Thank you for standing by. Welcome to the Precinct Properties Half Year Results Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to your speaker today, Mr. Scott Pritchard, CEO. Please go ahead.
Thanks, Amber. Good morning, everybody. Welcome to the 2018 interim result briefing for Precinct Properties. I am Scott Pritchard. I am the Chief Executive for Precinct, and I am also joined today by George Crawford, Precinct's Chief Operating Officer, and Richard Hilder, Precinct's Chief Financial Officer. The first half of the 2018 financial year has been an active one for Precinct, with markets continuing to perform well and with further progress made on our major initiatives. The past six months have seen us take substantial steps forward. We are very pleased with our result, in particular, the quality of the result, with revenue and net property income growing as a consequence of strong occupier markets. The program for today's call is outlined on page two of the presentation.
I will provide an overview of the highlights of the result before discussing the strategic progress we have made over the past six months. I will then discuss Precinct's development portfolio and provide an update on Commercial Bay and Bowen Campus. Following that, I will hand over to Richard to provide an overview of the financial results and capital management initiatives in the period. George will lead us through section four of the presentation, covering the property markets and our portfolio performance before I provide some concluding comments. Moving to the highlights page. The most notable outcome over the past six months has been the strong growth in operating income, which is up 3.8% on the prior period. Similarly, net property income is up 3.7%, with both metrics benefiting from a strengthening Wellington market and solid like-for-like revenue growth across the portfolio.
As I mentioned at the outset, it has been an active six months. Our focus on capital management initiatives is an example of that. We have concluded two key initiatives with a successful convertible note issue of NZD 150 million and a NZD 100 million retail bond offer. Pleasingly, the portfolio continues to benefit from strong occupier markets as businesses continue to expand and employee numbers grow. As at 31 December, the portfolio occupancy remains very robust at 99%, and the weighted average lease term has extended once again to 8.8 years. The benefits of owning well-located and high-quality real estate is evident, with growth in rental levels above valuation and contracted rents. Turning to section one, strategy progress. Page five focuses on the three pillars of Precinct's strategy, which we outlined in our full-year results last August. These pillars consist of our people, operational excellence, and developing the future.
Consistent with that strategy, we have outlined on this page the progress that's been made in each of these aspects. In terms of our people, we are currently recruiting for a Commercial Bay retail management team and are very encouraged by the quality of the people who want to work with us on this asset. We have updated our diversity policy and recently completed our annual intern program. Initiatives within our operating business include the launch of a sales campaign for 50% of the ANZ Centre, the NZD 250 million of capital management initiatives, which I've mentioned already, as well as Generator's further growth with a new offer set to be launched into the market in May. Further operational excellence has been made with our Wellington portfolio, demonstrating strong growth following occupier demand.
In terms of our development activities, the most notable achievements in the period include the progress made on retail commitments at Commercial Bay and Bowen Campus reaching 100% occupancy, following the New Zealand Defence Force's entry into an extended 18-year lease for the Bowen State building. Turning to page seven in our development summary. This slide is very important in articulating the stage that Precinct is at with regards to our development activities. To date, we have committed to around NZD 1 billion of development, with pre-commitment sitting at around 80%. Of that development, which is currently underway, we have a blended return on cost, i.e., development profit of 27% and a yield on cost of around 7.5%. Importantly, as we look to the next phase of our development activities, we feel it important to set out what we believe our targeted returns will be.
The next second stage of development activities will include the second stage of Wynyard Quarter, One Queen Street in Auckland, and Bowen Campus balance land in Wellington. Combined, these developments will provide around 30,000 sq m of additional office supply across Auckland and Wellington. Those targets will be to continue to seek development profits of 15% and yields on cost of around 7%. Now turning to Commercial Bay. As discussed already, the retail at Commercial Bay is attracting strong interest from retailers, demonstrated by our progress made in the period. At balance date last August, we were 46% committed, and we are pleased to announce today that we are now sitting at 60%. Most pleasing, however, has been the quality of the retailers who are committing to the center, with a retail mix that will be unique and of a very high standard.
