Good morning, security holders, fellow directors. My name is Trevor Gerber, and I'm the Chairman of Vicinity Centres. On behalf of my fellow directors, it is my pleasure to welcome you to the 2025 Annual General Meeting of Vicinity Limited and the meeting of Vicinity Centres Trust, which I will refer to together as the meeting. It's just past 10:30 A.M., and as a decorum, I declare the meeting open. In doing so, I would like to acknowledge the traditional custodians of the various lands on which we meet today and pay my respects to the elders of past and present. I recognize and respect their cultural heritage, beliefs, and relationship with the land, which continues to be important to the traditional custodians living today, and I extend that respect to Aboriginal and Torres Strait Islander peoples attending this meeting today.
Today, I will share my reflections on the 2025 financial year of Vicinity. I will then ask our CEO and Managing Director, Peter Huddle, to address you. After Peter's address, I will take any questions you may have on Vicinity or today's presentation before we move to the formal part of the meeting. Joining Peter and me today are your directors, Tiffany Fuller, Tim Hammon, Peter Kahan, Janette Kendall, Georgina Lynch, Angus McNaughton, and Dion Werbeloff. I'd also like to acknowledge Michael Hawker, who retired from Vicinity's board on 31 August, and thank Michael for his valuable contribution to Vicinity. In addition to the board, here with us today are Rohan Abeyewardene, our Group Company Secretary, our auditor partner, Kylie Bottomley, our Ernst & Young.
Jane Kenny, our General Manager, Investor Relations and Corporate Communications, who will relay any online questions to me today, and various other senior members of Vicinity's management team. The Returning Officer for today's meeting is Jim Kompogiorgas from MUFG Corporate Markets, our security registry. Before we proceed, I have a couple of quick housekeeping points. As a courtesy, I would appreciate it if all mobiles in the room could be turned to silent. Recording devices and cameras must not be used during the meeting, and in the event of an emergency, please follow the emergency exit signs and instructions of the venue staff. Today's meeting is being held in a hybrid format. We are pleased to have some of our security holders here in person with us today at Hotel Chadstone in Melbourne and to offer our online meeting platform to those who can't be with us in person.
Instructions on how to participate in today's meeting are included in the notice of meeting and online meeting guide, both of which are available on our website. We would address any security holder questions during the discussion on relevant items of business. Questions submitted online may be moderated to avoid repetition, and in the interest of time, lengthy questions may be summarized. I encourage online participants to submit your votes and any questions you may have earlier in the meeting via the online platform to ensure they are received, and questions can be addressed at the relevant parts of the meeting. If you are a Vicinity security holder and would like to ask a question via the online meeting platform, please click on the Ask a Question button on the meeting web page and follow the instructions.
Alternatively, if you would like to ask a question via the dedicated phone line, please follow the instructions on page five of the online meeting guide. For those in the room, if you were issued with a yellow or blue card, you are entitled to speak at the meeting. If you need assistance, please see a MUFG Corporate Markets team member at the registration desk. Should those security holders attending online encounter any technical difficulties during the meeting, please check the online meeting guide, which you can access through the download section at the bottom of your screen once you are in the platform or from Vicinity's website. The webcast will subsequently be made available on our website. If we experience any technical issues today, a short recess or an adjournment may be required. If this occurs, I shall advise you accordingly.
The notice of meeting outlines the items of business today before the meeting and has been made available to all security holders. I'll take this notice as read. Voting on all resolutions today will be decided on a poll, and I now formally open the poll on all resolutions. The poll will remain open for five minutes after the conclusion of the meeting, with the results of the meeting to be announced to the ASX as soon as possible following the meeting. I would like to formally thank security holders who are participating today and those who submitted their votes ahead of the meeting. Following the conclusion of today's meeting, I would like to invite the security holders here today to join the board and executive leadership team for some light refreshments just outside this room.
Once again, it gives me great pleasure to share with you today my perspective on the performance of Vicinity over the last 12 months. Financial Year 2025 was another important and successful year for Vicinity as we continue to make meaningful investments in the long-term quality and resilience of our retail asset portfolio whilst concurrently delivering on our immediate operational and financial objectives. As Peter will speak to in more detail shortly, the outlook for the retail sector is increasingly positive. Since emerging from the depths of the pandemic and despite record high immigration in recent years, Australia has boasted an incredibly resilient employment market. This, together with the cumulative impact of income tax cuts made effective 1 July 2024 and the 75 basis points reduction in interest rates to date, is providing a noticeable increase in shopping confidence to spend at our centres.
Moreover, the confluence of strong population growth and limited investment in incremental retail floor space is underpinning a growing shortage of retail gross lettable area per capita. This bodes well for incumbent owners of premium retail assets located in great trade areas and that are well managed by retail property experts. In response to a tightening retail supply, retailers are now more discerning and selective in terms of partnering with owner-managers of the best performing assets and are committing to leases with longer tenure, and as our leasing spreads demonstrate at favorable margins too. In this context, the curation of a higher quality, higher growth asset portfolio has been executed by Peter and his team with strategic precision, impeccable timing, and importantly, with intense and strong financial discipline.
The strategy has involved the acquisition of premium assets with strong growth potential at attractive pricing, the divestment of non-strategic assets also at attractive pricing, and selective investment in important, large-scale retail developments at our flagship centres. The culmination of the strategy is reflected by the total asset portfolio composition by value, shifting from 51% premium at June 2022, so three years ago, to an impressive 66% as of June 2025. Noting that the 66% incorporates the developments on a stabilised basis. In this context, the key highlights for me are the acquisition of a 50% interest in Lakeside Joondalup in Western Australia for AUD 420 million, along with the full suite, critically, of property management rights. Under our management, the asset was accretive to FY 2025 earnings and achieved a AUD 30 million gross valuation uplift.
