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Thank you for standing by. And welcome to the Mirvac Group Third Quarter Operational and Business Update Conference Call. [Operator Instructions]I would now like to hand the conference over to Mr. Campbell Hanan, Group CEO and Managing Director. Please go ahead.

Thank you, and good morning, all. I've been in the CEO seat for just under 2 months now. And today, I'm pleased to provide an observation on our business and our future focus against the current market backdrop. I'll then hand over to Courtenay to provide our third quarter operational update. I'm in Melbourne today, and I'd like to acknowledge the Wurundjeri people of Kulin nation and pay my respects to elders past and present. I'd also extend that respect to any Aboriginal and Torres Strait Islander people who are online today.Mirvac's competitive advantage lies in our unique integrated asset design and construction capability, which delivers new, modern, sustainable assets for our security holders and capital partners, along with development earnings and NTA growth. Our construction capability is proving to be a competitive advantage in the current environment given the industry insolvencies in the market reported to date. Our asset curation capability is also critical in driving superior investment performance and increasingly higher recurring funds management income streams, supported by deep in-house asset management capability. This unique flywheel model remains a key differentiator for our business.As a best-in-class urban asset creator, we have more than 50 years of experience in creating exceptional places through multiple cycles. Over the past few years, our operating environment has shifted, presenting a number of cyclical and structural changes. We've identified a number of these key structural megatrends, which we aim to leverage over time to drive value for investors. These include continued institutional demand for quality real estate is expected to persist in Australia, urbanization and densification of Australia's major capital cities to continue as land becomes more scarce, strong immigration and changing demographic shifts with millennials and digital natives to make up 75% of the workforce by 2030 and over 55 to be 28% of the population, technology driving changes in the way we use real estate and sustainability becoming a must-have for all stakeholders.In addition to these major structural trends, we're also experiencing a higher global interest rates than we've experienced in recent years and a dramatic undersupply of housing for our growing population. Our multisector capability, integrated platform, asset quality and strong balance sheet positions us well to respond to these trends so that we can continue to deliver performance for our security holders. And as our business and operating environment continue to evolve, we remain as committed as ever to delivering quality for our customers, advancing our sustainability ambitions, innovating and maintaining our unique and vibrant culture.As mentioned, I've been in the CEO role for almost 2 months and I'm confident that we have a resilient business, underpinned by our strong balance sheet, our platform and scale and a 50-year track record in creating and curating assets for performance. Given the evolving market environment and structural trends, there are 5 main areas of focus, which will be critical to deliver performance in the future.These focus areas include retaining balance sheet flexibility to take advantage of future opportunities, expanding the funds management offering across a broader suite of asset classes and product types, including living sectors, further improving the cash flow resilience of the high-quality AUD13.4 billion investment portfolio with higher exposure to living sectors and Sydney-based industrial expected over time, leveraging Mirvac's integrated development capability to drive a more efficient allocation of capital, better utilization of skills and superior returns on risk management and maintaining leadership and sustainability and culture, which will help to future-proof the business against changing stakeholder requirements and expectations.Our balance sheet is in a strong position with modest gearing, strong liquidity and trusted capital partners to support our growth aspirations. With the cost and availability of capital increasing and cap rates now expanding, the importance of robust and flexible capital management is paramount. As part of our capital approach, we aim to maintain gearing at the low- to mid-end of our 20% to 30% gearing range, retain part of our earnings to reinvest in the business, be increasingly selective on the deployment of development capital and increase the use of aligned third-party capital to execute on our strategy.The execution of our current AUD1.3 billion asset disposal program and capital partnering initiatives underway are important elements of how we will look to further strengthen our balance sheet position. We will also be making a modest adjustment to the way we define active capital, now including investment properties under construction into this calculation and targeting a 20% to 30% allocation to active capital over time with 70% to 80% of our capital to [ past ] investments. As you can see, this combined allocation is consistent with our exposure in previous years. And while it may increase modestly in the short term, our active capital will remain well below 30% over time.We've been successfully growing our third-party capital strategy for a number of years and we now manage more capital for external parties than for our own balance sheet. The benefits of this strategy are numerous and we have a unique, highly aligned model supported by best-in-class corporate governance. Going forward, we'll be expanding our funds management offering across a broader suite of asset classes and product types with a strong focus on living sectors and industrial, utilizing the depth of our asset creation and curation capabilities. This will allow us to deliver higher returns for investors and accelerate value and capital being unlocked from our deep development pipeline.To reflect the increased scale and importance of this income stream to our business, we have created a new stand-alone Funds Management division and have also separated the Asset Management division from investments to ensure best-in-class corporate governance and operational performance for all stakeholders. Our investment portfolio has undergone substantial change over the past decade as a result of our focused portfolio management. We've sold over AUD4.2 billion of noncore assets and created approximately AUD6 billion of assets across BTR, industrial and office, substantially improving the quality of our portfolio. As a result, we now have a high-quality, modern, sustainable portfolio, which has consistently outperformed the direct real estate performance benchmarks.So that we can continue to drive investment performance, we are focused on increasing the cash flow of our resilience of our portfolio by lifting our exposure to living sectors where we have strategic competitive advantage and pipeline opportunities such as BTR and land lease communities, continuing to lift our exposure to industrial assets in Sydney, where vacancy is around 0.5% and supply is expected to remain restricted and moderating our exposure to office over time, while continuing to focus on modern prime assets, where the demand fundamentals remain the most resilient and capital expenditure needs are lower.Our unique internal design and construction capability is a key point of difference and significant competitive advantage. Our integrated model is essential to managing risk and delivering a consistent source of earnings to investors. This capability is now deeper than ever, spanning commercial real estate and multi-living sectors and our diverse capability also provides increased flexibility to these earnings streams over cycles. This capability will be essential to help us grow our exposure to new asset classes such as BTR and land lease, expand our industrial exposure and take advantage of the next residential cycle, all while delivering on our sustainability objectives.We have now centralized our residential and commercial mixed-use development teams under the leadership of Stuart Penklis to help us better allocate capital and to better harness and utilize our human capital across the business. Given the tighter availability and cost of capital and required returns, we will need to do more with less, which will require discipline around the deployment of development capital. Utilizing capital-efficient structures and third-party capital to deliver high returns will be a key opportunity.We have already shown leadership in the use of digitization and prefabrication in our development process and this will become even more important going forward, particularly as we begin investing in the land lease sector. Leadership in ESG is a critical area to ensure success in the business into the future. We are starting from a position of strength, having achieved net positive carbon in Scope 1 and 2 emission 9 years ahead of our target. We've maintained high energy and water ratings across our investment portfolio and we have a highly engaged and diverse workforce. We have set ambitious goals to be net positive Scope 1, 2 and 3 carbon water and Net Zero waste by 2030.Continued leadership will remain a key focus going forward with our customers, capital partners and employees demanding strong environmental, social and governance performance. The organization has been restructured into investments, funds management and development, which will operate as separate EBIT divisions to reflect the growing scale of the Funds Management platform and integrated nature of our development division. Asset Management has also been separated from investment managed to provide independent support to both Mirvac and its partners, helping to a better performance-driven culture.Victoria Tavendale has been appointed our Chief Asset Management Officer, overseeing our new Asset Management division, while Richard Seddon has been appointed to CEO, Investments and will have responsibility for the assets on Mirvac's balance sheet and within Mirvac Ventures. I'm pleased that we're able to promote our own people to these roles, which reflects the strong focus Mirvac has on professional development and talent management. I look forward to introducing Victoria and Richard to many of you over the coming months. And of course, Scott Mosley, he was appointed in December last year, will focus on growing our third-party funds under management and unlocking intrinsic value for Mirvac.I'll now hand over to Courtenay to present our third quarter update.