The return metrics remain unchanged, with a forecast yield on cost of around 7.5% and a development profit in excess of 30%, or over NZD 200 million. Turning to page nine. To date, we have found that the interest in the food and beverage opportunities has been significantly ahead of our own expectations. We believe this is because of the location and the extent of critical mass that we will be providing. Additionally, the fashion mix is progressing well, with several new to New Zealand brands either committed to or currently considering a commitment to the center. An office leasing update is set out on page 10. Total office commitments remains at 66%, which is consistent with the previous update. While no new leasing has been secured in the period, we remain very confident of our ability to lease the remaining space in the tower.
We currently have negotiations at various stages for around 6,000 sq m, which would equate to around 15 percentage points of the tower. As a reminder, our feasibility assumes the tower will be 90% leased on completion, with void periods assumed of between one and two years for the remaining 10% of space. Turning to page 11. As you may recall, in August last year, we announced that we were delaying the opening date of the retail center following independent advice that the likely completion date for the retail center was going to be at the end of quarter one 2019. For completeness, the contract date for completion of the retail center is November 2018, and our main contractor has advised recently that their programmed date for completion is December 2018. Our independent advice is that a December completion date is unlikely.
The contracted date for completion of the office tower remains in July 2019, albeit that we are beginning to become a little concerned that this date is challenging. Critical to achieving this date will be the rate at which the façade can be installed, as this fundamentally drives the timeframe for completion. Importantly, we are continuing to monitor closely the production rates on site and remain comfortable with the provisions of the construction contract and how that protects Precinct from the risks and costs of potential delay. An update on Bowen Campus is outlined on page 12. In the period, we have completed the leasing for the remaining vacant floors with the New Zealand Defence Force taking a lease over all of the office space and some amenity space within the Bowen State Building.
This takes the entire development to 100% leased with an average lease term of close to 17 years. The construction activities are progressing very well on site with the main contractor performing to a very high standard. The project remains on budget and on program. Turning to page 13 and our future opportunities. The business is really pleased to have an exciting set of opportunities which are held within the business. These are either assets acquired at a low point in the cycle or development rights, which are based off residual land value calculations, ensuring that the next stage of developments will be both value and earnings accretive. The most advanced of these opportunities is the second stage of Wynyard Quarter. We have three remaining sites at Wynyard Quarter, and the next stage is anticipated to consist of around an 8,000 sq m office building.
Targeting a 50% pre-commitment, we anticipate commencing this project within the next six months. The next most advanced development opportunity is 1 Queen Street. We have considered a range of development opportunities for this asset over the past 12 months and have determined that the most optimal use to be a mixed-use development comprising hotel and office uses. On that basis, we commenced a competitive process seeking suitable hotel operators and have progressed to now be in a position where we are negotiating with our preferred operator. We feel confident in the location, the opportunity to convert the building to a hotel use, and the benefit that a hotel offering will provide to Commercial Bay generally. The remaining opportunities within the portfolio are held at Wynyard Quarter and Bowen Campus.
Wynyard Quarter stages 3 and 4 offer a further 20,000 sq m of NLA made up of either one or 2 buildings. These developments will be targeted towards future growth and innovation or corporate occupiers seeking a standalone building. The commencement of these stages will be demand led. The remaining land at Bowen Campus also offers around 20,000 sq m of office space, which is suitable for either the Crown or corporate occupiers. This stage is currently being designed with the opportunity to develop high-quality, large floor plates with high efficiency ratios. The existing Annex building is currently being demolished to allow for construction to commence. Similar to Wynyard Quarter, any commitment to proceed will depend on a level of pre-commitment. I will now hand you over to Richard to take you through section three.
Thank you, Scott, good morning, everyone. Slide 17 sets out our financial performance for the half year, including a bridge to our net operating income for the period of NZD 0.0315 per share. The completion of Wynyard Stage 1 and improved occupancy in our Wellington corporate assets resulted in net property income being NZD 1.7 million higher than the comparative period. Offsetting this was an anticipated higher tax expense for the first half, which I will discuss shortly. A further devaluation at 10 Brandon Street in Wellington of NZD 14.7 million and an unrealized loss on interest rate swaps resulted in a lower net profit after tax for the period of NZD 17.7 million. The business continues to be highly active and remains on track to deliver full-year earnings of around NZD 0.063 per share, which is unchanged from August. Slide 18 provides a breakdown of net property income.
