Of course, our commitment to having a positive environmental and social impact remains unwavering.
This week, we announced a refresh to our sustainability strategy, which is called This Changes Everything, which sets out new targets across environment, social, and governance, targets that continue to be bold and ambitious. Having reached net positive for our Scope 1 and Scope 2 emissions nine years early, we are now turning our attention to the infinitely more challenging Scope 3 emissions. That is, emissions that are outside of our operational control. We have set a target to be net positive in Scope 3 by 2030, and we intend to achieve this by reducing our embodied carbon, collaborating with our customers to reduce their emissions in both our commercial and residential businesses, and investing in high-quality nature-based offsets. We note that our approach, I know, will change as we learn and share with our peers.
In addition to our emissions target, we have a goal to invest AUD 50 million by FY 2025 in activities and initiatives that create a very strong sense of belonging and to expand our community partnerships and advocacy with a focus on existing priority and passion areas such as reconciliation, affordability, LGBTQI+, mental health and safety, and social procurement. Finally, as part of the refresh strategy, we're going to continue to improve our measurement and our reporting against those targets so that we can continue to give our employees, our customers, our partners, and security holders transparency in everything that we do. Our cities look significantly different today to when Bob and Henry started Mirvac 50 years ago.
What hasn't changed over the course of 50 years, however, is the passion of Mirvac's people and their commitment to quality in every little detail, to sustainability, and to innovation. I am incredibly proud to have walked this journey with the people of Mirvac over the past decade, to have seen our urban strategy come to life with the delivery of award-winning projects, to have seen our culture evolve into what it is today. It has been an absolute privilege and a joy. There's so much for us to be proud of in the legacy Mirvac is continuing to build, having a positive impact on our urban environments, driving towards ever-increasing sustainability, providing a workplace where all people can belong and thrive, and delivering returns for our stakeholders.
As we look to deliver the largest development pipeline in our history in an increasingly complex environment, I am very confident that Mirvac has the right strategy, the right skills, and the right people in place. I'd like to thank all of Mirvac's people for helping to make Mirvac the special place that it is, and to everyone involved in our story for your contribution over the years. I'd also like to thank our board for your guidance and for setting the direction of the company, and to our leaders for your role in Mirvac's success. In my last AGM address as Chief Executive Officer and Managing Director, I would especially like to thank you, our security holders, for your continued support and your trust in everything that we do. Thank you very much.
Thank you, Susan. I'll now explain the process for voting and asking questions. All the resolutions to be considered at the meeting will be decided by poll, which I now open on all resolutions. This gives you the choice to cast your votes now or at any time until the end of the meetings. The polls will remain open for all resolutions until five minutes after the conclusion of today's meetings. For those present in the room, when you reregistered for the meetings today, you would have been given an attendance card. Please raise your hand now if you did not receive an attendance card. If you have a yellow attendance card, you are a voting security holder, proxy holder, or corporate representative and are entitled to vote and speak at these meetings.
You can vote by placing a cross or a tick in the For, Against, or Abstain boxes opposite each resolution. Your voting cards will be collected at the end of the meetings. If you have a blue attendance card, then you are a non-voting security holder who is entitled to ask questions at today's meetings. If you have a red attendance card, then you are a visitor and cannot vote or ask questions at today's meetings. Security holders and proxy holders voting online can vote on the resolutions by selecting the Get a Voting Card button at the bottom of your screen. Once you have registered, your voting card will appear with all of the resolutions to be voted on. You can vote by clicking the For, Against, or Abstain boxes opposite each resolution and then submitting your vote.
For assistance with voting online, please check the online meeting guide or call the number on the top of your screen. As the Chair of the meetings, any open proxies given to me will be voted in favor of each resolution. The number of direct votes, as well as the proxy votes received prior to today's meetings, will be displayed on the screen for each resolution after discussion time toward the end of the meetings and before I close the polls. Questions for all items of business will be considered together during open discussion time after I describe each of the resolutions. If you are using the online platform and you have a question that you would like to ask, click Ask a Question and follow the prompts.