In addition, having acquired the residual 49% interest in Chatswood Chase in 2023 for AUD 307 million, it is fair to say that the team acquired two retail assets with exceptional growth potential at prices likely to be below replacement cost. Fast forward to today's market. The elevated level of competitive interest in and pricing for retail assets is further testament to the timeliness and foresight of the strategy Peter and his team have been executing. Having set a target of approximately AUD 250 million of asset sales in FY 2025, the team exceeded this target by the end of the first half of FY 2025, raising close to AUD 460 million. By the end of FY 2025, cumulatively, we have divested around AUD 1 billion of non-strategic assets since the beginning of FY 2024.
These sales have not only allowed us to self-fund much of our current and future growth but have accelerated our shift toward a higher quality premium portfolio mix. Another major highlight was the completion and launch of Chadstone's revitalized fresh food precinct known as the Market Pavilion. As Peter will elaborate on shortly, with its unique blend of truly artisan to everyday offerings, this new fresh food and dining precinct has received glowing feedback from customers and retail alike and continues to exceed expectations in terms of sustained visitation and sales growth. Similarly, Chadstone's new One Middle Road office tower was also completed, and the caliber of tenants this office tower attracted, now being the headquarters of Adairs and Kmart, is testament to the quality of the office itself and the appeal of Chadstone as a sought-after destination for the corporate offices of Australia's prominent retailers.
The second of our two major retail developments progressed during FY 2025 has been the complete reimagination of Chatswood Chase in Sydney. Only a fortnight ago, the first stage of the reopening was successfully launched. Whilst I do not wish to unfairly steal Peter's thunder, I believe that the extension of Vicinity's partnerships with the LVMH Group and other market-leading luxury and category retailers, all to be open next year and housed in a now magnificent retail mall, will solidify Chatswood Chase as Sydney's newest and most comprehensive retail destination. With the heavily anticipated commencement of the redevelopment of Galleria in Western Australia, I look forward to reporting on the success of its relaunch with you this time next year. As I said last year, at every level of Vicinity, we believe that how we deliver outcomes is just as important as the results themselves.
In this context, it was again pleasing to see our FY 2025 employee experience survey rise to 7.8, representing a 0.4 uplift from the previous year. This has not come from just sheer luck. Quite the opposite, in fact. Together with my fellow directors, I have observed with great pride the significant amount of time and effort that has been invested into embedding Vicinity's values and behaviors across the organization, thereby ensuring that respect, integrity, customer focus, collaboration, and excellence are not just words. They are actions that cultivate a culture of high performance, inclusion, diversity, and opportunity. Touching on the results themselves, Vicinity delivered stated net profit of just over AUD 1 billion for the 12 months. Funds from operation, which we call FFO, was AUD 674 million.
AUD 9 million up on the prior year and on a security basis at AUD 14.8, which pleasingly was at the top end of our guidance range. The board declared a final distribution of AUD 6.05 per security, bringing the full year payout to AUD 0.12, representing 95.4% of adjusted FFO. I should mention at this point that a year ago. The increase in our share price from then till now, together with the distribution we've all been able to bank, has approximated a 20% return over the past 12 months. The management and board are united in our steadfast focus on strong financial stewardship. It is a discipline that we know you, our security holders, value. Preserving our strong balance sheet and maintaining our credit ratings will remain guiding principles for us when deploying capital.
In a year of elevated capital requirements from acquisitions and developments, disciplined financial stewardship, together with a AUD 349 million increase in asset valuations in FY 2025, ensured that our gearing remained at the lower end of our target range at 26.6%. Our balance sheet remains a source of competitive advantage and strength and is a critical enabler of our current and potential growth agenda. As a board, we continue to place great importance on sound judgment, deep experience, passionate leadership, constructive debate, and diversity of thought. Our partnership with management remains strong and collaborative, united by our shared commitment to create long-term value and delivering sustainable returns for our security holders and indeed all stakeholders connected to Vicinity. Before I hand over to Peter, I would like to take a moment to acknowledge and thank him.
His executive leadership team, and the broader Vicinity team, many of whom are here with us today, for yet another year of strong strategic progress. Disciplined execution, and value creation. I also extend my sincere thanks to my fellow directors for their valuable contributions and to you, our security holders, for your continued trust and support as we shape Vicinity for long-term and, importantly, mutual success. I'll now hand over to Peter.
Thank you, Chairman, and good morning. Let me begin by saying it continues to be my privilege to lead Vicinity and share with you in more detail today what I believe are our key achievements in recent months and provide a high-level update on the first quarter of FY 2026.
As I have said before, delivering predictable and growing income for security holders while at the same time driving capital growth over time remained at the core of our business decisions and investments. As a team, we are continuing to execute on our strategy to deliver long-term sustained value creation while at the same time delivering on our near-term operational and financial objectives. Collectively, we have delivered and achieved a lot, but in retail, retail is ever-changing, and there are always opportunities for us to shape our business and our assets to embed greater resilience and earnings growth and ultimately to create value that is more enduring. Turning now to our update on our first quarter for fiscal year 2026. Building on the positive momentum in the fiscal year of 2025, fiscal year 2026 has had an encouraging start.