After allowing for Wynyard Stage I, 10 Brandon Street, and Commercial Bay, including the associated foregone income at HSBC House, net property income on a like-for-like basis was 3.1% higher. An increase in occupancy at State Insurance Tower and Dimension Data House saw net property income across these assets increase by around 12%. In both Wellington and Auckland, we continue to see good levels of leasing inquiry and market rental growth, which George will talk to you soon. Turning to slide 19. Tax expense for the period was NZD 2.1 million higher than the comparative period. This is due to a high level of deductibles in the prior period due to the disposal of fixtures and fittings at Bowen Campus Stage I in October 2016. Our guidance on the effective tax rate for the 2018 financial year is unchanged at between 4% and 6%.
A high level of deductibles are expected in the second half due to additional leasing fees and the disposal of fixtures and fittings at Bowen Annex in number three, The Terrace. Finally, on capital management, it has been an active six-month period with the issue of a NZD 150 million subordinated convertible note and a NZD 100 million senior secured bond. We were very happy with the final terms and the level of demand shown for both issues. We now have total committed funding of NZD 1.18 billion for a weighted term of around four years. This provides sufficient capacity to deliver all current developments and near-term opportunities, such as Wynyard Stage II. Recapping on the convertible note, we continue to think this is a capital management solution which is well suited to Precinct's strategy.
Importantly, should the capital not be required at maturity, Precinct maintains the flexibility to not convert the notes to equity and instead repay the notes in cash. Gearing at December, which disregards the convertible note, has fallen to 23%. The sale of a 50% interest in the ANZ Centre will, if successful, reduce our level of gearing and provide capital to fund our future development opportunities. Our weighted average interest rate fell in the period as we continue to draw on borrowings to fund our developments. Hedging currently sits in the upper half of policy, and we remain comfortable with our current position. I'd now like to hand over to George, who will take you through the remainder of the presentation.
Thanks, Richard. Good morning, everyone. As Richard has just mentioned within the financial results, our investment portfolio has performed very well over the last six months. This has been particularly the case for our Wellington corporate assets, which have benefited from strong occupancy and good rental levels. As outlined on page 22, we are completing new leasing overall around 2% ahead of valuation rents. This indicates continued strength in the market, with the portfolio now sitting at around 5% under rented. This strength is also seen in the market rent reviews completed during the half, which represented an average lift of 8.3% compared to the previous contract rentals, with particular strength in the Auckland reviews. Turning to page 23. We continue to have strong portfolio occupancy, sitting at 99% for the half year.
The 8.8-year portfolio average lease term has once again lifted to a new high for the business on the back of the lease term for Bowen State Building increasing to 18 years. Turning to the market overview on page 25. Auckland remains supply-constrained. We think that the new supply in the pipeline will meet good demand. As we noted at the full-year result, we continue to see occupiers adapting to the supply constraints by increasing their occupation densities in order to make their existing premises work. In terms of the market generally, we think that there was probably a slowdown in decision-making before Christmas, with election uncertainty and businesses choosing to defer major decisions. This year, we are generally seeing a good level of inquiry and believe there is increasing levels of business confidence, which should be positive for the market for 2018.
Turning now to the Wellington market on page 27. We are seeing solid occupier demand for good quality, strong buildings continue, resulting in very low levels of A-grade vacancy. We think the combination of the reduction in supply and the confidence in Wellington from the change in government should provide continued support for both the occupier and the transactional markets in Wellington. Turning to page 28. We have undertaken a comprehensive analysis of our options for 10 Brandon Street. We have wanted to make sure we have a very good understanding of all the options before committing any further capital. As Richard has noted, based on an assumed strengthening of the building for office use, we have written down the value of 10 Brandon Street further to now sit at NZD 7 million.
However, no commitment to further capital spend has been made as yet, and will depend on development being feasible in its own right, in the same way as we would assess any other opportunity. Finally, before I hand back to Scott, our co-working investment Generator has had a busy period with the successful launch of its Wynyard Quarter operations as part of the Grid AKL innovation precinct. This has more than doubled the space which Generator manages, and demand for that space is tracking ahead of our expectations. Generator has now committed to the third Auckland location, Generator House in Britomart, which the business is looking forward to launching mid-year. I will now pass back to Scott to conclude the presentation.