Thanks, Campbell, and hello, everyone. We're pleased today to provide an update on our quarter 3 results. Our progress in the quarter against key objectives demonstrates our ability to execute our strategy in the current challenging market.Firstly, to our Investments portfolio, we announced a AUD1.3 billion asset disposal program for the current financial year. With AUD445 million completed to December, we have now terms agreed on the remainder with 60 Margaret Street expected to be finalized and settled in the fourth quarter and terms recently agreed on 367 Collins Street with the party now in due diligence. In addition to delivering these key objectives, the business continues to perform well and our high-quality investment portfolio maintaining its performance.Occupancy across the portfolio remained high at 97.5% and we saw elevated leasing activity, particularly at our build-to-rent assets. Our newly opened LIV Munro in Melbourne is already 54% leased, well ahead of our expectations. And LIV Indigo is stabilized at 96%, with tenant and capital demand for our build-to-rent assets and our Sydney-based industrial portfolio strong, supported by positive market fundamentals. This further supports our plans to increase our capital allocation to these sectors over time.Elsewhere in our investment portfolio, we continue to see the bifurcation of tenant and capital demand across office sector -- across the office sector, with occupancy remaining high at 96% against a market occupancy in the mid-80s. Our well-located urban retail centers are also performing well, with 19.1% MAT growth on the prior corresponding period, up 12.6% versus 2019 and positive foot traffic growth of 20%.Secondly, in our growing Funds Management business, we indicated we would bring capital partners in to support the growth of our BTR and industrial platforms. And in the quarter, we've been progressing the establishment of our build-to-rent venture with 2 aligned long-term capital partners with final Board approvals expected within the next month. And we have a partner, an exclusive DD to establish an industrial venture with Switchyard and Aspect North to seed assets. Switchyard is expected to settle in the fourth quarter and Aspect North will settle -- we expect to settle in FY '24.In addition to these transactions, we are securing a partnership with a new long-term capital partner on our 7 Spencer Street development, which will enable the commencement of this project. Together, these 3 transactions will grow our funds under management and accelerate our growth into these asset classes with strong fundamentals. A AUD230 million co-investment in MWOF was completed during the quarter and a partially underwritten equity raising process is underway, expected to complete in quarter 4.Thirdly, in our Development business, we remain selective on progressing development projects. And in the quarter, we commenced demolition at our mixed-use project at Harbourside in Sydney with the launch of the residential component targeted for early calendar year '24. And as noted earlier, we are close to selling down 50% of our 7 Spencer Street development to a new long-term capital partner, which will enable the commencement of the development.More broadly, across commercial and mixed-use developments, we have seen great progress across our build-to-rent office and industrial developments. Switchyard is expected to complete shortly. And as of today, leased, we've hedged agreement for 90% of the development. Our build-to-rent development is progressing well with 2 projects in construction and Albert Fields is expected to commence shortly. We remain selective in our deployment of capital in the current environment and we are progressing our commercial and mixed-use projects with the right tenant pre-commitments and confidence in capital partner support in place.Within residential, we've seen further impact on delivery progress across key projects in the quarter with the 319 settlements completed behind where we expected to be, mainly due to weather. Sales activity in the quarter were slower. However, we continue to see solid sales activity across our established project apartment precincts, such as Ascot Green in Brisbane and Green Square and Pavilions in Sydney, with Pavilions now 100% sold. Leads in the quarter have improved to the strongest level in 12 months and are above pre-COVID levels and the initial launch of our new all-electric masterplanned community Cobbitty, in Sydney also saw strong demand during the quarter with the first stage 88% pre-sold.Our AUD1.8 billion of pre-sales provides us good visibility of future earnings and the underlying residential market fundamentals remain compelling, with tight vacancy, a restricted supply outlook and a strong resumption of overseas migration underway with over 450,000 net visa arrivals in the year to March. Coupled with signs of being close to a peak in interest rates, a stabilization of established house prices and a pickup in sales inquiry levels, our deep development pipeline is well placed to take advantage of the expected pickup in sales in activity over time.I'll now hand back to Campbell to close out the call.

