Operator: Thank you for standing by, and welcome to the Region Group First Half FY '26 Financial Results. [Operator Instructions]. I would now like to hand the conference over to Mr. Anthony Mellowes, Chief Executive Officer. Please go ahead.

Anthony Mellowes: Thank you very much, and welcome to our First Half FY '26 results for Region Group. My name is Anthony Mellowes. I'm the Chief Executive Officer. Presenting these results with me today is David Salmon, our Chief Financial Officer. Also in the room with me is Erica Rees, our Chief Operating Officer. I'm really pleased with this set of results as we have increased our earnings growth, which is underpinned by some really strong operational results and our fully hedged interest position. Let me take you to Slide 4, which sets out our first half FY '26 highlights. Our funds from operations or FFO, was $0.079 per security, which increased by 3.9% from December 2024. The distribution per security was $0.069 per security, which was the same as our adjusted funds from operation or AFFO, which increased by 3% from December 2024. Our statutory net profit after tax of $180 million, including an increase in the fair value of our investment properties. Our assets under management has increased by 3.9% from June '25 to $5.4 billion. Our operational metrics remained resilient. Our comparable MAT growth was 3.1% per annum. Our average annual fixed rent reviews were 4.3% per annum. Our average specialty leasing spreads were 3.4% and our comparable NOI growth was 3.7%. With respect to capital management, our weighted average cap rate firmed by 10 basis points to 5.87% since June '25. We've continued the on-market security buyback program. 6.7 million securities have been purchased during the half year at an average price of $2.39 for a consideration of around $16 million. And our NTA per security has increased 3.6% to $2.56 off the back of that valuation growth. Our weighted average cost of debt of 4.6% per annum with 100% of debt hedged or fixed for FY '26 at an average rate of 2.89%. Slide 5 remains unchanged. Our strategy is to provide defensive, resilient cash flows to support secure, growing and long-term distributions to our security holders. Moving to our operational performance, which starts with our portfolio overview on Slide 7. Our occupancy has improved to 97.7%, up 20 basis points with a continued strong weighting towards those nondiscretionary tenants. 45% of our gross rent is attributable to our anchor tenants and 55% of our gross rent is to specialties and mini majors with a focus on food, liquor, retail services, pharmacy and health care. We have 87 centers that are owned 100% by Region, which are geographically diversified across Australia. Moving to Slide 8. Our positive sales momentum continues across our nondiscretionary categories. Our 3.1% comparable MAT growth is driven by supermarkets at 3.1%, our discount department stores at 3.7%, our mini majors at 1.7%, nondiscretionary specialties at 3.3% and our discretionary specialty tenants improved to 3.6%. Our specialty sales productivity is now at $10,265 a square meter. As for the majority of the market, we have excluded tobacco sales consistent with our June '25 results. Our supermarkets continue to demonstrate resilient growth as shown on Slide 9. We continue to capital partner with our anchor tenants to drive sales growth with over 53% of supermarkets generating turnover rent. We have 123 anchor tenants contributing 45% of our gross rent. 76 direct-to-boot and e-commerce facilities. 97% of stores have online sales included in the turnover rent calculation. And as I said earlier, there was 3.1% supermarket comparable MAT growth. And the turnover rent generated from 52 anchor tenants with a further 20 anchor tenants within 10% of that turnover rent threshold. Moving to Slide 10. Over 88% of gross rent is generated from nondiscretionary tenants. Our portfolio occupancy of 97.7% is up from 97.5% as at June '25. Our specialty vacancy has improved to 4.5% as at December '25 compared to 5.4% at June '25. Our portfolio WALE decreased slightly by 0.1 years to 4.8 years. Our average specialty rent increases to $930 per square meter, representing annualized growth of 5% since December 2022. Our average specialty annual fixed rents remained strong at 4.3%, and these were applied across 96% of our specialty and kiosk tenants. 79% of expiring tenants were retained, which helps to minimize leasing capital expenditure and downtime. Moving on to Slide 11. Proactive leasing continues to drive increased leasing spreads across the portfolio. Our specialty leasing benefited from slightly increasing annual fixed rent reviews and positive leasing spreads. We completed 177 specialty leasing deals with 3.4% average leasing spreads, a positive uplift on prior December periods. A strong performance from new leases with an average leasing spread of 7%, while renewals were relatively flat. The average annual fixed rent reviews increased from 3.9% in December '23, up to 4.3% in December '25. Our leasing incentives on new deals averaged 12.3%, and this is aligned with our 12-month leasing incentive for new tenants. Moving on to our sustainability update on Slide 12. We're on track to reach our net zero for Scope 1 and 2 greenhouse gas emissions by FY '30 and continue to make a positive impact in the local communities which we serve. We continue to progress towards our sustainability targets, which is spelled out in our annual sustainability report. The key focus has been on environmental, progressing with our net zero investment during the period, contributing to our solar rollout target of having 25 megawatts installed in construction or design on Region assets by the end of FY '26. In social, we continue to make a real positive impact in the communities that we operate in and have undertaken a number of community initiatives, including the uniform exchange program at Raymond Terrace in Newcastle. We also continue to sponsor 128 students through the Smiths Family's Learning for Life program. And with respect to governments, our alignment to the ASRS is on track for our FY '27 reporting. I'll now hand over to David, who will talk through our financial performance.