Thanks, George. While recent volatility in global capital markets shows that uncertainty remains, we are buoyed by the trend of emerging and sustained growth in global markets. In New Zealand, we see stability emerging following the change in government last year, and a continuing strength in occupier and investment markets. We continue to believe that Precinct is well-positioned relative to our markets and following capital management initiatives over the past six months. We also believe we have a very strong balance sheet to take the business forward. We're confident about our position. Our developments are tracking well with construction occurring under fixed price and fixed program contracts with strong inquiry levels. Our portfolio is demonstrating the benefits of owning premium quality real estate in strategic locations. Our strategy is clear, and we think it's working well.
I'd like to thank you all for joining us today, and we're happy to take any questions.
Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Joshua Dale from Craigs Investment Partners. Please go ahead.
Good morning, guys. Just a few questions from me. Just on Commercial Bay office, on slide 10, you write that commercial terms remain consistent with feasibility assumptions, yet there's been no progress in the tower over the last six months. What are the risks to having to revise those rental rates assumed at feasibility so that you can ensure occupancy?
Thanks, Josh. Yeah, I think in terms of Commercial Bay, we noted a pause and an elongation, I suppose, in negotiations that were occurring in the back half of last year. Our sense is that a lot of that was to do with change of government and businesses just sort of waiting to get a bit more certainty. The negotiations that we've got underway at the moment confirm that they are terms which are very consistent with our feasibility. To date with all of the deals that we've done, as we've announced previously, our terms were sort of 3% ahead of feasibility. We're still feeling very good about where the rents are sitting, and we're feeling very good about getting the next tranche of space away.
I do acknowledge that in that back half of last year, there was a pause and deals had taken a bit longer to get done.
Okay, thanks. Just at your full year result last August, you announced that four floors were under negotiation then. Can you give us an update on where those are at and a bit more color on any negotiations that fell through?
Yeah, look, we haven't really had any deals fall through. Status quo remains in the sense that the negotiations have taken a bit longer than we expected. Again, the level of inquiry still remains very good. For those occupiers that occupy a floor or less, we feel like we're just now coming into the zone where they will consider what their options look like if they have an expiry that's 12 months out. We're starting to see smaller occupiers really be interested in some smaller suites or occupying a single floor. Again, feeling good about where we're at on Commercial Bay. We would've liked to have got a couple of deals away, but we just haven't been able to get there in time before the result.
Okay. Just on the additional leasing you made on the retail side, were those rental rates achieved in line with feasibility as well?
They were actually ahead of feasibility. The demand we're finding on the retail is incredibly strong. It's really a case now of just getting the mix right. There's demand across the whole plan, and there's names against every tenancy. At the moment, the important thing is focusing on getting the right retailers in the right location, ensuring that we sort of get that unique mix that we've always wanted for a CBD center.
Okay, great. Just lastly from me, does your expected development margin incorporate the NZD 27 million Queen Elizabeth Square acquisition that just recently settled?
Yeah. It does. Yep.
Okay. That's great. Thanks, guys.
Thanks, Josh.
Thank you. Your next question comes from Angus Simpson from UBS Investment Bank. Please go ahead.
Good morning.
Hi, Angus.
Just quickly, I may have missed this, apologies if not, did you have the FFO number per share for the first half?
Hey, Angus. No, we didn't. We'll get it on a full year basis.
Can you give me a sense of the adjustments on the maintenance CapEx, et cetera, than there's a rough guide that was incurred in the first half?
Within our cash flow, there's about NZD 7 million in there. A large part of that relates to the RFP assets, Pastoral, Mayfair which some of the work's undertaking there. It's pretty consistent to previous years in what our policy of 10% of operating income.
Thanks. The next question, just with regard to Generator. I see that's been excluded from the distributable profit calculation. Is that going to be the policy going forward? Also, I guess, what do you expect the run rate of profit will be, or when will it turn profitable?
Angus George here. In terms of the second part of your question around the run rate, sitting at a half a million NZD loss for the half year which reflects the trading up of the Wynyard Quarter operations which were launched in September. We expect that run rate to be similar for the second half of the year, as occupancy gets to breakeven and then into profitability. I'll maybe ask Richard on the distributable profit.
Yeah. The view is that it's very much in a growth phase with the additional site, and all the new space that they've taken at Wynyard as well. I think as it transitions to more of a stable business, that will be reviewed.
Fantastic. Just last question, just on the comments around the delays which you previously flagged for the Commercial Bay retail. What's the assumption around liquidated damages? Should we just assume that all the rent that you would have received for that period will be paid through to you guys?