Driven by our ongoing focus on achieving key strategic milestones and delivering enhanced portfolio metrics. These improvements reflect the elevated quality of our retail asset portfolio, strengthening shopper sentiment, and increasingly favorable retail property sector fundamentals. As Trevor mentioned, it was a thrill to officially reopen the first stage of our reimagined Chatswood Chase, which I'll talk to in more detail shortly. Suffice to say, initial feedback from retailers and shoppers, and in fact investors, has exceeded our expectations. I'll share in more detail the performance of the Market Pavilion and the One Middle Road office tower shortly, but there is no doubt that Chadstone has entered a new era of growth and prosperity. We have broken ground at Morley Galleria in Perth, commencing an eagerly awaited redevelopment that is expected to see Galleria return to its former vibrancy in time for Christmas 2026.
From a portfolio perspective, we are pleased to report that we have maintained occupancy at 99.5%. The leasing spread at the end of Q1 was a strong +2.9% . I'll talk to retail sales in more detail on the next slide. However, at a high level, the positive trend set in the second half of fiscal year 2025 has continued. The confluence of continuing enhancements of our retail asset mix, maintaining occupancy, and positive leasing spreads amid an improving retail sector has enabled us to grow rent while only marginally increasing our specialty occupancy cost ratio, or OCR. At 14.2%, our OCR continues to support our view that sufficient headroom exists for further rent growth via our circa 4.8% average annual rent escalators and via positive leasing spreads.
Finally, we are pleased to reaffirm our earnings guidance for fiscal year 2026, with FFO and AFFO per security expected to be within the range of AUD 0.15-AUD 0.152 and AUD 0.128-AUD 0.13 respectively. Moving on to our retail sales in more detail. Pleasingly, the momentum in retail sales growth in the second half of FY 2025 has continued, with the total portfolio delivering +4.4% sales growth in the first quarter of FY 2026. Despite supermarkets and discount department stores cycling off strong comparative periods, we are pleased to report that all segments delivered positive sales growth. Our specialty and mini-major retailers continue to provide much of the heavy lifting in terms of growth at 5.9% growth for the quarter.
What's more, the momentum of strong quarterly sales growth set in the second half of fiscal year 2025 has been maintained, with 3.1% growth in the third quarter of FY 2025, followed by 6% growth in the fourth quarter of FY 2025. While shoppers are benefiting from lower mortgage rates and easing cost-of-living pressures, our active portfolio remixing and an enhanced retail portfolio itself has, I believe, led and continues to lead to meaningful drivers of positive sales growth. Since 2019, we have actively invested in 44 of 51 assets. In addition to ambient upgrades to maintain asset vibrancy, our investments have largely focused on ensuring the retail offer in each centre is contemporary, fit for purpose, and importantly, satisfies the often unique demands of customers across different catchments.
Our portfolio-wide approach to investing in our assets is a competitive advantage for Vicinity and is showcased by our premium and core asset portfolios, delivering very encouraging sales growth for combined specialty and mini-majors in the first quarter of FY 2026 at 6.4% and 5.3% respectively. While these sales results are very encouraging, we continue to be mindful of the uncertain and often volatile geopolitical environment and other potential exogenous risks that have the ability to impact the outlook for both our sales and rental growth. As I said at our FY 2025 results in August, the completion and launch of the Market Pavilion at Chadstone was widely touted as world-class and further reinforced the asset as Australia's preeminent retail destination.
What was especially pleasing to observe was the huge sense of excitement and pride the completion of this project garnered, not just for those directly involved in the project, but for everyone at Vicinity. We are now six months post the official opening of the precinct, and I'm pleased to report that the strong performance metrics in the first three months have been maintained. With the asset having been impacted by development for close to 18 months, the success of the Market Pavilion has truly catalyzed growth and prosperity, with sales growth for the centre, excluding the Market Pavilion, up 5.9% in the first quarter of FY 2026. Exceeding the 4.4% sales growth in the last quarter of FY 2025.
The rate of visitation growth has been sustained, up 35% in the first quarter of FY 2026, having been up 36% in the last quarter of FY 2025, with both growth rates being on a relative basis to the same period last year. At Vicinity, we refer to days where visitation at Chadstone would exceed the number of people that would fill the MCG for the AFL Grand Final, or more than 90,000 people, as grand final trading days. In the six months since opening, the Market Pavilion at Chadstone has achieved five grand final trading days. Typically, in any year, Chadstone has two grand final trading days, being the Saturday immediately after Black Friday and, of course, the first day of the Boxing Day sales period.
Further to this, at more than 18,000 per sq m, the sales productivity at the Market Pavilion is well above our premium centres' average of 16,600 per sq m, reinforcing the strength of the offering. Beyond retail at Chadstone, our 20,000 sq m A-grade office tower, One Middle Road, is now home to Adairs' head office team. Kmart's fit-out is on track, with occupation scheduled for early next year, at which point One Middle Road will bring around 2,000 office workers to Chadstone during weekday trading. As we look at Chadstone today, with a retail offer of the size and quality that is unmatched here in Australia, combined with the opening of this Chadstone hotel in 2019 and the Social Quarter in 2023, the latest developments just completed further solidify Chadstone's position as a world-class retail destination that blends fashion, food, entertainment, leisure, work, and stay.
Perhaps of most significance in this quarter was the successful stage one reopening of the completely reimagined Chadstone Chase. As planned, the stage one welcomed more than 60 retailers to Chadstone Chase, comprising both new and existing retailers. Given it's only been a little over two weeks since the reopening, assessing the visitation and sales performance of the asset relies on direct feedback from our retailers, and I'm delighted to share some of the anecdotes with you today. Over the first weekend of trade post-opening, our major retailers achieved sales outcomes that were materially above their opening targets. Significant retailers that opened include a new David Jones department store, a flagship Apple, Mecca, Sephora. As well as an Australian designer fashion precinct that included retailers such as Zimmerman, Camilla, Scanlan, and Theodore, alongside international brands such as Ralph Lauren, Hugo Boss, Armani Exchange, and Max Mara.