David Salmon: Thanks, Anthony, and good morning, everyone. I'll start on Slide 14. We'll highlight the key drivers of the movement in our funds from operations, which has had strong earnings growth in the first half of FY '26, partially offset by an increase in the weighted average cost of debt. Our FFO for the first half of 2026 is $0.079 per security, representing growth of 3.9% from December 2024. There were positive contributions from the comparable portfolio NOI growing by 3.7% and the impact of our transactional activities and growth in funds under management. The FFO growth was offset by the previously flagged weighted average cost of debt increase from 4.3% to 4.6% during the period. Moving to Slide 15, where we provide further information on our financial results for the half. As mentioned, our funds from operations was $0.079 per security. Our adjusted funds from operations came in at $0.069 per security, an increase of 3% from December 2024 after additional capital this period from the leasing up of vacancies. Our distribution for the period represented a 100% AFFO payout ratio in line with guidance. Comparable NOI growth was 3.7% with moderating property expenses as well as specialty annual fixed rent reviews and positive leasing spreads. Full year comparable NOI growth guidance remains at around 3.3%. Total net operating income has grown by 5.3%, driven by the aforementioned comparable NOI growth, cost reduction phasing from the prior period, lower ECL compared to the Mosaic impacted prior period and completed developments NOI, partially offset by net asset disposals. There was strong growth in funds under management income supported by funds management platform expansion during the period. Corporate expenses were impacted by cost phasing in the prior period with costs in line with the FY '25 average over the year. Statutory profit for the period is $180 million, following an increase in the fair value of investment properties. Moving to Slide 16. As at December 2025, our total assets under management was $5.4 billion. This is a 3.9% increase from 30 June 2025 with investment property valuation growth and an increase in funds under management. NTA per security of $2.56 has increased by 3.6% from June 2025, driven by fair value uplift on investment properties. Our balance sheet remains healthy with gearing of 32.7% at the lower end of our target range. This provides us with the capacity to deploy capital when opportunities arise. 6.7 million securities were purchased during the half year at an average price of $2.39 for a consideration of $16 million as part of an on-market security buyback program. Since the announcement of the buyback program in April 2025, 8.9 million securities have been bought back at an average price of $2.37 for a total consideration of $21 million. Slide 17. Our property valuation movement shows cap rate compression and continued income growth driving the valuation increases. During the period, our portfolio increased by $129 million. The movement was driven by a $92 million fair value increase and $37 million in capital expenditure. Capitalization rates have firmed by 10 basis points since June 2025 to 5.87% on top of the 10 basis points firming in the second half of FY '25. We have 3% fair value increases since June 2025, with approximately 1.7% driven by cap rate compression and the remainder being valuation NOI growth over the 6-month period. On to Slide 18, where we talk to our funding. In November 2025, we issued a successful 6-year AUD 300 million medium term note. We saw significant interest from both offshore and Australian debt investors with the final order book being 3.6x oversubscribed. This strong demand allowed for the transaction to be priced with favorable borrowing margin of 1.22%. Proceeds from the MTN issuance were used to repay bank debt. We have total debt facilities of $1.9 billion with around $355 million of funding capacity available for us to draw on. We have no debt expiries until FY '28, and we have strong interest from both new and existing banks to enter into new facilities. Our weighted average cost of debt increased from 4.3% to 4.6% over the first half, and we expect this to decrease just slightly to 4.5% for the full year. Moving on to Slide 19. Our strong hedging across FY '26 to FY '28 provides stability and reduces exposure to near-term interest rate changes. We have high hedging levels with 100% of debt hedged or fixed in FY '26 at an average rate of 2.89%. We remain highly hedged in FY '27 and FY '28 with 87% and 70% of debt hedged or fixed in those respective years. This mitigates the impacts of any near-term rate increases, which the RBA has now commenced and is expected to continue. Our average hedged fixed rate over the next 3 years of around 3%, which is well below forecast market rates. I will now hand back to Anthony to talk through our value creation opportunities.