To ensure you have enough time to submit your questions, I encourage you to type this in now instead of waiting until later in the meetings. We may aggregate written questions if we receive multiple questions on the same topic. Only questions that are relevant to the business of the meetings will be addressed. Any questions relating to customer or personal matters will not be put to the meetings. Instead, you will be contacted after the conclusion of the meetings to assist you with your questions. I will provide further guidance on the question procedure when we get to open discussion time. Turning now to the formal items of business, there are four items of business as shown on the screen and as set out in the notice of meetings.
The first agenda item is the receipt and consideration of the financial report, directors' report, and auditor's report for Mirvac Limited and its consolidated entities for the year ended 30 June 2022. While there is no resolution for this item, security holders and proxy holders are welcome to ask questions on these reports on management and Mirvac's operations generally, as well as on the audit. Questions will be considered during the open discussion time later in the meetings. Agenda item two contains three separate resolutions for the re-election and election of directors. Jane Hewitt retires under Mirvac's constitution and, being eligible, offers herself for re-election to the board. The resolution for agenda item 2.1 is on the screen. Jane is a member of the Audit, Risk and Compliance Committee and a member of the Health, Safety, Environment & Sustainability Committee.
She has been a Non-Executive Director of Mirvac since 2018. The Board values Jane's experience and contribution to the Board and unanimously supports her re-election. I'll now invite Jane to address the meeting.
Thank you, John, and good morning, everyone. I would like to acknowledge the traditional custodians of the lands on which I live and which this meeting is being held today, the Gadigal people of the Eora Nation. The past few years have been challenging for our people and our stakeholders. Through the challenges, I have learned a lot about Mirvac's business, but more importantly, about the capability of our people. Because of their commitment and dedication, we have emerged from the pandemic in a strong position with a substantial pipeline and fit for a rapidly transforming business environment. I remain very passionate and curious about design and the impact that well-designed buildings can create socially and environmentally. The end-to-end development capability at Mirvac puts us in a unique position to control cost, quality, and delivery schedules.
More importantly, it is proving very effective at fueling the product innovation that supports many parts of our strategy, including HS&ES. Mirvac's purpose and its values under Sue's guidance are clear and present at every Board discussion. They are the reason I joined Mirvac, and they are an important guide for how we will continue to improve our business and the ecosystem to ensure social and environmental prosperity for all, as well as value for our security holders. I'm excited about the recent appointments of a new Chief Executive Officer and Chair, and the prospect of working with them to continue to deliver on our values and our strategic objectives. What do I think I can bring to the Board going forward? I've worked for myself for 30 years and have a track record in building businesses around real estate.
As Mirvac's funds under management increases and our new and emerging asset classes grow, I bring a deep understanding of where the strategic opportunities and the risks lie, with an emphasis on development of premium assets that provide a platform for optimizing customer experience and therefore returns. My background in entrepreneurship, innovation, and social impact certainly informs the way I approach board work. The pandemic has shown how rapidly new social patterns can be established. My experience in bringing new ideas from concept to successful enterprise puts me in a good position to contribute to a strategy for a future fit Mirvac. In addition, my background in working on not-for-profit boards, particularly on social and affordable housing, gives me a different lens with which to view ESG. I look forward to bringing my experience and knowledge to future board discussions. Of course, I'm excited about Mirvac's future.
The growing community of Mirvac customers, employees, and partners has considerable scale and reach. This offers a great opportunity to optimize the value chain as we work across the enterprise with an ever-increasing digital capability to create better experiences for everyone as we reimagine urban life. It has been an absolute privilege to serve on the Mirvac Board since 2019. I've thoroughly enjoyed working with the Mirvac Board and Executive Leadership Team over the past three years, and I look forward to ensuring we deliver for our security holders, partners, customers, and communities into the future. Thank you.
Thank you, Jane. The next agenda item is the reelection of Peter Nash as a Director of Mirvac Limited. The resolution for agenda item 2.2 is shown on the screen. Peter Nash was appointed a Non-Executive Director of Mirvac in November 2018. Peter is a member of the Audit, Risk and Compliance Committee and a member of the Health, Safety, Environment and Sustainability Committee. The board values Peter's experience and contribution to the board and unanimously supports his reelection. I'll now invite Peter to address the meeting.