Thanks, Courtenay. At the half year, we spoke of settlement risk due to inclement weather, subcontractor failure and labor shortages. With sustained adverse weather conditions persisting over the quarter further impacting our delivery program, we now expect approximately 2,200 resi settlements to complete in FY '23, with the remainder now pushed into FY '24, and the delayed settlement of Aspect North due to planning outcomes into FY '24. The impact of this decision is that our EPS guidance for FY '23 has been reset to at least AUD0.147 per share from the previous guidance of AUD0.155.Our distribution guidance is AUD0.105, representing 2.9% growth. I'd like to reiterate that these earnings have not been lost, but delayed into FY '24 and will also ensure that we do not compromise on the quality of the product we are delivering to our customers. Looking to the future, we are well positioned for medium-term earnings growth. Our business is supported by our modern high-quality investment portfolio largely created by Mirvac and expanding Funds Management platform and our in-house design and construction platform through which we can continue to unlock value for the group, our capital partners and our security holders.We are seeing strong tailwinds forming for the residential sector over the medium term with an acutely undersupplied market, strong migration trends and tight vacancy, and we are confident we have the pipeline brand and track record to take advantage of this theme over coming years. All of this is underpinned by a vibrant culture, a platform of scale, passion for delivering sustainable outcomes, strong balance sheet and a 50-year track record in creating and curating assets for performance. We look forward to catching up with many of you in the coming weeks.Thank you, and we'll now open for questions.