Anthony Mellowes: Thanks very much, David. Turning on to Slide 21. We maintain our disciplined approach to continue to pursue high-quality opportunities that align with our long-term strategy. In January '26, we settled on the acquisition of Treendale Home and Lifestyle Center for $53 million at a 6.4% initial yield. It's a large-format retail center strategically located directly opposite our existing center at Treendale Shopping Center, and this also allows some improved management efficiencies. The center also has a district center and urban zoning, providing the ability to house additional retail such as additional supermarkets into the future. We remain the largest owner of convenience-based centers with a proven transactional track record that allows us the opportunity to continue to consolidate this very fragmented market. Slide 22 highlights the targeted reinvestment and increased development spend to drive earnings and portfolio performance. The table shows the first half FY '26 actual and FY '26 forecast indicative spend on our capital deployment program. In the first half of FY '26, we spent $32 million and in -- for the full year FY '26, we expect to spend around $65 million. This forecast has increased by roughly $15 million, which is mainly driven by development projects relating to center expansions across North Orange in New South Wales, Newcastle Market Town in Newcastle and Greenbank in Southwest Brisbane. Moving on to Slide 23 for funds management. Our Metro Fund continues to be a platform for growth with 2 new acquisitions. We set Metro Fund settled on the acquisition of Dalyellup Shopping Center in Western Australia for $36 million in November '25, growing our funds under management by 5.7% from June '25 to $752 million. Metro Fund also exchanged on the acquisition of 3 additional strata properties valued at $89 million at West Village in Brisbane in Queensland, which is driving further growth through these strategic acquisitions. Two of these strata properties have already settled in January '26 and the remaining Strata is due to settle by June '26. David will now talk through our AFFO growth target.

David Salmon: Moving to Slide 25. To sustainably drive our medium- to longer-term earnings growth, we are focused on generating comparable NOI growth of at least 3%. Through our value creation initiatives, we aim to add another 1% to our growth rate. Our work in the capital management space to increase our hedging has mitigated some of the short- to medium-term earnings volatility generated from interest rates with a longer-term impact dependent on market movements. Based on all this, we are targeting medium to term longer growth in our FFO and AFFO of 3% to 4% per annum. Our results for the half year have aligned with this growth target, notwithstanding the flagged impact of interest costs. I'll now pass it over to Anthony, who will talk to our key priorities and outlook.

Anthony Mellowes: Thanks again, David. So Slide 26 steps through our key priorities and outlook. We believe the nondiscretionary retail will continue to be resilient, and we will generate comp NOI growth through our strong leasing, increased fixed rent reviews and continued proactive expense management. Our balance sheet is supported with growing valuations, which provides us with the opportunity to develop some of our centers, also to be disciplined with our acquisitions and disposals and explore additional funds management opportunities. We're maintaining a proactive approach to capital management, including where prudent, asset recycling, on-market security buyback and interest rate hedging. Assuming no significant change in market conditions, our FY '26 earnings guidance has been upgraded to be FFO of $0.16 per security, up from $0.159 per security, a growth of 3.2% on FY '25 and AFFO of $0.411 per security, up from prior guidance of $0.14 per security, a growth of 2.9% from FY '25. This marks my final results presentation over the past 14 years. It's been a real privilege to lead the group through a period of significant progress and growth. I'm really delighted to welcome Greg Chubb as our next CEO and Managing Director, effective the 9th of March. And I'm really confident the company will continue to build on this really strong foundation. Thanks very much, and over to questions.

Operator: [Operator Instructions]. Your first question today comes from Howard Penny from Citi.

Howard Penny: Just the first question on -- just to talk through how you're firstly seeing the sort of upgraded guidance drivers. What really drove the increased guidance in this period?

David Salmon: Howard, it's David here. Yes. Look, largely, the upgrade in the guidance from the $0.14 to the $0.141 was largely off the back of some of the transactional activity. As we flagged, we bought Treendale Lifestyle Center, the circa $50 million. Obviously, that's at a yield of over 6% compared to our funding cost. That's an upgrade in net earnings. And we also expanded the funds management platform through the acquisition of those 3 properties we flagged at West Village, which has the -- we have a 20% interest in that fund. So we have earnings accretion there, plus also we get acquisition and funds management fees as well, which go into the mix. What we are doing for the full year guidance is we are holding our comp NOI growth of 3.3% guidance that we'd flagged at the start of the year. We haven't changed that at this stage.

Howard Penny: And just my second question on the Treendale acquisition. Could you just take us through why this was a great acquisition for Region? And then just a second question on that, can we expect potentially more acquisitions in the next sort of 12 to 18 months similar to this?

Anthony Mellowes: Thanks, Howard. It's Anthony here. Look, this center, if you look on Google Maps at Treendale, it is directly across the road. It is -- there's a lot of retail in that space. And it just makes a lot of sense for us to own it. It's really very integrated with the whole precinct. And so we are the natural owner of that. Just like it's no real difference to we bought a large-format center in Ballarat. Again, it's basically physically linked to our existing shopping center, and there's no real difference. So it's about -- it's strategically owning that, and it's at the price that we could buy it for. We continue to remain really disciplined looking at opportunities. There's a lot of groups out there that are still offering very tight yields on assets, which is great because we own and manage over 100 of them. But we continue to be really disciplined about ensuring that they meet our long-term hurdle rates. I still believe we will continue to buy assets and find them and work them through. And I think there's some great opportunities out there, but we're going to remain really disciplined. And that's not just on acquisitions. It's also on disposals as well. We still have some, not that many assets that are really tight yields with not huge growth, but very -- there's a strong appetite from privates out there for those smaller dollar value assets, of which we still got a few there to go. But it's really just remaining disciplined to meet our long-term hurdles.

Howard Penny: And maybe just one final question from me. It's good to see the joint venture starting to get more active. What's changed in that in terms of where the partner and Region are getting more active? What's changed in the expectations at the moment?