Thank you, Chair, and good morning to everyone that has joined today. I've traveled from Melbourne to be here today, and I live on the lands of the Wurundjeri people of the Kulin nation. It has been a privilege to serve as your representative for the past three years, and I'm grateful for the opportunity to address you today. These past three years have certainly been challenging as the company faced into the difficulties presented by COVID and the social and economic challenges that came with it. Throughout this difficult time, the Board and management worked closely together to ensure Mirvac emerged as a strong and robust company. That's certainly how I see our company today, strong and robust, and with the capacity and capability to deliver on the strong pipeline of opportunities that has been built, as well as access new opportunities that may present.
Throughout my tenure, I believe I've been able to make a sound contribution to the liberation of the board. In particular, the skills I have brought to bear include business management and strategy, financial management and reporting, and internal controls and risk management. These skills have been developed over a period of almost forty years in a professional career through which I served as an audit partner at KPMG, specializing in the financial services sector. Chair of KPMG Australia and a member of its global board guiding business strategy and investment, and is a director of other publicly listed companies including Westpac, ASX, and the Johns Lyng Group. Whilst my other roles keep me busy, I'm confident that I have had and will continue to have sufficient time to devote to Mirvac. Indeed, I firmly believe that my other roles enhance my capacity to contribute at Mirvac.
The economic and geopolitical landscape ahead of us remains complex. The mix of inflationary pressure, rising interest rates, and many other variables will require strong governance and capable management. In this regard, it has been our privilege to work with John Mulcahy and Susan Lloyd-Hurwitz as leaders of the Board and management respectively, and I'm confident the company will be in excellent hands when Rob Sindel and Campbell Hanan succeed them. Ladies and gentlemen, thank you for the opportunity to address you today. I will continue to be a committed and dedicated Director, and it would be an honor to have your support.
Thank you very much, Peter. The next agenda item is the election of Damien Frawley as a Director of Mirvac Limited. The resolution for agenda item 2.3 is shown on the screen. Damien Frawley was appointed to the Board in December 2021, and being eligible offers himself for election to the Board. Damien is a member of the Audit, Risk and Compliance Committee and a member of the Human Resources Committee. The Board highly values the contribution that Damien has made to the Board in the last 12 months and unanimously supports his election. Damien is attending today's meetings online from the U.S., away from his home in northern New South Wales, which is on the traditional lands of the Arakwal people of the Bundjalung Nation. Damien will address the people in a pre-recorded video, which will now be shown.
Thank you, John, and good morning all. It is a privilege to present myself today for election to the Mirvac Board. Mirvac is a business I am very familiar with given I was employed by them in the late 1980s for a period of two years. It's an organization I've kept an eye on over the past 30-odd years of my executive career, and it has come a long way in that time. Today, Mirvac is considered to be a world-class property developer, asset creator, asset manager, and investment management company. The management team and Board have built a brand and culture that our people, customers, and security holders are proud to be a part of. As the organization celebrates its 50-year anniversary this year, it is worth remembering the foundations that Mirvac was built on.
High-quality product and standing behind this quality was a critical value that the Founders instilled and demanded of their employees. This foundational value remains today. Since my appointment to the Board in December 2021, I have witnessed and been impressed by the passion, dedication, and commitment of everyone I have met. This commitment is to deliver great outcomes for customers and securityholders alike, and at the same time, create sustainable and innovative spaces to live, work, and socialize. Reimagining Urban Life is not just a catchcry, rather a reality that the whole of Mirvac gets behind to anchor its purpose and culture. I believe I am well-equipped to act as a disciplined steward of capital on behalf of securityholders. My executive career has been characterized by leading teams of investment professionals in the areas of real estate, infrastructure, private equity, and public markets.
My experience in asset management and investment management positions me well to ensure that I can make valuable contributions around the board table in these areas as Mirvac expands and grows. My most recent role was Chief Executive Officer of Queensland Investment Corporation, a position I held for 10 years. I gained valuable experience in leadership and the execution of strategy, amongst many other things. If elected today, I look forward to working with Susan, Campbell, and the broader leadership team at Mirvac as they continue to strive to grow and expand the business. I also look forward to providing strong support where required, and above all, ensuring that the executive and board's accountability is always ultimately to the security holders. I will always act independently and work diligently to help create value for security holders. Thank you very much.