Our level two precinct also has a focus on athleisure, with brands such as Nike, LSKD, and 2XU, complemented by Australian fashion staples such as Country Road, Seed, Richey, and RM Williams. The combination has further solidified the already successfully opened lower-level Fresh Food, which opened last year, and Dining Precinct that had long queues consistently experienced by our retailers in that level since opening. As I've said before, our AUD 625 million investment in the reimagination of Chadstone Chase reflects our commitment to creating meaningful retail destinations that are uniquely curated for people who love to shop, dine, and be entertained at our shopping centres. In terms of Chadstone Chase, this will be a truly unique retail shopping environment for Australia, commensurate with some of the best premium destinations globally.
Before I hand the meeting back to the Chairman, I'd like to take a moment to sincerely thank the Vicinity Board for their guidance, partnership, and support. I also extend my appreciation to our executive leadership team, most of which are in the front row here, and indeed every team member across Vicinity for their dedication, passion, and commitment to delivering our strategy and the way they go about delivering our strategy. Importantly, I want to thank our security holders for your continued support, endorsement of our strategic direction, and for your confidence in the work we are doing to create long-term value for everyone affiliated with our company. Thank you for that, and I'd like to hand back to the Chair.
We will shortly move to the formal business of the AGM.
A reminder that security holders who hold a yellow or blue card may ask a question in the room. To do so, please raise your yellow or blue card and wait for the microphone. Then identify yourself before asking me a question. I note that we received one question from a security holder ahead of the meeting today, and I'm pleased to provide a response. Mr. Jesse Felsinger asked about Vicinity's plans to reuse the space of Target and Big W to match the changing social trends. Thank you, Jesse, for your question. Currently, Vicinity has a total of 14 Targets and 13 Big Ws across its portfolio of 51 retail assets, all of which have long-term leases. In fact, the majority of leases expires after 2030.
Anchor tenants such as Kmart, Big W, and the department stores continue to appeal to local communities and play a very important role in our shopping centres. That said, we are constantly assessing opportunities to backfill spaces occupied by retailers, both large and small, who are consolidating store numbers and whom we assess as potentially higher risk given monthly sales trends. Let me give you a practical example. When we knew David Jones wanted to exit Mandurah Forum in Western Australia, we, having anticipated the change for some time, were willing and ready to take the space back and repurpose it with a full-on Rebel and Timezone. Not only are we realizing higher rent per square metre, but the sales productivity is also higher, and importantly, the space is occupied by retailers that are in demand by our customers.
I hope this answers the question, Jesse, and thank you again for raising the question. This brings me to the formal part of the meeting. The items of business are described in the notice of meeting. There will be an opportunity for general questions at the end of the meeting. The first item of business is to receive and consider the financial reports of Vicinity Centres and the reports of the directors and auditor for the year ended 30th of June 2025, which were included in the 2025 annual report, which is available on our website. There is no requirement for security holders to vote on this item of business.
As I mentioned earlier, Kylie Bottomley of Ernst & Young was the signing audit partner for our 2025 annual report, and he's present at today's AGM to answer questions relevant to the conduct of the audit, the preparation and the content of the report, and the policies adopted by Vicinity Centres and the independence of the auditor. I'll now open the room for any questions on item one. Di, we have a question. We do. Thank you.
Thank you, Mr. Chairman. My name is Peter Rae. I'm representing the Australian Shareholders Association. I'm obligated in proxy to the Australian Shareholders Association.
Peter, one sec. We're just getting your mic adjusted. The sound isn't coming through properly.
Changing microphones.
Thank you. Hello? Yes. Are they working now?
Back with you. Yes. Yes. Yes. Yes.
Yeah. Peter Rae representing the Australian Shareholders Association. I'm holding proxies for 731,000 shares, representing 45 shareholders.
The value on current shareholdings of around AUD 1.8 million. First up, Mr. Chair, thank you very much for the opportunity to meet with yourself and Jane and Rohan before the meeting. Welcome very much the opportunity for you to engage with the ASA, and we certainly look forward to further engagement with you in the future. I just had a question regarding growth and distributions. You and the CEO have spoken about the growth over the past few years, the acquisitions, the development of Chadstone, or redevelopment of Chadstone, Chatswood. There is a lot of activity going on there. I suppose I am looking for when we might see some of that expenditure flow through to distributions. If you look at the distribution, it was modest growth in the past year, but it is still flat on the distribution of two years ago. As security holders.
It's good to see the growth. Also, the move in the portfolio to more premium assets, I think the numbers were 51- 66 in the last three years. I guess also interested in how you see that progressing over the next few years. I guess spinning it all around is where will that end up with the distributions for shareholders? Will we expect to see some better growth in future years?
Thank you for that, Peter. Yes, thank you to you too for the opportunity to meet prior to the meeting. You raise a very valid point, and the component of return to security holders is comprised of two things, as I mentioned earlier. One is the distributions, which you get into your bank account, and you're very grateful for, I'm sure.
The other is the growth in the value of the share price, which you can choose at any time to realize by selling in the market pretty quickly and painlessly. It is important to aggregate those two to work out what you are actually getting as a security holder, not focus on only one component. As I said earlier, if you go back 12 months from today, you have seen roughly a 20% return, which is pretty impressive by any stretch of the imagination. However, one of the items, Peter, which you correctly raised, is our improvement in the quality of our portfolio. Very simply, arithmetically, that costs immediate distribution. Why? Because a lower quality asset generally pays higher yields than the good quality one, the difference reflecting their quality and risk gap.