Thank you. [Operator Instructions] Your first question comes from Sholto Maconochie from Jeffries.

Just a couple of questions on the asset sales. Here's an article today saying you've sold at circa AUD800 million. Can you comment on what the pricing was for that sale for the MetCentre and Margaret Street all in one?

Look, I'm very happy to do that in the next month or so. We'd just like to make sure that it's executed and done before we do so. But you're in the ballpark on numbers.

And then just on the resi, it looks like the guidance number you take out, the difference is about AUD32 million lost profit equates to about AUD158,000 per lot. That seems like a pretty high margin. Was it mainly that one project you flagged out in Aspect North that was contributing to that?

Yes, that's part of it. So, there's a few components. Probably most importantly, the apartment projects in New South Wales, Willoughby and Waverley, both of those are now pushed into FY '24. And that really is a product almost exclusively of wet weather. And then we have a number of MPC product as well, which is a multitude of factors. Some of those factors include just labor shortages with our subcontractors. Part of it is weather related. And I guess the choice that we've had to make is whether we are prepared to compromise quality to squeeze to hit that 30 June deadline. And I have to say we've taken the view, we think prudently that we should always ensure the quality of our product over and above the timing of its delivery.And on the Aspect North, you're right, there was -- on Aspect North, there is a planning -- a one planning outcome. We expect to get the deal done with Aspect North very, very shortly. However, the profit recognition under the transaction will actually be in FY '24 versus Switchyard where the profit recognition will be this financial year.

Okay, Switchyard this year. And then just can you comment on the pre-sales at a -- I know you've been flagging Willoughby and Langlee, at Waverley even more, at the higher end that want to see the product. I think it's 54% pre-sold at the half in December and mainly 29%. Can you comment on where those sort of pre-sales sit currently for those 2 projects?

Look, we've certainly seen acceleration in sales, particularly in April, and we probably have as much again in deposits received. So, certainly now for the first time, we do have at Willoughby the first stage. We actually have completed apartments. We just need to finalize the removal of all the scaffolding and all of the landscaping work, which will happen over the next 6 to 7 weeks. And ideally, we will start to see a vast improvement in sales thereafter.

And then just finally, on the restart or revisit of rejigging of the business in terms of reporting lines and people, is there any cost out given your old role wasn't replaced and Brett Draffen's role wasn't replaced. Is there any cost out on the overhead line that we should be factoring in?

Look, it's probably a bit soon to say that. But certainly, Sholto cost is always important and probably more important now in the environment we're in than it has been in the past and that's certainly something we'll be looking at.

Your next question comes from James Druce from CLSA.

My first question is just around the 1 Margaret Street and Collins Street transaction. Do you -- once sold, do you think they reflect the value of the broader investment property portfolio for office in terms of discounts and rates?

Well, look, certainly, we will be reviewing all of our values going into 30 June, which you'd expect as there is sales evidence starting to be created in the market. The outcome on 60 Margaret Street will not be that dissimilar to the carrying value we had at 31 December. So, we certainly are taking into account where we thought demand was likely to be at that point and trying to reflect that in our values. But that being said, you should expect a decline in values going into 30 June. I probably can't tell you the quantum at this point.

And maybe just comment, how do we think about the sensitivity of Harbourside and some of the office development to potential valuation declines? Should we be pretty comfortable that if you see a 10% or maybe 20% decline in office that you can still have a margin to push those projects forward? Or will you need to reassess those?

No, look, I think we -- I think as you've sort of grown to expect from Mirvac, we are always pretty conservative in our expectations around our development processes in commercial. Certainly, we are very, very aware. We now manage a very, very significant amount of office across the Funds platform and our own balance sheet. So, we get very good live data on what's happening with tenant incentives and what's happening with market rents across the board. So, that's a very important part of how we think about our feasibilities in office.And then with cap rates, the 7 Spencer Street transaction, which we are working on, I think will give us very good color in terms of what brand new real estate should be valued at on a relative basis compared to the older quality stock. So, we've got a pretty good read on all of those at the moment. And certainly, when it comes to 7 Spencer Street, we look forward to sharing more information around that at the appropriate time.