Thank you, Damien. Damien is online, so thank you. Questions on the re-election and election of directors will be considered during the open discussion time later in the meetings. You may cast your vote now on the re-election and election of directors resolutions by recording your votes on your yellow voting card or via the Link online platform. Alternatively, you may wait until after the open discussion at the end of the meetings. The next agenda item deals with the adoption of the Remuneration Report for the year ended 30 June 2022. While the vote on this item is advisory only and therefore non-binding, the Board will take the outcome into account when considering the remuneration policy in the future. The adoption of the Remuneration Report is unanimously recommended by all members of the Board. The resolution for agenda item three is on the screen.
Questions on the report will be considered during the open discussion time later in the meetings. You may cast your vote by recording your vote on your yellow voting card or via the Link online platform. Alternatively, you may wait until after the open discussion. I now move to the final agenda item to approve an increase in the non-executive director fee pool. The resolution for agenda item four is on the screen. The board believes that the proposed increase to the fee pool limit is a prudent step that would continue to provide flexibility to make additional board appointments and establish new committees if and when required. However, I should note that if security holders approve the fee pool increase today, there is no current intention to increase non-executive directors' fees.
As the Non-Executive Directors have an interest in the outcome of this item, the Board does not make a specific recommendation to securityholders as to how to vote on this resolution. Questions on this item will be considered during the open discussion time, which we'll move to shortly. You may cast your vote by recording your vote on your yellow voting card or via the Link online platform, or you may wait until after the open discussion. This brings us to the end of the explanation of the resolutions being put to today's meetings and is now time to open the floor for questions from our securityholders. For those present in the room, if you wish to speak or ask a question in relation to any of the resolutions, then please make your way to the microphone on the floor and state your name before speaking.
Please bring your yellow or blue attendance card, which entitles you to speak today. If anyone is unable to move to the microphone, then please raise your hand and a microphone will be handed to you. To be fair to everyone, I request that you please limit yourself to two questions or comments at a time. For those attending today's meetings online, if you wish to ask a question, please type it in Ask a Question box at the bottom of the screen of the online platform. I will consider the questions submitted online after we have discussed the questions from those present in the room. We have received one question prior to the meetings that I would now like to address. The question concerns the timing of reactivation of the Dividend Reinvestment Plan.
As security holders may recall, following the assessment of the Group's financial position, the Board suspended the DRP in 2014 until further notice. The Board continues to maintain a watching brief over this matter, and if and when the Board determines that the DRP is to apply for future distributions, it will make an announcement to the ASX at the relevant time. I now ask questions from the floor.
Good morning, Mr. Chairman. My name's Kevin Daly. I've just got a couple of questions to ask. Actually, it was the Chief Executive Officer, related the performance of the various divisions in the company. A couple of questions came to mind.
Yes.
The first one I think has to do with the occupancy in your office division.
Yes.
I think that was said to be 100%, which seemed quite high.
No, I think it's in the 90s%.
It's 96.
I think it's 96%.
Okay.
I think industrial was 100%.
Oh, okay. All right. Yeah.
Okay.
Well, it's with respect to the office section that I wanted to ask you.
Sure.
Because there's been a lot of publicity about the work from home movement, if you wanna call it a movement.
Yep.
I'm just wondering if there's scope for recovery from that 96% as hopefully that movement dies away?
Yeah, look, the occupancy is what people pay us rent for. Doesn't mean that everyone comes to the office from those companies that pay us rent. There's a real variety of number of people returning to the office. We had a conversation, I think this morning, where I was advised that we get up to 80% of Mirvac people returning to the office at any point in time or some points in time. There's a wide variety of return to office. It is a difficult issue for leadership and institutions and companies to deal with. I think it's gonna, you know, adjust over time. Our buildings, we're paying rent for 96% occupancy, but of course, it's up to individual tenants as to how many of those people actually attend the office.
The other question had to do with the retail section. There's also been a lot of publicity about the growth of online shopping.
Yep.
I'm just wondering to what extent that's impacted your retail division.
Yeah, look, online shopping, we all participate in online shopping. We find that a lot of our retail tenants, the best tenants are those that provide both physical shops as well as online shopping. We call them omni tenants, really, and they provide both. It's a way of life, and our retail team have adjusted to that and understand it. We run lots of events to encourage people to come back to our shopping centers. I think Susan can talk to this, but I think our foot traffic now is up above pre-COVID times in some of our shops. Is that right?