If what you do is you sell a high-yielding asset and invest the money into a lower-yielding asset, you're hopefully better off in the long term, but immediately there is a shortfall in this year's distribution. It is a bit like saying if you really want just distribution, we can sell all the shopping centres and invest in junk bonds, and you'll get 20% cash distribution. You may well lose your money along the way, but you'll get a good distribution. We are always balancing those issues. The second is that looking at the quality of the portfolio, we have, as we've said, gone from 51% to 66% in terms of what we consider to be the highest of quality changes. That has been done in a very difficult market. We have not been the only ones out there seeking to make adjustments, yet our team have.
Equipped themselves incredibly well by both buying and selling remarkably well. The other component to that is, sometimes the market gets a little bit out of whack. We are very rigorous in our financial parameters, and we were able to buy really well and invest really well over the past two, three, four years. More recently, we've had an asset publicly come on market, Erina Fair shopping centre. For those that do not know, it is north of Sydney. It is about an hour and a half north of Sydney in a very sort of vibrant holiday home type catchment area. Lots of cows as well, I might mention, but they do not do a lot of shopping. And this asset.
We bid on it because we think we can do decent things, but we had a limit on what we were prepared to pay because no matter how good an asset, if you overpay for it, it's going to drag on your returns. We had a limit. Our limit was surpassed. We had five bidders, Peter, ahead of us, five bidders ahead of us. It ended up going for somewhere around 5% more than we felt we wanted to pay. Each of those five, I think, were syndicators. They were not necessarily major institutions, although a bunch of the syndicators coupled with institutions. What that reflects is there is a turning and changing demand for the good quality assets that is now seeping into the broader marketplace. We will continue to be judicious.
We are obviously working within a framework, and we have rigorous financial parameters beyond which we choose not to go. Thanks, Peter. Thanks as always for the question. Anyone else from the floor? Thank you. I'll now ask the operator for any questions on the phone lines.
Chairman, we have no questions at this time.
Thank you, operator. Jane, any questions online?
Chairman, no questions online.
Thank you, Jane. The voting exclusions that apply to today's resolutions are described in the notice of meeting. Item two to four are ordinary resolutions. Ordinary resolutions are passed if more than 50% of the votes cast by or on behalf of security holders entitled to vote on the resolution are in favor. Items five and six are special resolutions. Special resolutions are passed if more than 75% of the votes cast.
By or on behalf of security holders entitled to vote on the resolution are in favor. Proxy votes received on each resolution before the meeting will be shown on the screen when each item is being considered. As set out in the notice of meeting, I intend to vote undirected proxies in favor of each resolution. I will now formally vote all undirected proxies in this manner and all directed proxies in accordance with the directions instructed by security holders. Moving on to item two. Vicinity's remuneration report was released to the ASX on the 20th of August, 2025, as part of our 2025 annual report, which is available on our website. As outlined in the notice of meeting, the remuneration report outlines for FY 2025-R. Vicinity's reward principles and framework. The linkage between Vicinity's performance and the remuneration outcomes for our key executives and our key management personnel.
The remuneration received by our non-executive directors and executive KMP. While the vote on the remuneration report is advisory only, we will take into account the outcome of the vote and any security holder feedback when considering relevant remuneration matters in the future. The board recommends that you vote in favor of this non-binding resolution. The words of the resolution are displayed on the screen. The summary of proxy votes received before the meeting will now also be displayed. I'll now open the room for any questions on item two. There are no questions in the room. I will move to the phone line, operator.
Chairman, we have no questions at this time.
Thank you, operator. Jane, online?
Thanks, Chairman. No questions online.
Thank you. Item 3A. Is my re-election, and I will now hand over to Peter Kahan, who will chair the meeting for this item. Peter.
Thank you, Trevor. Item 3A seeks your approval for the re-election of Trevor Gerber as a director of Vicinity Limited. Trevor is eligible for election as a director and offers himself for re-election accordingly. The board, with Trevor abstaining, recommends that you vote in favor of his re-election. The words of the proposed resolution are displayed on the screen. Trevor will now speak to his proposed re-election.
Thanks, Peter. I appreciate the opportunity, everybody. My main executive career was at Westfield for 14 years, and the positions I held through that time included Group Treasurer and Director of Funds Management responsible for the two listed REITs, which one was in Australia and one was in America. I left there in late 1999, and I took on professional directorships.
I've been doing this for about 25 years, and hopefully at one stage I'll get good at it, but it may soon seem. I've been on boards in a variety of industries and through a variety of circumstances. I've seen lots, and I've learned lots too. The challenge is relevant, and the rewards of getting stuff right are there. It requires judgment, dedicated effort, and energy, which I believe I do bring to the table. I joined this board in 2015 and was appointed Chairman at the AGM in 2019, just before COVID appeared in our midst. I look forward to continuing this journey. I think we have an exciting vehicle. I think we have a great team, and I would certainly appreciate your votes. Thank you.
Thank you, Trevor. The summary of proxy votes received before the meeting will now be displayed on the screen.
I'll now open up to the room for any questions on item 3A. Peter.
Peter Rae again. Just a quick question over tenure and succession planning for the board. Mr. Gerber has been on the board for 10 years as a director and 6 years as chair. While I say he doesn't have any sort of prescriptive measures as to tenure, we tend to look around 12 years as probably being a suitable length on the board. Recognizing the different directors have different skills and bring different things to the board. I guess the question is, is Mr. Gerber intending on staying on the board for the full three years given his existing length on the board? Will he likely stand again at the end of this term on the board?