One more, if I may. I think there's a reference to the BTR joint venture in the press and talking about potentially Mirvac retaining, I think, 45%. Is that of the entire JV? Or is that -- can you split that up between capital and management, I suppose?

Yes, that's for the entire JV, which is the 2,200 apartments that we have under construction around the country, either complete or under construction.

But James, just to clarify, where we've ended up with that transaction is we are just selling the properties down. So, it's a propco, the management is not in that. So, we retain 100% of the management in the structure and we'll continue to service those properties as Mirvac. So, that 45% is of the properties.

Yes.

You next question comes from Ben Brayshaw from Barrenjoey.

Just had one question. Will the 7 Spencer Street capital partner produce realized development profits in FY '23?

No, it won't.

And that will be -- will that be an FY '24 expectation?

Yes. So look, historically, how we reflect profits in the commercial pipeline is on a percentage complete and on a risk-adjusted basis, which is usually tied to leasing success. So, how we've done that in the past will be consistent with how we do it in the future.

And can I just clarify as well the sell-down at Switchyard, is it still likely to produce development profit in FY '23, because I think you brought back 49% from Morgan Stanley for AUD138 million. So, just could you comment on the development profit there, please?

So, there will be development profit recognized in FY '23, and that's hopefully, the exchange of that project, which will include Aspect North is imminent. So, we will certainly let you at the time. And as we get close to that number, we can certainly provide some guidance around what the profit looks like.

And I think maybe just to add to Campbell's point. So, we've had a successful outcome and we're working with a partner on the selling down of those seed assets into that venture. And Switchyard and Aspect North are those and have always been, we indicated that they were the seed assets. It's just that we will complete on the Switchyard selldown this year and that profit will be realized. And Aspect North, just due to some planning conditions will delay into FY '24, and we expect it to deliver development profit in FY '24, just to help you think about how it's coming out compared to what we've indicated previously.

Your next question comes from Lauren Berry from Morgan Stanley.

You've hinted in the presentation about increasing the exposure to industrial residential downsizing office. Is that a way of saying that you're going to target more office asset sales going forward? And office is 60% now. Do you have a target percentage that you might be aiming for?

Look, we're probably not going to get drawn into percentage targets just yet, Lauren. But I think the key message that we want investors to understand is that brand new office performs really well. It's very CapEx light. There are no incentives. Essentially, every dollar earned is a dollar that we can distribute to unitholders. Older real estate by its nature, unfortunately, is a little more CapEx intensive and it has a lot more tenant incentives. And over time, we want to diminish that exposure in our portfolio so that we have a far more resilient portfolio with less CapEx leakage. That's where we're driving. We think there are some asset classes which do that better than other asset classes. Industrial is certainly one of those. Our experience in build-to-rent is consistent. And obviously, we're doing a lot of work on land lease and we think that, that is a really nice adjacency for what we do with our MPC projects.

And just on your resi sales, 288 in the quarter. It seems like that was due to lower launches in the period. How is your launch pipeline looking like for the fourth quarter? And how should we think about how pre-sales might track over the next 3 months or so?

Lauren, it was -- the sales in the quarter probably are mainly due to less launches, but there is lower sales activity. We sort of indicated that leads are increased over the quarter, but it is still a difficult sales environment. We expect when interest rates settle and there's certainty, then the market will come back. We have product to meet that. We have apartment product that is available in completed precincts like Green Square in Brisbane we talked about, but also in Willoughby and Waverley and then also in masterplanned communities. So, Cobbitty is a really good example. We've got product ready to go. The first release [ albeit ] small was this quarter. There'll be more releases available in this coming quarter if we see the market there to meet it.

Your next question comes from Tom Bodor from UBS.

I was just interested in an update on what Westpac's plans are at 275 Kent Street. And if you've got an indication on what's happening with their lease. And also an update on leasing progress at 55 Pitt Street as well.