Retail sales are back above pre-COVID times.
Mm-hmm.
Foot traffic is still slightly down. People are much more thoughtful about when they go out shopping, and they buy more on fewer trips, essentially. We're back up above pre-COVID levels.
Yes.
John's quite right. We think about the continuum between online retail and physical retail as all part of an experience and work with quite a lot of pure play online retailers and bring them into our physical space.
The last question I wanted to ask has to do with your aim to reduce Scope 3 emissions to zero by 2030.
Yep.
I'm just curious where you expect to get your steel and concrete from in 2030?
Uh, we-we will still be using steel and concrete, but we'll work with suppliers to reduce their emissions in the production of that, and then we'll look for really good offsets as well. So I-I don't think we're gonna get zero out of steel. Um, and the... We can give you a lot of detail about it, and Rob Sindel in particular can give you a lot of detail about it. But I think to say that we set an ambitious target, we're gonna work our way through it. Um, and we may adjust what we do over time, but if we set an ambitious target, we did for Scope one and two, and we achieved them nine years early. So we're starting with an ambitious target, working with our suppliers, working with our partners to optimize the outcome.
Yeah. Your Scope 1 and 2 emissions were pretty well negligible from the start.
Oh, yeah.
It's not a big deal.
Not really. Thank you very much, Kevin. Appreciate your questions. Any more questions from the room? Thank you.
Yes. Mervin Page is my name. I represent our superannuation fund. A couple of things. First of all, it's very nice to see you all face to face after all this time. It's nice. I also went through the annual report very carefully. Took me hours and hours to do it, but it was very informative. I agree with all that. I should remind the Board, as our employees, you are expected to give us a reasonable return. How we measure value is very strong in the annual report. Well, we measure value as to how our market value of our shares, our units are, and we measure value as to what our return is.
I'm sorry to say that since we bought into Mirvac in 2003 at something like AUD 4.70 and took up various issues during the period, it hasn't arrived, not very pleasant to us to see them lapsing at around AUD 2.14. How do we rectify this? Well, it's a long story, isn't it? This is a long story business. What I'm asking firstly is on build-to-rent.
Yes.
Have we done the numbers as to what sort of return shareholders can expect? Is it in line or in better than the normal one, or is it less? Has someone done the numbers on it?
Absolutely. We've done a lot of numbers on build-to-rent. We think it's a significant asset class. There's a huge demand for rental accommodation. We can tell you that we get a premium rent out of our build-to-rent assets. We think it will contribute significantly to the performance of Mirvac as we go forward. Do you wanna add to that, Susan?
Yes. From a financial point of view, it's a 4.5% yield on cost and an 8% unlevered IRR, and that certainly will exceed our cost of capital and is favorable compared to other asset classes as well.
As we proceed further with build-to-rent, we should expect a better return. Is that what you're saying?
I'm saying that the returns are very favorable, and we're very happy to put capital into those.
All right.
We need to differentiate here. That's the return out of the asset, but I think you were referring to our share price.
Yes.
The share price should reflect the returns out of our assets, but from time to time, there's volatility in share price, which is based on people's perception of headwinds or whatever. All the board and the executive team focus on generating good returns out of our invested capital, and we expect over time that the share market will value that appropriately. That's our focus, and certainly, Susan just described how the invested capital in build-to-rent will generate good returns over the cost of capital.
Yes. The expected return for 2003 is not that much better. It's a little better, and that's fine, but it's nowhere to get back to even net tangible assets.
Yeah
...really value.
Our share price at the moment is disappointing to all of us, and it's below our net tangible assets.
Yeah.
That's a function of volatility of liquid share markets.
Yeah
Not a function of the generating returns out of our assets.
Right. I know as [audio distortion] used to say, why is this so? Well, it is so because the return is not good enough.
Yeah.
Now let me just say firstly, it's not a question, but congratulations to Jane Hewitt and to the other Members that are standing. I went through and ticked those Directors which I felt were doing the job and could do the job, and those three got my tick. I won't mention the others, but at this stage, they're not up for reelection. We also look to see, and I'm sure Directors like James Millar, who is a well-known Director, is well aware of how important it is to get a return for unit holders.