It brings out the broader question of succession planning for the board and the chair role. When Michael Hawker left the board back in August, I think the board said at the time that they were happy with the board as it was without looking for a new director at the time. Just questions around how the board thinks about its succession planning for both the number of directors, the chair, and also gender diversity as well. I think the board has a target of perhaps 40% females/women on the board, which it's not meeting at the moment. Is that brought into consideration too, and will that come into any succession planning for looking at board renewal? Thank you.
Thanks, Peter. As Peter knows well, I'm a little bit of a heretic when it comes to having these hard and fast rules of tenure.
There are some directors who I probably, or people who hold the aspiration to be a director, I probably wouldn't like to sit alongside for more than about a week. There are others who I beg to stay on board for as long as works for them personally. The concept of having a time period has arisen because I think people have felt you need some number. No one can tell me why the number's been arrived at. We all get comfortable that there's a number. What you do with that, no one really has much idea. I am not an advocate, as you can hear, in the tenure of directors being a strong guiding light. It is always a factor. The factor comes into, is that director a valuable contributor to the board? If not, they oughtn't be on the board.
Frankly, I do not care if that is a week or if it is 20 years. We have a couple of directors, excluding myself, who have been on the board for around 10 years or 10 years and a bit. I am actively persuading those individuals not to be mindful of these external parameters. I have discussions with our key major security holders during the lead-up to every AGM. I have canvassed this issue with every one of them. It is fair to say there is a unanimous view that quality trumps over any arbitrary time period. I will continue to push that barrel, Peter, as you know. As far as I am concerned, I am obviously seeking another three-year term. I make no assurances that I will be around for the next three years because.
My fellow directors and I will be the arbiters of when my time comes and how we go about doing it. Having said that, we are always in somewhat of an active process, keeping a mind's eye on who's available and to what degree and when, because the time when it comes time to find another director, you may well find that your universe is not as wide as you think it is because busy people generally are well employed and productive. We are always looking for new people. That will be no different going forward. As far as gender is concerned, yes, gender, of course, comes onto our agenda. It is not a priority driving force in terms of one, two, or three. It is a factor. If we can, we would happily take, but we are not going to be appointing any person.
Based on the characteristics rather than the value that they can bring to the board. That's critical. Thank you, Peter. I've known Peter for some years. Peter, how long have you been around Vicinity? It's going to be 10 years, I'm guessing.
I was the monitor. I was the monitor for, say, 10 years ago.
Right. There you go.
We're good. We've been up a lot for 10 years. Come back.
Yes. Yes. We're well aware of each other's views, and there's always the debate is the critical one, and the outcome is a question of judgment. Any other questions? Operator, any questions on the line?
There are no questions on the board at this time.
Thanks, Jane. Thank you, Jane. Peter, you have another question on the matter?
I had before I wanted to as well just raise the matter of skills matrix again.
We did discuss this in our pre-AGM meeting, but I thought perhaps I'll bring that up again. You're aware that ASA would like to see a more detailed skills matrix, which has a detailed list of the skills for each individual director rather than just a broader matrix. I know your view that the board operates as a collective, and therefore it's probably not necessary. I suppose that the view that we take at the ASA is that we think that shareholders should be able to look at individual directors and see what the talents and the skills that they bring to the board and the contributions that they're likely to make to the board. That can reflect in the way that we then look at them on the board and how we then think about voting for those individual directors.
I guess putting that on the table again and ask that if you would. Perhaps consider again whether you might like to look at a more detailed skills analysis in the skills matrix in the annual report. Thank you, Chair.
Look, I will compliment you on saying this has been a perennial question of yours, and I continue to battle back saying, "No, disagree." It is no different this year. I will spend just a minute talking about why, which again is important, because no one has a preemptive right on being right. It is always worthwhile reflecting and debating these issues. The skills matrix is something that has arisen over the last few years, being a good idea for people to understand what the directors bring to the table. As always, conceptually, it is a fabulous idea.
I would love the ability to be able to assess people based on a piece of paper, but unfortunately, it never quite works that simply. What we do is we comply with the broad requirements, we put the skills of the board as a whole, excuse me, into a table so people can see what broad skills people bring on the board. We do not break up each individual's skill because relying on a narrow skill is dangerous in a collective such as a board of directors. It is important that everyone works cohesively and brings their various skills to the table. The second thing I would say is that if you do want to test the relevance of the matrix, I have two criteria which I think are sacrosanct in a fellow director. One is their integrity, and the second is their business judgment.
I don't see that on any skill matrices. And it's awfully hard to judge that and to analyse without knowing the people intimately. So, Peter, I will continue probably to say to you, "Not this year." Sure. No more questions? I'll hand back to Trevor to chair the rest of the meeting.
We may have—do we have a question? One question on the mic. Okay. My apologies.
So the question comes from Natasha Lee.
One sec, Jane. I don't think your mic is on. Eddie, how are we going with the mic? I think the answer is a new one's on its way, Jane.
All right. The question we have is from Natasha Lee. And the question is, "While the board currently has reasonable female representation, it seems that there is a lack of other types of diversity.
Best practice is that boards broadly reflect the communities in which they serve, and in addition, more diverse boards tend to perform better financially. Will the board commit to having greater diversity other than female representation?
First of all, Natasha, welcome. I think you've attended many AGMs, some physically, some not. So welcome. And as always, your questions are very searching. Diversity is a great debating point. There is a lot of stall put about diversity. Mainly, people really talk gender when they talk diversity, but they don't feel comfortable making a specific point of that. Diversity of thought, to me, is the critical one. I don't care what gender, what race you are. It's irrelevant to me. I care how you think and how you behave and how you contribute. I know in the US it's currently vogue to have ethnic diversity.
I've yet to see a definition of that that I understand properly. I actually think it's perverse in many respects. We will continue to prioritize diversity of thought and of not much else.