Anthony Mellowes: Look, I think it's fair to say when interest rates really jumped up very quickly. The hurdle rates were increased as interest rates have stabilized and they certainly have stabilized, notwithstanding they've just gone up a bit recently. They're still relatively stable compared to the increases that we were looking at. And I think that's the major driver. And we find really good opportunities that, again, the assets at West Village, there's strategic reasons for owning the additional strata to control everything in that particular asset, but also the likes of Dalyellup was met the hurdle rates that we needed. So yes, but I'd say it's the volatility in interest rates or less volatility in interest rates has been the key driver.

Operator: Your next question comes from Andrew Dodds from Jefferies.

Solomon Zhang: Just firstly, I'd just be interested to hear how retail trading conditions have trended throughout January and February. It's positive to see that they held out throughout the period, but certainly, just keen to hear about how they've trended since the sort of the outlook for rates has sort of evolved over the past couple of weeks.

Anthony Mellowes: Yes. Look, it's Anthony here. We haven't got the actual figures. It's a little bit too early. So it's only the Anthony Mellowes is anecdotal. It's not based on any real data because we just don't have it yet. It's continued to be -- I don't expect it to be all that different from December, November, I think January because it goes on like-for-like against January last year, I think it will be fairly much the same because we do have that high focus on nondiscretionary, which really doesn't move around a lot. I mean, I've said for the last 13 years, we get excited when it moves from 3% to 4%, and we get a bit worried when it goes from 3% to 2% because it's always around the 3%. So I expect much the same.

Solomon Zhang: Okay. Great. And then on the buyback, $100 million, it looks like it's just over 20% complete now. You've been buying back stock sort of between $240 million and $225 million. So I mean, with the stock sort of trading within this range now, do you expect that the buyback will recommence once the blackout period ends? And just a follow-on, it would be good to understand just what guidance assumes in terms of completion of the buyback in the second half, too.

David Salmon: Yes. It's David. Well, maybe just answer the last bit. Yes, we haven't assumed any further buyback in our guidance for FY '26. In terms of whether we intend to continue the buyback. Look, I mean, obviously, when we announced the buyback, we were trading much lower. We also had raised a fair bit of capital through some asset sales, and we're looking to redeploy that capital. We've obviously deployed that capital a bit into the buyback, about 20%, but we've also acquired Treendale for circa $50 million recently as we just talked about. So the buyback, the merits of the buyback are still there in terms of where we're trading relative to NTA and where our distribution -- implied distribution yield sits at. So the merits of the buyback is still there. But I guess it's probably been the appetite to do as much buyback is probably lessened because we've been deploying capital into some other opportunities. So I won't say a hard no or a hard, yes, but it will depend on where trading goes. But to the extent that we have other opportunities arise, we might decide to deploy that capital into those opportunities. Also, if we were to sell some assets that might come about -- that obviously gives us some surplus capital to consider in that context as well.

Solomon Zhang: All right. And then just finally, just on the MTN issue. The borrowing margin you got of 122 basis points is clearly very favorable. Can I ask just what the sort of weighted average margin is across the group and how much of an earnings benefit this has provided?

David Salmon: Yes. Our weighted average margin across the group is around 1.5%, that's our forecast for the year, I should say. So obviously, this is circa 1.2% is obviously bringing that debt has brought that down a little bit. It was 1.6%, I think, pre that. Look, we see there's definitely opportunities in the compressing borrowing margin market that we find ourselves in. I mean, you can do the math, $300 million at 30 bps and the annualized benefit there. That's obviously -- that's coming through a bit in FY '25, but also it will annualize in -- sorry, a bit in FY '26, that will annualize in FY '27 as well.

Solomon Zhang: Okay. Thank you very much and congratulations Anthony.

Anthony Mellowes: Thank you.

Operator: Your next question comes from Solomon Zhang from UBS.

Anthony Mellowes: No, I can't hear you, Solomon.

Operator: Your next question comes from Daniel Lees from Jarden.

Daniel Lees: Just a question on costs. It looks like your property expenses are down, corporate expenses up a little bit. Maybe just if you could talk through the key drivers here and how do you want us to think about costs going forward?

David Salmon: Yes. It's David here. Yes, obviously, in the second half of last year, we have done a number of cost initiatives to manage our gross costs. You're seeing some of that come through this half. There was a bit of phasing of the cost benefits last year between first and second half. So what we've done is for our comp NOI growth of 3.7%, we're saying that comparable cost growth was around 1.4%. What I'd also say that the property expense reduction cost has also been impacted by asset disposals that we had in the prior period as well. But like it's fair to say that the cost growth looking forward, our target is to manage cost growth in that 3% to 3.5% growth range as well as our revenue line for that matter, which we think sets us up well for that 3% to 3.5% comp NOI growth that we talked about.

Daniel Lees: And corporate costs?