Yes.
I feel with all the nice talk, and it was terrific, we think like to see a company which does all the right things as we do as individuals. The basis that you are here as our employees.
Yes
Is to give us a return to our super fund.
Right
Our individual funds. That should not be lost in all the other nice talk. I welcome Rob Sindel to the Chair. That's another tick from me. Thank you.
Thank you.
Oh, one other thing. I noticed that there was AUD 10 million, I think it was, given as cash donations. Can I ask to whom?
Yeah. That's part of our ESG strategy, This Changes Everything. Just to be very clear, no political donations are ever made from Mirvac.
All right.
These are donations to charities. For example, today, after this meeting ends, I'm going to the Lifeline Lunch, which Mirvac is the sponsor of the Lifeline Lunch.
Yes.
It's a very worthy cause, so it's causes like that, and in no way a political donation.
Right. That's very commendable too. We as unitholders make donations to a lot of these charities also. I don't expect my company and Mirvac to make those donations, let me make that clear. That's our choice. I'm just giving a personal opinion here. This is a good organization, as Susan has just said. I don't think it's, in my view, not necessary for Mirvac to make those donations. Thank you.
Thank you very much for your questions and your opinions. We take note of those. Thank you. Are there any other questions from the room? Okay. I will now proceed to any questions submitted online.
Thank you, Chair. We have received a question online. It is quite similar to the one that the gentleman just asked you in the room, but I will read it out of course. We have a question from Mr. Neville Clinton. The security price has remained low for as long as I can remember, with unfranked returns remaining minimal. Will this ever change?
As I pointed out previously, the focus of the Board and the Executive Team is to generate returns on invested capital, which we do with a lot of emphasis and a lot of focus. We are not able, other than through producing those sort of results, affect the security price. The security price is subject to the volatility of liquid investment markets, basically. We have had volatility in our price. At the present time, we are disappointed with our share price. It's below, as I said, NTA. We would expect it to recover from that, and we're doing everything in our power to do that.
With regards franking credits, that goes to the fact that we have had losses from the past, which is really from the GFC, which meant over a number of years we hadn't paid taxes. We are now getting to the stage where we do pay taxes, and so we will begin to build up a franking credit pool.
Thank you, Chair. We have another question online. This question is from Scott Mosely. The retirement of the Chief Executive Officer and the Chairman in rapid succession is less impressive. Of particular concern is the Chief Executive Officer and Chairman's retirement within a short period. Does the Chair have any comments on this process?
Yes. Look, I think this is a great question. I'm glad I got it because Mirvac is in fact a people company, and it's a highly skilled people company. One of the key things we do is focus on succession planning. We focus on it continuously. For the last 10 years since I've been Chair, we have had significant work around succession, both of the Board directors as well as key management personnel. You will have seen that the appointments for both Chair and Chief Executive Officer are internal appointments. They were considered over a long period of time. You've seen continuous renewal of the Board as we go through succession planning, and that takes a lot of effort, a lot of work, and there's a lot of time between initial discussions to the appointment.
You know, Rob joined the board in 2020 and chaired the Sustainability Committee, basically leading up to me taking over the Chair of the business. Campbell joined us a number of years ago, and during that process, he was one of a number of potential candidates, internal candidates. Those candidates went through skilling and succession planning, and we came to the conclusion that Campbell was the right person. He's very skilled, highly talented, and I think we're lucky to have him as Chief Executive Officer. It's something we do with a lot of emphasis and a lot of hard work. I guess, you know, one final comment would be that just as myself and Susan had a partnership, it's ideal that Rob and Campbell now form a new partnership.
Thank you, Chair. We have two questions online in relation to cybersecurity protection. I'll read them both out, but I'll ask you to answer in one. The first question is again from Scott Mosely, which is the board confident that adequate cybersecurity protection is in place? The second question is from Mr. Stephen Hart. Several major companies have been subject to cybercrime or hacking attacks causing significant disruption to customers and their businesses. Is Mirvac able to offer any assurance that they have steps in place to minimize the risk of cybercrime or hacking? Please outline how this risk is addressed by Mirvac.