Yes. So Westpac, we probably think there is a stronger chance that Westpac will leave. That's still -- we're still talking to them. We have appointed agents to that space and we do actually have some quite strong interest in that space. 55 Pitt Street is, we haven't made further progress formally, but the amount of demand that is building on that asset is probably as high as I've seen on any project Mirvac's done from an office perspective. So certainly, all of the forward indicators are good. And I think a lot of the language we've used in the past is still relevant. Corporate Australia is still very focused on high amenity buildings, high sustainability credentials, good digital systems in place and high quality. And certainly, we haven't seen anything in the last quarter that suggests that's changing. If anything, we're probably seeing increased interest in those characteristics.

So, do you -- can you confirm that you haven't started construction there? I know that demolitions occurred, but is it early works? Or is it actually starting to go vertical given that strong demand?

No, we're still digging the hole and we will make a call in coming months on what we do next. But at this point, there is -- the building is not coming out of the ground at this stage.

Your next question comes from Stuart McLean from Macquarie.

First question, just regarding your comments, Campbell, around maybe more efficient with your capital, maybe bring in capital partners a little bit early on in the development phase. Can you just provide any more color on that please compared to what you've done maybe over the last 5 or so years? And I imagine that also means you need to give a little bit more upside away, but is going to be higher ROIC. Can you just talk to those sort of changes that you're going to be making there on capital efficiency?

Yes. Look, I think that's a fair observation, Stu. Certainly, we are receiving more inbound interest from capital about how it can participate in the residential cycle going forward. Clearly, we spent time talking to the market about what's happening on the demand side with immigration, what's happening on the rental side with extraordinarily low vacancy rates in rental product in the major capital cities. And then just the almost anemic supply outlook of residential markets. So, all of those augur quite well to participate in that cycle and we are taking more inbound interest from third-party capital probably than we have at any point in the past. So, that's an area we want to explore.I think the overarching theme is we are always going to be a developer and the developer is a very important part of the DNA of what Mirvac is. However, we don't need to do it all with our own capital and having balance sheet being as efficient as possible is a key element of how we sort of see the business changing going forward. And third-party capital participating alongside our balance sheet will be a key part of it.

And my second question is kind of related there. Just on the living sector of build-to-rent and on land lease, how long do you think it will take you to get scale in those sectors? It's taken a while to get to where you are on build-to-rent and you're still not at scale there. Just what's -- what are we looking to see in terms of what does scale mean? What does the significant exposure there to those sectors mean? Just how do we think about that on a medium-term view, please?

Look, I'm probably not going to be drawn just into giving you target numbers just yet. I think we've always held a view that scale and BTR, which we've published before, is 5,000 apartments and that's certainly our medium-term expectation. Just the changing nature of the build-to-rent sector, when you start to think about cap rates, what's happening with construction costs, what's happened with the availability of builders, we certainly think that there maybe different opportunities to grow scale in that space than we have in the past, which has very much been our focus on developed to core ourselves and we will continue to do so. And we do have significant opportunities on our own development book, which can play into that space.And obviously, on the lend lease -- land lease space -- sorry, that was a real slip of the tongue, on the land lease space, there are really wonderful adjacencies with our existing business. We have been building communities in MPC for over 50 years. We have a very strong reputation in that space for quality. We are a market leader in prefabrication, which has been a key element of our construction processes for a number of years. All of those tie in very well to land lease. And that's certainly an area that we hope to pilot our first project very shortly.

And just a final follow-up on that. Can you expand into land lease organically? Or do they need to be sort of acquisition of a platform to help the progress?

Look, at this stage, it will be organic, but no, it will depend again on opportunities available and we would never say no to opportunities if opportunities are there.

[Operator Instructions] Your next question comes from Alex Prineas from Morningstar.

Just a question on the comment around the delay from settlements moving into the next financial year. You commented that it's delayed earnings, not lost earnings. Can you just sort of clarify whether there is any -- or what sort of impact it could be on development margin arising from delays?

Look, there is certainly for the apartment projects, there is a little bit of margin slippage. Obviously, we've got interest expense that we're carrying for a longer period of time as a result of the weather delays in particular. So, that will have a small impact on margin. It's certainly not dramatic because we're really only talking about delays impacting some of the apartment developments by 3 months. But what it has done, obviously, is push those that EBIT number, which back in August when we provided guidance for the full year, we expected Waverley and we expected Willoughby to be delivering EBIT in May. That's now more like July and August. And so that's certainly a key element. It doesn't tend to impact as much the margins on the MPC projects.