David Salmon: Yes, sorry, corporate costs. Look, again, there's a little bit of phasing and lumpiness in last year's split between first and second half. But our corporate costs for this half, noting that the corporate costs in terms of the dollars are a lot smaller compared to comp NOI. But our corporate costs of $7.4 million in the half is more in line with the half average from the full year last year, which was about $15.2 million for the year, about $7.6 million for the half. So I think you'll see it more in line with that in the second half going forward.

Daniel Lees: Great. And then on deployment opportunities, obviously, 10-year bond rates and rates generally have shifted higher. Are you seeing that flush out any acquisition opportunities from maybe the high net worth and syndicators?

Anthony Mellowes: I think it's still just a little bit early to be saying that at the moment. There was still some -- there was an asset in Tamworth that sold at a very tight 5.1%, I think, recently to a private. There's still DD happening of deals that were agreed in sort of December that they're going through their DD. So I think it's just a little bit early to be making that judgment at the moment. What I would say is at our results at June, I've said I think overall cap rates will compress to December of about 10 to 15 basis points, which is what happened. And if conditions continue, I'd expect sort of maybe another 10 basis points to June '26. Conditions have changed. I don't expect cap rates to continue to compress from December '25 to June '26. I think they'll stay fairly flat.

Daniel Lees: Okay. That makes sense. And just a final one from me, if I could. On the capital deployment program on Slide 22, the $65 million, what's your estimate yield on cost for that program?

David Salmon: Look, generally speaking, we're targeting a 6% plus yield on our capital deployment. Obviously, you've got a bit of variation depending on the nature of the projects. But that's -- as a rule of thumb, we target that.

Anthony Mellowes: And there's timing issues.

David Salmon: Well, there's obviously timing issues in terms of the phasing of the projects coming online and also you have sometimes you have a bit of downtime in -- while you're developing sites as well.

Operator: Your next question comes from Solomon Zhang from Morgan Stanley.

Solomon Zhang: Hello David. I'm sure there's a reason for this, but your 5.3% NOI growth. I know, David, you talked about cost savings at the property expenses line. But can you explain to me why gross rental income didn't move at all?

David Salmon: Look, the primary reason that didn't move is the impact of the disposals. They have come out. So that's the primary reason. The comp growth after adjusting for the disposals was about 3% growth.

Solomon Zhang: Comp growth at the gross property income line was about 3%.

David Salmon: Yes, comp growth, correct.

Solomon Zhang: Okay. Fair enough. The 7% leasing spreads for new leases, that's pretty impressive. Can you kind of give me some color as to the composition? Like were there still some old Mosaic boxes that you leased up at massive leasing spreads? Like I'm just trying to work out what the underlying leasing spread would have been without some of those extraordinary good boxes?

David Salmon: Look, we -- maybe just to preface it with the Mosaic site, there are vacant sites that we're trying to lease, but it's -- at the same time, we see them just another vacancy we're trying to fill. So we're trying not to differentiate between all the different sites. Obviously, there were some good deals this half, and it's been quite low. Sometimes you're talking half numbers, the stats can be very sensitive to a few big deals. Maybe if I could put it this way, if you excluded the top few deals, yes, you'd be closer to that sort of 4% to 5% leasing spread range. And conversely, if you excluded the bottom few deals on the renewals, they'd be up around 2% or 3% higher as well. So yes, I mean, you do get some outliers that can skew things either way. But at the end of the day, yes, look, there is an element of Mosaic that's not into those numbers, yes.

Solomon Zhang: Great. What were those bottom few deals and renewals that dragged it down to pretty much flat? Like were they a special type of retailer? Or was it a specific retailer?

Anthony Mellowes: Yes. We had -- there were 3 deals that hurt us in that renewals, 2 were banks, and we wanted to keep those banks because they wanted to leave. And one was a pharmacy who, as you know, pharmacies retain the basically pharmacy license. And if they move, you can't just easily replace a pharmacy. So they were the 3 deals, 2 banks and a pharmacy.

Solomon Zhang: Great. Great. And just one last one. I noticed you guys kicked off a Metro Fund III. Can I assume it's with the same capital partner as Metro 1 and Metro 2?

Anthony Mellowes: Yes.

Operator: Your next question comes from Murray Connellan from Moelis Australia.

Murray Connellan: I just wanted to quickly drill into the Mosaic brand space, if you wouldn't mind. Would you be able to contextualize for us the amount of vacancies that still remain there, the amount of income that you've assumed going into the second half? And I guess, the drag of those vacant sites relatively speaking, in FY '26 guidance overall?

David Salmon: It's David.

Anthony Mellowes: What David is looking at -- look, I'll just say, Murray, Mosaic is gone, and they're just now a vacancy for us. And -- but David will run through some numbers, and we are getting better rents on the Mosaic groups. It is heading pretty close to what we suggested when Mosaic went broke. I remember what was 18 months ago, whatever. So -- but Dave run through.