Cyber risk is really high on the agenda of all boards. It's certainly high on the agenda of the Mirvac Board and the executive team. We have a cyber team in-house, and then that cyber team works with a lot of external experts to ensure we have really good security around our data, around our systems. It's a continuing work because basically the bad actors who try to infiltrate companies are continuously improving their ways of doing that. We do have a real system in place. We're working very well together to make sure that we're improving our systems continuously.
We give regular reports to the Board around our cyber capabilities. I think that you can say that we're working very hard at making sure we've got great systems in place.
Thank you, Chair. We have another question from Stephen Hart, and this time it's in relation to the Toombul Shopping Centre.
Yep.
I'll read it out. Noting the Chief Executive Officer's comments about the flooding of the Toombul Shopping Centre and its subsequent closure, what does Mirvac have in mind for the site, given the flood risk? Didn't Mirvac acquire this center within the last 10 years? Was the flood risk understood at the time the center was acquired? What steps does Mirvac have in place to ensure it doesn't acquire sites with excessive flood risk or other environmental risks?
Thank you very much for the question. If I go back, when we bought Toombul, there was a full due diligence, and we didn't consider flood. We didn't expect any flooding of Toombul based on all the records that we'd considered prior to our acquisition. What did occur in Toombul was flood levels that had never been anticipated or seen previously. You know, that was a surprise to us, and that's been caused by a number of factors that we can go into in detail later. Certainly we do due diligence around every site we acquire with regards to flooding.
What we're gonna do going forward is clearly we're now in the consultation phase with government, councils, and the community to determine the best use of Toombul site going forward. It will be redeveloped. It's a great site. It'll have to be done differently than it was previously. You know, there is a lot of interest and a lot of enthusiasm from the local community and Queensland regulators and governments.
Thank you, Chair. There's no more questions online at this time.
I have a question.
Oh. By all means.
Regarding the franking credits, I think we're probably all aware that in the future, nothing is as guaranteed as far as franking credits. I would urge the Board, we have some there, and I'd urge the Board to use them in the best possible timing they can do. Because overnight, these things change, and they change very quickly. I wouldn't like to see them go to waste. If I could suggest that to the Board, they consider it very seriously, quickly.
Yeah.
The second question is regarding the passive and active, 80% passive, 20% active.
Yeah.
Does the Board regularly consider whether this is the best number of %? The market, I think, has some reservations, which I think is the reason that the share price has waned and stayed down for a considerable time. Has it ever considered offshooting the construction side from the investment side? If it hasn't, then I believe that it should, because this might be a way of both satisfying the market and satisfying the unitholders as such. Will they consider that?
Let me assure you that the board and executive team continuously consider their capital structure, their organization structure, their business model, and how to optimize the performance for our security holders. Absolutely. There are no stone left unturned about that. We aren't fixed in our position. We look to generate the best returns we can from security holders. I might point out, I just have a little emphasis on the construction division. Right now, we're facing significant headwinds in the community and economically, and our ability to do the full end-to-end asset creation gives us a significant competitive advantage that we think will come to the fore as we go forward. We do consider all of those matters on a regular basis. Okay. Any other questions? Okay. There doesn't appear to be any further questions.
I'll now conclude discussion on all resolutions. The proxy votes, the direct votes on all resolutions that have been received prior to today's meetings are now displayed on the screens. If you haven't already done so, please cast your votes now. The polls will close five minutes after the end of the meetings. I'll just pause briefly to allow voting. That concludes the formalities of today's meetings. For those in the room, a Link Market Services representative will now come around to collect your yellow voting cards.
Could I just ask you to leave the proxies up on the screen so that we can read them as we're going out?
Sure. Absolutely. You're right, I can't read them either from here, actually. Okay. Do you wanna hand your card in or not?
Oh.
Needs a pen.
I was just waiting for a pen.
Okay. You want a pen?
There you go. Oh, is this the nice one you take?
It's a cheap one from DJs. Okay. I think we've collected all the cards. The results of today's meeting will be released to the ASX and published on our website later today. On behalf of the Board and Management of Mirvac, I'd like to thank you all for your attendance and participation today. I now declare the meeting's closed, subject to the finalization of the poll, and invite those here in Sydney to join the Directors, our Executive Leadership Team, and other Management for light refreshments in the foyer. Thank you all very much. Thank you.