And just sort of following up on that. You commented that most of the delay more recently is around weather. For new projects that are starting today, would you expect forgetting about weather, just thinking more about supply chain disruptions, would you expect project time frames to be more back to historical levels? Or are you still putting kind of longer time frames into feasibilities?

Look, we've definitely increased the grossing in our programs, which takes into account lost weather days. Certainly, this last 12 months is something we really haven't experienced before. Across the board on most of our projects in the -- in calendar year '22, we lost around about 35%, 36% of working days. And we've lost a similar amount in the first quarter of this year just due to wet weather. And certainly, that is something that you struggled to forecast. But now we are certainly being far more prudent in terms of how we think about growing in our feasibilities going forward.

Okay. And that's sort of taking into account supply chain disruptions as well? Or are you just allowing for more weather interruptions?

Look, it's probably more about weather at this point. Supply chain, we are certainly diversifying our sources of supply and have been doing that regularly over the course of the last 7 or 8 months, just ensuring that we don't have too much specific country risk. So that's something that we've been doing anyway. Cost of containers has come back dramatically in recent times, which has made a significant change as well, so -- and we are seeing costs across the board beginning to stabilize, which is good. Labor costs still remain high. And from our residential housing perspective, particularly for built form houses, labor costs are still significant -- having a significant impact on costs.

And I wouldn't say, I mean we're not back to historical norms on programs and grossing. I don't think, but it's definitely probably come off some of the challenges through COVID when you think about supply chain. But when you put weather, supply chain, labor in, we're still seeing some of those impacts, but not back to historical norms, just to be specific on your question.

Your next question comes from Richard Jones from JPMorgan.

Just further to Alex's question, just in relation to sort of key residential completions for '24, projects like Waterfront Sky, Ascot Green, The Fabric and Tullamore. Is there -- should we be thinking about delays for those projects associated with the delays you're calling out for like what FY '23 completions?

Look, there are delays across the board. And I think one of the things there is not the Concertina impact of things being pushed in the short-end and not impacting the long-end. So, we are seeing delays across the board. We can be more specific as we get into the full year about where we see some of the bigger apartment projects. Certainly, we -- at this stage, there is some softening in timing without doubt.

Just one more sort of strategic question, just in relation to the invested capital mix between resi build-to-sell and resi build-to-rent over time. Can you just talk about how you think that might change?

Look, probably the way we think about it is a little bit more from the investment portfolio perspective. So, we see build-to-rent as an investment asset class rather than a resi asset class. We probably feel the same way about land lease. These are long-term income-producing asset classes, which in an ideal world, will have some exposure to CPI or CPI-equivalent fixed increases with marginal CapEx. And we find those particularly attractive income streams to form part of an investment portfolio. So, the growth in those areas really will come over time by a dilution in office. So, you should just expect us to change our mix over time. But in the short term acknowledging that we still will develop office buildings, but that will just see us as we complete those, spend a little bit more time thinking about what the tail of our portfolio looks like.

So, no real change in invested capital in resi for sale?

No. No, look, we're -- I think the plan is to make sure that the capital deployed on the development side is pretty disciplined. Certainly don't see us increasing that at the moment, just given the environment we're in. But also it's -- we want to make sure that the volatility of the earnings line in our business is a little more controlled than it has been in recent years.

What I was more getting at was, would that be lower, I guess, but you're saying it's not going to be higher, but you're holding it in that what we're assuming.

No, it will be -- look, we'll hold it at similar levels.

And I think what's important in all of that -- I mean, residential and our capability in residential, very important part of the value we create for shareholders and across the organization. And we do see the fundamentals in the residential business -- residential market very strongly. So, we will meet that. But to Campbell's point, we're being disciplined about how we deploy that to make sure the return on that capital is commensurate with what we're deploying on an annualized and a whole of project basis.

Thank you. There are no further questions at this time. I'll now hand back to Mr. Hanan for closing remarks.

Look, thank you, everyone. And certainly, I appreciate you taking the time to listen to this call. And again, I just want to reiterate that whilst there have been changes in our EPS line going into FY '23, I just want to reiterate again that these earnings are not lost. And these earnings will now perform in FY '24. And I thank you all for your time and I'll look forward to catching up with many of you over coming days and weeks. Thanks very much.

That does conclude our conference for today. Thank you for participating. You may now disconnect.