Yeah. Look, we probably don't want to get into details around the construction contract. We are comfortable with that contract. We're comfortable that the provisions within there protect us and effectively keep us whole.
Okay. Thank you. Just at the moment, I guess, Fletcher's guideline is December versus the November. If they delivered in December, would there be liquidated damages payable to you?
Correct.
Thanks. That's all. Thanks.
Thanks, Angus.
Thank you. Your next question comes from Hayden Stricker from Forsyth Barr. Please go ahead.
Hey, good morning, guys, congratulations on a solid result. Just a few ones from me. Can you give an update on timing with respect to the redevelopments of the other three Crown assets in Wellington outside of Bowen Campus, Pastoral Mayfair, and number three, The Terrace, given the Crown indicated they need that space in the short term. Just secondly, just further on from Gus's question on ComBay. I suppose, if you've taken a position internally that timing for the tower might move out, at what point does that impact your commercial negotiations with moving tenants and moving tenants around? Obviously, a big chunk of the tenants are coming out of the existing portfolio, which you can obviously house. Someone like DLA Piper who's coming out of another building, can you just walk us through the practicalities of that?
Yeah, sure. Thanks, Hayden. In terms of the RFP timing, Three The Terrace will be getting underway mid this year. Pastoral House will be getting underway late next year, and Mayfair House will be getting underway at the start of 2019. Some of that sequencing has changed, and that was really a consequence of the earthquake and the Crown's requirement to just shift their timing around. Those times are now locked in. In terms of Commercial Bay, look, at this stage, as we said on the call, contracted date for completion is July 2019. As I mentioned, it really does depend on just the pace at which the façade is installed. That's just started going on the tower, so we'll be keeping a really close eye on that over the next few months.
For all of the occupiers that are coming into the tower, they have lease terms which extend quite a bit beyond the completion of the office tower. We do have a lot of comfort around our ability to absorb some delays if there is some. To give you, I suppose, a bit of a sense of that, we don't have anyone that needs to absolutely get into the tower within six months of the targeted completion date. We do have quite a bit of room there, headroom in respect to potential delays.
Cool. Thanks, guys. Just one more from me, just on HSBC. In terms of the office and hotel components there, are you still targeting NZD 150 million as the additional spend? That number you talked about in the presentation for future capital projects as a 7% initial yield, is that a blend across all those projects, or you'd be targeting a 7% yield on HSBC as well?
Yeah, look, certainly at an aspirational level, I think we should be targeting 7% yields on individual projects. That's what our goal will be. We think if you're going to put capital at risk, you ought to be getting a return of around that. The extent to which the capital required for One Queen Street, and whether it's NZD 150 or higher, will depend on the number of rooms that are included in the hotel. Your spend on the hotel use is higher than your spend on office. We're just working through what's optimal. The NZD 150 would be if we do a sort of half and half. If we do two-thirds hotel, one-third office, you might see that NZD 150 million spend increase a little bit.
Okay, cool. That's great. Thanks, guys.
Thanks. Thanks, Hayden.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Nick Mar from Macquarie Group. Please go ahead.
Hey, guys. Just on the potential sale of half of ANZ, will you guys intend on managing that and hence generating a property management fee for investors? Or is that to the manager itself?
G'day, Nick. The arrangement would be that the management company would provide property management services. As per the current arrangement with Precinct, that's on a cost recovery basis. The co-investor that comes in would get the benefit of having an arrangement which is purely cost recovery with complete transparency. That's the arrangement we have with Precinct.
There's no upside for Precinct investors from the fact that there's going to be a co-investor in there?
Not from a management fee perspective, no. We're not looking to generate management fee or the benefit from management fees for either the management company or Precinct.
Okay. No, that's cool. Just in light of that, and obviously the targeted projects you've got for the future pipeline, what's your current thinking about where you would like gearing landing? Obviously, you've got the flexibility around the convertible note to move at 5%.
We think gearing in that 30-35 range, we're not uncomfortable with that. We've got an FRN policy, which sets an upper limit at 37%-38%. Managing the balance sheet within that range is something that we're focused on the long term. Matching capital out of initiatives like ANZ at a, hopefully, a tight yield and into development opportunities at a seven-plus yield kind of makes sense to us. That would be, for us, a nice piece of portfolio construction.