David Salmon: Yes. Look, just to give you a bit of context, obviously, and we have flagged this in the past that there would be a bit more leasing capital this year to help lease up those Mosaic sites. We had about $1.2 million in leasing capital on those sites for the first half, and we're forecasting roughly about double that for the full year of FY '26 to about $2.5 million. Look, in terms of how much of the Mosaic portfolio have we dealt with, we've got about 85% either leased or casually let where it's earning some sort of income. Obviously, we're looking to fully lease everything, but there is a little bit of a drag. In terms of dollars on the NOI line, there still will be a bit of drag for the full year because obviously, we've got the new rents kicking in, offset by the lost rent coming out. There'll still be a little bit of a drag, maybe $0.5 million or so for the full year, depending on how we go in the second half on things. But yes, like I said, the primary impact on AFFO for the year will be that leasing capital and that leasing capital is part of the first half higher leasing capital that we talked about earlier.

Murray Connellan: Will it be fair to say that, that space is assumed to be, I guess, mostly 90% productive going into 2H? '26 on average?

David Salmon: Look, we're certainly banking on having most of it in there. There might be a few delays in terms of start dates and things like that. But obviously, when we come out with our guidance at year-end for FY '27, we'll be able to give a bit more color on that. But like Anthony said, we're trying not to think about Mosaic as one big thing. At the end of the day, we're trying to fill up all our vacant sites, and this is just one part of it.

Murray Connellan: And Anthony, congrats on your last set of results. All the best for the next phase.

Operator: Your next question comes from Richard Jones from JPMorgan.

Richard Jones: Anthony, just interested in your broader views on retail markets. Obviously, you've been around a while, and we've seen a heap of demand come through in the past 6 to 12 months. Obviously, Charter Hall have raised a lot of money and deployed in a relatively short time frame. So just interested in where you see transaction markets in light of a bit of a shift in where rates are going as well.

Anthony Mellowes: Yes. Look, people get quite excited by institutions buying. The privates for 20, 30, 40 years have been the most active buyer and seller in this particular sector. And they will continue to be the most active buyer and seller for, I think, for some time. The issue is you just get institutions coming in and everyone thinks that's really interesting. But the bottom line is there's always buyers and sellers. You can go back as many years as you like, and there's roughly 40 to 50 sort of transactions a year, which is roughly 1 a week. And that's just what happens in this particular space. The difference is you've got institutions looking at the moment. So -- but I think the buyers will still be there. The sellers will still be there, and it's a really good sector. Roughly 50% of your income comes from really high-quality tenants like Woolies and Coles. The other 50% of the income comes from pretty well nondiscretionary retail, coffee shops, pharmacies, whatever you want, it's a pretty good, solid returning asset that's very consistent. And I think that's what people like. Now with rates going up, yes, it will have a bit more pressure on people's buying ability, but I don't think it's going to move it all that much. People don't necessarily buy assets. They buy them for a lot of cash often. So lending isn't always a consideration because they're private buying.

Richard Jones: And just on your funds management business, can you just clarify what the rough return hurdle is for that deployment and how much you've got in committed capacity?

Anthony Mellowes: Well, I was -- I'm not going to tell you a return because that's up to our partner. But I think it's fair to say it's market returns for these types of assets. Now they have a slightly lower cost of capital. And so maybe it's slightly better to buy in different times, but that can move. But look, we originally started our joint venture with them, our partnership with them for a $750 million sort of stake. We're sort of at that now. We're at over $800 million. And I think we all want to continue. We've got -- started with Metro 1. We've got Metro 2. We've got Metro 3. We're over the $750 million. And I think they have -- they like that particular partner likes this type of sector, and they have capacity to purchase in this sector. So I think where it ends, I think it comes down to the opportunities that are presented to them.

Operator: Your next question comes from Callum Bramah from Macquarie.

Callum Bramah: I just wondered, can you just clarify a little bit of the drivers of the expectation of comp growth to slow over the full year? Because you've still got, as you said a couple of times, 3.3% as your guide relative to, I think, 3.7% delivered in the first half.

David Salmon: It's David. Yes, look, I think the simple answer there is the first half has benefited more from some of those moderating costs that we implemented in the second half of last year. And so that's also the reason why the second half is a little bit lower to get to that 3.3% for the full year.

Callum Bramah: Okay. And so that's in the property expenses is what you're talking about?

David Salmon: Yes, property expenses, that's right, yes.

Callum Bramah: Okay. And just going or maybe a follow-up also on the lease incentives comments that you've made. So clearly, there was the step-up in the first half. And I think based on the comments around Mosaic, that continues into the second half. But should we anticipate that you step back down in fiscal '27? So I think at the moment, you'd be running at something in the order of $15 million per annum in lease incentives. So would it come back down closer to the 12% as we go forward as those have disappeared out of the portfolio?

David Salmon: Yes. Look, I mean, obviously, our higher leasing incentives this half is some of the Mosaic, but obviously, it was due to a number of new tenants in general as well as Mosaic. Look, in terms of where -- I think we're guiding towards around $13.8 million for the full year on the leasing side. Yes, Prima facie, you won't have as many Mosaic tenancies to fill. But it's part of a broader environment where it depends on how many other new tenants we might get in. Obviously, our retention rates help mitigate some of that exposure. And look, you got to remember that the cost of fit-outs and things like that is not going backwards. So as well as trying to keep those new leasing incentives on new tenants around that 12-month mark, you do have cost pressures. So I won't say you can just draw a line in the sand and say whatever it was this year will go backwards by x million dollars. It will be part of a broader environment where you have to consider cost of doing fit-outs and also how many new tenancies you expect to put into the portfolio.