No further questions on the platform. Thank you.
Thanks, Jane. It's unusual for Natasha to only have one question, so I'm a bit bemused. Are there more coming later? Okay. Good. Good. Good. All right. Thank you.
Thanks, Peter, for your judgment. Item 3B seeks your approval for the re-election of Tiffany Fuller as a Director of Vicinity Limited. Tiffany is eligible for election as a Director and offers herself for re-election accordingly. The Board, with Tiffany abstaining, recommends that you vote in favor of this resolution. The words of the resolution are on the screen, and Tiffany will now speak to her proposed re-election. Tiffany?
Thank you, Chairman.
You're always a very hard act to follow. Good morning, everyone. It's been a privilege to serve as one of your directors, and I seek your support today for re-election to the board of Vicinity Centres. As Chair of the Audit Committee and a member of the Risk Committee, I'm focusing on ensuring Vicinity maintains high standards of financial integrity, governance, and transparency for all stakeholders, which is critical to executing on strategy in what is a very dynamic retail and economic environment. I bring over a decade of top 50 public and private board experience across funds management, financial services, technology and transformation, retail, and consumer, underpinned by strong financial stewardship and risk management expertise. I have chaired the audit and risk committees on all boards. This background enables me to contribute a disciplined, analytical, and most importantly, independent perspective to board discussion.
I've had a multidisciplinary executive career with developed skills across accounting and corporate finance, banking and treasury, consulting, M&A, and investment disciplines. I'm a qualified chartered accountant and a fellow of the Institute of Company Directors. I remain passionate about Vicinity's purpose. If re-elected, I will continue to bring my energy, integrity, and experience in supporting what is a very high-quality management team to execute on strategy in a disciplined way and evolve reporting and governance frameworks to meet the emerging risks with a view to delivering sustainable long-term value for security holders. Thank you for your time today.
Thanks, Tiffany. The summary of proxy votes received before the meeting will now be on the screen. I'll now open up the room for any questions on item 3B. Operator, any questions? Operator?
No questions on the phone at this time, Chairman.
Thank you. Jane?
No questions on the platform.
Thanks, Chairman.
Thanks. Item 3C, the re-election of Georgina Lynch as a director of Vicinity. Georgina is eligible as a director and offers herself for election accordingly. The board, with Georgina abstaining, recommends that you vote in favor of this resolution. The words are on the screen, and Georgina will now speak to her proposed re-election.
Good morning, Chair, fellow directors, security holders, and guests. I'm Georgina Lynch, and it's a pleasure to sit before you today as a candidate for re-election to the board of Vicinity Centres. I'm grateful for the opportunity to continue contributing to a company that is not only shaping the future of retail and mixed-use precincts but also delivering long-term value to its investors and communities. Over the past three decades, I have built a career at the intersection of property, investment, and financial services.
My executive and board experience has given me a deep understanding of the dynamics that drive performance in the real estate sector. I have seen firsthand how strategic investment, disciplined development, and strong governance can unlock transformational growth, and I see that firsthand every day in my role at Vicinity Centres. Since transitioning to a non-executive role in 2016, I've had the privilege of chairing Cbus Property, one of Australia's largest integrated property developers. Cbus Property has delivered award-winning, highly sustainable developments, including multiple six Green Star-rated buildings. With a significant AUD 7.8 billion core portfolio and a robust residential pipeline, I have remained closely engaged with the evolving trends in the construction sector, urban development, sustainability, and tenant expectations. I'm delighted that I have had the opportunity to use these core skills and experience to assist the very talented team at Vicinity.
I also bring experience from the ASX listed space, where I'm currently serving as the chair of Waypoint REIT and a non-executive director of PEXA, where I have championed transparent governance and resilient business models. If re-elected, I will continue to bring this breadth of experience, strategic insight, and unwavering commitment to Vicinity Centres. I believe this company is well positioned to thrive in a rapidly changing environment. It has a first-class management team who are deeply committed to delivering the strategic goals the organisation has set. I'm genuinely very excited about the possibilities ahead. Thank you for your support and consideration. I look forward to continuing to serve you and helping Vicinity Centres achieve its ambitious goals.
Thanks, Georgina. The summary of proxy votes received before the meeting are now on the screen. I'll now open up the room for any questions on 3C.
If not, I'll move. Operator, any questions on the phone line?
Chairman, we have no questions at this time.
Thank you. Jane, online?
No questions at this time. Thanks, Chairman.
Thank you very much. I'll now move on to item 3D, which seeks your approval for the re-election of Dion Werbeloff as a director of Vicinity Centres. Dionne is a representative of the Gandel Group, Vicinity's major security holder, and co-owner of Vicinity's largest asset, Chadstone Shopping Centre, where we all are sitting today in one of the assets. Dionne is eligible for election as a director and offers himself for re-election accordingly. The board, with Dionne abstaining, recommends that you vote in favor of this resolution. The words of the resolution are displayed on the screen.
Just before Dionne speaks to his re-election, I would like to add something gratuitously, and I've told our key investors the same thing. We have two Gandel representatives on our board. I would happily have each one of them sitting alongside me on the board, irrespective of their affiliation with Gandel or otherwise. Over to you, Dion.
Thank you, Chairman. Good morning, everyone. My name is Dion Werbeloff, and it is a genuine privilege to be before you today as I seek your support for re-election to the board of Vicinity Centres as a non-executive director. While I am not considered independent due to my association with our major security holder, the Gandel Group, I remain deeply committed to acting in the best interest of all our security holders.