That's great. Just on backfill leasing, how are you going there? There's a bit more space, I guess, coming up out of AMP for a different reason with QBE leaving there.
Hi, Nick. George here. Generally, we're seeing really good demand for space that we've got available. We're confident around AMP Centre on retaining good occupancy there. Particularly that asset on its price point, and location combined, means it's quite attractive for a number of people. In terms of other assets, the existing PwC Tower, that space is largely leased. We have some inquiry on the balance of space in ANZ Centre.
That's cool. Just one semi-random question. On your market outlooks for, say, Auckland, I noticed you've used JLL as the reference to rental growth and previously it was CBRE or Colliers. Is there a particular reason you've changed there around relative outlook research houses?
No, there's not really. It's timing of work completed, and we tend to rotate them a bit.
Okay. Thanks, guys.
Thanks, Nick.
Thank you. Your next question comes from Tony Sherlock from Morningstar. Please go ahead.
Good morning, guys. Just a few questions on leasing costs. I think that you indicated that the tax rate was going to be lower because there will be more leasing costs coming through. I am just wondering if they have actually been outlaid or they are coming through in the second half.
Hi, Tony. Yeah, no, there is an anticipation of additional leasing fees in the second half, both on the investment portfolio, but also with leasing at the retail and office within Commercial Bay. Also with the expectation that Wynyard second stage would progress with their 50% at lease pre-commitment.
What's the order of magnitude, just an indicative range of cost outlay that we should be thinking about?
I think just look to the guidance of the 4%-6%, Tony.
Okay. No problem. Just, I know you mentioned that there were some delays around the election. What are the major alternatives that these tenants? Are they looking at staying in their current building? I'm just wondering why, if their lease is up, what are their major alternatives that they're considering?
They'll stay put-
Okay
to be honest, Tony. Yeah. There's Commercial Bay is 40,000 sq m. There's one other, what you might call CBD fringe-based office building that's currently under construction, which is 14,000 sq m. There's a 30 or 40-year-old tower with 700 sq m floor plates that's been refurbished, that's in the market. They're really the options, other than the existing market and all of the occupiers that we're talking to, it's stay put or relocate to Commercial Bay.
Okay, that's fine. I noticed that June, the under-renting was 4.7%, in December, 4.7%. I probably was expecting that to blow out a bit further. Do you see market rents actually not having moved, or your just whole portfolio just moving in line with that? I was just wondering if there was market-specific stuff that impacted that.
Tony, it's more that we're still comparing with the June valuations. We haven't updated valuations at 31 December.
Okay. All right. Just as a finger in the air view on that, do you feel that it's now moved out to 6% or still sitting around that five number?
Yeah, look, I commented on the presentation. Leasing that we've completed
Sure
has on average been 1.8% above valuation rentals, above the 30 June valuation rentals. That indicates continued strength in the market. We'd see that also in market reviews completed. For Auckland, probably, I would say we're year-on-year, maybe up around the 4% level. Wellington, with the supply impacts, is probably more like around the 6% level.
That's fine. Thank you very much. Final question, just on the smaller leases and suites that you're indicating are maybe potentially trickling through. How does that impact your returns from feasibility given that presumably the rent per sq m is a bit higher for those?
Yeah. Generally, your cost to construct the suite is a little higher. We would look to get a corresponding lift in rents to offset that and keep whole in terms of our feasibility rental level assumptions.
You'd say it's a wash then really with the CapEx impost?
Yeah. To be honest, what we have seen in the market, there's a couple of very good operators in the market that do small leases, sorry, small suites really well. I would say generally they are getting premiums to market rents. We're not assuming that in our feasibility yet. The extent to which we can obtain it would be upside.
I've not checked out the actual rents on Generator versus Commercial Bay. Just as an indicator, I know it's a different type of market, do they compete in some ways?
Look, the Generator offer would tend to be limited to 20 employees or less. Generally. There might be a few occasions when it's a little bit more. There's not really a direct competition with the size of suites we would create at Commercial Bay.
Okay. All right. That's fine. Thank you very much.
Thanks, Tony.
Thanks, Tony.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Pritchard for closing remarks.
Thanks, Amber. Look, I just want to thank everybody for dialing in once again, and appreciate your support. Have a great day.