Callum Bramah: Okay. And maybe just 2 other ones. So just on Treendale, I think the guide is for an initial yield of 6.7% -- just in relation to the commentary that sort of implies there's some sort of synergies between properties across the street. Does the 6.37% include that benefit? And therefore, maybe -- I assume maybe the cap you bought it on is lower and you've got a benefit through property management?

Anthony Mellowes: Look, that's exactly right. How much -- it's not massive dollars, but there's a little bit there for us. And that's what we're going to be focusing on to maximize that. But we're not talking, it's going to move from a 6.3% to an 8% yield. But there is efficiencies there for us.

Callum Bramah: Fantastic. And then just maybe if you can also just talk -- so cost of debt into the second half will be, I guess, around 4.4%. Is that fair? And then it just trends up with your hedge book a little bit into fiscal '27?

David Salmon: Yes, we're guiding towards 4.5% for the full year. So I don't have a split of the second half, but yes, it would be -- implies it's slightly lower than given the first half was 4.6%. So -- and in terms of your question about the hedge book, yes, look, we've always had high hedging. Obviously, what's embedded into our hedge position is we have some callables and we have a collar as well. Inherently, if you're working out your percentage hedged and your rate, you have to make an assumption around what is going to be come into effect based on the interest rate environment. So we're assuming that both those callables are called and also that the collar will be enacted from when it kicks in, in the future. So that's the main thing that's driven our sort of movement in the hedge book since 6 months ago.

Callum Bramah: And one last one, sorry to finish it maybe on a negative. But just looking at those -- the comparable MAT growth for sort of discount variety or apparel, just are there any tenants that you're particularly concerned about?

Anthony Mellowes: No. In the past, we have been concerned about sort of Mosaic and that type of thing. Look, you've got the reject shop that have been taken over by an enormous discount retailer from Canada doing a tremendous job. They want to expand. So they're looking really positive. So a lot of chemists in there. Chemists are doing well. So we don't have any portfolio of tenants that we're sitting there going, we've got a big watch on them, like we have had in the past. There will be some that will come up. That's just natural, but there's nothing there at the present in those many majors.

Callum Bramah: Congratulations, Anthony, on your successful tenure as CEO of the group.

Operator: Your next question comes from Ben Brayshaw from Barrenjoey.

Benjamin Brayshaw: I just had a quick question on the guidance for NOI growth for the Callum's chat earlier. Could you just clarify the driver around the lower NOI growth implied for the full year in the second half? You mentioned property expenses. So will property expense growth be up in the second half?

David Salmon: Yes. I mean that's essentially -- yes, it's the first half benefited more from those cost savings initiatives, which kicked in, in the second half of last year. And yes, for the full year guidance, it is slightly lower because we will effectively have higher expense -- property expense growth in the second half compared to the first half, noting that what I said before, the first half only having comparable growth of 1.4%, which is obviously lower than the run rate we would be envisaging going forward.

Operator: [Operator Instructions]. Your next question comes from Solomon Zhang from UBS.

Solomon Zhang: Apologies for the tech issue earlier. Two questions from me. So maybe for David first. You mentioned earlier that there was some balance sheet capacity to deploy potentially on acquisitions. But I guess your look-through gearing is sitting around 35%, and I can't really recall you sitting above that mark for very long. Should we read this as increased appetite to lift gearing? Or is this more a reflection of reval unlocking deployment capacity?

David Salmon: Yes. Look, in terms of that look through gearing, I think we calculate it to be a little bit lower than that, but I think sort of in the 34s. But we still have what we say is capacity to debt fund some acquisitions if we wanted to go down that path, noting that, yes, there's also the opportunity to maybe recycle some capital from other asset disposals if we wanted to do so as well. Look, I guess, at the end of the day, we look at through the lens of do we have confidence in our gearing position through the valuation cycle? Yes, we do at the moment. do we want to protect our credit rating. We're not going to do anything that's going to threaten that. We're comfortably in our credit rating at the moment, and we would like to continue to do so, and we expect to do so. And obviously, like I said earlier, the security buyback is an option, but I'd say that's been mitigated to some extent where we've deployed capital into other opportunities like Treendale.

Solomon Zhang: Makes sense. So you'd be comfortable sitting in the upper half of your target range of 30% to 40%?

David Salmon: I'd say going to the upper end of that is probably a bit stronger language. Maybe around the mid-30s is probably more about how we view it as a potential scenario, noting that there might be reasons why that comes down, like I said, through asset sales. So it might be more of a capital recycling situation like you've seen over the last few years.

Solomon Zhang: Okay. Maybe a question for Anthony. Just looking at Slide 11, just on your renewal spreads, they were basically flat. And I know you called out the bank and the pharmacy spreads that are a bit lower. But can you just discuss the dispersion of your spreads?