Over the past three years, it has been a privilege to serve as one of your directors and contributing as a member of the Risk Compliance and ESG Committee. With over 30 years of experience spanning retail property, financial management, and investment banking, I bring a deep understanding of our business. This enables me to support Vicinity in navigating market shifts, making sound capital allocation decisions, and driving long-term value creation. Currently, I serve as CEO and a director of Gandel Group, where I have been for the past 11 years. Prior to this, I spent 22 years in investment banking, including senior leadership positions with Goldman Sachs. This blend of operational and financial expertise allows me to contribute meaningfully to Vicinity's strategic direction. My other roles include serving as a director of Breakthrough T1D, a not-for-profit organization dedicated to type 1 diabetes research, advocacy, and community support.
I'm deeply committed to Vicinity's continued success, and if re-elected, will work diligently to deliver value for all our security holders. Thank you very much for your time and consideration.
Thanks, Dion. The summary of proxy votes received before the meeting will now be on the screen. I'll now open up the room to any questions on item 3D. Operator, any questions on the phone?
Chairman, we have no questions at this time.
Thank you. Jane, online?
No questions at this time. Thank you, Chairman.
Thank you very much. We move on to item 4. This resolution seeks your approval for the grant of performance rights to our CEO and managing director, Peter Huddle, under the Vicinity Centres Equity Incentive Plan and as part of Peter's financial year 2026 remuneration package. The board, with Peter abstaining, recommends that you vote in favor of this resolution.
The words of the resolution are on the screen. The proxy votes will now be displayed on the screen. I'll now open the room to questions on item 4. Operator, any questions online? On the phone, apologies.
Chairman, we have no questions on the phone at this time.
Thank you. Jane, online?
Same, Chairman. No questions online. Thank you.
Thank you very much. We'll move on to item 5. This special resolution seeks your approval to renew the partial takeover provisions in Vicinity Limited's constitution. It's renewing Rule 21, which I'm sure you're all very familiar with. The same form approved at the 2022 AGM and is set out in the explanatory memorandum to the notice of meeting. The board unanimously recommends that you vote in favor of this resolution. The words are displayed on the screen. The proxy votes will now also be displayed.
I'll now open for any questions on this item. Operator, anyone on the phone line?
Chairman, there are no questions on the phone at this time.
Thank you. Jane?
No questions at this time.
Thank you. We'll move on to item 6. This special resolution seeks your approval to renew the partial takeover provisions in Vicinity Centres' trusts constitution. By renewing Rule 12.11 in the same form approved at the 2022 AGM and as set out in the explanatory notice of the notice of meeting. This is, excuse me, for the trust as we've just approved for the company. The board recommends that you vote in favor of this resolution. The words of the resolution are on the screen. The proxy votes will now be on the screen. I'll now open the room for questions on item 6. Operator, anyone on the phone line?
Chairman, no questions on the phone line at this time, Chairman.
Thank you. Jane?
No questions. Thanks, Chairman.
None. Thank you. Before I close the meeting, I would like an opportunity for any general questions and check if there are any remaining questions. Are there any in the room? Phone line?
None at this time, Chairman.
Thank you. Jane, online?
Yes, we do have a couple of questions. Firstly, once again, from Natasha Lee on general business. The company issues its tax statements to security holders much later than other property trusts. As it is not possible for security holders to complete our tax returns until we receive this statement, is it possible to provide this information by the end of August?
Thanks, Natasha.
I don't know the answer to that, but I will take it on notice, and someone from our secretariat will get back to you in person.
Thanks, Chairman. I have another one from Natasha Lee. While borrowings are at the lower end of your gearing range, interest expenses are higher, and there was a comment that this was due to higher weighted average costs. Given interest rates have been falling, could you explain why you are facing higher average interest rate costs?
Yes. Look, it's a good question. Again, beware of using averaging as a method of analysis. We're talking that the 12 months ended June 2025. Borrowings fluctuate throughout that year. Interest rates fluctuate throughout that year. Just as importantly, for reasons of conservatism and prudence, we fix a substantial amount of our portfolio of interest rates one to two years and out to five years.
One to two years, we are very substantially hedged. In other words, no matter what happens to interest rates during the one- and two-year period, there is not a dramatic move in our underlying interest costs, which is a form of insurance, if you like, and that tends to be quite valuable when you are running an AUD 15 billion portfolio. If you want a full analysis of that, Natasha, I am more than happy to get someone to respond to you offline.
Thank you, Chairman. One final question from Natasha Lee. I note that solar capacity has been added to a number of sites, which is a positive move. However, to what extent are Vicinity assets powered by solar power, and what is the longer-term timeframe to install additional solar panels? It is an interesting question. Of our emissions, about 95% are power-related. It is a very relevant question.
Putting solar on roofs is not the panacea you might think it is. Whilst it certainly does remove a need for some electricity that might not be green, there's a significant amount of cost that goes together with that. Part of our job is to continue assessing the validity of where to put solar and at what cost and at what risk. If we wanted to put it everywhere, we probably could, but you would be screaming blue mode, and believe me, the distributions would not be what they are today. We continue to judge that. And just for accuracy, think about 8% of our centres do have solar power. We continue to assess that on a regular basis.
Thanks very much, Chairman. There's no more questions on the platform.
Natasha must be busy this year, I think. But it is great.
Look, it's great to have interested people, and she has always been. Look, I think we've now considered all items of business, and that concludes the formal part of the meeting. I will now declare the meeting closed, subject to the completion of the poll. The poll will remain open for five minutes to allow any final votes to be submitted. If you have not yet submitted your votes via the online meeting platform, please do so now. The final results of today's meeting will be released to the ASX and placed on our website as soon as possible following this meeting. On behalf of the board, I thank you all for your participation and continued support of Vicinity. The meeting is now formally closed. Thank you very much.