Anthony Mellowes: Well, I think we did -- basically, if you take out the top number of new leases, it comes from 7% down to sort of 4-ish. And if you take out the bottom 3 of the 80-odd renewals, it comes up to sort of 3%. So they're all sort of sitting in around -- the vast majority by number is sitting in and around there. And I think you're going to see a skew where in the second half, there's going to be more renewals than new leases. And I think you'll see the average spread lift from flat to positive 2 to 3s, 4s where it has been sort of sitting in the past. We have been very focused on increasing our annual -- average annual fixed rent reviews, and that has moved from sort of 3.7% to 4.3% over the last number of years. That is a lot more important because it gets -- it applies to 80% of the tenants every year versus leasing spreads only apply to 20% of the tenants each year. So maybe we have been a bit focused on increasing getting those 5% average annual fixed rent reviews through, and we've been successful at that. So I'm really comfortable where things are at. And like I said, smaller numbers do get skewed by a couple of deals, as David said earlier.

Solomon Zhang: What were the re-leasing spreads in the Bank of [indiscernible].

Anthony Mellowes: What was that?

Solomon Zhang: Could you quantify the actual re-leasing spreads, the percentage on those bank deals?

Anthony Mellowes: No.

Operator: Your next question comes from [Claire McHugh] from Green Street.

Unknown Analyst: Just a quick one regarding capital allocation. I appreciate you're evaluating buybacks and acquisitions. But on the acquisition front, what unlevered IRR hurdle are you targeting? And how has this changed in light of recent increases in long-term rates?

David Salmon: Look, I mean if you look at our weighted average cost of capital, it's sort of around that 8-ish sort of percent sort of range depending on what you want to assume for long-term funding rates, which has obviously been moving a lot recently. Yes. So it's for us, it's a combination of initial yield and growth opportunities. Obviously, we're trying -- in the past, we talked about wanting to get -- wanted to buy assets with a 6% yield and growth and obviously sell at tighter yields with less growth. So I think a lot of that thinking is carrying forward. What I will say is sometimes we will acquire sites more for strategic reasons. It's not always just a purely a yield discussion. But obviously, we like to do both. So -- and look, in that context, when we're deploying capital, obviously, you've got a buyback -- security buyback where we're sort of trading at north of a 6% yield and an implied growth as well. So you've got to consider all deployment of capital opportunities. But as Anthony said earlier, we're trying to be very disciplined around our capital decision-making.

Unknown Analyst: Okay. That's helpful. I mean just looking at the recent deals, it would seem that Treendale looks like on an unlevered basis, you're probably going to hit sort of 8.5% to 10%. Is it fair to say that sort of that sort of return excess of 8.5% to 10% or 8% on an unlevered basis is reasonable or --.

Anthony Mellowes: Yes, we wouldn't have done it otherwise.

David Salmon: Yes. Obviously, the yield was good. That was a tick. And there was also obviously a strategic purchase, like Anthony said, being across the road from our center that we see there's further opportunities in the asset in terms of overall management efficiency, also the leasing opportunities that will come with the site as well.

Anthony Mellowes: And there is growth out of those centers.

David Salmon: Yes. That's right.

Operator: Your next question comes from Connor Eldridge from Bell Potter Securities.

Connor Eldridge: Just looking at the full year FFO guidance bridge from the FY '25 preso, you flagged about $0.02 per share of incremental income from transactions. It looks like that full contribution has effectively been already realized in the first half. So I guess, just to be clear, should we assume that current guidance is effectively assuming no incremental contribution from transactions in the second half and i.e., there's potential upside there?

David Salmon: Our updated guidance has factored in all the transactions and funds management initiatives that we've announced. So that's all been factored into the new guidance.

Anthony Mellowes: We haven't factored in any others.

David Salmon: Correct. So we haven't factored any further capital initiatives like either through funds management or on balance sheet acquisitions or disposals or -- and we haven't factored in any security buyback as well.

Connor Eldridge: Right. Okay. And just one more for me. Just on the tenant retention number has now dropped below 80%. Can you just help me understand how much of that, I guess, is intentional churn, upgrading the tenancy mix and whatnot versus how much of that is actually tenant driven?

Anthony Mellowes: I think it's dropped from -- was it 81% or something to 79%. It's still roughly 80%. So it's just the mix that's sort of come in.

David Salmon: But, I would -- just to your last point, I would say that look, there is some intentional churn on our behalf in that number that we're trying to get the most out of the assets. So the reality is if we excluded those, it would be into the 80%. So yes, that is a factor, but we just reported as it is a fact.

Operator: There are no further questions at this time. I'll now hand back to Mr. Mellowes for any closing remarks.

Anthony Mellowes: All right. Well, look, thank you all. And I think that was one of our -- my longest one at 58 minutes. So thanks very much and look forward to speaking to you all, all the investors as we speak to you and the analysts all this afternoon. But thanks very much. It's been a great fun since December 2012. So thank you very much, and I'll speak to you all shortly.